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Economy and Austerity
Transcript of Economy and Austerity
We have interviewed two politicians.
Birgitta Jónsdóttir from the Pirate party and Rósa Björk Brynjólfdóttir from the left Green party.
Question 1 : Which were the main factors leading to Iceland falling into the crisis started in 2008 ?
The main factors, in her opinion, were a false sense of richness due to the continuous rise of the property value and normalization of loans. Also, the passing of the EA resolution and existance of loopholes within the financial and economical system, which were not suited for Iceland. When the crisis awoke, all the elements and actors supposed to protect society and the citizens failed. That is: Bankers, politicians, the Media, academics... This resulted in a general movement towards new politics and a Constitution project which wasn´t passed by referendum.
The main issue leading to this was, in her opinion, the banking system. Due to it´s excessive size, more than 20 times bigger than the GDP and the amount loans being taken from abroad(mainly the UK, the Netherlands and Germany). When the markets started to shake, and those loans could not be paid, everything started to get out of
In their answers they both talked about the banking system failing, but Birgitta went a bit further and talked about how other big parts of the society failed Icelanders. More specifically the Bankers, politicians and media failed to protect the society when the crisis awoke.
Question 2:How did Iceland managed to get out of the crisis in such a quick manner? Which were the key movements and actions leading to this change?
There were two main reasons: Good decisions and luck.
Firstly, good decisions because we were able to stop Icesafe and paying debt to the dutch and the british. This allowed Iceland to have more space to recover and get back stability in their economic system.
Secondly, good luck because having their own currency as opposed to the Euro and such, allowed them to shield it´s value and maintain prices. Also, tourism sprouted heavily due to a volcanic eruption which attracted tourists, and an abundant fish captures during the time allowed Iceland to risen up its economy in times of need
Iceland was the first country to fall when the crisis started, so a call for help to the IMF amidst great shock in both the population and the international comunity. The IMF was not used to work with modern and developed countries so this was a difficult and new project to explore. A plan for recovery was created and several painful austerity measures had to be taken, although the left-wing party at the moment stepped up and made them less severe.
At the same time, we experienced both a touristic boom, thanks to the media coverage of the Eyjafjallajökull eruption, and a rise in the fishing industry due to the abundance
in mackerel banks around the country.
While Birgitta gave more credit to Icelanders getting rid of the Icesave debt. Rósa emphasized more on the work that the IMF and the government did appose to the crisis.
Then they both talked about Iceland having luck due to the touristic boom after the Eyjafjallajökull eruption and the unexpected rise in the fishing industry.
Question 3: Are social media an useful tool for the citizens to have a clearer view of politics and politicians, or does it spread untrue information, making the process of recognizing ideas or what it is true or right harder?
At first, they were an useful tool to meet people to connect people with similar thinking and organize protests, movements...Nowadays, however, they have become more and more dictatorial, and harder to use for those means, so the peopla are having to diversify their use for such actions. The people need to involve directly into democracy and for that, the media need to allow the free move of information and protect privacy and freedom of speech. If not, they are just propaganda for the rich and famous people, spreading untrue news, feeding an acritical thinking, and allowing movements such as fascism to rise.
In her opinion, social media are a very useful tool to share and receive information, and to get in touch with people around the world, but it presents several issues.
First of all, you are in risk of getting locked away inside a bubble where everyone has the same opinion as you, and that stops you from advancing and learning or getting to see the bigger picture. It also allows anyone, media included, to spread fake news and polarize people towards their interests if they don´t check and contrast what anyone says, so doing this is a key point.
Both of them talked about of the good sides of social media and their issues empasizing on the ability of the big media and famous to spread untrue imformation and use them in the wrong way.
While Rosa talked about them as a medium for knowledge and information, for Birgitta they are also a way to connect people and organize protests, riots and other movements to get the people closer to politics.
Question 4: Where did the crisis and the consequent budget cuts strike the hardest? Economy, healthcare...? In which ways?
The cuts didn´t necessarily come during the crisis, but instead they appeared afterwards.
