As I outlined last month, on Jan. 1, my friend Paige Parker and I set out on a 150,000-kilometer journey around the world. We're equipped with still and video cameras, tape recorders, and a portable computer to obtain a close view of the major political forces shaping the globe at the turn of the millennium. We'll arrive back on the Dec. 31, 2001, having covered as many countries and peoples as we can on six continents.

As you read this, Paige and I are in Iceland, the starting point on our three-year journey, careening around the island's perimeter on a coastline road some 1,400 kilometers long. Iceland (more green than white) lies in the North Atlantic Ocean east of Greenland (more white than green) and just touches the Arctic Circle. What one finds in the soft, buttery light of the far north, are snow-covered mountains, volcanic ash, deep valleys with sheep, clear streams, icy lakes, and of course fresh- and salt-water fjords. Volcanic in origin, Iceland's geography consists of lava tablelands with mountainous out-croppings.

My last trip around the world, in 1990-1992, lasted 22 months and covered 65,000 miles. Last time I set off from Ireland, but this time I'm beginning from Iceland, the western-most point of Europe. Because the tectonic plates of North America and Europe meet beneath Iceland, this island is in the only place in the world in which you can ride from North America to Europe. This year the Icelanders are preparing to celebrate the millennial anniversary of the voyages of Leif Eriksson as well as the millennial year of their embrace of Christianity.

My first world trip was on a motorcycle, a BMW, and my chief method of communicating with the folks back home was a daily log and postcards that served as a valuable aide-memoir when I sat down to write Investment Biker, my book about the experience.

This time, I'm driving a four-wheel-drive convertible sports car, powered by a diesel engine, with a world-class cell phone, short-wave radio, and a portable computer to keep up through e-mail and my web-site.

Early on I decided the most enjoyable way to make this trip would be in a four-wheel-drive sports car. Ignorant as I am about everything mechanical, I didn't know a four-wheel-drive sports car didn't exist. Yet I've made most of my long trips on motorcycles, which give an unparalleled sense of freedom and adventure, and I certainly didn't want to make this trip in a sports-utility vehicle's enclosed cabin, which my black-leather biker friends rightly call "a cage."

Our car is a modified SLK Mercedes, designed by Prisma Design of Irvine, Calif. That is, since no factory makes a four-wheel-drive sports car, we started with the chassis and motor of a Mercedes G-Wagon and installed on it the outer shell of the Mercedes SLK, a retractable hard-top convertible. With the extra fuel tank we installed, our bright-yellow beauty should have a range of 600 to 650 miles. Because the convertible's hard top fills the trunk space when it's retracted, we're also hauling a small trailer filled with gas cans, water, sleeping bags, extra tires, tents, tools, and luggage.

Such a rig has its advantages and disadvantages. First, an open-top car is fun to drive. The wind rushing through our hair gives us the feel of the open road and adventure. Our diesel engine has a number of advantages. Diesel engines last longer, have fewer moving parts, use less fuel per mile, and are more reliable than gasoline engines. Not only are there more diesel mechanics in remote parts of the world, but almost all the trains, buses, and boats in such areas use diesel engines, meaning that parts and fuel are more available. A factory-built sports car wouldn't have the high underbody clearance to make it across the awful ruts, mud-holes, and dirt roads we'll encounter in three-quarters of the world, places like Siberia, China, Africa, and the Sahara, and of course the four-wheel drive will get us through the deep mud of Siberia and the steep snow drifts of the South American mountains.

However, in many parts of the world the inhabitants won't have ever seen a sports car, which is likely to excite curiosity and envy and possibly danger. A few weeks ago we had the rig in Las Vegas, the denizens of which have seen everything, yet everywhere we drove we attracted crowds. We'll have to be careful at night where and how we park to make sure the car is there in the morning.

As for communication, we're outfitted with a world telephone, made by Motorola, which allows us to communicate via satellite from any location on earth -- Afghanistan to Zambia and parts between -- to any other phone. At night we can pull the phone from the car and take it into our hotel. When we can find them, we'll stay in hotels, but of course we'll have to do some camping. When they turn up, we'll need and relish the luxury of Hyatts, as the Hyatt folks have graciously invited us to stay with them on the house.

