Iceland Found Another Way to Clean Up a Financial Crisis

While flying last week to a conference in Reykjavík, it dawned on me that I knew almost nothing about Iceland. What little understanding I had was based on Michael Lewis’s epic tale of the nation’s financial collapse in Vanity Fair magazine entitled “Wall Street on the Tundra.” His 10,000-word missive is a Norse saga of its own.1 Other Icelandic literature included entries in Carmen Reinhart and Ken Rogoff’s “This Time is Different: Eight Centuries of Financial Folly,” and some academic work on bubbles and collapses. It all added up to a cursory understanding of a brief but wrenching period in the long arc of the country’s history.

That understanding proved dated and left me ill-prepared for what greeted me upon arrival: a booming economy, one that has been greatly transformed from the depths of the crisis. Growth has topped 4 percent in each of the past three years and the economy is forecast to expand 3.3 percent this year, according to data compiled by Bloomberg.