Iceland, like various other countries, has recently had to bail out a major bank. And like other countries, it looks like there may be more bank failures on the horizon. But where Iceland differs from other countries is that it’s tiny — fewer than 300,000 people live there — so that even though it’s a prosperous country, it simply doesn’t have very much money in the aggregate. And while its banks aren’t huge, they are quite large relative to the overall size of the Icelandic economy. Consequently, Iceland’s bank nationalization is leaving the country as a whole in need of a bailout.
Financial problems aside, Iceland’s one heck of a nice country. Absolutely beautiful and blessed with abundant reserves of puffins, hydropower, fish, and Bjork. Ultimately, taking over Iceland could be an excellent long-term move for a great power on the rise. Maybe China wants a new colony? After all, the US shut down the Keflavik Naval Air Station last year so it’s a wide open field.
UPDATE: More here from the Observer. Joking aside, the situation is quite serious: “Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.”