Yesterday afternoon I headed out to a demonstration — the first time I’ve taken part in the Saturday afternoon demonstrations for almost a year.
Those of you who have been reading for a while may recall that in the midst of the meltdown in 2008-2009 there were demonstrations every Saturday, that eventually morphed into the Kitchenware Revolution.
Soon after the government collapsed in January of last year, the demonstrations ended. Last autumn, they started up again. This time they are organized by an association called Hagsmunasamtök heimilanna — an interest group fighting for the rights of families and households — for ordinary people who are in deep sh*t as a result of the kreppa, or just those who are furious about the absence of real measures available to help those whose mortgages and other loans have skyrocketed.
I’ll make a confession: I’ve been really quite sheltered when it comes to this aspect of the kreppa. EPI and I were amazingly fortunate in that we bought our apartment in 2002 — just a few months before the real estate bubble started to inflate [and inflate and inflate …]. At that time, property values were much lower than at the height of the [artificial] boom — our home more than doubled in value during that six-year period. In other words, the mortgage we took out was relatively small, compared to what it would have been if we’d bought when real estate prices were at their height. Of course our mortgage has increased in line with the rise in interest rates and the [ridiculous] indexation of loans, but only a relatively small amount. An amount that is quite manageable for us.
So, because we have not been so adversely affected, and because the issue is complicated, and because the kreppa is so multifaceted and complex, and because coming to grips with it all is just TOO MUCH and can easily result in massive burnout if one isn’t careful … you tend to pick your battles and focus on the things that hit closest to home.
And in our case, coping with massive debt has [fortunately] not been a huge problem.
But that is not the case for many, many people. Young people who, for example, were starting families during the boom, who were buying cars and property because they weren’t able to wait [the rental market is not very big in Reykjavík and certainly was not during the boom] — they of course had no choice but to take out large mortgages in order to be able to purchase a home. And because the prices were so high and the state mortgage fund only loaned out a fixed amount, many families had to bridge the gap with bank loans — and many chose currency basket loans because that’s what the banks were pushing.
And now, after the crash, they are suddenly faced with the grim fact that their mortgage has skyrocketed while the value of their property has taken a nosedive. Meanwhile, many people have lost their jobs, so one and sometimes two family members are without an income. They’ve got a debt burden that they can in no way cope with.
Here in Iceland, we have extremely high interest rates and loans are also indexed to the rate of inflation. Meaning that when inflation rises, so does the principal on your loan. And everything is taken into the index. For example, the government has been raising taxes on everything from gas to alcohol to tobacco to biscuits — and this causes inflation. Those tax hikes automatically mean that our loans increase.
Meanwhile, most people have had to take pay cuts, our spending power has decreased substantially, and savings are being eaten up by inflation [although somewhat offset by the high interest rates].
It goes without saying that the system of indexation is grossly unfair. When someone goes to apply for a mortgage, the lending institution measures various criteria that determine the borrower’s ability to pay. However, with the economic crash — resulting from the incompetence of our authorities [*cough* Independence Party] to run the economy — those criteria were suddenly turned upside down. — So why should the borrower be solely responsible for repaying the debt, when his or her ability to pay was deemed OK at the outset — and then circumstances beyond his or her control changed so drastically? The borrower takes ALL the risk for anything that may happen in the future – even 20 or 30 years down the road. It’s ridiculous.
Soon after the crash, the government froze mortgages — meaning that people could delay their payments until a later date. However, that freezing runs out next month, at which time there is likely to be a tidal wave of people losing their homes.
The demonstration yesterday was an eye-opener. It was poorly attended — only about 100-200 people standing around in the wind and rain, but the speeches were passionate and the organization exemplary. There was fire in the people there, and a very evident sense of unity. I suspect a lot of people haven’t been going because, like me, the issue doesn’t hit close to home — but I plan to start attending, just to show my support. It’s a worthy cause and affects us all, whether we are losing our homes or not.
The speeches from yesterday are now available on this website [along with a bunch of others]. The one I found most impressive is by a young man who has decided to move to Norway in the spring. For some reason there are no permalinks, but the speakers from yesterday [January 23] were Jóhannes B. Lúðvíksson, Atli S. Guðmundsson [the young man I was referring to] and Andrea Ólafsdóttir. They can be found by scrolling down in the left-hand column. [Obviously they are in Icelandic.]