Interesting Article from 2008 During Collapse
Iceland's next saga: The wounded tiger's tale MATTHEW HART
REYKJAVIK — The Globe and Mail
Published Friday, Nov. 14, 2008 11:56PM EST
Last updated Tuesday, Mar. 31, 2009 9:13PM EDT
There was a man called Mord; he was called the Fiddle. He was the son of Sighvat the Red, and he lived at Voll in the Rang River Plains. He was a powerful chieftain and a great lawyer - so great a lawman that no case was thought to be legally judged unless he took part.
So begins one of the greatest Icelandic sagas, Njal's Saga. Generally, in Iceland's tales, the reader expects blood and is not disappointed. Men trudge about the country clouting each other's brains out in the bracing air.
But so important is this passage about Mord that American archeologist and Old Norse scholar Jesse Byock quotes it in the opening to his bestselling Viking Age Iceland - because, for all their chopping off of limbs and stealing of women, the sagas describe a people vitally concerned with how to conduct themselves, with what is proper and ethical in relations between people who had to regulate themselves in a society without rulers.
Today, Iceland is in ethical disarray, stripped by financial catastrophe of its image of itself. In real terms, the gross domestic product has crashed by 65 per cent. The island faces a sudden spasm of depopulation as Icelanders prepare to flee in search of work. Anger, shame and dread have spread like pathogens. They depress the mood of this northern capital as much as the empty construction sites and the gallows of idle cranes.
In less than a generation, Iceland had transformed itself from Europe's poorest country into one of its richest. It took a scant eight years of frenzied expansion for the country's banks to help buy companies worth nine times Iceland's GDP. When the banks collapsed in October and Iceland's currency, the krona, began to fizz away, the country found itself transformed in a few weeks of headlines from rampaging Viking tiger to global deadbeat - a country whose bankers had annihilated not only the security of their countrymen but the savings of tens of thousands of other depositors, particularly in Britain.
Iceland now confronts appalling choices. There will be no rescue package until it settles with foreign depositors. And if it does reach some accommodation, and seeks the further safety of full membership in the European Union, EU rules would strip it of control of its fishery - a horrifying prospect for Icelanders. The fishery is freighted with emotion as the resource that single-handedly pulled Iceland out of the medieval age and for which it fought three bitter "cod wars" with the British.
However Iceland plays its cards, its hand is a bad one. Perhaps its best hope lies in its sense of itself as a people united by a history of survival and a cherished culture.
By the book
Reykjavik after the fall: A thin rain slicks the sidewalk with wet ice. Swans wrangle over bread beside the city hall. In a tiny square, a bronze patriot stands on a plinth and gazes through the weather at the dark grey parliament, the Althing. Then the Borg Hotel and the narrow thoroughfare of Austurstraeti. The only shop with any life on a late fall afternoon is Eymundsson the bookseller. Packed. An Icelander can always read.
Some of the books they are buying got their start right here in a coffee shop and bar called Hresso that has sent a steady trickle of writers out into the world pumped with coffee and ideas. One of them, Bragi Olafsson, comes in from the rain and peers at me through round tortoiseshell glasses that give him an owlish look. We commandeer a red banquette and sit in the rain-streaked window wondering what is to become of Iceland.
"What people are mostly saying is that there will be a very dramatic change in our way of thinking. We have been very greedy - a very rude society. You know - people in Range Rovers talking on their phones and honking horns. But almost overnight this has changed."
Mr. Olafsson is a poet and prize-winning novelist. The Pets, his first novel translated into English, sold 5,000 copies in Icelandic - a bestseller in a country of scarcely more than 300,000. He is one of a small group of leading writers salaried by the state. Nurturing writers is state policy in Iceland, where the written language has remained almost unchanged for 1,000 years.
"The only answer now is to join the EU and throw away the krona," Mr. Olafsson says with evident despair. "There are even talks of joining Norway. I don't want to be against it because I don't understand it, but culturally and aesthetically I don't want to be Norwegian. I hate their language."
