Iceland, six years after the meltdown

by alda on September 29, 2014

Six years ago today, my bank, Glitnir, collapsed.

It was a regular Monday. EPI and I had just returned from a holiday abroad the night before, he had gone to work, and I was at home unpacking the suitcases. At around 9 am he called me and told me that Glitnir had gone bankrupt.

I was speechless. Having been abroad, I had no idea that anything was amiss [though we certainly had noticed that the Icelandic krona had been devaluing steadily while we were away]. Of course that was only the beginning of what was to come. Within days everything had spiralled out of control, the krona was in free-fall and Iceland’s other two commercial banks had also collapsed.

Suddenly the eyes of the world were on Iceland. The international media flocked here and variously reported that Iceland was a pariah state, or the canary in the coalmine of what was to come. Meanwhile, all was chaos in Icelandic society and those of us who lived here struggled to come to grips with what had happened, and what lay ahead. It was a scary, scary time.

HopelessnessSoon, though, it became apparent that the implosion that had taken place was not going to manifest instantly. Indeed, foreign reporters seemed perplexed to come here and see that life was more or less continuing as normal – there were no people throwing themselves out of windows in despair, or families in tattered clothes living in cardboard boxes on the streets. [I sometimes got the feeling that they were a little disappointed not to find more physical signs of the disaster - it didn't exactly lend itself to visual representation in the media. That changed when the demonstrations started - but that's another story.]

Those of us on the inside, meanwhile, knew that the disaster would be less a sudden implosion than a gradual, debilitating erosion that would only begin to show its true face in a few years’ time.

And that is where we are now.

This weekend I had a lengthy conversation with a friend of mine – one of several conversations I have had with people on the same topic in the past while. The stories are all more or less the same, only with a slight variation of circumstance. Her story is this: around ten years ago she bought a condominium in Reykjavík. [Most people in Iceland, incidentally, own their own flats. The rental market is both small and outrageously expensive.] She took out a mortgage from the state mortgage fund for ISK 16 million [around USD 132K]. Since then, she has been making payments religiously every month. Today, even though she has made regular payments and not remortgaged her home, she owes ISK 27 million [USD 223K].

Why? Because of the system of mortgage indexing. Here in Iceland, our mortgages are indexed to inflation, which means that when there is rampant inflation [which is the result of, say, a country's economy melting down] the principal of our mortgage increases in tandem. And of course the interest just piles up on top of that.

Since the meltdown six years ago, everyone’s mortgage has gone up. People owe a lot more than they did when they started. It’s the same for us. EPI and I were very lucky in that we bought our home in 2002, just before the mortgage bubble started and property prices rose astronomically. That means we didn’t have to take out a very high mortgage compared to those who bought a few years later, but even so, it has increased by 50 percent from what it was 12 years ago – even though we have made our payment every single month since then.

For us it is manageable because the amount is relatively low [and there are two of us]. Not so for most other people. Take my friend, for instance. She is in her early sixties and has always been a vibrant and energetic woman with no financial issues. Then she had an accident that rendered her unable to work. Today she is on a disability pension. She is divorced, and her kids have moved out [her youngest lived with her until recently and helped with the mortgage]. Her payment is now so high that she struggles to make ends meet. She has tried to sell her apartment but so far has had no luck. By the time she has paid her mortgage each month she has ISK 50K [USD 413] left over on which to live.

She has sold her car and is trying to get a little extra in by renting out the parking space in a communal garage. She has also considered renting out rooms in her flat to help offset the costs. I asked whether she could rent out to tourists, through Air B’nB or some such outfit. No – there has recently been a crackdown on people doing that [at the behest of the association of hotels and guest houses who saw that regular folks were starting to get a substantial slice of their pie] and they now require people to apply for licences if they want to rent out. I asked whether she couldn’t just do that, then. No – because as soon as you have the licences, they raise your property taxes sixfold. So that would eat up all her profits and even drive her into the red. Meanwhile, regular property taxes have gone up anyway, as has everything else – food, gas, heating costs, etc. All except disability pension.

