Iceland 2008: What happens when a country goes bankrupt

Iceland has always enchanted me. Fishing, volcanos, glaciers, all those excellent sagas of bloodthirsty Vikings, northern lights... it's quite a place.

Iceland decided to turn itself into an international banking powerhouse. They got overleveraged, ran out of money. Here's what happened:

• Iceland turned into a 3rd World nation yesterday. They closed their stock exchange. I hear the Atlantic Salmon fishing there is world class. Maybe I will be able to do that one day.


• From a Bloomberg article Iceland is running out of groceries:
  

  Magnusson said last week that one of Iceland's largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer's electronic payment didn't go through. Iceland will begin to see shortages of ``regular goods'' by the end of the week if nothing changes, he said.

  
  
  Iceland is trying to prevent capital flight:
  

  Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.

  
  
  This is grotesque. People aren't allowed to leave without state permission.