Mr. Olafsson dropped out of university at the age of 24 in 1986 and with some friends founded the publishing house Bad Taste. It specialized in music, poetry and the preservation of Icelandic choral works from the 10th century. Not the fast track to riches; for that, they formed a band. The lead singer would become the only Icelander more famous than Eric the Red - Bjork.
Six years later, they dissolved the group, the Sugarcubes. Bjork rocketed into the firmament. Mr. Olafsson took up his pen, joining in his pursuit of letters another Bad Taste founder, novelist Sjon Sigurdsson, who writes as Sjon.
Sjon broke into print at the age of 15, publishing at his own expense a collection of symbolist poems and flogging them on the Reykjavik city bus. "No one made fun of me," he says. Being a literary nation is one of the most important points of Icelandic identity. "We respect that literature is said to have kept us alive."
Viking dragon ships first scraped ashore in Iceland in the ninth century. The country remained an independent commonwealth without a ruler until 1262, when it yielded to the diplomatic exertions of the Norwegian king. For the next 700 years - first under Norway; later, Denmark - the island endured successive periods of neglect, oppression and calamities of nature.
The literature that fed them through those long winters was one of the most remarkable on Earth - a collection of 40 prose narratives called the family sagas and more than a hundred other tales of kings and noblemen. The family sagas are the literature most particular to Iceland, concerned with often undistinguished people finding their way through the everyday problems of life - murder, theft, sex, money and trolls.
The sagas are a singular accomplishment by a thinly spread people on a harsh and isolated island. Even those who do not read them feel warmly about this vast, chaotic trove of lore in which no farmer ever bashed another farmer on the head without someone remembering it. At independence in 1944, the repatriation of the books from Denmark was the first task of the Icelandic state.
Psychic energy
The fact of the sagas seems to power the literary enterprise of Iceland, like a sort of psychic nuclear bundle pulsing away in its treasure room in Reykjavik and driving every pen. It is not that writers write in the saga tradition, or even mine the source, but they see themselves as part of a people formed by writing and powerfully connected to it.
"I think it's interesting," says Sjon, "that on Oct. 9, when the whole financial structure of Iceland was crumbling, the main paper ran an editorial marking the hundredth anniversary of the birth of the poet Steinn Steinnar. What they said was that maybe at a time like this we should look to our poets for inspiration."
We are drinking tea in the bar of a Reykjavik hotel. Sjon is an intense figure with extravagant sideburns. He stares boldly out of rectangular glasses and speaks in a rapid, confident manner. He is surfing the runaway success of his novel The Blue Fox, just translated into English but already a bestseller in Denmark and Germany, and also writes lyrics for Bjork. He acknowledges that everyone in Iceland benefited from the boom.
"And yet at the same time you felt that this was news of a different world. It was something you saw from far away. In the far distance were these people flaunting their money. The old Icelandic idea of a classless society - it was hard to keep it alive. I think the feeling in society now is that [the economic expansion]is a project that went horribly wrong, so let's return to what we were - a humanist society."
If literature adorns the life of every nation, it seldom has the central place that the sagas had for early Icelanders, for whom they constituted a manual of conduct.
"In Iceland, we had courts, but no means to enforce them," historian Gunnar Karlsson says. "It was up to the person who had been wronged to enforce any sanction. So the family sagas are studies of how Icelandic people handled disputes.
"They are packed with minor events - love, adultery, petty theft. They are studies of the limits of freedom on individual dealings between people."
"If you have a society that's small and poor and far away, you wouldn't suppose that to be a good prescription for being highly literate," says Vesteinn Olafson, director of the Arni Magnusson Institute, where the sagas are deposited.
"But I think that the smallness of the society contributed to the creation of literature. Because the audience was so small, writing in the vernacular made more sense than writing in Latin."
If the sagas are a large achievement for a small, medieval people adrift in the North Atlantic, their descendants are trying to keep it up.
