In the early days of the financial earthquake that swept the world in 2008, Iceland was at the forefront, unlikely as it might have seemed. This small country on the rim of the North Atlantic and the edge of awareness for most people in the industrial world had run up a far-too-remarkable record of economic growth in the early 2000s. It was based on an utterly unsustainable banking expansion and the inevitable crash was both shocking in its magnitude—the Reykjavik stock exchange lost 94 percent of its value, the Icelandic krona 60 percent—and devastating in its economic impact. It inflicted enormous damage on Iceland’s reputation and Icelanders’ view of themselves.
The aftershocks are still being felt. In an April referendum, Icelanders rejected for a second time a government plan to repay $5 billion in loans extended by Britain and the Netherlands during the worst of the crisis. The margin this time was 60–40—decisive, but not as lopsided as the 98–2 result in the...
Bruce Little is a former economics reporter and columnist for The Globe and Mail. Since leaving the Globe in 2004, he spent a year at the Bank of Canada as a special advisor to the governor and wrote a book, Fixing the Future: How Canada’s Usually Fractious Governments Worked Together to Rescue the Canada Pension Plan (University of Toronto Press, 2008).
Advertisement
Advertisement