Comment: I disagree

with your observation. It's in the IMF's and Britain's best interest to get Iceland's economic situation back up again. Yeah, your scenario is certainly possible, but I don't think it's as likely as you make it out to be.

Also, the people of Iceland have vested interest in their economic situation. Sure farmers probably don't understand to much about economic policy, but they do have educated citizenry who can step up to evaluate the situation and steer a clear course.

Your premise is based on the idea that nobody will trade with them because of lack of trust. I don't believe Iceland is going to ignore the debt to the IMF/Britain in the long run. They may not agree to the terms of repayment now, but after this new "revolution" is over I'd be willing to bet that when faced with an economic situation you proposed they'll agree to some kind of mutually beneficial repayment plan and things will continue on for Iceland.

Also, maybe I missed it but I didn't specifically see in the article where they refuse to pay back Britain and the IMF. They didn't agree to the two proposed terms..but not a complete dismissal of intent to repay. Again, maybe I missed it.