Some manufacturers have been equally generous. Bridgestone has promised to supply us with tires, as you can't go around the world and expect to find in every village a new tire to match your others. Besides, we'll require different tires for the Sahara than for driving across the snow-driven South American mountains. Eibach has supplied us with their extraordinary springs, an essential set of parts for the roads -- or the lack of roads -- where we'll be going.

When we leave here, we plan to cross Europe, then Turkey and Iran, which has allowed us to come through. Interested readers can follow our progress here in Worth and on my web site, www.jimrogers.com, which will carry video, audio, still photo, and text reports.

We'll attempt to bring together historical, political, economic, sociological, demographic, financial, geographic, and cultural elements into an analysis of each area. We'll try to integrate all these dimensions, but obviously circumstances will dictate the slant. For example, politics, the military situation, and economics will dominate in a war zone, while geography will be more important in the desert. Through extensive interviews, we hope to capture the views of everyone from heads of state to shepherds.

We hope these reports will show the state of the world and its parts through the eyes of experienced and knowledgeable travelers at a unique time, the end of the second millennium. I suppose these accounts will combine adventure and suspense -- next week, will we be in a hospital, a jail, on the beach? -- with useful knowledge. We're hoping to appeal not just to current audiences, but also to audiences far into the future, perhaps those a millennium hence.

After Iran, we'll travel through China, Korea, and Japan. The rest of the trip will depend on the state of the world, as wars and roads will dictate our path. In the United States there are a hundred separate routes a traveler might take between New York and Los Angeles, but the rest of the world is not so fortunate: there are only three routes crossing Africa and two crossing Siberia, journeys we want to take.

While I haven,t spent much time in Iceland, I have learned it is about the size of Kentucky, with about 270,000 people, the population of, say, Corpus Christi, Texas, most of whom are bunched into the 7 percent of the island along the fertile southeast coast.

Reykjavik ('Smoky Bay'), Iceland's chief city, is darker yet warmer than New York in January, as it sits on the gulf stream, but its warmth belies its winter weather, which is stormy. It's dark here in January, as you might expect in a country on the Arctic Circle. Despite its grim name, its closeness to the Arctic Circle, its North Atlantic winter storms, and its high altitude, Iceland has a relatively mild and equitable climate. The mean annual temperature in Reykjavik is about 41º Fahrenheit, with a range of 31º F. in January to 52º F. in July.

Iceland has more land covered by glaciers than does all of continental Europe, 120 in total. Indeed, more than 13 percent of the island is covered by snowfields and glaciers. And despite its small size, it has more geysers than any country in the world, and is chock-a-block full of hot springs, sulfur beds, canyons, waterfalls, and swift rivers, all very pleasing to tourists.

Iceland's vast lava fields were created by its many volcanoes, which heaped up lava from beneath the North Atlantic to create the island, and during the last millennium eruptions have caused widespread devastation to the island's inhabitants. In 1783, when the only known eruption of Laki occurred, molten lava, volcanic ashes and gases, and torrential floods resulting from melting ice and snow led to the deaths of more than 9,000 people, ruined large tracts of arable land, and destroyed about 80 percent of the island's livestock. The atmospheric ash even caused darkness for months in Europe. As you might expect, most homes and industrial establishments in the Reykjavik area are heated by water piped from nearby hot springs, a product of the volcanic activity still lurking below Iceland's cool surface.

The flora and fauna here are of the Arctic European type. That is, grass and heather are abundant along the southern coast and afford pasture for the abundant sheep and other livestock. In prehistoric times Iceland probably was covered by vast forests, but trees today, such as birch and spruce, are sparse. For amateur fishermen, salmon and trout inhabit Iceland's wonderful freshwater rivers and lakes. Bilberries and crowberries are the only fruit that grow on the island. Reindeer were introduced in 1770; the rodents here came as stowaways on ships. No reptiles or frogs live here, but about 100 varieties of birds can be found. Many of these are aquatic, such various ducks and the whistling swan. The eider duck is valued for its down. Whales and seals live along the coast, as do cod, haddock, halibut, and herring.

