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The enormous financial losses during the economic crash in Iceland led to widespread anxieties, coupled with a deep sense of shared national disaster and moral collapse …
The enormous financial losses during the economic crash in Iceland led to widespread anxieties, coupled with a deep sense of shared national disaster and moral collapse (Bernburg, 2015; Ólafsson, 2014). The strong sense of betrayal indicates how economic processes are not only about economic prosperity, but are embedded also in wider societal discourses and a sense of national identity (Schwegler, 2009). We use perspectives from anthropology and cultural economics to ask how the lack of trust by the Icelandic population after the crash signals both a different way of visualising Iceland’s role within an increasingly global world and a changing sense of Icelanders as national subjects standing unified against foreigners. Iceland’s neo-liberalisation inserted the country into global institutions and processes with the faith that these processes would automatically be beneficial to Iceland. Furthermore, the sense of some kind of a unified Icelandic subject was manifested in the image of the ‘Business Viking’, which was seen as embodying the interest of the Icelandic nation as a whole. Following the economic crash, the betrayal of trust involved disrupting the idea of the ‘oneness’ of Iceland and thus, the sharp distinction between ‘us’ Icelanders and ‘those’ foreigners. In our discussion, we trace different ways of conceptualising this sense of Icelanders as a unified entity, asking what this notion means in terms of trust. Our research shows how the sense of ‘unified Icelanders’ was instrumental in creating the feeling of trust, and how it is possible to manipulate and appropriate that trust.
During the banking crisis of October 2008, Iceland became the first developed country in decades to seek the assistance of the International Monetary Fund (IMF). Iceland’s…
During the banking crisis of October 2008, Iceland became the first developed country in decades to seek the assistance of the International Monetary Fund (IMF). Iceland’s IMF programme provided a measure of stability at a time of intense turbulence. The IMF’s credibility was helpful during this period of collapse not just of the banks but also of the public trust towards almost all Icelandic institutions. Importantly, the IMF implicitly supported Iceland’s policy of letting institutional creditors of the banks rather than Icelandic taxpayers bear the costs of their collapse; this provided credibility for the policy and limited repercussions. In a reversal of previous IMF policy, capital controls were imposed. The controls helped stabilise the exchange rate, and inflation subsided. The controls also helped recovery after the crisis by shielding the economy from international financial shocks. The direct fiscal cost of the Icelandic crisis was very high, but the considerable and painful fiscal tightening that was a part of the programme was needed to avoid a sovereign debt crisis. This helped in regaining trust from international markets. Mistakes were made in the design and implementation of the IMF programme, but overall, we judge that its contribution was positive. The programme provided one of the elements for restoring trust in Iceland when it was most needed, both domestically and internationally, during the depth of the crisis in 2009–2010.
Public trust in institutions in Iceland plunged after the country’s banking sector collapsed. The political system wobbled under outrage and anger when the general public…
Public trust in institutions in Iceland plunged after the country’s banking sector collapsed. The political system wobbled under outrage and anger when the general public took to the streets. The Parliamentary Special Investigation Commission conducted a ground-breaking crisis-induced investigation, delivering a report that was a milestone in Iceland’s history of politics and public administration. Yet, despite this endeavour and the fact that subsequent investigations have disclosed ample information intended to restore trust in institutions, public trust remains unsteady. This chapter addresses the following questions: How has public trust in institutions progressed after the crash? Why is it taking so long for trust to return? In Chapter 3 in this volume, we examine data on public trust in Icelandic institutions from Gallup surveys over the 15 years from 2002 to 2017 in order to identify and explain patterns of trust in the aftermath of the crisis. Our interpretation of theory in this chapter suggests that elements of mistrust inherent in the principal–agent approach to accountability in public administration, implemented in previous New Public Management reforms, undermined the creation of a climate of trust necessary to ensure effective accountability mechanisms. We argue that in the absence of a climate of trust, accountability mechanisms of culpability that conflict with mechanisms of answerability, combined with a succession of post-crisis scandals, mainly explain the slow return of the public’s trust.
Purpose — Analyze and assess the actions taken by the government of Iceland prior to a banking crisis that resulted in the collapse of Iceland’s largest banks in October…
Purpose — Analyze and assess the actions taken by the government of Iceland prior to a banking crisis that resulted in the collapse of Iceland’s largest banks in October 2008. Was the government’s behavior prior to the crisis dishonest in the sense that it deliberately tried to fake reality or was the government honest but incompetent in the sense that it did not see the problem coming, and was therefore not trustworthy?Design/methodology/approach — Review of the existing literature, analysis, and assessment of this literature. Case study of Iceland.Findings — The government showed negligence and made mistakes by not taking credible actions to manage risks following a rapid cross-border expansion of Iceland’s largest banks. This had severe consequences and resulted in the collapse of the largest banks in October 2008. Instead of addressing the problems in the economy the government launched a PR campaign and the analysis of various scholars may have helped to justify inaction. According to the Special Investigation Commission (SIC),1 the government did not address an obvious problem and could perhaps on that basis be charged with dishonesty, including faking reality with PR campaigns. As some scholars put it, the authorities gambled for resurrection, and failed. The analysis carried out by a number of other scholars who downplayed the problem may have confused the government and it may have been honest in its inaction. In that situation one can argue that the government was honest but incompetent and not trustworthy, as according to the SIC and several international scholars the problem was obvious.Research limitations/implications — This is a case study. The study does not present results that can be evaluated on the basis of statistical significance and generalized. Some of the lessons, however, can have a wider relevance than for Iceland only. This is especially true for small countries with a large banking sector, using its own currency, and with limited fiscal space to support the banks during a crisis.Practical implications — The combination of a risk seeking behavior of businesses, in this case in the banking sector, and inactive or negligent governments can result in the collapse of a country’s economy. The Icelandic government should encourage and enforce more risk mitigation via regulations, monitoring, and supervision of the private sector’s cross-border activities. This does not only apply to the banking sector but also to other sectors such as the energy sector.Social implications — Less risk seeking behavior and more risk mitigating actions can stabilize Iceland´s economic growth in the medium and long term, and reduce the risk of an economic collapse that typically has severe social consequences.Originality/value — The so-called Viking spirit of Icelandic business people accompanied with aggressive risk taking and bold business behavior can be very detrimental for a small economy especially when global economic and financial crisis hit.
