>a handful of Icelandic banks, expanding aggressively, have ended up with liabilities more than eight times the national GDP. <

Extraordinary.

>Now the krona is plummeting, loans are ballooning<

Also extraordinary. Banks so "rich" would easily own the government, I guess, allowing them to invent and use a contract like that against the entire population. It's strange that they are not instantly nationalized (along with all utilities and other crucial industries.) Is the government that weak?