"We publish 1,500 titles a year in Icelandic," says Thorbjorn Broddason, a sociologist at the University of Iceland. "Some of them will be reports and others translations, but there is also a large amount of original Icelandic composition - a much higher publishing rate per capita than any other country, with a single exception - the Faroes."
(The Faroe islands are a semi-autonomous Danish protectorate in the North Atlantic, between Shetland and Iceland. The population, about 50,000, speaks a Nordic language distinct from Danish.) "I think this is worth considering," Prof. Broddason says. "Iceland is a tiny country and Faroe is a micro-Iceland. What it says is that there is a floor you can't go through. Irrespective of the size of population, if you want to keep your society alive, you have to have a distinguishable culture. If we did not have a national theatre, a symphony orchestra and our own publishing, we would not be culturally sustainable."
And so a geyser of output is spewed into the world by Iceland's literary geothermal. Bragi Olafsson and Sjon are just two of a score of writers translated into foreign languages and sold around the world.
Hallgrimur Helgason's 101 Reykjavik is now in 13 languages, and was made into a movie. Arnaldur Indridason's Reykjavik flatfoots have made him into an international crime-genre bestseller. Over all looms the titanic figure of Nobel laureate Halldor Laxness (1902-1998), an Icelandic volcano who wrote plays, poems, editorials, short stories and 51 novels.
All this from a country with a population smaller than Etobicoke's, with three airlines, four banks and an economy that went from slow walk to warp speed in a decade.
Financial spree
The oxygen Iceland was breathing was foreign money. Tutored by an inflationary past, the central bank maintained high interest rates. In classic hedge-fund practice, says Jon Danielsson, a native Icelander who teaches banking at the London School of Economics, international investors borrowed massively in countries with cheap money and parked it in Iceland, raking in the difference.
Iceland's banks, newly released from government ownership, swollen with fresh money and piloted, in Mr. Danielsson's words, "by a lot of smart, well-educated, risk-loving Icelanders," financed a foreign buying spree by the country's businessmen.
"It was typical emerging-market behaviour," he says. "They thought they had found the magic secret of wealth. At the time, the world was in the midst of the biggest asset bubble in history."
The rest of the tale is sadly familiar: Dominoes toppling elsewhere in the world came rattling into Reykjavik. Inter-bank credit vanished and Iceland's banks, starved for cash, went looking for it elsewhere, offering high-interest accounts to depositors abroad.
When the banks collapsed anyway, billions of dollars in deposits evaporated. The state took over the banks. Britain used anti-terrorism law to seize Icelandic assets. The Dutch and British demanded Iceland cover all deposits - a sum equal to more than 100 per cent of the country's GDP. The International Monetary Fund and the EU made it clear to Iceland that no help would come until it settled, something that may simply be beyond its resources.
"It's just unbelievably bad," Mr. Danielsson says. "It's the first developed country to go to the IMF for help in 30 years. A third of the population is considering emigration."
"The tension is incredible," Reyjavik City Councillor Oddny Sturludottir said when 3,000 people - 1 per cent of Iceland's population - lost their jobs in a week. (The Canadian equivalent would be 300,000 people joining the unemployed in a span of days.) Layoffs have increased since then. "We're going to lose a whole generation," Ms. Sturludottir says. "I am really afraid of what is going to happen."
Two weeks ago, I watched one of the first public demonstrations. A straggle of people made their way along the lake behind a band in scarlet coats. No one seemed to be in charge, and even the music sounded like the erratic blare of horns at a high-school football game. Kids and dogs were entangled everywhere and people were doing their damnedest to look stern.
That was then. Last Saturday, 4,000 angry Icelanders packed the square in front of the Althing and pelted the venerable building with stones. They shoved police aside, rushed the Parliament and hoisted a flag with the piggybank logo of one of the country's now-hated billionaires. The Prime Minister called it a riot.