As usual, they hit the hardest in those areas sensitive for people without much resources, such as healthcare, education, economic aids... because people who live paycheck by paycheck do not have much room for unexpected expenses and changes, and many people lose a lot of money or even their jobs during the crisis.
As a conclusion, those areas already weak and exposed became even more vulnerable and in need of change after the crisis.
Due to the cuts and measures mentioned before, the healthcare and wellfare suffered the most, striking the hardest among those vulnerable before. All this changes were met with criticisim and protests. Even today, those sectors have not healed completely, and in the aftermath, those who were rich before got even richer in the
end, while the poor and vulnerable have gotten stuck.
They both gave really simular answers emphasizing on welfare, health care and educational system as the most affected by the cuts, and acknowledging that the wage gap has gotten even bigger with this crisis.
Question 5: Why is Iceland not a part of the EU and the Euro?
Iceland is more or less 70% into the EU, because they are part of the EEC and the Schengen space. Icelanders have chosen not to be fully into the European Union due to fear of losing sovereignty and their own identity being part of such a big union, but at the same time, they don´t want it to dissapear because it is benefitial for them. In a sense, they are waiting and negotiating for a good contract and the right moment to join in, but not just yet. Birgitta´s party supports letting the people vote and choose whether they want in or not.
It has been a very debated topic lately. Some parties, like the Social Democrats, wanted to enter rightaway, but they were blocked by others. And the same happens with the people, there are both pro EU and against EU movements all around. In general, we are afraid of losing autonomy in the main edges of our economy: the fishing industry and clean energy.
They both mentioned that there are debates for and against joining the EU and the Euro, due to the fear of losing sovereignty over the fishing industry and the energy production, although Birgitta mentioned how Iceland is part of the EU in a way, being part of the EEC and the Schengen space.
Question 6: How has Iceland gotten to the point of becoming one of the richest countries in the world?
Iceland is a rich country when it comes to resources, but it lacks organization and
improvement to use them properly and benefit from them. Even though, there are
still lots of people who are poor, children who live under poverty levels. People with
dissabilities, the elderly and those with extra needs do not get the help they need to
integrate into society
Seizing and improving their use of their main economic edges, fishing and producing
energy, and also, due to this, some industry has moved into the country to profit from
They both mentioned how resourceful Iceland is and the lack of organization that drags the rising economy a bit down. Rósa mentioned the lack of environmentally friendly ways of using these resources and how this should change over time.
Question 7: Do you believe that this crisis will repeat soon, or will the situation get better? If you think it will repeat, how can we prevent it?
There are factors indicating that it will indeed repeat, such as the rising of the price
of houses, although it wont, in her opinion, be as severe as the last one. There is
only so much Iceland can do as a country to prevent it because there are too many
factors to take into account as to cover every possibility, but people should avoid
getting into too much debt and save all they can to be prepared for anything
There is always a risk of crisis over the horizon, and all we can do is keeping a strong
surveillance over our markets and institution in order to make sure everything is in
good shape. Apart from that, the growing movement of nationalism and isolationism,
for example the case of Donald Trump, menace to undermine international business
and the growth of our economy, and we should be very careful about it.
Rósa didn‘t want to guess and said that a crisis is always possible and how we should always be prepaired and vigilant, specially the institutions and goverments.
On the other hand, Birgitta said that there are factors indicating that another crisis could be near, such as the housing market, although it wont be as severe as this one. For her, there is only so much we can do but try not to get into debt and try to save as much as we can.
In which way did your participation in the project and doing the specialist interviews change your oppinions and state of mind about the european citizenship?
After all this time spent making the project and meeting the poiliticians, we, the team got a really good perspective of Icelandic politics and their effect on the people of the country. We got to meet great members of the Parliament and understand things from their perspective as well as discuss the problems that some European countries have. All in all this was a marvelous experience that not all people get to have.
Regarding the situation of the EU, we have realised that the same issues and laws that affect some countries in a possitive way, have a negative one on some others, and we understand better now how difficult it is to balance such a big and diverse comunity as the EU is, and that great effort and dialogue will be needed to do so