When careless talk can cost a country

Financial experts must choose their words carefully when communicating their crisis to the media


A financial crisis is not something to be taken light-heartedly. It became quite clear early this year that something was not going all that well in the Icelandic economy (or the world economy, for that matter). It all started with the steady decline of the stock market that went hand in hand with sky-high Credit Default Swaps spreads for the Icelandic banks. Those spreads clearly indicated that most people in the international financial markets thought that Icelandic banks were risky and prone to default. However, things were not looking all that bad on all fronts. There were few signs that our banks were being run differently than other banks in the western hemisphere, or that they had been taking more risks in their lending. Of course, as an economist working in academia, this whole affair has to be something like a tropical storm for a meteorologist to study, or a geologist experiencing a volcanic eruption: in a word, interesting. At times like these, journalists from various newspapers, radio and TV stations all rush in to witness the financial meltdown. The government hires PR people but the messages they convey are probably not the ones that the media like to here. So naturally they look elsewhere for information. Somehow they get the idea that universities are excellent places to look for information and different viewpoints.

Gunnar Haraldson

Gunnar Haraldson is director of the Institute of Economic Studies at the University of Iceland. From 2002 until 2005, he held the position of an Economic Advisor at the Prime Minister’s Office, before becoming a Project Manager at the Icelandic International Development Agency. Among other degrees, he holds a PhD in Economics from the University of Toulouse.