Our guide, Helga, was enthusiastic and well-informed, our fellow travellers friendly and fun, the weather unusually warm and clear.

And yet all the time we were there, a question kept nagging away in the back of my head: How does this place work?

It has a population of 300K, two-thirds of whom live in Reykjavik. There are four institutions of further education. Like their Northern European colleagues, their quality of life seemed, well, high quality.

It couldn’t all be based on fish?

At the time, the best I could come up with was a two-part answer:

1) everyone has at least two jobs. They’re an industrious lot, the Icelanders. As an example, Helga was also a schoolteacher and she knitted hats and gloves, sold through craft shops.

2) cheap energy. Iceland straddles two tectonic plates, the American and the Eurasian. As they shift, so the country splits in the middle by a couple of centimeters each year, with the gap being filled with magma, Earth’s Polyfilla. Being so close to such an energy source also generates masses of hot water that’s easy to tap.

Water is to Iceland what oil is to the Gulf. Case in point: metal giant Alcan ships raw aluminium from Australia to Iceland for processing. That’s cheaper than doing it locally.

So with these two strands, I wove a not-entirely satisfactory answer to my question, put it away in the mental filing cabinet under “Life’s Imponderables” and moved on.

And today – like an amateur sleuth in a cheap murder mystery – I got the final clue that unlocked the puzzle.

Debt.

No one knows how much (if they do, they’re not telling), but enough to send the value of the krona down by 25% in a day and for shares in its banks to be suspended. Enough for Prime Minister Haarde to address the nation last night, warning that the country could be drawn into bankruptcy unless drastic measures are taken.

There’ll be plenty written about this by people better informed than me. But even I can see lessons in this:

* However good something looks, reserve judgement until you’ve checked under the covers;

* Follow your instincts – if it doesn’t feel right, it probably isn’t right;

* “Let not vaulting ambition o’erleap itself.” OK – that was Shakespeare, not me. But he usually makes the point better than most of us.