Surreal Reykjavik

It feels surreal to drive the streets of downtown Reykjavik. The banks are lit up and people are working there. The logo’s are still outside the houses. The ads are still running saying how wonderful and trustwurthy the banks are. Range Rovers and BMWs are still filling the streets and the parking lots. Bankers in their suits walk the streets with heavy eyebrows. There’s a strange silence.

It’s like we know the system is broken, we know it’s gone, but we can’t see it. We can’t tell what’s real, what’s still there, and what are just the ghosts of yesterday, when Iceland was one of the richest countries in the world. A pale reflection of the golden age in Icelandic economy which is now going up in flames. Where’s the smoke?

The world is treating us like we’re dead. Bank accounts frozen. No buziness without cash payments in advance. No currency can be bought. The stock market is closed (not that I have anything left there). Imports have stopped because of closed currency markets and diapers, flour, sugar and other neccesities are selling out in the shops.

I would like to remind the world that the banks went down because of a chain reaction – that started in the US. I’m not going to tell you the chain of events, the intervention of politicians, the misunderstandings, the dispute with Britain where they used their anti-terrorist laws to confiscate Icelandic assets. I’m not trying to find someone to blame. But I would like to tell you that we still have a lot of innovative and prominent companies in Iceland, and you might actually get a pretty good deal there at the moment, as the Icelandic Krona is so low.

So if you want to seize the opportunity and go on a shopping spree, here are a few Icelandic companies that are still alive and kicking, like:

CCP (Eve Online) – online games

Stiki – Risk Management Studio – information security

Gavia – submarines

Lysi – fish oil for a longer life

Arctic Trucks – super jeeps (like the one Top Gear used to go to the North Pole)

And loads of other prominent companies.

People are well aware of the pshycological effect of the bank crises. For me, it’s the biggest shock since my mother-in-law’s sudden death. I fear that the society will be going through a similar cycle. We’re in stage one – the disbelieve and numness. When routine hits us and we realize that we don’t have our money and can’t pay the bills, start losing our cars and homes, then the real sorrow and sadness sinks in. And it happens at the worst time of the year, when the nights are getting longer and longer. In December we have 20 hours of complete darkness. That will be a very tough month. Suicides are already being reported.

The minister of education, Þorgerður Katrín Gunnarsdóttir, has sent an email out to all schools in the country with some guidelines on how to react. In the television ads are running reminding people that the most precious things in life – are free! Helplines have been opened. And people are being reminded that if you’re not one of those going broke, keep on spending like normally. The economy really needs it.
Let’s hope it works. I try do my share in all this with my new website and writing. I don’t plan to turn this blog into a blog about the financial crisis in Iceland. I will continue to write about marketing. But I might give you an update once in a while. You can also follow me on Twitter where I tell more about other stuff than marketing.

UPDATE: As some readers have requested, I've put together a list of Icelandic designers selling online. Check out the following:
The Naked Ape - fun wear
Kirsuberjatréð - with all sorts of stuff - order via email
Hanna 70 - Icelandic clothing
Steinunn - an Icelandic designer
Gust - Icelandic clothing
Birkiland - Icelandic design
Liborious - Icelandic design
Spaksmannsspjarir - Icelandic clothing
The Farmers Market - traditional Icelandic clothing

You can also check out series of Icelandic design and innovation on Trendhunter.

UPDATE: Following this, I wrote an ebook with marketing tactics and strategies to become a winner during a recession. You can check it out: "The Marketer's Magic Chest - Marketing tips, trick and tools to unlock the chains of recession"

Hjörtur

Disclaimer. I’m not getting paid for linking or mentioning the companies in the post. One of them is a client of mine and the others are just different companies that came to mind.

If this is your first time on my blog, you might want to consider subscribing to my feed or email updates (here on the left). You can also follow me on Twitter.

Comments

[Syl]

Wow! I saw a few articles saying that Iceland could go bankrupt anytime but I thought journalists were over reacting to get more audience but what you just posted opened my eyes upon reality of things. I've learnt quite a lot of things about Iceland this week. I came once to Iceland but it was just an airplane transfer from Orlando to Paris... I'll try to go there pretty soon. BTW are there any online merchant that quotes prices in your local currency?

[Hjortur Smarason]

Well, I've learned quite a few things too about Iceland this week :)

There are local online merchants that quote prices in our local currency. Some booking engines have the Icelandic Krona. Don't remember which at the moment though. Not sure that works now as fluctuating as the Icelandic Krona has been.