"A lot of psychic damage is being done," Thoranna Jonsdottir says. "Icelanders have a very strong work ethic. You lose a sense of purpose when you lose a job, and that hurts even more."
Ms. Jonsdottir is an executive of Audur Capital, a firm run by women and celebrated in Iceland for weathering the crisis with its clients' money intact. In Reykjavik, the idea is gaining ground that women may have to set things straight. "Icelandic women to clean up male mess," said a headline in London's Financial Times when women were appointed to run two of the seized banks.
"They talk about the Viking model," Ms. Sturludottir says of the aggressive business climate that reigned in Iceland. "What is the Viking model? Rapists and robbers!"
"When everything was booming a few years ago," Ms. Jonsdottir says, "the President of Iceland said that was our true nature - hard-working and courageous and we knew what we were doing."
She shakes her head and drums her fingers on the boardroom table. "People remember the great saga age, but not the 700 years of misery that came after. It lasted until the end of the Second World War. Until then, we were a medieval country."
In Prof. Broddason's view, the sagas that gave Icelanders their ethical ideal also expose them to a suffering that transcends any anguish about lost jobs and threatened homes.
"We look upon ourselves as descendants of an honourable people. The sagas are so much about revenge, but also about honour, and now we are a dishonoured people. We have behaved like children and not been able to take care of ourselves and done damage to people in other countries.
"I believe other Icelanders feel like this."
Op-ed explosion
The turbulence afflicting Iceland is producing, as in the distant past, a phenomenal eruption of words.
Morgunbladid, Iceland's national newspaper, sometimes seems written more by its readers than its staff. Unsolicited opinion can run to 10 pages - editorial space eagerly subsidized by advertisers who have quickly realized the interest generated by the content.
"You would have to look long and hard," editor Olafur Stephensen says, "to find a newspaper as open to its readers. On Wednesday, we ran 11 pages of op-eds. This weekend, we have up to 45 contributions from people who have a dire need to express themselves."
The habit of pouring out their hearts in print was already established among Icelanders. Morgunbladid's obituaries often take up six to 10 pages. They consist largely of tributes written by friends and relatives and printed for free. The newspaper is a clearing house for the deepest feelings of the community.
When the country learned that it was bankrupt, op-ed contributions stopped, "as if the whole country was in shock," Mr. Stephensen says. "But then they started and now have really picked up. Sometimes they report news so good that we write a story for the front page alerting readers to what's inside."
In this way, Icelanders learned from an outraged lawyer that a fired banker, prohibited by law from acting as a director of any listed company, was sitting on 13 boards. Similarly the former chief executive officer of a company owned by the Baugur group, the consortium whose rapid expansion became a metaphor for the Icelandic tiger, revealed in the op-ed pages that the company had unreported debt.
The pages are alive with events of the keenest interest to the people reading them, as were the sagas.
"They were about beached whales and fights and farmers," American scholar Jesse Byock says. "It's not a fantastic literature. If you are alone and five men come after you, you're dead. In the Icelandic sagas, there are no flying dragons to rescue you. It was a literature of social construction that taught them how to live according to their laws.
"Culturally, Icelanders are equipped in their approach to life to deal with hardship," Prof. Byock says. "I think they're rather proud of it."
It is impossible not to feel sympathy for Icelanders as they face a desperate future. Their country was turned into "a gigantic hedge fund for the benefit of a few," in Jon Danielsson's bleak assessment, and now they must all pay.
On my last day in Reykjavik, I go to a museum display of the saga treasure. In case after case lie the noble books, survivors of long centuries spent in ice-cold, turf-roofed farms, thumbed through by people who had just finished feeding cows. On my way out, I chance into a room where students in their early teens sit at long tables with pots of ink and quill pens and scraps of stiff paper.
Outside, dismay is spreading through the city by the hour - a growing sense of inevitable doom. Inside, the youngsters bend their heads above the paper, copying with exquisite care the old, quaint letters of a page of manuscript.
