The Miraculous Economic Recovery in Iceland is a Lie

You may have heard the story of Iceland and the financial collapse the country endured back in 2008. You may also have heard stories about how the country did not resort to austerity measures, how we let the banks fail and jailed bankers. This is a story I hear again and again whenever I talk to people outside of Iceland and clearly detect the envy that that they feel towards my country. The envy however has been misplaced to a large degree. You see this so called “economic miracle” is just like any other miracle, it’s a big lie. It is perhaps the most successful PR con-job our nation has pulled and what makes it worse is that the international community has fallen for it.

Nobody has been as helpful in perpetuating this lie as our president Ólafur Ragnar Grímsson, who regularly appears in international media and tells the world how Europe should follow Iceland by example. The truth of the matter is however that the Icelandic government took on a huge amount of extra debt after the collapse to keep privately owned banks afloat as well as the Icelandic Central Bank. The Icelandic government now pays an astronomically high amount in interest every year, enough to run some of the country’s largest institutions for a whole year.

While austerity measures may not have been quite as backbreaking as in some EU countries, the devaluation of our currency combined with cuts in the public sector has made recovery from the collapse for the average citizen, a long and burdensome road. If you are a minimum wage worker, a student or unemployed then you most certainly have felt the burden of the financial collapse. The most insidious lie is probably the jailed bankers story. While there the office of the special prosecutor was created to bring the people responsible for the collapse to justice, an enormous sum of money has been spent on this office and very few bankers have been sentenced to serve actual jail time. There is however one clear example of this. Now you would think that a person who shares responsibility for the collapse of an entire county’s economy would deserve a pretty heavy punishment. The sentence was 9 months in prison…and of those 9 months, 6 months where on probation.

Now you might wonder why it is important for people and governments in other countries to understand what truly happened in Iceland. Because many people want to do exactly what Iceland did. And then you can have populist parties promising you free money as well. Free money that as it turns out, just comes from your own pocket. We may have kicked out the politicians who got us into this mess, but the same people are back now, with the same backward policies that dragged our country to the cusp of financial ruin. The people who are paying for the mistakes of bad politicians and bad businessmen are normal, everyday people. There will be a next time, and it may very well come sooner than people think. Will we truly change things then? Or will we keep doing what we’ve always been doing and hope everything will be fine? Þetta reddast.

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