[Brent Willen]

I'm very sad to hear of what's going on in Iceland, I have wanted to visit at least since the world debut of the Sugarcubes; I will do my part for Iceland if I only knew what it was.

My best wishes to you, your family, and your lovely country.

[Danny Brown]

The current situation in Iceland is indicative of what's wrong with the world at the minute. And that's not meant as a slight at Iceland - far from it.

All the news stories have been about the US and the $700 billion bail out. While this is certainly newsworthy, the flipside of the coin is that many other stories are forgotten about.

Iceland more than anything needs help, but where are the banks and financial institutions worldwide to help? You know, the ones that are falling over themselves to help the US and her partners?

The really sad thing is that prior to this financial development, Iceland was always excellent at being rather self-sufficient and not one to ask for European or Monetary Fund hand-outs. Now, when she needs help, there's none to be found.

Sums up all that's wrong with the Western world and the major finance institutions...

[Lars Hilse]

If you need any necessary things feel free to call me. I'll send a care package.

[Mike Richards]

Hi Hjortur,

If it's any consolation every other Brit I've spoken to is shocked and angry at our government's action in bringing down the last of the big Icelandic banks. Even the Treasury seems to be embarrassed by their use of anti-terror legislation, saying that it was just the easiest one they had to hand.

No one in power seems to have thought what sort of message it would send to another democracy; and no one can explain why the British government didn't seize the assets of the UK subsidiary of Lehman before they were spirited back to the US. I guess the British government knew they could get away with it with a small country.

Brits are questioning if the laws the government claims were created to protect us from bombings are being misused to increase its power over citizens. Perhaps the seizing of Icelandic assets was the final straw - I hope so!

I'm sure everyone you know must still be in shock at what's happened, going from a booming country to one that might have to go to the IMF for loans is going to be very hard. Especially if the IMF imposes conditions on any loans that would hurt Icelanders. The only thing I can add is that it WILL get better in time. The UK had to go to the IMF in the 1970s and the economy did recover. So just as long as you can stick it out, you and your family will find life getting easier.

I'm visiting Iceland for the first time in two weeks - a trip I've always wanted to make, I just wish I could be coming at a happier time for the Icelanders.

Stay safe.

Mike.

[Vijay]

Here's a guide for what happened in Argentina after their financial collapse:

http://billstclair.com/clairewolfe.com/wolfesblog/arg.html

Stay safe!

[Juan Jose]

Hello! I am from argentina, we had the same trouble you are having now, but way back in 2001. Dont worry too much about it, you will advance anyway, once you reach bottom the only way is up.

[Jónathan]

Interesting writing about Argentina, Vijay - I don't Iceland will end up like that at all, but it was a good read. There are some other countries I can think of that might experience that type of problem if there is a global financial meltdown.

[Jónathan]

Interesting writing about Argentina, Vijay - I don't Iceland will end up like that at all, but it was a good read. There are some other countries I can think of that might experience that type of problem if there is a global financial meltdown.

[Blah]

I don't see Iceland going the way of Argentina. Italy, the US maybe. But Iceland is small, homogenous and nonviolent.

I want to thank the author for this post, here in the states I don't think we really understand what's going on there. Our media hasn't reported on it at all.

[voteforme]

It's a very unfortunate situation and the UK government hasn't helped matters. Although it's not really surprising that any country would try to protect itself, the UK has a track record of abusing powers which were brought in for other reasons.

Hope things work themselves out quickly and your winter doesn't seem too long.

All the best.

[Evan]

Once Icelanders figure out how to cheaply export their enormous geothermal energy in a suitable form, the rest of us will be their lapdogs.

[Rick]

I can't bring myself to feel sorry for you guys. What's your population..300K? You must have been swimming in money. Your banks failed for the same reason they all did...the unrealistic mortgage bubble burst then bad investments in CDOs caused the exchange of credit to seize up. In retrospect the high interest rates promised by banks like IceSave were too good to be true. Your banks were basically riding on the an unrealistic wave and when it crashed it was their own fault.

Time to get back to smoking the rotten fish.

[Hjortur Smarason]

Thanks for the comments people. We're getting our act together so that we can quickly re bounce and get back on track.

I'll be writing more about how bad PR ruined our economy and how we must use PR to rebuild it - so stay tuned.

