What Caused the Collapse? On Thin Ice Skip to content

What Caused the Collapse? On Thin Ice

Why did the Icelandic economy collapse? What caused the country’s ongoing financial crisis? These are questions regularly posed by readers and those which Icelanders have often asked themselves.

In On Thin Ice – A Modern Viking Saga About Corruption, Deception and the Collapse of a Nation (2011), Icelandic economist Jón F. Thoroddsen attempts to shed light on what led to the collapse of Iceland’s three largest banks in 2008.

Originally published in Icelandic as Íslenska efnahagsundrið (“The Icelandic Economic Miracle”) in 2009, this book is an expanded, revised and updated version, drawing from the author’s observations as a stockbroker in Iceland before the crash.

These include “the unhealthy relationship between the biggest pension funds and Iceland’s fast-expanding banking sector,” as Jón writes in his preface.

While I’ve never found economics to be a particularly interesting topic, Jón tries to jazz it up with humorous headings like “The New Money: An Unholy Trinity” and to simplify complicated issues as much as possible, so that a layman like myself may keep reading.

On top of that, this isn’t just any old dry fiscal report. This is the outrageous tale of the rise and fall of the young Icelandic business ‘Vikings’ who wanted to conquer the world but ended up almost bankrupting a whole nation, made possible by lax regulations and pushover authorities.

Most of this I’ve heard before, in particular in discussions following the publication of the Special Investigation Commission (SIC) report on the banking collapse in 2010, yet stories of insider trading, bribery, arrogant and impotent authorities never cease to shock.

Not to mention stories of the excessively extravagant lifestyles led by the nouveau-riche Icelanders, who competed with each other on who could get the most famous star to perform at private parties—Elton John probably topped the list—and who served the most expensive dinner; risotto garnished with gold flakes, anyone?

The book also provides an informative back story to the Icelandic political and economic climate in which the banks were privatized, an overview of the main characters involved in the collapse and a summary of the SIC reports.

I don’t know the story well enough to comment on whether important aspects may have been left out or whether the author may have alternative motives to simply enlighten readers on what went down in Iceland.

It doesn’t seem like he is taking anyone’s side, though: no banker or politician is let off the hook, members of all business and political factions are given equal bashing and various sources are consulted.

Also, I consider it a recommendation for the book’s credibility that its publication was supported by The Eva Joly Institute; I have much respect for the Norwegian-French corruption hunter who served as assistant to Iceland’s Special Prosecutor.

While the book shouldn’t be read as the absolute truth behind Iceland’s economic collapse, it is certainly a good starting point for anyone wanting to learn more about it.


On Thin Ice – A Modern Viking Saga About Corruption, Deception and the Collapse of a Nation is available on amazon.com.

Eygló Svala Arnarsdóttir

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