Iceland is in sad shape:
In a globalized world, it is difficult to uphold international living standards when you are cut off from the rest of the globe. This is the situation facing Iceland following the collapse of the krona in 2008 and the resulting strict enforcement of capital controls.
Icelanders can no longer travel freely; we are restricted to roughly €2,000 ($2,570) for travel expenses on each trip. We are restricted in terms of how much support we can give relatives studying abroad and we are completely banned from investing internationally. With the exception of those over 40 who were born on the eastern side of the Iron Curtain, no European has ever experienced such a situation.
Wow. What a uniquely destructive policy.
Imagine a bank that decides to hold on to its capital by prohibiting withdrawals. Sure, it can hold on to the money it has, for a while, but it will never get another cent. If Iceland keeps this policy in place until its economy recovers, it will be permanent.
Glenn Reynolds adds:
Yes, and by a curious coincidence, the U.S. government has been making it steadily more difficult for Americans to move money offshore.
Lord help us.