How big was the banking sector as part of the stock market in Iceland?
Before the market started declining, financial companies were probably between 80% and 90% of the stock market. At its height, the market cap of all the companies in the stock market was something like two times GDP. This is not really out of line with what you see in other countries. But that has now all basically been wiped out. The stock market has come down by nearly 96%. So, on paper, two times GDP vanished. Q: There’s so much in the story of what happened in Iceland that sounds very similar to what’s happened in the U.S., in terms of the growth of the financial industry and lending behavior. What’s been different in Iceland? I think you’re right that a lot of the developments were similar — for example, a real estate boom and consumer debt growing — in the U.S. and some countries in Western Europe. The main problems in Iceland were that the scale of it relative to the size of the country or the economy was considerably worse than it was in most other countries, and the fact that
