Tempted by the billions of dollars being made all over the world, Iceland transformed itself from a fishing economy into a financial economy. The entire country essentially became a hedge fund.

According to the article:

In 2003, Iceland’s three biggest banks had assets of only a few billion dollars, about 100 percent of its gross domestic product. Over the next three and a half years they grew to over $140 billion and were so much greater than Iceland’s G.D.P. that it made no sense to calculate the percentage of it they accounted for. It was, as one economist put it to me, “the most rapid expansion of a banking system in the history of mankind.”

When the markets reversed, Iceland's liabilities were too big, and the country collapsed. The legendary Michael Lewis explains the situation as only he can…

Read full article...