Iceland has been hit hard by the global financial turmoil, becoming the first country to see its economy collapse.

"No Western country has crashed in peacetime as quickly and as badly," said Jon Danielsson, finance professor at the London School of Economics. "This shows the degree of problems facing the global financial systems and how governments must do all they can to stabilize them," he told USA Today.

Iceland, a Nordic country of 304,367 people, experienced a booming stock market in the mid-1990s. Deregulation of its banks led to swift growth in the financial sector, construction and housing.

The country has developed one of the highest per-capita gross domestic products in the world: $40,000 last year compared to $45,800 in the United States. Before the economic crisis, Iceland's banks had assets nine times greater than the nation's economic output.

Iceland's economic collapse occurred very quickly. On Sept. 29, the government took over the Glitnir bank after the institution could not find loans to cover its debts. A week ago Monday, the Iceland Stock Exchange stopped trading in shares of six major financial institutions.

The following day, the government seized Landsbanki bank, guaranteeing Icelanders' deposits but not foreigners'. That was too bad for 300,000 British customers unable to touch any of their collective $6.91 billion from the bank's Internet subsidiary Icesave.

The krona, Iceland's currency, dropped. To pay its foreign debt and avoid bankruptcy, Iceland sought $5.4 billion from Russia. On Thursday, Oct. 9, the government took control of the nation's biggest bank, Kaupthing. Prime Minister Geir Haarde urged customers not to make huge withdrawals.

Ordinary people are feeling the pinch from the krona's collapse. Crowds have protested outside the country's central bank offices in the capital of Reykjavik. They have demanded the resignation of the bank's governor, David Oddson, a former prime minister who helped make Iceland what USA Today termed a "global financial player."

One of the problems is that foreign investors have a lot of money tied up in Iceland's banks. One investor is the authority that runs London's subways. The three largest banks owe a combined $62 billion in foreign currency debt.

Europeans are upset that Iceland, a NATO country, would shun help from Europe and the International Monetary Fund, and go to Russia for assistance. Russia would like to obtain licenses for oil and gas exploration and development that Iceland will be auctioning off next year.

Meanwhile Iceland, located between Northern Europe and Greenland in the North Atlantic, struggles to stabilize its economy. Analysts say all would have been well if the government had been large enough to bail out the banks. It wasn't.