In Reykjavik, a joyous, brilliant fireworks exhibition 'spontaneously' erupts each year on New Year's Eve.

Other things to do? A tourist can take a boat to see the whale Willy, of "Free Willy" movie fame. Willy is in a large submerged cage off the Icelandic coast acclimating himself to the chilly rigors of the North Atlantic before he's set free to swim off into the wild blue Arctic.

Despite all the water, the island has no navigable rivers, and it has no railroads. As for natural hazards, it has more earthquakes and volcanic activity than any place in the world.

Along with its ravishing natural beauty and tiny size, the most distinguishing characteristic of Iceland is its homogeneous population. The descendants of Norse Vikings and Celtic priests who settled here more than 1,000 years ago, the people have had a millennium to get to know one another well. The Vikings' hearty capacity for brawls, melancholy, heroic deeds, hard drink, and epic poetry gave the world the Icelandic Sagas, a lusty oral tradition to match Beowulf and Homer's best work. As you might suppose in such a homogeneous population, there's only one religion, evangelical Lutheranism. Likewise, the crime rate is low, as how many commit a crime against their own family?

Legend has it that Hrafna Floki named the country 'Island,' Norwegian for 'Iceland,' in an attempt to discourage other Norse settlers from joining him here, a characteristic that seems to have endured in his descendants as a national trait. ('Greenland,' a land far more inhospitable than Iceland, was the linguistic perpetration of the opposite scam.) Like many isolated countries, such as Switzerland and Japan, Icelanders are indeed fairly insular.

In the 13^th century and again in the 18^th century, the island&'s population shrank to 50,000, intensifying Icelanders' sense of family. Thus the gene pool is not only small, but every Icelander is related to every other Icelander, and their characteristic Nordic looks proclaim it. The odd redhead here is a throwback to the early and relatively few Celtic priests who settled here, many of whom became slaves to the Vikings, and even after all these centuries redheads are a touch déclassé.

In the Scandinavian way, everyone here is well-educated -- literacy is 100 -- and most people speak not only Icelandic, which means they can get along in Norwegian, but also Danish and English. Indeed, Icelandic is much like Old Norse in the way Chaucerian English is like modern English. However, the Icelanders are dedicated to keeping life as it is.

Like other island cultures, such as Japan and England, Iceland keeps itself a closed society. As sparsely populated as the island is, as much as I think they could use another million people or so, Icelanders make it difficult for newcomers to settle. Even native entrepreneurs are not welcomed here, unless they exploit new industries, such as creating software. Certainly they aren't allowed to rock the boat of traditional fishing and energy production by expanding whatever share of the pie they happen to acquire.

By way of exploring, Paige and I visited Thingvellir, the site of the original parliament, located in the odd two-kilometer-wide riff that actually marks the split between the North American tectonic plate -- deep below the valley -- from the European tectonic plate. Over past millennia these two plates have been pushed apart as magma and lava pressed upward from the earth's core, creating this volcanic riff, marked by a striking cliff, some 80 kilometers east of Reykjavik. Today this valley seems safe enough, as even the president's summer home is there, but we couldn't help but wonder what will happen as the two tectonic plates continue to be pushed apart. Will Iceland split into two islands before the fourth millennium? Will there be massive tectonic disruptions? Earthquakes?

While the United States likes to boast that it's the world's oldest democracy, Icelanders drew up a constitution in 930 A. D. and provided for the Althing, or general assembly, which despite periodic interruptions over the last millennium, still meets. Legend has it that Columbus stopped here on one of his journeys and learned of Leif Eriksson's explorations of the North American continent. In the 13^th century, Iceland came under Norwegian rule, then passed to the Danish in the 15^th century. In the 19^th century the Icelanders regained their own constitution. Early in this century, Denmark recognized Iceland as a separate state with unlimited sovereignty.