@brent Now is actually a very good time to visit Iceland. Prices are only half of what they used to be and people are very happy to get tourist, so you'll get extra good treatment.

@danny looks like we have a friend east of the "iron curtain" ;)

@lars Thanks for the offer, but I don't it'll come to that.

@mike Thanks. It looks like this might back fire in the hands of Gordon Brown. This group on Facebook is at least growing very fast: http://www.facebook.com/group.php?gid=8679440217

@vijay Thanks. I'll check it out.

@Juan That's what we're focusing on now. Clear up and start over. It's only up from here :)

Greetings from Iceland, cheaper than ever ;)
Hjörtur

[nanpanman]

Perhaps Iceland can use their geothermal resources to become the world leader in hydrogen production (& export).

[Someguy]

Good PR is the main thing now. There was a problem and everyone knows about it and now Icelanders have to emphasize the positive (and that's not lie - there is plenty to be optimistic about).
Icelanders were a 3rd world colony a century ago...something to keep in mind. Icelanders know hardship and are not to be taken lightly.

[name:]

I am afraid i cannot believe your country will be unable forego this eventuality. Because it would prove wrong my theory that since 1492 is the economic system designed to make money flow west- and northbound and you, my friends still live on the happy side of the coyuntural world, and it takes more than a crisis to change that.
Nice post, please continue!!

[name (again)]

sorry, i mean "overcome" in stead of "forego". N.b. that your Captcha system is so hard to break that it makes the underpayed slave's worth their time!!

[Dolnor]

Here is a couple of podcasts that help explain both the start of this world mess we helped create. Each of the podcasts are 1 hour long. Listen and learn about greed and excess in the world.

"The Giant Pool of Money" explains what started the US mortgage crisis and how it affects everything today.
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242

This second one explains how the World Credit crisis impacts every bank, country, and large company throughout the world. This is why Iceland and most every other nation are struggling. This is entitled "Another Frightening Show About the Economy."
http://www.thisamericanlife.org/Radio_Episode.aspx?episode=365

I truly hope the world financial markets learn something about all this mess. And remember it longer than the last one.

Those of ignore the past are doomed to repeat it...

[Eric Steinhart]

We love Iceland! We spent two weeks there this summer and were inspired both by the landscape and the people. Icelanders certainly seem tough and resourceful. You'll get through it.

[Karen Bryan]

I did freak out when I heard about Icesave as I have a UK based savings account with them and it sounded like the Icelandic Government were not willing or able to pay the first 20000 euro compensation. I was distraught thinking I'd lost my money. I was so relieved when the UK Government said they'd pay back all UK depositers.

While I don't think that the UK Governemt should have used anti-terror laws I think they were justified in seizing the Icelandic banks assets in the UK, if Iceland couldn't or wouldn't pay the compensation that they were supposed to the savers.

It sounds as if we are all going to be affected by this whole credit crunch fiasco. Why did banks lend money so recklessly? Now the whole thing is collapsing like a pack of cards.

I hope that Iceland manages to find a way out of the mess, I did read that Russia was being approached for a loan. I've read many articles recently about this being a good time to visit Iceland.

I'm sure in the UK things may get worse and certainly it'll take years to recover for all this.

[Andri Sigurðsson]

"I would like to remind the world that the banks went down because of a chain reaction – that started in the US"

I wish it where that simple :/

[Hjortur Smarason]

@andri it is that simple. It's not the only cause, but that's what started it all and our government was to vulnerable to be able to handle it. I recommend reading this article by Portes in the Financial Times:
http://www.ft.com/cms/s/0/e17cb5a0-98ce-11dd-ace3-000077b07658.html?nclick_check=1

The economy is a mess at the moment, but people are keeping their spirit, determent to rebuild the economy fast. We have great human resources and still many great export companies, as I mention in the post.

We'll be back!

:)

[Katti]

I don't suppose you know of any Icelandic websites where one can buy stuff from local designers?

It seems to me that the best way the rest of us can help is buy Icelandic goods or even travel to Iceland and spend money there, and getting Icelandic design at reasonable prices would certainly be a strong motivator for me to do some good in that department :)

[Backload]

Hi Hjörtur

Please slot in a google adsense account on this blog; you're mentioned on Boing Boing (and no doubt other big blogs) so you'll have a good hit rate.

This will help your readers support you. People can then click through and help you, as it will monetise this unique opportunity to help you and others in Iceland in a small way.

I can't see why the EU won't help Iceland, they help every other little island around Europe.

