I don't have any theories about what happened to Iceland at this point. I don't know what happened.
So, when you watch a documentary that explains what happened there, you stop watching after 5 minutes because you dont like what its saying and assume it to be wrong despite not having a clue?
As for "too much regulation" and "government intervention" mantra's; please, dont confuse them. Government intervention as in bail outs or other market distorting actions are bad. But a free market needs regulation, regulation is not evil its a dire necessity. Its not regulation that caused this crisis, if anything its a lack of good (and enforced) regulation.