Tuesday, 7 October 2008

So long and thanks for all the fish

When I sat down at the computer this morning I was going to write about the gorgeous sunny weather and the vegetable garden throwing goodies at us and the fig festival at Le Mas d'Azil and how (oh joy) the four month old electric tile cutter broke down with just two cuts to go. But then the day turned a little less good, because a friend in the UK emailed me to tell me that the merde in Iceland has not only hit the fan but in the process has been spattered a thousand miles southwards, towards him, and me, and possibly you.

I've been following the Icelandic financial crisis since the weekend, partly because it's such a microcosm of the bust bit of boom and bust capitalism that's currently bringing the world as we know it to its knees, and partly because it's a country I've always somehow felt connected to since I spent several weeks there in the seventies. Things were very different then: there was barely an 'economy', fishing and farming being the orders of the day for most people, foreign visitors were a rarity and Icelanders looked inwards rather than outwards. It was certainly one of the most welcoming places I've ever been: we were backpacking but spent very few nights in our tent and rarely had to cook for ourselves - mostly we were invited to peoples' homes on a whim as we walked on the roads and paths. And there was no TV on Thursdays, or in July. But the last 10 years or so brought this tiny country, with a population the size of Coventry, into the super league as deregulation and fish quota cash allowed it to ride the crest of the credit boom and build the highest per capita wealth in the world.

And now? A currency losing nearly half its value over the last year; inflation at 14%; interest rates at 15.5%; people drawing out money from what remains of the country's banking system up to their overdraft limits and stashing it under the bed because they fear there won't be any money left; a serious chance that the country itself will be bankrupt before the week's out ... And (closer to home; this is the bit that hurts) this morning Landsbanki has pulled the plug on its UK based internet savings arm, Icesave, freezing (no pun intended) all withdrawals and guaranteeing UK savings only up to the legal minimum of around £16,000 while maintaining business as normal in Iceland and protecting domestic deposits 100%. Even that guarantee, of course, is useless if the country goes belly up, but it feels at this point (and I hope I'm wrong, I really do) that UK savers have been sold down the river in the interests of Icelandic ones.

And here's the bit that's going to make it difficult for me to sleep for a while. The Grillou renovation fund is - was? - stashed in Icesave. After much Libran agonising I decided to leave it in the UK, where interest rates were much better than in the Eurozone, until it was needed for the first payments to artisans late this year (er - that would be in a couple of months ...). Yes, I'm aware that that'll teach me to act like a capitalist pig, but honestly, what would you have done? Word is that Landsbanki will be declared insolvent at any point now, meaning that I (and some 349,999 others, apparently) will have to salvage what we can from the Financial Services Compensation Scheme and sing for the rest.

There comes a time when even I don't know what to say next.

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