If you think large American banks are in trouble, <a href="http://www.vanityfair.com/politics/features/2009/04/iceland200904?printable=true¤tPage=all" title="take a look at this story in Vanity Fair “>take a look at this story in Vanity Fair on the rapid rise and fall of Icelandic financial institutions. Iceland is basically bankrupt, Icelanders have been protesting outside the parliament building nearly every day and the country’s central bank chief was forced to resign. Here’s why:
When their three brand-new global-size banks collapsed, last October, Iceland’s 300,000 citizens found that they bore some kind of responsibility for $100 billion of banking losses—which works out to roughly $330,000 for every Icelandic man, woman, and child. On top of that they had tens of billions of dollars in personal losses from their own bizarre private foreign-currency speculations, and even more from the 85 percent collapse in the Icelandic stock market. The exact dollar amount of Iceland’s financial hole was essentially unknowable, as it depended on the value of the generally stable Icelandic krona, which had also crashed and was removed from the market by the Icelandic government. But it was a lot.
Iceland instantly became the only nation on earth that Americans could point to and say, “Well, at least we didn’t do that.”