There are a lot of happy-clappy references by Keynesian economists to Iceland as a state that has handled its crash well, written debt off and avoided the kind of damage that Ireland and Greece have undergone.
Reading blogs from Iceland, it is clear that people there continue to go through agonies of debt and loss of income, unemployment and emigration.
This blog by a "free market" writer has a serious go at Krugman for painting Iceland in unrealistic colours.
Incomes are down, inflation up 30%, personal debt is a nightmare, unemployment and emigration continue and last year Iceland's GDP contracted faster than Ireland's.
The idea that there is a simple solution to the current crisis - print money and increase public spending - as put forward by Krugman and others - is clearly a delusion, and a dangerous one.
There aren't any simple and easy solutions at Keynesianism lulls people into a false sense that a quick fix is possible. We either continue to live in an economic disaster zone, under capitalism, or undertake the difficult task of building a completely new, non-profit based system.