Iceland only has 304,000 inhabitants, but it’s “emerging as the biggest casualty of the global financial crisis,” said Kerry Capell in BusinessWeek online. Iceland nationalized the vast majority of its “once-proud banking sector” over the past week—on Thursday, it took over the country’s largest bank, Kaupthing. Unbelievably, a country that went from being one of Europe’s poorest nations to one of its richest, in one generation, is now on the verge of bankruptcy.

If Iceland fails, it won’t be the only nation feeling the pain, said The Guardian in an editorial. Iceland “was allowed to become one of Britain’s bigger overseas investors,” and British city councils and charities have more than $130 million in deposits in the failed Icelandic banks. However Britain reacts, “Iceland is a sign of the deep chill still to come.”

Everyone wants to blame someone else for this global mess, said John Gapper in the Financial Times, but “the fault lies closer to home.” Many Britons blame the U.S.; Americans blame their bankers. But the housing bubble was global, and “we home buyers and mortgage borrowers share the blame, whether we are American, British, or Icelandic.”