The 18^th century marked the most tragic age in Iceland's history and bound its people even more closely together. In 1703, when the first complete census was taken, the population was approximately 50,000, of whom about 20 percent were beggars and dependents. From 1707 to 1709, the population shrank to 35,000 because of a devastating smallpox epidemic. Twice again the population declined below 40,000, during the years 1752-57 and 1783-85, owing to a series of famines and natural disasters.

As for modern history, immediately after the Germans occupied Denmark in 1940, the British occupied Iceland. In 1942 the United States took over the burden of occupation. As Iceland refused to give up its stance of neutrality during World War II, it forfeited charter membership in the United Nations. However, it cooperated with the Allies throughout the War and joined NATO in 1949. Since the War, its population has doubled.

Iceland's Scandinavian-style economy is basically capitalistic, yet with an extensive welfare system, low unemployment, and an almost too remarkably even distribution of income, as if in this closed society no cousin is allowed to make too much money, to get too far ahead of any other cousin. It has a good medical system. The educational system is good, too, producing 100 percent literacy; oddly enough, however, the schools insist their students learn Danish. In a world in which Chinese, English, and Spanish dominate trade, it seems a strange requirement.

The Icelandic economy depends on its fishing industry, which provides 75 percent of the country's export earnings and most of its hard currency yet employs only 12 percent of the work force. A thorn in the side of some Icelanders, 10 percent of its GDP comes from the single American military installation, Keflavik Air Force Base, about 50 kilometers from the capital.

In the absence of other natural resources -- except energy, provided in abundance from hydro and geothermal power -- Iceland's economy is vulnerable to declining fish stocks as the oceans are depleted, as well as to any drop in world prices for its few exports such as fish and fish products, aluminum, and ferrosilicon.

Fisheries management in Iceland is based on privately held, transferable quota rights, which means private companies are able to trade their rights to shares in the overall quota, which quota is determined by the government every year. However, by law quotas can't be sold to foreign companies, and there are severe restrictions on foreign ownership in the fishing industry.

The government, center-right, says it plans to continue to reduce the budget and its current-account deficits, limit foreign borrowing, contain inflation, revise agricultural and fishing policies, diversify the economy, and privatize state-owned industries. In a Scandinavian-style society, such counter-statist goals are easier said than accomplished. Once average citizens come to depend on the government for such basic items to their welfare, they're reluctant to give them up. The government has been opposed to European Union membership, primarily because of Icelanders' concern about losing control over their fishing resources. Where most nations are content to claim 12 miles of fishing rights off their shores, since 1975 the Icelanders have claimed 200, resulting in various 'cod wars' with European nations, chiefly Britain.

In 1994, Iceland's gross domestic product was $6.2 billion, about $23,199 per inhabitant. This sounds wonderful until you realize that Iceland's debt is woefully high. Iceland has borrowed heavily to maintain its citizens' lush lifestyle, and it's important to remember that when a person, company, or country borrows heavily, either to finance its lifestyle or its economy, its plans must work out perfectly so it can meet debt payments or it falls victim to massive trouble. It seems a shame that Iceland is such a closed society, as it could profitably use lots of immigration and the energy and extra hands immigration brings. All too many young Icelanders migrate abroad, even though many return later in life.

As might befit a close-knit family with many mouths, Iceland has regulations in place to give every Icelander something and no citizen a lion's share. However, heavy regulations are a prime way entrepreneurs around the world are muzzled and discouraged, and it's a major reason young Icelanders leave to seek their fortunes elsewhere.

Thus while Iceland seems prosperous, because it doesn't make much room for entrepreneurs who are essential for any society's growth and general prosperity, it's dooming itself to mediocrity at best and disaster at worst.

Take fishing, its chief industry. To fish, a local businessman needs a license and a government quota. No eager beavers are allowed and foreign capital or innovations seeking to expand quotas certainly aren't welcomed.

