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A man walks by a branch of the Icelandic bank Kaupthing on in Rejkjavik, Iceland. Icelandic investors have been racking up debts, leaving the country with a bad rep in Europe. - 


Bill Radke: Many, many countries are suffering in this economic quake. Perhaps the biggest national casualty has been Iceland. Its three largest banks have gone bust. The whole economy is in peril. IMF officials have arrived on the island and should unveil a rescue package any day. Marketplace's Stephen Beard has been talking to members of Iceland's largest expatriate community in London.

Stephen Beard: Iceland's oldest hymn rings out in a small church in London, offering Icelandic emigres solace in the midst of one of their country's biggest ever disasters.

Siggi Arnarsson: We've had earthquakes. We've had eruptions. But this one, ya, it's the biggest, yes. Nothing compares to it.

Siggi Arnarsson, rector of the Icelandic Church in Britain, says his congregations have been packed with bewildered expats.

Arnarsson: People are afraid. Yes, some are angry and frustrated, sad.

Once the poorest people in Europe, they made themselves the richest. Icelanders now face penury again. Among the first casualties in London are hundreds of students -- like Kristin, whose money lies frozen and virtually worthless back home.

Kristin: I haven't been able to move my funds in Iceland to Britain, so I'm unable to pay my rent and I'm unable to pay my school fees.

Many of the emigres feel they've been reviled by the British press. Three hundred thousand Brits also have money frozen in Icelandic accounts.

Siggi Olafsdottir edits an Icelandic magazine in London:

Siggi Olafsdottir: Suddenly, Iceland has become one of the most hated countries in England, which is, you know, unbelievable really.

Her sister, Alda, says she's even taken the Icelandic sticker off her car. Alda blames a small band of Icelandic entrepreneurs for expanding rapidly abroad and racking up debts that are six times the size of the Icelandic economy.

Alda Olafsdottir: Because of money people, because of a very few money people and investments being made, it's affected a whole nation.

The emigres acknowledge that Iceland may now have to fall back on its oldest industry: fishing. But Alda says the Viking spirit will out, Iceland will not fall back into permanent poverty.

Alda Olafsdottir: We will fight this. We will get through this. It's gonna be tough, it's gonna take a while, but we will rise again.

In London, this is Stephen Beard for Marketplace.