Again, this story is not unique. It is the norm. And it is so frustrating and infuriating that I could scream. My heart bleeds for all the people, like my friend, who have tried and tried and tried to do the right thing – to make their monthly mortgage payments, even though it means cutting down somewhere else: scrimping on food, or on buying their kids new shoes, or whatever. Because that is what the vast majority has done. Tried and tried, for the sake of their own pride and dignity. Meanwhile, if they want to take some initiative to help themselves, like renting out rooms in their homes, they are shot down before they even begin. People are THIS CLOSE to giving up. And many of them already have. Many have stopped making payments and declared bankruptcy with the resulting implications, and/or buggered off to Norway. And who can blame them? I can’t. But my heart really goes out to all the people who have struggled, and are struggling, to serve a horribly corrupt and unjust system that has absolutely no regard for their welfare.

Because after a while you really do wonder: what is the point? When your government consistently lies to you, staring you in the face and promising relief while at the same time blatantly shifting money from the poor to the rich, when Iceland is losing on average 66 doctors a year [in a country with a population of 320,000], when young people are opting to join the European Union one by one by leaving a country that offers them no future and moving abroad … it really is hard not to wonder: What is the point?

EPI met a man last Friday who owns a chain of shops here in Iceland and is consequently financially stable. Even he is horribly pessimistic. He cannot see how this country will go on, and predicts another collapse in another year or so.

Yeah. So that’s where we’re at, six years on. And no solution in sight, only more of the same.

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The Icelandic National Broadcasting Service [RÚV] recently had an excellent and easy to understand explanation of the forces at work in Bárðarbunga, the caldera beneath Vatnajökull glacier that has been repeatedly mentioned in connection with the current eruption in Holuhraun. I’ve taken the liberty of translating it for the edification of those who don’t speak Icelandic and perhaps don’t have access to this sort of information. Please keep in mind that this was written on September 3rd, and since then two new fissures have opened up.

Guide to Iceland pic

The translation is taken more or less verbatim from this link. Please keep in mind that I may not have all the scientific terms down pat, but I believe I’ve managed to get the meaning across:

Some 4,500 million years ago, when our solar system had just been created, the earth was a single ball of fire – a smouldering cauldron of melted rock. Gradually its surface cooled and the earth’s crust was formed. Yet deep in the centre of the earth there is still a vast amount of heat, and material is constantly seeking to find a way to the surface. As it gets near the surface it begins to melt and forms lava fountains that find their way out. This happens in two places: where the heat deep in the earth is especially great, in so-called hot spots, and where the earth’s tectonic plates either meet or pull apart. Iceland sits on top of such a division of plates, and it is also on top of a hot spot. Consequently volcanic eruptions here are more common than in most parts of the world.

The centre of [Iceland's] hot spot is beneath the area around Bárðabunga, a region that seems quite innocuous as it is covered by Vatnajökull glacier. However, if the glacier were peeled back it would reveal one of the country’s largest and most active volcanoes. There are around seven kilometres from one edge of the caldera to the other, which is approximately the distance from the old city centre of Reykajvík to the Grafarvogur suburb.

Underneath the volcano, the molten lava flows from the centre of the earth and collects in a huge chamber believed to be under the Bárðarbunga mountain.

In recent years, the pressure beneath the mountain has grown. The land has risen, but in the end, something has to give. Like water, the lava finds the easiest route along which to flow, and instead of breaking through the magma chamber it has flowed to the side, into a dyke, or tunnel. This flow of magma has now lengthened and currently extends some 40 km to the north.

The flow came to a halt beneath Holuhraun [where the current eruption is] and the magma broke its way to the surface. However, the eruption of lava out of the fissure in Holuhraun is less than what is believed to flow into the dyke, and so the current eruption is not sufficient to release the pressure.

What will happen next is uncertain. There have been many large earthquakes in Bárðabunga itself and scientists say they cannot exclude the possibility that it will erupt. If that happens, it will melt its way through a layer of ice 850 metres thick, which means that flooding and ash emissions will follow. As yet, however, there are no indications that this will happen.

Many thanks to Guide to Iceland and lurie Belegurschi photography for the above photo. 

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As most people are aware, a free and independent media is one of the four cornerstones of democracy. Therefore when serious struggles for control of the media occur it is definitely a cause for alarm.

fjölmiðlarWhen the economic meltdown took place in 2008, many of us were shocked to realize that much of the madness and corruption that had led to one of the worst crises in Icelandic history had gone unreported by the press. Why? Because the perpetrators of the meltdown owned all the main media outlets. [An exception was the state broadcaster, which on the other hand was staffed with politically-appointed directors].

