Finally, the Icelandic crisis shows the impact that the current financial fallout may have on what is termed the ‘real economy’. As a result of a stockmarket boom in the 1990s, Iceland’s banking sector grew rapidly, to such an extent that it eventually dwarfed the rest of the Icelandic economy: the banking sector had assets nine times the size of Iceland’s gross domestic product of $19billion. The ‘banking crisis’ in Iceland is intimately bound up with the country’s ‘real economy’, with some predicting job losses and lowered living standards for the Icelandic people as a result. Similar developments may take place elsewhere. Not surprisingly, people in Iceland are protesting. Last week, protesters gathered in the main square in Reykjavik to call for serious action to secure the economy; some Icelandic people have reported having problems withdrawing and transferring money from their bank accounts, and are demanding assurances from their leaders that their hard-earned money is safe (15).
There is no need to take sides in the disturbing spat between the governments in London and Reykjavik. Far better to side with the people of Iceland who, like many others in the developed world, may suffer as a consequence of their leaders’ mismanagement of the economy and the inability of international institutions to stabilise global economic conditions. Having lived harsh, hand-to-mouth existences for centuries, Icelandic people have only relatively recently enjoyed high wages, comfortable living standards and the fruits of modern technology. And despite the complaints of shallow anti-capitalists on web discussion boards – who argue that the Icelandic people typify ‘ordinary people’s stupidity’ in ‘bingeing on consumerist rubbish’ (16) – there is no reason why they should accept a cut in their living standards now.
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