Things can get a lot worse yet. We might feel a bit foolish about putting our money in Icesave now with the benefit of hindsight, but we were all taken in by the promised compensation scheme. That scheme was designed for individual banks going under, not a major collapse of the whole system. The depositor scheme will find it difficult to cover our first 20,000 euro losses, and if there is a major collapse in the UK the remainder of our funds are at risk too.

What about Iceland? They face a complete collapse of their banking system, with no access to personal bank funds, no petrol at the pumps and no pay cheque at the end of the month. Lets hope UK is not next. We seem to be relying entirely on 'consumer confidence' to avoid this scenario in the UK at present. Bland statements such as the government should guarantee all deposits miss the point - the money is just not in the system - and never was1