When the shock wore off we started to see glimpses of reality through the smoke, and it became clear that there had to be laws in place to ensure the autonomy of the media. New laws were subsequently passed to that end. And we hoped for the best.

Iceland has three main print media: Morgunblaðið, Fréttablaðið and DV. About Morgunblather Morgunblaðið I have written extensively in this space in the past and no need to cover that ground again. If you are interested, you may want to start here.

Fréttablaðið has been owned since the mid-2000s by Jón Ásgeir Jóhannesson, one of the disgraced moguls who helped push Iceland to the brink of bankruptcy. A part of the 365 Media conglomerate, it was used basically as a PR tool for its owners and an advertising medium for their companies. It is delivered free to all households in the Reykjavík area, and to various locations beyond. After Jón Ásgeir crashed and burned in 2008 he managed somehow to hang on to 365 by putting it into his wife’s name.

Despite its lightweight editorial policy, Fréttablaðið has had some good people on board. They’ve run some very astute editorials, and have one of Iceland’s foremost commentators on board in the form of Halldór Baldursson, the brilliant cartoonist. However, there have always been rumours that the owners have tried to influence how the news has been presented, in particular news of their own misdemeanours.

About a month ago it was announced that a new publisher of Fréttablaðið had been hired. She is one Kristín Þorsteinsdóttir, who had previously been on the board of Fréttablaðið and is a long-time associate of the owners. She was on the PR team at Baugur back in 2007-ish, and after the meltdown became the spokesperson for Iceland Express, which also had connections to Jón Ásgeir & co. A couple of years ago she wrote a hard-hitting op-ed piece in Fréttablaðið in which she attempted to whitewash the perpetrators of the economic crash and urged that investigations by police and the special prosecutor into the meltdown be stopped, among other things.

Two days ago, one of two editors of Fréttablaðið was suddenly fired. The other, Ólafur Stephensen, immediately made himself scarce, only to return with an editorial – his last – in the paper yesterday. In that editorial he insinuated beyond any doubt that Kristín Þorsteinsdóttir had been tightening the screws and that he was no longer permitted editorial autonomy. Predictably, he tendered his resignation later in the day.

So that’s Fréttablaðið, which I think we can now write off completely as anything other than fluff and mindless propaganda. That leaves only DV, which has been one of the very few media trying to engage in any sort of investigative journalism over the last few years. [The others are Kjarninn, which comes out once a week I believe and which is now teetering on the verge of bankruptcy, and Reykjavík Vikublað, a weekly paper that is little more than a flier, but which nevertheless has been engaging in some very ambitious reporting over the last while.]

Long story short – there has been an incredibly nasty struggle over DV for the last few weeks. It appears to be a hostile takeover-type situation, with an individual who is clearly a frontman for God knows which moneyman, trying hard to gain a controlling share. He now seems to have succeeded, since the people who own World Class, the chain of fitness centres in Reykjavík, just bought a small share, which – if I understand this correctly – will push the controlling share over 50%. DV has been relentless in exposing corruption among the owners of World Class [repeated bankruptcies and write-offs, etc. with them simply starting over with a new kennitala ... long story which I won't get into here] and now the owner of World Class has openly stated that his objective for buying the share is to oust the editor, whom they obviously cannot stand.

In other words, corruption and dirty practices seem to be winning the upper hand, and things appear to be slowly moving back into the pre-meltdown darkness here in the land of the not-so-Nice.

Your thoughts?

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There is a subject close to my heart that I have occasionally considered posting about, and since the discussion has recently arisen on our Facebook page, I figured this was as good a time as any.

vistvæntIt concerns the supposed superiority of Icelandic produce, and this image of Iceland as somehow pure and untainted in all things pertaining to nature and food production. Sadly, this is a misconception. Icelandic poultry is factory farmed under WORSE conditions than in Europe, as Icelandic farmers have not implemented regulations set by EFTA about cage sizes, etc. There are generally three chickens to a space the size of an A4 piece of paper. Consequently salmonella outbreaks are frequent and chicken routinely has to be recalled from supermarket shelves. Chicken farmers will not allow media inside to film or photograph their factories.

