Iceland was the first victim of the global banking crisis of 2008, when its heavily-leveraged international banks all collapsed--taking down many British savers as well as inflicting a major blow to the home economy.
Jonsson tells the story of the crisis, beginning with a brief history of Icelandic banking and then moving to a blow-by-blow account of events. He gives us capsule summaries of various businesses and their highly-leveraged adventures, with lots of factual detail but often insufficient analysis. Charts of companies, subsidiaries, name changes, and principals would have been nice, as would time lines of bank failures, interventions, and legislation. There information is here, but visual references would also be helpful.
Events make it clear that there is plenty of blame to go around - Icelandic entrepreneurs, state banks, regulators, and politicians; foreign politicians and bank regulators, especially in the UK; and international financial institutions.
With all the market failures and institutional failings, it's surprising that Jonsson attributes many problems to Icelandic culture, starting his story of the banking crisis with Iceland's conversion to Christianity in the year 1000. The flip side of this overemphasis on culture is a relative inattention to Icelandic politics. Sure, David Oddsson was a key player in establishing the free-market policies of the 1990s, and as a governor of the Central Bank, making a mess of the crisis response. However, Iceland has coalition governments and most of the other parties and players are invisible in this account.
Finally, I'm struck by how many of the underlying factors are also found in other countries, and have not been addressed by reforms after 2008. He concludes that Iceland may be the canary in the coal mine. Readers concerned about the future of the international banking and finance sector will find much here to lose sleep over.
