Wednesday, 12 October 2011

Why Am I Blogging?

Some people would call me young. When I was even younger, I was studying BSc economics at the University of Iceland. I graduated in May 2008. My final work was a 25k word dissertation about the comparisons between the Icelandic banks and the Scandinavians. My final conclusion: despite some possible liquidity problems, the Icelandic banks seemed fine in comparison with their Nordic peers. Six months later I, and many other people, was proven awesomely wrong. What I had learned in my undergrad studies crashed in front of me and left me with a feeling of being completely lost. Something wasn't right.

I left to England in September 2008 to study masters in Money & Banking at the University of Exeter. I continued directly into a PhD in economics, emphasising financial instability and foreign direct investment. During the academic year 2009-2010 I read Kindleberger's Manias, Panic, and Crashes. Everything remotely connected to the topic of financial crises ended on my night table. When I read Cooper's The Origin of Financial Crises I came across the name of Minsky. Naturally, I ended up reading Minsky's Stabilising an Unstable Economy. That was a complete eye-opener and from there I realised that something was seriously wrong with my undergraduate courses. I drowned myself in books and papers by authors such as Minsky, Keynes, Schumpeter and Keen. 

The knowledge I gained from reading those authors instead of mainstream economics made me certain that the crash of the financial and economic system back home in Iceland wasn't a coincidence or collateral damage from the global financial crisis. There were structural deficits in the Icelandic economy that made it even more prone to crises than the common fractional reserve banking systems of other countries. No matter if the global crisis would have happened or not, the Icelandic economy would have crashed anyway. The timing was just a coincidence.

I started blogging in Icelandic in April 2010 about diverse economic matters ranging from pointing out what I considered structural economic madness to contemporary matters such as the Icesave dispute. To some people I seemed to make sense and I got emails from people that thanked me for putting their own thoughts down in a more concrete way than they thought they could do themselves. Others said I was being ridiculous and just "one of those bloggers" who thought they knew what they were talking about. Somewhat as expected, most of the negative comments I got were from other economists or people that had in some part built up or maintained the system that I was accusing of being the root of the whole economic problem.

So here I am, starting a blog about what happened in Iceland during and before 2008 and why the crash was inevitable given the structure of the economy that is in place in Iceland. I hope some people will find this informative and interesting. More importantly, I hope people will learn from this blog not to do "Icelandic economics." Because they're "neat, plausible and wrong."

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