Beef and dairy farming is not much better – it has recently come to light that there are farms that completely ignore animal protection laws, treating their livestock very cruelly (neck harnesses that are too low so the animals can never stand up straight, they never see the outside of a cowshed, etc.) and do so with complete impunity. Worse, consumers are unable to boycott those specific farms since all milk goes into one big vat.

Pork farming is horrendous – sows are kept in pens so tight that they can never turn around, can never nuzzle their piglets, etc. Until just a month or two ago, piglets were castrated without anesthesia, which is illegal. Their testes were simply ripped out of the scrotum. Only after a major outcry and public pressure did pork farmers agree to abide by the law and stop this cruel and heartless practice.

As for Icelandic produce, it has also recently come to light that the labelling “vistvænt”, which basically means “eco-friendly”, has been used for over a decade by various vegetable producers to label their products, and is basically meaningless. There has been no supervision of this labelling, so anyone can stick it on their products, whether they use pesticides or whatever else to augment their production. Meanwhile, we consumers have been buying these products in good faith, believing them to be somehow superior to non-labelled products. AND the few struggling organic farmers in Iceland have been trying to compete, while needing to adhere to very stringent regulations, all with the accompanying costs.

Iceland has the same social problems as everywhere else, albeit on a relatively smaller scale, given the size of the population. There are folks here who have no scruples about breaking the law and/or abusing animals if it is for their own financial gain. (Don’t even get me started on the dog breeding. Or the industrial salt that was sold to food production companies for over a decade and used in our food as regular salt. Yes. Industrial salt, the kind you use to melt ice.)

What is perhaps worse is that we consumers do not have a great deal of lee-way when it comes to selecting products that have been organically or ethically produced. Imports of meat are illegal unless retailers apply for exemptions from the government, and there are no organic chicken or pork farms. (Mind you, that is set to change soon, since there has recently been a major awakening in these matters and two women set up an organic chicken farm last spring, with the first chickens due on the market shortly.)

Bottom line is that the supposed superiority of Icelandic produce – with the exception, perhaps, of lamb and fish, is a myth. And of course the stakeholders – food producers, tourism operators – would like nothing more than to keep that under wraps.

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It was the final day of our West Fjords adventure, and guess what happened.


Patreksfjördur fog

After five days of pretty exceptional weather, we woke up to rain and, most annoyingly, FOG. Over there, across the sea, you would normally see mountains. On that day, they were completely obscured.

That threw a bit of a wrench in our plans. You see, we had planned to visit two of the most beautiful sites in the West Fjords – Rauðasandur sands, and the Látrabjarg bird cliff. However, given the weather and the fact that a visit there would not yield any good photographs to share with you all, we decided, after some deliberation, to wimp out and go home.

I hasten to say, though, that had we not lived in Iceland, and had we not been there a couple of times before, we would DEFINITELY not have missed out on going there. In other words, if you’re touring this area in Iceland, GO THERE, whether rain or shine. It will be worth it.

Happily, I had some pictures from earlier visits (as did the West Fjords tourist board, hehe), and the awesome experience of visiting these places for the first time is still fresh in my mind, so at least I can try to convey my enthusiasm about them.

We chose Patreksfjörður as our base camp for this part of our trip, since it’s a good place from which to explore the area. From there it’s about a fifteen-minute drive the turn-off to both of these places.

When you turn off the main road towards Látrabjarg you make another turn to the left to get to Rauðasandur. You pass over a ridge, and then suddenly the vista opens up before you with breathtaking beauty:

Raudasandur Iceland

Rauðasandur literally means “red sand” – a moniker that is pretty self-explanatory.

Raudasandur, Iceland

The red colour comes from scallop shells that have been pulverised into a fine powder and colour this vast stretch of sand. It is a stunning sight, especially in sunshine, when the sand looks like it is glowing.

There is a small community down there, all summer houses, and one cafe that is open during the summer months. Behold the view from their patio:

Raudasandur cafe

The area is filled with history, as well – not all of it as beautiful as the scenery. If you drive to the end of the road, and then hike a short distance along the shore, you come to some ruins that are marked with a plaque. This was the scene of a gruesome double murder back in the early 1800s, where a couple who lived on a duplex farm murdered their respective spouses so they could marry one another. They were later sentenced to death. The man was sent to Norway to be executed, but the woman died in prison in Reykjavík, and was buried in non-consecrated soil on Skólavörðuholt, where Hallgrímskirkja church is today. Her bones were later moved to a proper graveyard. It’s a pretty grim story that is still very much alive in the Icelandic consciousness.

