A Gripping Saga of Cod, Elves, and Bankers

Michael Lewis spent ten days in Iceland and came out the other side with 10,000 indelible words on how a nation of fishermen became a giant hedge fund, and how that hedge fund spectacularly imploded. Here's a taster, but do go read the whole thing:

No one asked, What might Icelanders want to do? Or even: What might Icelanders be especially suited to do? No one thought that Icelanders might have some natural gift for smelting aluminum, and, if anything, the opposite proved true. Alcoa, the biggest aluminum company in the country, encountered two problems peculiar to Iceland when, in 2004, it set about erecting its giant smelting plant. The first was the so-called "hidden people"--or, to put it more plainly, elves--in whom some large number of Icelanders, steeped long and thoroughly in their rich folkloric culture, sincerely believe. Before Alcoa could build its smelter it had to defer to a government expert to scour the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free but, as he put it, "we couldn't as a company be in a position of acknowledging the existence of hidden people." The other, more serious problem was the Icelandic male: he took more safety risks than aluminum workers in other nations did. "In manufacturing," says the spokesman, "you want people who follow the rules and fall in line. You don't want them to be heroes. You don't want them to try to fix something it's not their job to fix, because they might blow up the place." The Icelandic male had a propensity to try to fix something it wasn't his job to fix.

Back away from the Icelandic economy and you can't help but notice something really strange about it: the people have cultivated themselves to the point where they are unsuited for the work available to them. All these exquisitely schooled, sophisticated people, each and every one of whom feels special, are presented with two mainly horrible ways to earn a living: trawler fishing and aluminum smelting. There are, of course, a few jobs in Iceland that any refined, educated person might like to do. Certifying the nonexistence of elves, for instance. ("This will take at least six months--it can be very tricky.") But not nearly so many as the place needs, given its talent for turning cod into Ph.D.'s. At the dawn of the 21st century, Icelanders were still waiting for some task more suited to their filigreed minds to turn up inside their economy so they might do it.

Enter investment banking.