In April 2007, I traveled to Iceland to investigate what was then being called a "miracle economy." The Icelandic people had one of the highest incomes in the world and Icelandic banks and companies were buying up huge swathes of the British High Street. How was a nation of 300,000 able to dominate over so much of the economy of 60 million?
Everyone I met in Iceland gave me some improbably complicated explanation for the economic miracle, but I feared it was something much simpler -- hot money flowing from the global speculator class. If I was right in my belief, then Iceland was in for a mighty fall, for "hot money in" always and inevitably becomes "hot money out.'"
I asked the Head of Research at Kaupthing Bank, if when the global debt bubble did burst, the people might 'rise up' in anger as they did in France in the 1780's. He laughed at the question:
Today, the Icelandic people are calling for revolution, literally:
Why are the Icelandic people now protesting? According to the BBC:
The banking system collapsed in October and the currency, the krona, has lost half its value in the past year.
Iceland's government was forced to take over three of its biggest banks last month when they could not keep up with billions of dollars of debt taken on to finance overseas expansion.
The government has taken out $4.6bn (£3.1bn) in loans from the International Monetary Fund (IMF) and four of its Nordic neighbours to stay afloat.
That's right, all that asset and currency inflation derived not from a miracle, but from the same old historical pyramid scheme of banking fraud. Now that con of seemingly free money is imploding globally and devastating Iceland's small economy. Iceland's neighbors in Scandinavia and the IMF have bailed it out with billions in emergency loans, but it will be a generation or two before the Icelandic people are dumb enough to fall for the "free lunch" con again.
Before the credit crunch, this too good to be true economic miracle economy was sold to the Icelandic people with the help of the bankers and the media in such reports as this, "Where does the money come from?"
The Icelanders also work longer hours than is common in Europe, or about 50 hours a week, which on an annual basis is six weeks longer than e.g. the Danes. In other words, Iceland is a European country with an American labour market. The nation may not have more than 300,000 people, but in terms of the labour force it works like a population of 500,000.
Faster than a speeding bullet.
More powerful than a locomotive.
Able to leap tall buildings in a single bound.
Look! Up in the sky!
It's a bird. It's a plane. It's Superman!
It was a myth, the people bought:
The report then claims that it is also the nation's spiritual embrace of free market reforms that makes them a superman economy:
Most importantly, the spirit of the nation has been fundamentally altered. After decades of being the most anti-market nation in Scandinavia, the Icelanders are probably now the most pro-market with their eyes set on the Anglo- Saxon business model. This mirrors the experience of many other countries which have enacted free market reforms of the type mentioned above and are also endowed with a solid institutional infrastructure for growth.
Ironically, those "anti-market" Scandinavian nations are now bailing out the Anglo-Saxon business model embracing neighbor.
But as Iceland begs from its kind Scandinavian neigbours, so we too, who also bought into the free lunch theory of economics, have gone begging from the oil rich Gulf nations to pay our bills:
The United States has asked four oil-rich Gulf states for close to 300 billion dollars to help it curb the global financial meltdown, Kuwait's daily Al-Seyassah reported Thursday.
Quoting "highly informed" sources, the daily said Washington has asked Saudi Arabia for 120 billion dollars, the United Arab Emirates for 70 billion dollars, Qatar for 60 billion dollars and was seeking 40 billion dollars from Kuwait.
Al-Seyassah said Washington sought the amount as "financial aid" to face the fallout of the financial crisis and help prevent its economy from sliding into a painful recession.
All of our neo-liberal economies made the same exact bet, we put all our economic eggs in one collateralized debt basket. That we could just trade debt forever and nobody would ever have to produce or work another day in their lives.
And now we are all having to unwind this one way bet at the same time by electronically injecting trillions of fresh fiat credit into the global financial corpse.
Here's the film I made on the collapse in Iceland