People go bankrupt all the time. Companies like Lehman do, too. But countries? How many of us have ever heard that a COUNTRY announced ‘National Bankruptcy’.

Welcome to the new world!

ICELAND, this volcanic island near the Arctic Circle, is on the brink of becoming the first “National Bankruptcy” of the global financial meltdown.

Iceland, which appears just before India in the Country drop-down list, revealed on Thursday that the whole of Iceland has gone bankrupt following the collapse of the only Icelandic Bank, Landsbankinn. The government of Iceland shut down the stock market and seized control of its last major independent bank. The Country is struggling to get a grip on the collapse of its banking system and thousands of people have been left without jobs as the credit crunch hit Iceland.

ICELAND is all but officially bankrupt. The only option left with Iceland is to be bailed out by the International Monetary Fund. That’s a clear sign that the global financial crisis is entering a new and vastly more dangerous phase, where we are paying the price of the lack of a global financial regulator and global central bank.

Million dollar question: Which other countries are heading in the same direction as Iceland — BANKRUPTCY?

Most exposed are countries with large amounts of external debt relative to the size of their economy. By this measure, the U.S. is relatively well off, with external debt about equal to GDP. The euro zone has some weaknesses — Belgium, Ireland and the Netherlands have uncomfortably high debt levels. Italy is at about 100%, and Germany and France are in the 140-150% range.

The only savior will be the ‘political framework’ of a Country.

The road is slippery, which is looking like the Great Depression. The question is: Will these major players act collectively?