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Iceland, what made you think you were so special?

Michael Lewis' recent article in Vanity Fair is a must read on so many levels.  First, it's fascinating account of how Iceland, a quaint little country that has been isolated from the world of International finance for more than a millennium, suddenly became a careening high roller.  And then promptly became bankrupt. As in: 'the whole country became bankrupt.'

But there's another level (as their always is when Lewis looks at a situation) that I find more Interesting. How did a bunch of people who made their money for hundreds of years by fishing come to believe that they had an aptitude for high finance?  This short blurb, in which Lewis talks with an Icelandic fellow, kind of sums it up:

It took years of training for him to become a captain, and even then it happened only by a stroke of luck. When he was 23 and a first mate, the captain of his fishing boat up and quit. The boat owner went looking for a replacement and found an older fellow, retired, who was something of an Icelandic fishing legend, the wonderfully named Snorri Snorrasson. “I took two trips with this guy,” Stefan says. “I have never in my life slept so little, because I was so eager to learn. I slept two or three hours a night because I was sitting beside him, talking to him. I gave him all the respect in the world—it’s difficult to describe all he taught me. The reach of the trawler. The most efficient angle of the net. How do you act on the sea. If you have a bad day, what do you do? If you’re fishing at this depth, what do you do? If it’s not working, do you move in depth or space? In the end it’s just so much feel. In this time I learned infinitely more than I learned in school. Because how do you learn to fish in school?”

This marvelous training was as fresh in his mind as if he’d received it yesterday, and the thought of it makes his eyes mist.

“You spent seven years learning every little nuance of the fishing trade before you were granted the gift of learning from this great captain?” I ask.

“Yes.”

“And even then you had to sit at the feet of this great master for many months before you felt as if you knew what you were doing?”

“Yes.”

“Then why did you think you could become a banker and speculate in financial markets, without a day of training?”

“That’s a very good question,” he says. He thinks for a minute. “For the first time this evening I lack a word.” As I often think I know exactly what I am doing even when I don’t, I find myself oddly sympathetic.

Funny how easy it is for us to believe that we suddenly understand something that common sense should tell us is not that easily known.  I suggest that this a human (as opposed to an Icelandic) phenomenon by the way.  But of course we already knew that, didn't we?

P.S. If you appreciate my observations, you might want to join my inner circle.

One Comment

  • Mark Landrieu says:

    Long time no see.
    Great blog
    Great book, I am amazed how little people know or care about this.
    Catastrophic consequences and ….. oh well?

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