Matthew Hart is a Canadian writer based in London.
REYKJAVIK — The Globe and Mail
Published Friday, Nov. 14, 2008 11:56PM EST
Last updated Tuesday, Mar. 31, 2009 9:13PM EDT
There was a man called Mord; he was called the Fiddle. He was the son of Sighvat the Red, and he lived at Voll in the Rang River Plains. He was a powerful chieftain and a great lawyer - so great a lawman that no case was thought to be legally judged unless he took part.
So begins one of the greatest Icelandic sagas, Njal's Saga. Generally, in Iceland's tales, the reader expects blood and is not disappointed. Men trudge about the country clouting each other's brains out in the bracing air.
But so important is this passage about Mord that American archeologist and Old Norse scholar Jesse Byock quotes it in the opening to his bestselling Viking Age Iceland - because, for all their chopping off of limbs and stealing of women, the sagas describe a people vitally concerned with how to conduct themselves, with what is proper and ethical in relations between people who had to regulate themselves in a society without rulers.
Today, Iceland is in ethical disarray, stripped by financial catastrophe of its image of itself. In real terms, the gross domestic product has crashed by 65 per cent. The island faces a sudden spasm of depopulation as Icelanders prepare to flee in search of work. Anger, shame and dread have spread like pathogens. They depress the mood of this northern capital as much as the empty construction sites and the gallows of idle cranes.
In less than a generation, Iceland had transformed itself from Europe's poorest country into one of its richest. It took a scant eight years of frenzied expansion for the country's banks to help buy companies worth nine times Iceland's GDP. When the banks collapsed in October and Iceland's currency, the krona, began to fizz away, the country found itself transformed in a few weeks of headlines from rampaging Viking tiger to global deadbeat - a country whose bankers had annihilated not only the security of their countrymen but the savings of tens of thousands of other depositors, particularly in Britain.
Iceland now confronts appalling choices. There will be no rescue package until it settles with foreign depositors. And if it does reach some accommodation, and seeks the further safety of full membership in the European Union, EU rules would strip it of control of its fishery - a horrifying prospect for Icelanders. The fishery is freighted with emotion as the resource that single-handedly pulled Iceland out of the medieval age and for which it fought three bitter "cod wars" with the British.
However Iceland plays its cards, its hand is a bad one. Perhaps its best hope lies in its sense of itself as a people united by a history of survival and a cherished culture.
By the book
Reykjavik after the fall: A thin rain slicks the sidewalk with wet ice. Swans wrangle over bread beside the city hall. In a tiny square, a bronze patriot stands on a plinth and gazes through the weather at the dark grey parliament, the Althing. Then the Borg Hotel and the narrow thoroughfare of Austurstraeti. The only shop with any life on a late fall afternoon is Eymundsson the bookseller. Packed. An Icelander can always read.
Some of the books they are buying got their start right here in a coffee shop and bar called Hresso that has sent a steady trickle of writers out into the world pumped with coffee and ideas. One of them, Bragi Olafsson, comes in from the rain and peers at me through round tortoiseshell glasses that give him an owlish look. We commandeer a red banquette and sit in the rain-streaked window wondering what is to become of Iceland.
"What people are mostly saying is that there will be a very dramatic change in our way of thinking. We have been very greedy - a very rude society. You know - people in Range Rovers talking on their phones and honking horns. But almost overnight this has changed."
Mr. Olafsson is a poet and prize-winning novelist. The Pets, his first novel translated into English, sold 5,000 copies in Icelandic - a bestseller in a country of scarcely more than 300,000. He is one of a small group of leading writers salaried by the state. Nurturing writers is state policy in Iceland, where the written language has remained almost unchanged for 1,000 years.
"The only answer now is to join the EU and throw away the krona," Mr. Olafsson says with evident despair. "There are even talks of joining Norway. I don't want to be against it because I don't understand it, but culturally and aesthetically I don't want to be Norwegian. I hate their language."
