Iceland's story ended the same way as America's—and for the same reasons: the bankers in charge failed to understand what could go wrong and how much they could lose if the markets turned against them. After dramatically underpricing the risks of what they were doing, and then privatizing the gains, Iceland's biggest banks socialized the losses. Iceland's taxpayers and government had to nationalize the country's three biggest banks. And, to keep them operating after massive losses that threatened to bring down the country's entire financial system, Iceland's government secured a $2.1 billion loan from the International Monetary Fund and a $2.5 billion loan from a consortium of Nordic countries. According to CNN.com (November 20, 2008), "The IMF move marks the first time the international lender has had to funnel money to a Western European country in 25 years." Iceland's taxpayers will be paying this off for a long, long time.
What is striking, though, is how the same fraudulent accounting that brought down Iceland's banks also brought down one of the biggest banks of ice in Antarctica—in the same year. Just as the Icelandic economy was melting down, the Wilkins Ice Shelf in the western Antarctic Peninsula, a huge bank of ice that had been stable for most of the last century, began to crumble. According to Reuters (January 19, 2009), the Wilkins—"a flat-topped shelf of ice jutting 65 feet out of the sea off the Antarctic Peninsula"—once covered six thousand square miles, but in the last decade and a half had lost a third of its area under the pressure of global warming. "Researchers believe it was held in place by an ice bridge linking Charcot Island to the Antarctic mainland. But that 127-square-mile bridge lost two large chunks in 2008 and then shattered completely on April 5, 2009," Reuters added in a later report (April 30, 2009). This sent the Wilkins Ice Shelf collapsing into the sea. The report continued:
Icebergs the shape and size of shopping malls already dot the sea around the shelf as it disintegrates. Nine other shelves have receded or collapsed around the Antarctic peninsula in the past 50 years, often abruptly like the Larsen A in 1995 or the Larsen B in 2002. The trend is widely blamed on climate change caused by heat-trapping gases from burning fossil fuels. "This ice shelf and the nine other shelves that we have seen with a similar trajectory are a consequence of warming," said David Vaughan from the British Antarctic Survey. In total about 25,000 sq km of ice shelves have been lost, changing maps of Antarctica. Ocean sediments indicate that some shelves had been in place for at least 10,000 years . . . Temperatures on the Antarctic Peninsula have warmed by about 3 degrees Celsius (5.4 Fahrenheit) since 1950, the fastest rise in the southern hemisphere.