The Corner

“Wall Street on the Tundra”

Michael Lewis’s report from Reykjavik is full of telling details and makes some big points:

Back away from the Icelandic economy and you can’t help but notice something really strange about it: the people have cultivated themselves to the point where they are unsuited for the work available to them. All these exquisitely schooled, sophisticated people, each and every one of whom feels special, are presented with two mainly horrible ways to earn a living: trawler fishing and aluminum smelting. There are, of course, a few jobs in Iceland that any refined, educated person might like to do. Certifying the nonexistence of elves, for instance. (“This will take at least six months—it can be very tricky.”) But not nearly so many as the place needs, given its talent for turning cod into Ph.D.’s. At the dawn of the 21st century, Icelanders were still waiting for some task more suited to their filigreed minds to turn up inside their economy so they might do it.

Enter investment banking.

Much of what happened in Iceland, Eastern Europe, and elsewhere was like karaoke capitalism. But, for a while, the world agreed to pretend it was the real thing. After all, absurd asset inflation was a permanent feature of life:

That was the biggest American financial lesson the Icelanders took to heart: the importance of buying as many assets as possible with borrowed money, as asset prices only rose. By 2007, Icelanders owned roughly 50 times more foreign assets than they had in 2002. They bought private jets and third homes in London and Copenhagen. They paid vast sums of money for services no one in Iceland had theretofore ever imagined wanting. “A guy had a birthday party, and he flew in Elton John for a million dollars to sing two songs,” the head of the Left-Green Movement, Steingrimur Sigfusson, tells me with fresh incredulity. “And apparently not very well.”

Barely half a decade on, the big scenes in Die Another Day where Bond is driving an invisible Aston Martin round an Icelandic ice palace and fake diamond mine now play like some kind of weird metaphor.

But eventually another day comes, and you do die.

Mark Steyn is an international bestselling author, a Top 41 recording artist, and a leading Canadian human-rights activist.

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