A bitter generation


Egill Helgason of Silfur Egils gets a vast amount of letters that he publishes at his blog. Excerpts from his one explains why those middle-aged are not optimistic after fighting the battle of life in Iceland. It is a long letter and a bit rambling but keep in mind when you get to the end that prime minister Geir Haarde is 58 years old this year and according to information recently published owns his home outright. 

I am really glad people are discussing price-indexation. It is a touchy and personal subject but I think many of us are in the same position and see the injustice between the generations that have to live with price-indexed loans and the ones that didn’t have to pay theirs back.

I feel the bitternes grow and the exhaustedness come over me with growing debts yet again. If this discrimination is systematic then I want it to be examined by taking a look at generations born since 1944.

My thoughts are not based on exact numbers but feelings and opinion of the lifestyle of people of different ages.

It is often said that we need to save the indebted young people in Iceland, which is correct but does the system realise that many middle-aged still find themselves like they have a newly purchased home, and cannot imagine ever seeing any equity during their lifetime.

Some examples about price-indexation’s discrimination. Those who are around the age of fifty have gotten student loans, home loans, loans from pension funds etc. price indexed but those older didn’t, only because they were around a little bit earlier. People around fifty have gone through every imaginable economic turmoil, which can be described in the following way.

Around 1982, inflation was excessive but wages were price-indexed. I was 25 then and had not yet realised what it means to owe someone money with interest plus price-indexation. So I took two years to do a master’s degree and got a student loan for 2 years.

Then price indexation of wages was cut, but not of loans. Those in the workplace complained but those of us in school did not realize the effects. The debts grew considerably faster than the wages, 2 million ISK in 1987 became 10 million in 1989 and just grew from then although repayments had begun. Payments were tied to wages and price indexed, so that when our wages finally became decent much later or in the last three years to be exact, the annual payments of my husband and I became 500.000 kronas. Being educated people, we obviously tried to go after demanding and well-paid jobs and worked a lot. It was not only for our ambition but also so that we could pay our loans and perhaps one day live comparably to our elder siblings and parents.

Around 1987-1991 the system suddenly did not grant familiy allowance, no interest relief for homeowners and tax on people with high wages, where the yardstick was not the pay per hour but gross income without considerating how much we worked. We got no warning, this happened after the children were born and we had taken our home loan.

Some people got out of this by divorcing on paper. I stayed married as I did not believe this sort of injustice could last, but nothing changed. Some people got benefits from the system and worked illegally and the system seemed to help them better out than those who were honest.

Then home-prices dropped and around 1995, market price was even to the loans. We could barely afford payments and owned perhaps 10% in an apartment and a crappy car. Unemployment around 1988-1990 had not helped our cause as we had to work in the fish-industry and building industry after finishing our masters degree before jobs that were appropriate for our education became available. .

We sold our apartment, moved outside the city and rented an apartment and in order to get some return on our money in 1999 we bought some shares and stocks which we lost in 2001 like so many others.

So we started again in 2004-2005 with a mountain of debt hanging over us we managed to buy a home with a 100% loan (half in foreign currencies), with collateral from aunts and parents in their eighties. And now when we have never missed a payment in five years on an apartment we got for a very good price and paid down debts by 500.000 extra annually we have now lost part of the pension we were advised to put into the banks.

I hear from friends around the age of 55 that of course we shold not disband the price-indexation. It matters to them because their loans were not indexed but their pension is.

Those people own their homes outright, own two cars, travel abroad 2-4 times a year, got child allowance because they divorced on paper but remarried when the five kids were all in school.

Now those lucky people born in the right time can cut down on work, while I foresee having to look for high paying jobs and work all day until I drop dead. Are those saved by the system going to help us rebuild the society or are they going to enjoy the fact that inheritance taxes and property taxes have been as good as abolished while I am supposed to pay the debts the banks have transferred to yours truly and the young people in the country. Ahead are extra shifts, more work, independent work, work during summer vacation, work in the evening, teaching etc. just to manage the repayments.

My family is hardworking, honest, pays their dental bills and recreational sports, does not smoke, gets itself educated, is thrifty (once every five years out for dinner with the kids), has been abroad once together since 1985, has never had more than one car and always a used one, lived in 125 sqm apartment and now the children are grown up but cannot leave to start their own life because it is impossibly expensive, yet they have worked more or less since the age of fourteen.

We are the ones who are stuck and our children will see this future ahed. Can it possibly be that those in governement are possibly just that little bit older than us or just that bit younger they haven’t realised this. My age group is truly good enough to receive good wages internationally but has chosen to participate in building a just and fair Icelandic society.

If this is just me being envious, then I shall drop this argument. 


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