NEWS/BLOG

Iceland on the Brink

Iceland is the first major political victim of the worldwide financial crisis as its conservative coalition government collapsed in the wake of the country’s economic devastation. Iceland’s banks failed after accumulating large debts during the recent period of rapid economic growth. Its economy is expected to shrink by about 10% in 2009 and 2010,and an inflation rate of 13% is projected.

A $2.1 billion loan package from the International Monetary Fund, rates hikes to halt runaway inflation and campaigns by local celebrities such as singer Bjork, have had little impact. The IMF predicts Iceland’s economy is facing its biggest slump since the country won its independence from Denmark in 1944. Millions are also owed to depositors around the world.

In an unusual move for this peace-loving country, rioting erupted outside the parliament building in Reykjavik, where people of all ages turned out with pots and pans as well as musical instruments. Demonstrators have accused the government of leading their once-prosperous island nation of 320,000 people into economic ruin. Police used tear gas for the first time since 1949, when Icelanders protested the country’s decision to join NATO.

Demonstrators threw eggs and soda cans at the car in which Prime Minister Geir Haarde was riding but he escaped unhurt. He was also burned in effigy and shortly afterward announced that he would step down.

Iceland is expected to appoint Johanna Sigurdardottir as interim prime minister. Now social affairs minister, she is the choice of the Social Democratic Alliance Party to lead the government until May when an election will be held. She entered politics through the labor movement, serving as a labor organizer while working as a flight attendant with Loftleidir Airlines, now Icelandair. She would be the world’s first openly gay woman to become a head of state. Iceland gave women the vote in 1915, two years before the U.S. and elected a woman president in 1980.

Iceland was one of the most prosperous countries in the world a short time ago.“The standard of living is among the highest in the world with a per capita income of over US$35,575 as of 2000. Life expectancy rivals that of Japan despite being a nation of drinkers and meat eaters. One of the safest countries in the world, Iceland has a crime rate is so low the police don’t carry guns.” This is from our earlier article at liveabroad.com/articles/iceland/

Obama’s Expatriate Experience

“We are shaped by the places we have lived,” begins The New York Times special feature on January 18, highlighting the different places President Obama has spent time, not including Washington DC.

The section on Indonesia was written by Endy M. Bayuni, chief editor of The Jakarta Post, who notes that when Barack Obama arrived there at the age of six in 1967, the country was emerging from major political upheaval. Pro-American General Suharto had seized power from the left-leaning President Sukarno. The army had control of the government and wielded considerable power over people’s lives. Dissent was dealt with harshly.

Most Indonesians were very poor. There were few autos on the streets which were crowded with rickshaws, motorcycles and street peddlers. The future president lived with his mother and Indonesian stepfather in circumstances far from affluent in the outskirts of Jakarta. They had a small house with enough space for chickens and other birds as well as a pet ape. He went to a public Indonesian school and quickly learned the local language. As Bayurn writes, the local school, like Indonesia itself, would have held a mix of different races, ethnic groups and religions.

Early childhood is a time of much learning, and the mature Barack Obama, writing in his first book, offer more details of his experiences and says of his “rapid acculturation in Indonesia” that “It had made me relatively self-sufficient, undemanding on a tight budget and extremely well mannered.....” His mother supplemented his local education with lessons from a U.S. correspondence course. Five days a week, she woke him at 4 AM for English lessons which lasted three hours until he went off to school and she to work at the American embassy where she taught English to Indonesian businessmen. She taught him values, too. Before she sent him to Hawaii to live with her parents when he was ten, she had taught him “to disdain the blend of ignorance and arrogance that too often characterized Americans abroad” and an appreciation of the life chances he would have as an American.

Read more in the Op Ed page of The Times, January 18, and in Dreams from My Father: A Story of Race and Inheritance.

Also see: The American Journey of Barack Obama.

Just heard of this on The Charlie Rose Show, which you can get on line. It’s a book of photos from the campaign Yes We Can: Barack Obama’s History-Making Presidential Campaign.

Make it a Serendipitous Year!

A new year, a new president in less than a fortnight and lots of problems we never expected. The financial world as we knew it has undergone a sea change. My interest in AIG, which I wrote about under International Investing, is more than academic. I worked for the company in New York after college, helping with a company magazine that reflected AIG’s worldwide reach. The morning’s mail might contain letters from Singapore, Manila or Sao Paulo. It was an exciting time and if anyone else who worked there happens to see this, I’d love to hear from them.

Partly to make sense of the recent cataclysmic economic events, I picked up a copy of Nassim Nicholas Taleb’s The Black Swan: The Impact of the Highly Improbable.

Most of us live with a false sense of security, Taleb maintains. We’re wired that way and the so-called experts, especially economists and statisticians, encourage us to think that things will stay pretty much the same. Then wham, the unexpected happens and catches us off guard. The world economy has just experienced a black swan event. The title refers to the fact that everyone thought swans were invariably white until black swans turned up in Australia. An options trader turned philosopher, Taleb writes with considerable wit and humor. The book is tough going at times but worth the effort, and its outlook isn’t totally grim as these quotes prove.

“We are so quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions.”

“Imagine a speck of dust next to a planet a billion times the size of the earth. The speck of dust represents the odds in favor of your being born; the huge planet would be the odds against it. So stop sweating the small stuff. Don’t be like the ingrate who got a castle as a present and worried about the mildew in the bathroom. Stop looking the gift horse in the mouth – remember you are a Black Swan.”

I especially liked the advice - “maximize the serendipity around you.”

Ride Out the Recession Abroad

Moving abroad isn’t just for retirees or individuals of retirement age. Increasingly much younger people are creating businesses and careers in foreign countries. It might be a operating a guest house in Costa Rica or a retirement home in Mexico or a farm in Brazil. It might be a business catering to expats or travelers in France or Italy or India or Thailand. We hope to feature more information on expat entrepreneurs in the coming weeks and months.

Then there are those individuals who’ve opted to take an extended vacation far from home, perhaps learning a new language or another skill or just taking stock of their lives and figuring out what their next step will be. Why go to a foreign country to do this? For those who can get away, the reasons make plenty of sense.

It can be far cheaper to pack up and make an extended stay in a country where the exchange rate works to your advantage. Your food, rent and living expenses can be a fraction of what they were. No health insurance? No problem! Mexico, Costa Rica and many other countries have government plans that cost very little and may be the answer for those who are young and in good health. Those who want more extensive coverage can enroll in an insurance plan with a private company and pay far less than premiums would be with a U.S. address.

Once you’re living the life you’d only dreamed of, you may just decide to stay on. Whatever you do, check on the visa and residency requirements to be sure you’re “legal.” And don’t burn your bridges. Just be prepared for the adventure of your life and be open to opportunities you may never have considered. The economic situation is far from healthy wherever you go, but it’s still a big, big world.

Latin America Tops Ethical Destinations

Latin American countries—Argentina, Bolivia, Chile, Costa Rica and Nicaragua—are at the top of a list compiled by the Ethical Traveler after a study of the world’s 70-plus developing nations. The survey looks primarily at environmental protection, social welfare and human rights. “Ethical travel” is defined by the organization as “an awareness of our impact as we explore the world.”

Nicaragua was included with a caveat. The country is committed to fair trade and sustainable tourism, and maintains very low CO2 emissions, but homosexuality remains criminalized here. The law is not enforced and is the subject of protests.

Below is the list in full, in alphabetical order:
1. Argentina
2. Bolivia
3. Bulgaria
4. Chile
5. Costa Rica
6. Croatia
7. Estonia
8. Namibia
9. Nicaragua
10. South Africa