The financial collapse of Iceland

The Financial Times has a quite amazing story about Iceland, amazing in that the financial wreckage created by the collapse of their banking system will have repercussions that will last for years.
How bad is it? This bad.

“The huge measures introduced by the US authorities to rescue their banking system represent just under 5 per cent of the US GDP. The total economic debt of the Icelandic banks, however, is many times the GDP of Iceland” — Iceland Prime Minister

The UK invoked an anti-terrorist act to freeze the £8bn in assets of Icelandic banks there. This prompted Icelanders to start websites telling Gordon Brown that they are not terrorists. (see image.)

Their currency is not accepted anywhere except Iceland now. They appear to have a strong and cohesive culture, but it’s difficult to see how their society will not fracture, something which will be made worse by an exodus of escaping citizens.