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Eruptions in Iceland

Posted by Tom Haines, Globe Travel Writer  November 25, 2008 09:33 AM

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Speaking about contemporary art last May on an otherwise stable day, President Olafur Ragnar Grimmson said: "Perhaps nobody can explain how we have created a modern 21st-century society. But there is an important message for the world: If we can do it, everywhere else can too."

Since, the economy of Iceland - home to 300,000 people -- has collapsed, threatening to take much with it.

Those looking at Iceland now are mostly doing so to find cautionary signs in this crisis felt round the world. In other words, Iceland, which in recent years had been the cutting edge innovator of Nordic culture built upon a hothouse economy, has become a kind of geographic poster child for the global credit crunch.

One artist I'd met in Iceland sent a broadcast email to friends:

"The scenario of defaulting banks in iceland is crucially different from for example the USA, because all the banks that went bust in here are also savings banks, not only investment banks," she wrote from Reykjavik, "and people that believed they were depositing money with no risk, have also been victims."

There were signs of this in May. The morning my flight arrived and I paid nearly $100 for a ride from the airport to the city center, then something like $8 for a coffee -- prices even then were prohibitively high -- I woke to the sound of truck horns in the alley outside my hotel window. The trucks were protesting high gas prices.

Piercing blows bouncing around little lanes then up into the fog: a pretty sure sign something was ready to blow.

So now, geographic travel as means of explanation for the credit collapse:

Banks failed, and last week the IMF set up a $4.6 billion-dollar bailout.

As is their wont, tourists are finding bargains.

The International Monetary Fund is not an island. Who will bail out it?

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