But on to Látrabjarg.

This is actually the westernmost part of Europe. It’s a sheer cliff that rises straight up from the sea around 500 metres, and is teeming with sea birds that lay their eggs there, including puffins. They are so cute, and so amazingly unafraid of people that you can get right up close to them. However, BEWARE. They make their nests in holes near the edge of the cliff, and the ground can crumble out if you step too close, which you absolutely should not do, for VERY OBVIOUS reasons.

Látrabjarg cliff Iceland

I’m personally not very afraid of heights, but I would not even consider going close to the edge of that puppy without crawling there on my stomach and preferably having someone hold onto my legs while I’m there.

I did crawl to the edge on my first visit and got up close and personal with this little guy:

Látrabjarg puffin

I literally could have reached out and touched him.

Bottom line: these two places are absolute musts when you visit the southern part of the West Fjords. You won’t be sorry.


Where we stayed: Guesthouse Stekkaból in Patreksfjörður. A lovely place, very welcoming, with lots of special touches like fresh flowers in your room and little design objects everywhere, plus a TV lounge with a very cosy couch and a gorgeous breakfast room with an unhindered view over the fjord and the mountains beyond. No ensuite WC but toilet/shower facilities on each floor.

What we ate: It must be said that Patreksfjörður does not have an abundance of eateries. However, we found the restaurant Heimsendi, which had a pretty enticing menu with both fish and lamb dishes (Icelandic specialties), plus burgers. We both opted for the Bessaborgari burger, which was a very sizeable portion with lots of fries plus a salad. EPI said it was the best burger he’d ever tasted – I wasn’t quite so effusive in my praise, but thought it was very good.

Do not miss: The aforementioned Rauðasandur and Látrabjarg. Also, if you drive about 15 km north to Tálknafjörður (the next fjord) there is an amazing old outdoor hot tub (actually it’s a collection of three shallow tubs) that costs nothing to visit. There is a very rudimentary little change room with no showers that is maintained by the township. A perfect place to unwind and enjoy the fabulous surrounding scenery.

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Day five: paradise and waffles in the middle of nowhere

June 17, 2014

In which we barrel along on our road trip of the amazing West Fjords.  Having spent half of Sunday in Ísafjörður we hit the road again, this time due south. We weren’t headed far, only a couple of fjords down to Dýrafjörður – more specifically to Núpur, which for decades was a parsonage and also […]

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Day four: lovely Ísafjörður and some unexpected tangible history

June 16, 2014

We left off last post where EPI and I were driving from Djúpavík to Ísafjörður, via Hólmavík. We arrived in Ísafjörður pretty late, the drive being quite a distance – all that threading of fjords in and out, back and forth. The area we drove through is known as Djúpið – “the deep” – because […]

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Day 3: More on the the enchantment of Djúpavík

June 15, 2014

Day 3 of our stupendous West Fjords excursion, ostensibly undertaken to distribute a book but really mostly just for having a fabulous time in amazing surroundings.  We started the day in Djúpavík, a minuscule town in Strandir, most famous for its humongous abandoned herring factory. Djúpavík is a fascinating place. Its best-known residents are Eva and […]

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Day two: sublime pool, dramatic Djúpavík and a factory that defies all logic

June 15, 2014

Day 2 of our superexcellent West Fjords adventure: We woke up to the sound of birdsong in our lovely, compact cottage in Trékyllisvík. Got up and went for a run along the gravel road (the roads are pretty rudimentary around here), after which we drove the short distance to Krossnes for the express purpose of […]

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Day one of our West Fjords tour: necro pants, scary landscapes and idyllic pastures

June 13, 2014

Day 1 – Thursday, June 12 Our plan was to leave Reykjavík early-ish to get to Strandir, on the West Fjords, as soon as possible. However, since we had to stop to pick up some booze necessary provisions on the way out, it was actually 12.30 pm by the time we were on our way. We drove […]

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