Back in 2007, excess had become the norm in Iceland, and those who lived through it still seem slightly bemused as to how the country got quite so far out of touch with reality. “It was insane, and it is weird how quickly insanity becomes the norm,” says a senior banking executive who asked not to be named. “There was nothing wrong with importing more Range Rovers than the rest of Scandinavia put together, or with the entire population going on skiing, golfing and summer holidays every year. In the midst of things, it was all absorbing.”
Ultimately, however, the apparent mastery of financial alchemy that impelled such extreme immoderation proved to be illusory. When global credit markets seized up following Lehman Brothers’ collapse, Iceland’s banking system was unable to meet its international obligations, and was allowed to fail by a government that simply did not have the monetary reserves to support an industry that had grown to more than 10 times the size of national gross domestic product (GDP). The results – currency collapse, 20% inflation and mass unemployment – were acutely traumatic, especially for a population that had enjoyed a matchless period of prosperity, and led to popular protest of an unprecedented scale.