Lesley Riddoch - Proud nation laid low by greed still full of independent spirit

At mention of the "guilty men", a volley of rotten eggs was released – freezing immediately to the windows of the world's oldest parliament in the crisp darkness of late afternoon.

It will be quite a task to remove the eggs, but easier than excising the memory of being lumped with al-Qaeda and the Taleban in Britain's list of suspect states after the collapse of Landsbanki-owned Icesave. A new Icelandic website features a girl with a placard saying: "I am not a terrorist, Mr Brown."

As one Icelander put it: "Vikings have long memories." But they also have enough intelligence to know anger with Britain is largely displaced fury at the half-dozen Icelandic bankers whose greed has brought this proud, independent island state to its knees. And, of course, there's displaced fury at themselves – the world's best educated people – who fell for the unbelievable proposition that a currency based on 314,000 people could support bankers borrowing ten times the country's GDP. Once cocky, the Icelanders are now contrite – but not crushed.

"Icelanders are conjurers," said the guide on a Northern Lights bus tour. "We have one fish. We take it to Britain. Suddenly it becomes five four-wheel drives. We don't know how it happened, but soon everyone wants a four-wheel drive. Do you know we now have more than the rest of Scandinavia put together? In the last two weeks, eight have self ignited. The car's value is now just a third of the loan. But maybe it's just a factory fault."

Gallows humour abounds. With interest rates at 20 per cent, Icelandic bank cards refused for online payments and young people facing unmanageable mortgage repayments in euros not krnur (the euro has doubled in value in a year), annoyance with Gordon Brown is fighting for space.

"On your right, we are passing Bauhaus – a German hardware store. It's a huge display space – 600 metres long. So, of course, an Icelandic firm had to build one bigger – over there. They both opened last month and were puzzled there were so few customers. Reykjavik already has ten hardware stores. How many home extensions do these money men think one guy can build?

"On your left, ten acres of unsold cars. And two acres of unsold used cars. No-one will buy them. And in this cold winter, they need owners. So, if you don't want to buy a woollen jumper, buy an Icelandic car. Why not?

"And finally, here is the domestic airport – ten private bankers' executive jets used to be parked there – now there's just one. The British built the airport here last century. Funny, the Allies were keen on Iceland once because of our strategic location. Has the country moved?"

Our guide explains with disgust that the guilty men used to fly to London for the evening just to see the latest movies: "That's how crazy this society has become."

Those bankers aren't crazy enough to show their faces in Iceland now. The departure of Baugur chief Jn sgeir Jhannesson's private jet was compared in the papers to the last helicopter out of Saigon – the end of an era.

Hallgrimur Helgason, the author of 101 Reykjavik, said: "Deep down inside, we idolised these titans, these money pop-stars. Awestruck, we watched their adventures. We never had clever businessmen, not for 1,000 years, not to mention men who won battles in other countries."

Landsbanki's owners, Bjrglfur Thor and his father (and their executive jet), have also disappeared – all eyes in Iceland are on their massive landmark project, the National Concert Hall, where work is expected to stop this week. But there's a saying in Iceland – "We started with two empty hands." And, despite everything, if rebirth is required, the Icelanders are psychologically ready for it.

The message at the weekend protest was not one of panic or defeat.

"Stondum Saman" was the chant uttered by elderly ladies in fur coats and young families with children in prams. "We'll stand together." There's laughter at news of food parcels appearing on wealthy Reykjavik doorsteps. And, in the same breath, shock at news pensioners can't retire because their life savings have been wiped out and their unemployed children are saddled with a lifetime's debt.

With a potential loss of 8 billion for half a million savers in northern Europe (most in Britain) there is scant sympathy from abroad. But the astonishing thing is how much the national crisis has re-awoken a sense of purpose, solidarity and national pride. Icelanders are determined to grapple with their grim reality, at least in part because of the very independence Gordon Brown considers to have been their downfall.

No-one I've spoken to in the past three days is thinking of leaving the sinking ship. There are hoots of derision at the suggestion Iceland might want to crawl back beneath the wing of Mother Denmark. Indeed, the desire to join the EU (and relinquish fishing rights and the 200-mile limit they defended for years) is just a means to an end. Icelanders believe the stability of the euro will let them continue as one independent nation among many others.

"Iceland's independence has not been lost. It's been saved. We were bought and sold without knowing it. Now we will get back to the values that built this country. No more greed." This articulate and determined speaker was typical of the protest crowd.

An IMF bail-out has just been agreed. It's possible the tough terms will help a modest, creative, free-spirited nation reinvent itself.

For Icelanders, independence is not their biggest mistake – it's their most precious possession. Messrs Brown and Salmond take note: they're hardly like Scots at all.