Crisis, What Crisis? Icelanders Party On

The crisis has not hit us so much so far.

Icelanders are still going out to party at night in droves regardless -- or maybe because of -- the island's near financial collapse.

Helped by the Iceland Airwaves pop festival now taking place clubs across the capital, bars and restaurants along Reyjkavik's main street are doing a roaring trade.

"Actually when people get depressed they drink more," said Friesteinn Gislasson, manager of the Solon bar, one of the most popular on the main street.

"The crisis has not hit us so much so far."

Iceland has been a hip travel destination for young Europeans in recent years because of its off-beat nightlife and cultural scene and natural attractions, including thermal pools and volcanoes.

And although the most notable visitors in town are an International Monetary Fund delegation, Iceland hopes more tourists will come in search of bargains after the devaluation of their currency.

"It is going to be so crowded in downturn Reykjavik, similar to good, good summer days. You will see about 20,000 people in this small area. It is going to be a good party, just like normal," said Aegir Dagsson, manager of the Kaffibarinn.

His small, popular bar, central to the cult movie "101 Reykjavik", was packed on Thursday, with a mostly young crowd and many people waiting to get in.

Arnar Ludviksson works at the bar.

"I know 60 percent of the people that go to this bar, there will be about 200 people here tonight," he said.

NOT BLUBBERING IN THEIR BEER

In the early hours of the morning, large groups of people are out and about, despite the talk of financial woes.

The economic crisis erupted after Icelandic banks borrowed heavily abroad to fund expansion. When they hit liquidity problems due to the global financial crisis, the government quickly took over their domestic assets.

The indebted overseas operations are being sold off.

Many Icelandic people had gone on a debt-fuelled spending spree in recent years, causing some to call for a closer look at society and its values.

The Finance Ministry said that Icelanders' debt was equal to two times their annual disposable income. Some see these problems hitting home further down the road.

"I work partly for the Red Cross, we have a help line and we have increasing calls about loans, worries about loans," said student and part-time worker Hjordis Ddalberg, 29.

"People here need to re-evaluate their values and need to see that their self-image is not about what you possess, it is about who you are, you need to support your family," she said.

Icelanders say they are used to crisis and have also become toughened in the harsh climate of their north Atlantic island.