Iceland’s balance sheet is as bleak as its landscape. The country has enough hard currency to pay for nine months of imports. After that stretches a trail of creditors, including unsecured depositors such as London’s police force, 108 UK local councils and Britain’s largest cat charity. Some, but not all, will get their money back. That sounds harsh, yet is as it should be.

The biggest problem is the yawning gap between the value of its now nationalised banks’ foreign assets (essentially loans) and foreign liabilities (such as deposits) that fall due in less than a year. Economists Willem Buiter and Anne Sibert estimate that shortfall is about $10bn.