In recent weeks Geir Haarde, Iceland’s prime minister, has been engaged in an unusual sales mission. As his tiny country has been battered by the markets, Mr Haarde has flown to places such as New York, intent on convincing investors that Icelandic assets remain a good bet – notwithstanding recent falls in the krona or a sharp rise in the cost of insuring its banks’ bonds against default.

The movements in credit markets “are totally out of line and not justified”, Mr Haarde recently told the Financial Times, adding that the cost of protecting Iceland’s sovereign debt is also “totally unjustified”.