I was in Reykjavik, Iceland on the Monday when the Icelandic economy meltdown occurred. By co-incidence I was also on Wall Street when the 1997 crash happened and being in both locations was, I promise, purely co-incidental.
In 1997 I was with professional investors, where $400m loss hurt but they didn’t die. In 2008 in Reykjavik the only experience that I have ever felt that could describe the atmosphere, and grief displayed by the Icelandic people as they watched their Prime
Minister announce at 4 pm that the country was in meltdown, was when Princess Dianna died in the tragic car crash in Paris.
One waiter at the hotel that we were staying at literally cried as he explained that he had worked all summer to save up for a University course that he had to pay for in euro’s and now he couldn’t afford his course, his krona savings had devalued by 17%,
Late on that Monday night I heard that on the Tuesday morning Landsbanki was going the same way as Glitnir, and even then there was still some hope left. Travelling back to the airport on Tuesday lunchtime after a board meeting a call regarding RBS brought
home the crisis to me in a real way. Did the call mean that RBS about to fail as well and what impact would that have on my business and employees as we bank with them? I guess if you owe the Bank money and they go broke its one thing, but the bank owing you
is a totally different ball game. I’d already seen on the Tuesday morning the effect of the Landsbanki take over by the Icelandic Government and the snow ball effect that had already started in Iceland even before the tsunami hit the many Icesaver account
Whilst I understand that many of the UK Icesaver account holders should get their cash back as many of the deposits were under the £50,000 protection level I wonder actually how many people really realised, less than a few weeks ago, how at risk suddenly
we all were. I would bet that most people really didn’t know that money in a Bank isn’t actually safe, and for a business with substantial cash deposits, if the Bank goes broke, arguably so does your cash, your business and your life. Apparently all this started
because of bad payers in the US sub prime mortgage market. But is that completely true? I was at a Retail Banking conference in Thailand 2 weeks ago chatting to a prominent US Banker and we talked about this very point. According to him 97% of all US mortgages
are now performing and are current, and honestly, I believe him.
On the way back to Bangkok airport I put my Thai money back into my currency holder and got out UAE Dirham’s ready for my return flight to our R+D centre in Dubai. I dropped a single US dollar bill in the car and picked it up noticing that on the back, it
says “In God we Trust”. Whoever wrote that and convinced the FEDS to put it on their banknotes surely, and sadly had remarkable foresight.