Mr. Olafsson dropped out of university at the age of 24 in 1986 and with some friends founded the publishing house Bad Taste. It specialized in music, poetry and the preservation of Icelandic choral works from the 10th century. Not the fast track to riches; for that, they formed a band. The lead singer would become the only Icelander more famous than Eric the Red - Bjork.
Six years later, they dissolved the group, the Sugarcubes. Bjork rocketed into the firmament. Mr. Olafsson took up his pen, joining in his pursuit of letters another Bad Taste founder, novelist Sjon Sigurdsson, who writes as Sjon.
Sjon broke into print at the age of 15, publishing at his own expense a collection of symbolist poems and flogging them on the Reykjavik city bus. "No one made fun of me," he says. Being a literary nation is one of the most important points of Icelandic identity. "We respect that literature is said to have kept us alive."
Viking dragon ships first scraped ashore in Iceland in the ninth century. The country remained an independent commonwealth without a ruler until 1262, when it yielded to the diplomatic exertions of the Norwegian king. For the next 700 years - first under Norway; later, Denmark - the island endured successive periods of neglect, oppression and calamities of nature.
The literature that fed them through those long winters was one of the most remarkable on Earth - a collection of 40 prose narratives called the family sagas and more than a hundred other tales of kings and noblemen. The family sagas are the literature most particular to Iceland, concerned with often undistinguished people finding their way through the everyday problems of life - murder, theft, sex, money and trolls.
The sagas are a singular accomplishment by a thinly spread people on a harsh and isolated island. Even those who do not read them feel warmly about this vast, chaotic trove of lore in which no farmer ever bashed another farmer on the head without someone remembering it. At independence in 1944, the repatriation of the books from Denmark was the first task of the Icelandic state.
Psychic energy
The fact of the sagas seems to power the literary enterprise of Iceland, like a sort of psychic nuclear bundle pulsing away in its treasure room in Reykjavik and driving every pen. It is not that writers write in the saga tradition, or even mine the source, but they see themselves as part of a people formed by writing and powerfully connected to it.
"I think it's interesting," says Sjon, "that on Oct. 9, when the whole financial structure of Iceland was crumbling, the main paper ran an editorial marking the hundredth anniversary of the birth of the poet Steinn Steinnar. What they said was that maybe at a time like this we should look to our poets for inspiration."
We are drinking tea in the bar of a Reykjavik hotel. Sjon is an intense figure with extravagant sideburns. He stares boldly out of rectangular glasses and speaks in a rapid, confident manner. He is surfing the runaway success of his novel The Blue Fox, just translated into English but already a bestseller in Denmark and Germany, and also writes lyrics for Bjork. He acknowledges that everyone in Iceland benefited from the boom.
"And yet at the same time you felt that this was news of a different world. It was something you saw from far away. In the far distance were these people flaunting their money. The old Icelandic idea of a classless society - it was hard to keep it alive. I think the feeling in society now is that [the economic expansion]is a project that went horribly wrong, so let's return to what we were - a humanist society."
If literature adorns the life of every nation, it seldom has the central place that the sagas had for early Icelanders, for whom they constituted a manual of conduct.
"In Iceland, we had courts, but no means to enforce them," historian Gunnar Karlsson says. "It was up to the person who had been wronged to enforce any sanction. So the family sagas are studies of how Icelandic people handled disputes.
"They are packed with minor events - love, adultery, petty theft. They are studies of the limits of freedom on individual dealings between people."
"If you have a society that's small and poor and far away, you wouldn't suppose that to be a good prescription for being highly literate," says Vesteinn Olafson, director of the Arni Magnusson Institute, where the sagas are deposited.
"But I think that the smallness of the society contributed to the creation of literature. Because the audience was so small, writing in the vernacular made more sense than writing in Latin."
If the sagas are a large achievement for a small, medieval people adrift in the North Atlantic, their descendants are trying to keep it up.