The purpose of the chapter is to give an overview of special education in Iceland, historically and with reference to modern use of terms, research, policy, legal trends…
The purpose of the chapter is to give an overview of special education in Iceland, historically and with reference to modern use of terms, research, policy, legal trends and funding. Recent data is provided on demographic developments amongst children in Iceland and detailed account is given of practices in schools, including collaboration with parents and teacher education. Finally some issues and challenges are discussed that still remain to be solved with respect to meeting the special needs of students in school. One of the findings is that only 1.3% of students attend special schools and special classes and that the term special education has outlived its usefulness except perhaps in the context of the three segregated special schools that still remain in the country. Official papers have replaced it with the term special support. Despite a diversity of views and practices the main implication is that a new model of education is required, in line with that proposed by Slee where the needs of individuals are served in all schools and the binary thinking related to regular versus special education is no longer necessary.
This chapter maps the political economy characteristics of Icelandic society in the post-war period. It shows how the period of statism from the early part of the 20th…
This chapter maps the political economy characteristics of Icelandic society in the post-war period. It shows how the period of statism from the early part of the 20th century, with a strong legacy of protectionism and clientelism, changed up to the present. A major turning point came with a shift towards more liberal mixed economy in 1960, which progressed through the 1980s. That was a period of very high growth rates in an egalitarian society. During the 1990s the political economy became significantly more influenced by neoliberal policies, which can be associated with the buildup of an excessive bubble economy in the 2000s. A new policy emphasis in a new environment of globalized finance, of which Iceland became an active part from 1995, in conjunction with a generally lax attitude of laissez faire in public administration, seems to have made possible rather unusual excesses in speculation and debt accumulation. That eventually led to the dramatic collapse of Iceland's financial system in October 2008. In the wake followed a deep recession. The chapter sets this long-term development into a broad societal context, taking account of political power constellations and changes in politics, the labour market and living conditions.
This analysis attempts a comparative specification of certain aspects of the country studies contained in this volume. The point of departure is the banking crises of the…
This analysis attempts a comparative specification of certain aspects of the country studies contained in this volume. The point of departure is the banking crises of the early 1990s (deep in Finland, Norway and Sweden, mini-crisis in Denmark and absent in Iceland) and the contrast to Iceland's financial meltdown in 2007/2008 (no crisis in the three, a new mini-crisis in Denmark). Detailed process tracing of the Icelandic crisis is provided. The case account is then used to shed light on the different roles of neoliberalism, economics expert knowledge and populist right-wing party formation in the five Nordic political economies.
Following the collapse of the banking system in October 2008, the Icelandic authorities attempted to restore confidence in the country’s institutions, improve their…
Following the collapse of the banking system in October 2008, the Icelandic authorities attempted to restore confidence in the country’s institutions, improve their functioning and gradually improve the country’s credit rating. The authorities took ownership of an International Monetary Fund-sponsored economic programme that managed to turn the macroeconomic development around when, following a trough in the summer of 2010, an economic expansion started that has continued ever since. They applied for membership in the European Union in order to show their commitment to be part of the international economic community and to have a lender of last resort in the European Central Bank in future crises. The causes of the collapse were investigated and many bankers were prosecuted. Finally, financial regulations were made stricter and the structures of the Central Bank and the supervisory authority were changed for the better. The net effect was to lower the credit default swap rate on the government’s debt, gain access to capital markets and make the Iceland story one of resurrection rather than only hubris and collapse.
Broadband networks, enabling high‐speed and always‐on Internet connections, are now seen by many to be critical for economic growth and development, both at the national and global level. Much energy has been invested in the deployment of broadband infrastructure around the world, and governments and industry have now begun addressing the demand side of the broadband challenge, i.e. ways in which to encourage take‐up among users. The present article zooms in on one of the leading countries in broadband, Iceland. It examines the main strategies, policies and regulations in place for promoting broadband in a country that has the world’s highest number of Internet users per capita, and posits on the main opportunities and challenges that lie ahead.
This paper discusses the European Free Trade Agreement (EFTA), and the European Union (EU) in relation to Iceland. The fisheries sector is being treated extensively, since…
This paper discusses the European Free Trade Agreement (EFTA), and the European Union (EU) in relation to Iceland. The fisheries sector is being treated extensively, since it is crucial for Iceland's economic survival. Finally, the paper presents various facts as to whether Iceland should join the EU or not.