Aidan

[Alex]

We didn't seize Lehman assets in the UK because a) they were subject to the ordinary bankruptcy process and b) Lehman didn't take deposits in the UK, and therefore there wasn't a question of depositors being left out of pocket.

[alore]

I second Katti's comment, I know that local designers, small shopkeepers and artisans can offer struggle more in these situations, and I'd love to support them.

I've wanted to *move* to Iceland as of late (on a traveller's or student visa, I'm Canadian)...is that a bad idea? I know I should probably wait until things stabilize, at the same time, I often (not on purpose) visit places shortly after various crises so maybe I should keep up my habit!

[Hjortur Smarason]

@aida I'll look into it. I have some adsense, but it's way to low on the left to count. It wasn't giving me anything so I moved it down, maybe I'll move it up again

@alore and @katti I'm putting together a list of Icelandic designers who are online and will post it as an update in this post.

[Karl]

Are you living in the same Iceland I'm living in?

[Hjortur Smarason]

@karl Probably. But people are hit differently. Did you have stocks on the stock market? Are you doing business with foreign countries or trading currency? Did you have loans in a foreign currency? Did you just got laid off?

If you answer no to all those questions, nothing has happened to you - yet. It will when the inflation hits.

If you're exporting, you might actually be making good money on the situation. There are opportunities opening up and that's what we need to focus on - and be ready to grab.

The perception of the situation depends of course on how you're hit.

[Brizmo]

I have been following what news I can find about the crisis in Iceland. I'm American and traveled in Iceland while a university student twelve years ago. I've wanted to go back ever since I stepped off the plane.

I'm sure that you'll survive and eventually prosper, having learned a few lessons. You have strong people and good natural resources.

My worry, as a tourist, is an increase in anti-american sentiment. My experience in Reykjavík was great, but the further we got from your capitol, the more hostility we met, even having things thrown at us in Akureyri. This was explained to me by the owner of a B&B near Borgarnes as disapproval of our military stationed there; Icelanders consider it an occupation. Now with our markets triggering a global crunch, I fear I'll have to fake a Canadian accent during travel (I've done it before).

I don't offer any real answers. I believe that instead of reaching out to shake hands with other countries, our next president will only draw in to sure up our economy (the wrong move). This will cause a number of countries to blame us, even though we all played the debt game. Just don't start hating Canadian; that's the only accent I'm good at.

[Hjortur Smarason]

lol, we'll try not to hate Canadians :) Unless they take us over like they did with New Foundland in the '40s.

I don't think Icelanders will start to hate Americans, and I'm sorry to hear if that's the reaction you got during your last visit to Iceland. I don't know why that was and the reason someone was throwing stuff at you has probably got more to do with their upbringing and personal crisis, than anything else.

Many people are mad at Gordon Brown and the head of the central bank in Iceland. No harm feelings to the USA. This time ;)

[Michelle]

I'm so sorry this is happening to you and to your beautiful country. I wish you and your family the best luck and fortune in weathering this storm. As a simple US citizen, I am appalled and embarrassed about the greedy, short-sighted policies and actions that are causing so much misery here and abroad.
Blessings,
Michelle
Tennessee, USA

[Blah]

I'd buy some nice Icelandic sweaters to keep me warm this winter if I knew where to get them from.

Do they even make sweaters in Iceland any more?

[Hjörtur Smárason]

@blah Sure we do. Check out the Farmers Market (http://farmersmarket.is). They've got traditional Icelandic sweaters.

[Hjörtur Smárason]

@michelle Don't worry. It's not more your fault than it is ours. No one did foresee the series of events we've been going through in the last days, partly because they did not need to happen.

[Blah]

Hjörtur

I love those sweaters (and they look very warm) but I don't think I can order from them (short of heading out to NYC, lovely place but expensive as all get out).

thanks again!

[Blah]

Actually I just emailed them, hopefully they'll get back to me.

Again, thanks. Never could have found them without you.

[Philip Acob]

I am praying that Iceland will overcome the economic crisis that they experience. We have a family there working and they support for us here in the Philippines. Get up Iceland and learn from the circumstances. I believe that God will intervene in moving forward again in Iceland.

[Philip Acob]

I am praying that Iceland will overcome the economic crisis that they experience. We have a family there working and they support for us here in the Philippines. Get up Iceland and learn from the circumstances. I believe that God will intervene in moving forward again in Iceland.