Achmad Ibrahim/AP
Icelandic singer Bjork

Iceland Combats Financial Crisis with Arts and Crafts

March 08, 2009 10:00 AM
by Anne Szustek
In the face of a major economic downturn, Icelanders turn to their crafty sides and create homemade goods both to sell and use for themselves.

Knitting Their Way to a New Economy

The global economic crisis has hit Iceland hard. The Christian Science Monitor reports that unemployment is soaring and the national currency, the krona, has collapsed.

So Icelanders are taking action. In Reykjavik, the capital city, residents are picking up their knitting and crochet needles in an attempt to make the best of the situation.

Hildur Yeoman, a sales assistant at a clothing store, is now supplementing her income by selling handmade crocheted purses and illustrated greeting cards. Many other residents are doing the same.

And because the government has prohibited depositing money in foreign accounts, many local stores have been forced to stop ordering imported goods from abroad. Local designers have stepped up to the plate, offering their items for sale, and making money in return.

The trend is just another example of the Icelandic spirit triumphing in the face of adversity.

Björk, a native Icelander and well-known recording artist, has announced that she is collaborating with Icelandic venture capital firm Audur Capital for a 100-million-krona (about $816,300) investment fund that seeks to spur Iceland’s ravaged economy by investing in green technology.

In an interview with the Associated Press quoted by The New York Times, Björk said “If the money for the next aluminum smelters would go into supporting these businesses, we would be in a much better position in Iceland in five years’ time, both economically and also just image-wise or dignity-wise.” She continued, “I will not be able to live with my own conscience when my grandchildren drive around Iceland and it’s just full of factories and smelters.”

Björk also announced that the proceeds from her recently released single, “Nattura,” featuring Radiohead lead singer Thom Yorke, are to go toward funding for an environmental initiative of the same name.

Iceland's financial fate is up in the air, but in the meantime the country's natives plan on using their talents to fight the hard times.

"We're only 150,000 people here in Reykjavik, so that means each one of us has to know how to do everything," said Johann Sigurdsson, an architect. "And we really think we can do anything—arts and design included."

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Background: Iceland’s economic woes

In September and October, Iceland’s government took over the country’s three largest banks and halted trading on its stock exchange. Over the course of 2008, the country’s currency, the krona, dropped by nearly half against the euro.

Iceland’s banking sector dwarfed the rest of the economy over the past decade. The country’s banking sector was some eight or nine times larger than its gross domestic product. High interest rates beckoned scores in foreign deposits—far exceeding locally held accounts and exposing the country to the financial ills of the world at large. Kaupthing, for one, accumulated debts stemming from funding British transactions of more than $5.2 billion within five years. Iceland’s Financial Services Authority took over the bank on Oct. 9.

This followed the nationalization of number-two Icelandic bank Landsbanki two days earlier, and the third-largest Icelandic bank, Glitnir. The latter was nationalized on Sept. 29.

IceSave, an Internet bank operated by Landsbanki, was the target of U.K. government legal action after it halted all withdrawals from its accounts when it was nationalized without intending to return the funds of 300,000 of its U.K.-based customers.

British Prime Minister Gordon Brown invoked antiterrorism legislation to freeze £4 billion ($5.72 billion) in U.K. Landsbanki accounts.

The British treasury then seized assets of another Icelandic bank’s British subsidiary, Kaupthing Singer & Friedlander.

Iceland has asked British legal firm Lovells to explore “possible claims against the [U.K.] Treasury stemming from the Nordic country’s banking collapse.”

Icelanders have set up a Web site called Icelanders Are NOT Terrorists, with an online petition signed by more than 73,000 people, asking for an end to what it sees as abuse of the antiterrorism legislation.

Reference: Nattura


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