"We publish 1,500 titles a year in Icelandic," says Thorbjorn Broddason, a sociologist at the University of Iceland. "Some of them will be reports and others translations, but there is also a large amount of original Icelandic composition - a much higher publishing rate per capita than any other country, with a single exception - the Faroes."
(The Faroe islands are a semi-autonomous Danish protectorate in the North Atlantic, between Shetland and Iceland. The population, about 50,000, speaks a Nordic language distinct from Danish.) "I think this is worth considering," Prof. Broddason says. "Iceland is a tiny country and Faroe is a micro-Iceland. What it says is that there is a floor you can't go through. Irrespective of the size of population, if you want to keep your society alive, you have to have a distinguishable culture. If we did not have a national theatre, a symphony orchestra and our own publishing, we would not be culturally sustainable."
And so a geyser of output is spewed into the world by Iceland's literary geothermal. Bragi Olafsson and Sjon are just two of a score of writers translated into foreign languages and sold around the world.
Hallgrimur Helgason's 101 Reykjavik is now in 13 languages, and was made into a movie. Arnaldur Indridason's Reykjavik flatfoots have made him into an international crime-genre bestseller. Over all looms the titanic figure of Nobel laureate Halldor Laxness (1902-1998), an Icelandic volcano who wrote plays, poems, editorials, short stories and 51 novels.
All this from a country with a population smaller than Etobicoke's, with three airlines, four banks and an economy that went from slow walk to warp speed in a decade.
Financial spree
The oxygen Iceland was breathing was foreign money. Tutored by an inflationary past, the central bank maintained high interest rates. In classic hedge-fund practice, says Jon Danielsson, a native Icelander who teaches banking at the London School of Economics, international investors borrowed massively in countries with cheap money and parked it in Iceland, raking in the difference.
Iceland's banks, newly released from government ownership, swollen with fresh money and piloted, in Mr. Danielsson's words, "by a lot of smart, well-educated, risk-loving Icelanders," financed a foreign buying spree by the country's businessmen.
"It was typical emerging-market behaviour," he says. "They thought they had found the magic secret of wealth. At the time, the world was in the midst of the biggest asset bubble in history."
The rest of the tale is sadly familiar: Dominoes toppling elsewhere in the world came rattling into Reykjavik. Inter-bank credit vanished and Iceland's banks, starved for cash, went looking for it elsewhere, offering high-interest accounts to depositors abroad.
When the banks collapsed anyway, billions of dollars in deposits evaporated. The state took over the banks. Britain used anti-terrorism law to seize Icelandic assets. The Dutch and British demanded Iceland cover all deposits - a sum equal to more than 100 per cent of the country's GDP. The International Monetary Fund and the EU made it clear to Iceland that no help would come until it settled, something that may simply be beyond its resources.
"It's just unbelievably bad," Mr. Danielsson says. "It's the first developed country to go to the IMF for help in 30 years. A third of the population is considering emigration."
"The tension is incredible," Reyjavik City Councillor Oddny Sturludottir said when 3,000 people - 1 per cent of Iceland's population - lost their jobs in a week. (The Canadian equivalent would be 300,000 people joining the unemployed in a span of days.) Layoffs have increased since then. "We're going to lose a whole generation," Ms. Sturludottir says. "I am really afraid of what is going to happen."
Two weeks ago, I watched one of the first public demonstrations. A straggle of people made their way along the lake behind a band in scarlet coats. No one seemed to be in charge, and even the music sounded like the erratic blare of horns at a high-school football game. Kids and dogs were entangled everywhere and people were doing their damnedest to look stern.
That was then. Last Saturday, 4,000 angry Icelanders packed the square in front of the Althing and pelted the venerable building with stones. They shoved police aside, rushed the Parliament and hoisted a flag with the piggybank logo of one of the country's now-hated billionaires. The Prime Minister called it a riot.
