Wednesday, June 10, 2009

Iceland: the financial collapse and Maine lobstermen

When Iceland's banking system failed last fall, Maine lobster prices collapsed, allegedly because the banks were the primary sources of credit to the Canadian processors who buy much of the catch that time of year. It makes for a fascinating parable about the unintended effects of globalization -- a bank fails in Reykjavik and a fisherman in Jonesport pays the price -- but is it true?

While in Iceland this winter I researched the issue, meeting with bankers from Glitnir and Landsbanki, banks that specialized in the global seafood industry and, later, interviewing Canadian processors and Maine harvesters. The results are laid out in a feature article in the new issue of National Fisherman magazine.

For those without a subscription: the consensus of sources is that the banking collapse did have an effect on lobster prices, but was by no means the only factor. The loss of the Icelandic banks will have a lasting effect on the seafood business, however, as they were among the only ones in the world unafraid of lending to the sector.

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