Poverty is now a reality

Things have changed drastically since the economy was brought down by Iceland’s finest. What has changed in short is this:

Iceland is a nation of just over 300 thousand people. 3 years ago about 2 thousand people that did not have a job. It was between 2% – 4% unemployment most of the times. Very low compared to most nations, but after the collapse the numbers are now around 9% or approx. 16.000 people.

The numbers are higher because so many have applied for university and other kinds of education and most of them need student loans to support themselves. They do not work and gather even more dept. The universities alone had to to deny record numbers the chance to educate themselves.

When close to 20 thousand people do not have jobs out of around 180 thousand eligible for work, things are more serious than they seem. The portion of society that is affected by lower income, on top of higher food prices (around 60% increase in one year on average) and fuel prices (approx. 80% in one year) and that adds to increased government taxes, fees and import tolls (joining the EU could solve this problem at least). But the real kicker is the price indexing.

Here is a good article about this from EconomicDisasterArea. Read the chapter 4 especially, it explains it quite well. Another article from the same website explains how things are, and explain why there is not any violence in Reykjavik, when there should be mayhem in the streets because of this price indexing. In very short, when something gets more expensive, it affects our mortgage payments, no matter if it tax increase, of fuel price, or the price of a movie ticket. Everything adds to the loans. Things will not hold forever.

The results of this economic collapse are only now starting to appear in reality. All of last year, both with the public and more so with the government and the private sector, was all on credit. Only to stay alive, but now the squeeze really begins.

The government does not raise the social system welfare benefits in order to compensate those ever increasing prices. and according to Landsbanki, over 70% of companies they are in business with, are having troubles, and half of those have serious trouble because of this depression. The bank also estimates that around 20% of its customers are in serious debt trouble.

This is Iceland today. And things will only get worse….


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