The same applies to Iceland's cheap energy. Its chief competitive advantage over other nations is its bountiful hydro and geothermal power generated by volcanic activity that is barely restrained by the island's surface. The Icelanders admirably exploit this cheap energy by importing bauxalt and exporting aluminum, the production of which requires vast quantities of the island's cheap electricity. Should world-wide oil prices rise, which they will sooner or later, this competitive advantage would serve Iceland well, provided it has put in place the infrastructure to take advantage. However, pressures from environmental extremists keep Icelandic entrepreneurs from further exploiting this competitive edge.

Carrying this further, the government even forbids foreigners from investing in power stations, outlawing what could bring the island true prosperity. I have visions of huge undersea cables carrying electricity to Europe as a way to generate precious foreign exchange, or an expansion of energy-intensive facilities and power plants. That will take massive investment, I'm told, more than Iceland can afford. Yes, I answer, that's why Iceland needs foreign capital. Just as America's infrastructure grew through huge foreign investment in the 19th century without 'enslaving' us to foreigners, so could Iceland grow and develop with an open investment policy.

With its current massive debt and slight economic infrastructure, Iceland has left itself precious little breathing room, and it discourages bringing in more people or capital to make the island more prosperous or to allow its own people to be more aggressively entrepreneurial. That's how they want to live, and it's fine, but at some point Iceland will have to reckon with the consequences.

Not that anyone has asked me to, but if I were running Iceland I'd worry about the day of reckoning. As an example, the American air base at Keflavik contributes 10 percent to Iceland's GDP. Should the United States pull out -- and some Icelanders actually lobby for our leaving -- the country' economy would likely suffer. As another example, fishing and the exports it generates are hugely important to Iceland. If the cod give out in the North Atlantic, if interest rates on the borrowed foreign money become much higher, if anything major goes awry in the Icelandic economy, the country will be under water economically. Now it's relatively easy to attract foreign capital for investments in economic infrastructure, but once their economy is under water it will be highly difficult. The day will come when energy prices skyrocket, and the Icelanders could be sitting pretty if they will only figure out a way of cashing in on their huge competitive advantage.

As for investment opportunities, Iceland has only a small stock market, on which trade 32 stocks, 14 open-end mutual funds, and 258 bonds, bills, and notes.

Foreign direct investments in Iceland are regulated by a 1991 act, which severely restricts outside investment in the country's main strengths. Only resident Icelandic citizens or domestically registered companies wholly owned by resident Icelandic citizens may fish within the Icelandic fishing limit or operate primary fish processing, although indirect investing in these companies is allowed. Non-residents may own up to 25 percent of the shares of a domestically registered company which holds shares in an Icelandic fisheries company or up to a third if the investing company holds less than 5 percent of the fisheries company. Only Icelandic state, local authorities, resident Icelandic citizens, or domestically registered companies wholly owned by resident Icelandic citizens may acquire the right to harness hydro and geothermal energy. The same conditions apply with respect to power production and distribution companies. Investment by non-residents in Icelandic commercial aviation may not at any time exceed 49 percent.

Despite my misgivings, I have a few investments here. The most interesting is de Code Genetics, a company founded by geneticists and under contract to Hoffman-LaRoche. Because the Icelandic gene pool is so homogeneous, with many families able to trace their ancestors over hundreds of years, de Code has assembled a database containing all Icelanders as well as many of their forebears, which should prove invaluable in the study of the genetic importance in cancer, drug, and heart research.

I also own shares in Icelandic Air and Eimskip, Iceland's largest transportation company. Several software companies are developing here, as software entrepreneurship hasn't been regulated away. I own shares in OZ Interactive, a software company with close ties to Intel.

Icelandic tourism is another investment possibility. Regulations don't limit tourism, which naturally promotes visits to the geysers, the glaciers, the Arctic Circle, and the famous hot baths of the Blue Lagoon.

Iceland is a country with great competitive advantages: education, abundant fishing, and its cheap sources of power, with which it is careless, making it into a far more fragile paradise than its rugged landscape makes it appear. If its great competitive disadvantage, its large national debt, ever comes crashing down on the Icelanders, heads, it will be too late then for Icelanders to exploit their national advantages.