(CNN) - Greece may be known for its tragedies and Iceland famous for its sagas but recent history tells us these stories may turn out to have very different endings–from an economic point of view at least.
In October 2008, Iceland became one of the earliest victims of a credit crunch whose ugly effects many Europeans are still living with today.
The North Atlantic island was the first entire country to almost go under, sunk by the weight of a banking sector whose debts amounted to more than six times Iceland's entire economy.
However, three years on, Iceland is poised to re-emerge from economic purgatory.
The Icelandic people are known for their independent nature, isolated at the northern tip of Europe, but their second “no” vote on bailing out investors from Britain and The Netherlands will keep them entangled in European courts for a long while.
There are only 320,000 citizens of Iceland, but they continue to punch well above their weight in their desire to reject a bailout of nearly $6 billion “foreigners” who invested in the on-line division Icesave of Landsbanki.
REYKJAVIK, Iceland – The credit crisis consuming the island nation of Iceland and its small population has come just as the tourist season slows down heading into winter.But there are real worries that visitors might skip Iceland altogether if their own country dips into recession.
The one bright spot amid this financial mess is that the Icelandic krona has fallen more than 50 percent against the U.S. dollar in the past 12 months.
The manager of the hotel where I am staying says the country can no longer be seen as a high-cost destination.
They already plan to target Christmas tourists from New York and Boston. It's about five hours each way and Iceland hopes Americans will come and try the outdoor spas and see the glaciers and geysers and whales, and do a little shopping.
I just ran into a group of Northern Irish students on a spending binge. They could not believe how far their pound was stretching.
LONDON, England - If, like me, you are one of the 350,000 British or Dutch nationals who have savings accounts with Internet bank Icesave, you're probably pretty angry right now.
Iceland's second-largest bank, Landsbanki, the parent company of Icesave, says that it has gone into receivership and that the Icelandic Financial Services Authority has appointed a receivership committee. The Icelandic government stepped in to take control of the bank on Tuesday to keep it afloat, just days after Icesave was posting messages on its Web site reassuring savers that the bank was solvent and immune to the worst effects of the credit crisis because it didn't have exposure to the toxic U.S. sub-prime mortgage market.
Today, Icesave's customers were greeted by a message informing them that the bank was unable to process deposits or withdrawal requests. If the company is liquidated thousands of customers like me, with deposits under £50,000, are likely to face a long and stressful wait to retrieve their money.
Lured by attractive Icelandic interest rates I had just under £10,000 of savings deposited with Icesave. We'd worked hard to put it by and intended to use the money for non- budgeted items like home maintenance and improvements, family holidays and car repairs. It's money that I don't need in the short term, unlike other Icesave customers who had pension funds and home purchase deposits invested there.
For many of the bank's customers today will have been their first taste of the effects of the global financial crisis. Let's hope we won't have to experience many more.
If you've been affected by the collapse of Icesave, I can't help you get your money back but I can offer you the opportunity to share your experience with us and vent your frustration. Were we foolish to be lured by the kind of interest rates that simply aren't on offer in the UK or the Netherlands? Who do you think is to blame? Hit the comment button below and tell me your story. Getting it out there just might help you feel a little less sore.
REYKJAVIK, Iceland - I arrived in Iceland a few hours ago to find a country in shock. Two of its big banks are in state control, its currency has collapsed, and it is asking Russia for more then $5 billion to prop up the island's financial sector. Its prime minister was the first leader of any country to confess that the global credit crisis could bankrupt the country.
As happens in any country when you parachute in, the driver who took me to my hotel was all too happy to fill me in on where it all went wrong.
Iceland went on a lending binge - sound familiar? Cheap credit, rising house prices and bank shares soaring. Iceland's population of less than 300,000 never had it so good. Until now.
Why should the rest of the world care?
First, Iceland could be a sign of things to come. When the first bank to collapse, Glitnir, was taken over by the government, banks outside Iceland cut back on loaning to the country's other banks. The credit crunch became a credit freeze.
The prime minister admitted on national television Monday night that the banks had grown to about 10 times the country's GNP. There is no way the country can bail them out. What if that happens elsewhere? Governments will surely see how Iceland's economy reacts.
Second, Iceland's super-wealthy families went on a buying spree. From Debenhams to House of Fraser to Hamleys to the West Ham Football Club, the wealth of this once fish-exporting nation was invested in Britain. Thousands of employees and hundreds of shops across Britain are tied into Iceland's economy. Bank lending or strong bank shares were behind it all.
Third, Iceland's banks had higher than normal interest rates, which attracted thousands in Britain to stick their money in places such as Icesave, an Internet bank. As of Monday night, their accounts were frozen.
We will spend the next few days talking to people here. At first blush, the blame is being put on those who spent the past few years building up portfolios on the back of rising property prices, driving around in super luxury cars (something apparently unheard of even five years ago in this very Nordic nation which prides itself on egalitarian principles) and taking money off shore.
With the currency so weak, and with so many mortgages taken out in foreign currencies, the fall in house prices has really hit hard.
Some people are at least hoping that the weak kronur will bring in more tourists. Maybe consumers from the Nordic and Scandinavian countries that used to benefit from Icelandic shoppers with a strong currency will instead come this way for and help out this nation.
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