"A lot of psychic damage is being done," Thoranna Jonsdottir says. "Icelanders have a very strong work ethic. You lose a sense of purpose when you lose a job, and that hurts even more."
Ms. Jonsdottir is an executive of Audur Capital, a firm run by women and celebrated in Iceland for weathering the crisis with its clients' money intact. In Reykjavik, the idea is gaining ground that women may have to set things straight. "Icelandic women to clean up male mess," said a headline in London's Financial Times when women were appointed to run two of the seized banks.
"They talk about the Viking model," Ms. Sturludottir says of the aggressive business climate that reigned in Iceland. "What is the Viking model? Rapists and robbers!"
"When everything was booming a few years ago," Ms. Jonsdottir says, "the President of Iceland said that was our true nature - hard-working and courageous and we knew what we were doing."
She shakes her head and drums her fingers on the boardroom table. "People remember the great saga age, but not the 700 years of misery that came after. It lasted until the end of the Second World War. Until then, we were a medieval country."
In Prof. Broddason's view, the sagas that gave Icelanders their ethical ideal also expose them to a suffering that transcends any anguish about lost jobs and threatened homes.
"We look upon ourselves as descendants of an honourable people. The sagas are so much about revenge, but also about honour, and now we are a dishonoured people. We have behaved like children and not been able to take care of ourselves and done damage to people in other countries.
"I believe other Icelanders feel like this."
Op-ed explosion
The turbulence afflicting Iceland is producing, as in the distant past, a phenomenal eruption of words.
Morgunbladid, Iceland's national newspaper, sometimes seems written more by its readers than its staff. Unsolicited opinion can run to 10 pages - editorial space eagerly subsidized by advertisers who have quickly realized the interest generated by the content.
"You would have to look long and hard," editor Olafur Stephensen says, "to find a newspaper as open to its readers. On Wednesday, we ran 11 pages of op-eds. This weekend, we have up to 45 contributions from people who have a dire need to express themselves."
The habit of pouring out their hearts in print was already established among Icelanders. Morgunbladid's obituaries often take up six to 10 pages. They consist largely of tributes written by friends and relatives and printed for free. The newspaper is a clearing house for the deepest feelings of the community.
When the country learned that it was bankrupt, op-ed contributions stopped, "as if the whole country was in shock," Mr. Stephensen says. "But then they started and now have really picked up. Sometimes they report news so good that we write a story for the front page alerting readers to what's inside."
In this way, Icelanders learned from an outraged lawyer that a fired banker, prohibited by law from acting as a director of any listed company, was sitting on 13 boards. Similarly the former chief executive officer of a company owned by the Baugur group, the consortium whose rapid expansion became a metaphor for the Icelandic tiger, revealed in the op-ed pages that the company had unreported debt.
The pages are alive with events of the keenest interest to the people reading them, as were the sagas.
"They were about beached whales and fights and farmers," American scholar Jesse Byock says. "It's not a fantastic literature. If you are alone and five men come after you, you're dead. In the Icelandic sagas, there are no flying dragons to rescue you. It was a literature of social construction that taught them how to live according to their laws.
"Culturally, Icelanders are equipped in their approach to life to deal with hardship," Prof. Byock says. "I think they're rather proud of it."
It is impossible not to feel sympathy for Icelanders as they face a desperate future. Their country was turned into "a gigantic hedge fund for the benefit of a few," in Jon Danielsson's bleak assessment, and now they must all pay.
On my last day in Reykjavik, I go to a museum display of the saga treasure. In case after case lie the noble books, survivors of long centuries spent in ice-cold, turf-roofed farms, thumbed through by people who had just finished feeding cows. On my way out, I chance into a room where students in their early teens sit at long tables with pots of ink and quill pens and scraps of stiff paper.
Outside, dismay is spreading through the city by the hour - a growing sense of inevitable doom. Inside, the youngsters bend their heads above the paper, copying with exquisite care the old, quaint letters of a page of manuscript.
Matthew Hart is a Canadian writer based in London.