Right now Iceland is in the grip of the recession that's hit much of the world, and Iceland has been hit harder than most. The Icelandic government recently had to nationalize Glitnir, the nation's third largest bank, in an attempt to stabilize the economy. Those issues are being keenly felt by the local populace, which is being hit hard. But the news, perversely, is good for tourists from countries with stronger economies than Iceland's--including the United States.

Last year at this time, my American dollar was worth about 55 Icelandic kronur. This year, my dollar was worth more than twice that, though inflation hadn't driven up prices that much. Last year, everything from buying a restaurant meal to getting a soda at a convenience store was absurdly expensive; this year, it's more reasonable, though still a tad pricey--not surprising, for an island nation that must import almost everything that it uses.

Reykjavík proper is home to more than 118,000 people, but many more live in its immediate vicinity--more than 200,000, all told, the majority of the entire nation's population, in fact, live within 50 km of the city. It's located on a peninsula that extends into Faxaflól Bay, on Iceland's southwest coast. Iceland, and Reykjavík, in particular, isn't as cold as one might expect, thanks to the Gulf Stream, which winds its way up from warmer Atlantic climes to the south.

Reykjavík is a very cosmopolitan city with a strong European flavor, and lots of great restaurants and shops. I spent a lot of time last week on Laugevegur, one of the main drags of Reykjavík, where many locals go to see and be seen in the evening. It's also home to (and a short stumble from) many of Reykjavík's nightclubs.

Even before the recession hit, buying alcohol in restaurants and clubs was expensive in Iceland. A draft beer, for example, routinely costs more than 800 ISK--about US$3.50 today, but $7 when I visited last year; mixed drinks and hard liquor can be half again to twice that, depending on where they're being served. So many Icelanders prefer to stay home on Fridays and Saturdays and drink there, up until 11 p.m. or midnight, when they finally begin to emerge for a pub crawl downtown. And there they'll stay, often until the bars and clubs close, at 6 a.m. The rest of the week, bars close at 1 a.m.