The upside to Iceland's woes

A volcanic eruption seemed the last thing Iceland needed.

In 2008 a bank scandal pushed the country's economy to the brink of bankruptcy, causing the value of its currency to plummet and leaving Icelanders owing the United Kingdom and the Netherlands more than $5 billion. Then in April a volcanic eruption caused the biggest shutdown of air travel since World War II.

"You wanted cash, but we just gave you ash," became a popular logo on T-shirts, bumper stickers and Facebook pages.

There's been an upside to the country's economic and geologic turmoil: tourism.

Once among the most expensive places in the world for travelers, the country has become much more affordable since the devaluation of the country's currency, the krona. Lonely Planet guidebooks put Iceland at the top of its list of best destinations for 2010.

And now "volcano tourism" has skyrocketed.

"I think people will still want to see where it all happened," said Solveig Pétursdottir, marketing director for Reykjavik outfitter Arctic Adventures. "If you go to Paris, you go to the Eiffel Tower."

Despite an uncertain economic situation, many Icelanders are optimistic.

In anticipation of better times, Saedís Bauer Halldorsdottir and her husband, Peter Bauer, are opening a handcrafted jewelry store in a former fisherman's shack overlooking the old town's charming harbor.

"In the long run it will be perfect because there isn't a person in the world who doesn't know about us," said Halldorsdottir.

She said that even cash-strapped Icelanders are spending more of their leisure time in Iceland because they can't afford to travel outside the country.

"We're back to basics," Halldorsdottir said, "fishing and tourism, and that's what we're good at."