Friday, October 10, 2008
Iceland Says it's Gone Fishing for Bankruptcy Solution
Following the internatonal financial collapse, Iceland's entire banking system went bankrupt. In response, the Republic is reverting back its original strength- the fishing industry.During the past five years, Iceland's banking industry went from dynasty to disaster. Richard Portes, a professor of economics at London Business School, explained the internal collapse in Businessweek.
In just five years, the banks went from being almost entirely domestic lenders to becoming major international financial intermediaries.In 2000 two-thirds of their financing came from domestic sources and one-third from abroad. More recently-until the crisis hit-that ratio was reversed. But as wholesale funding markets seized up, Iceland’s banks started to collapse under a mountain of foreign debt.
As a result, many of those former banking professionals went job searching and were left with no other choice but to return to the high seas Their goal- pull in a valuable catch to keep the family funds from freezing.
In the North Mid-Atlantic, Iceland is an ideal location for commercial fishing, (which, according to the CIA, provides 70% of export earnings and employs 6% of the 300,000 citizens.)The Wall Street journal used Kristjan Davidsson as an example of one of the banking casualties.Davidsson spent 20 years in commercial fishing, but ambition led him to one of Iceland's privatized banks, where the money came much faster and easer than those cold days on the rough waters. His career appeared to be on the upward track, until the recent meltdown of stocks worldwide. The WSJ's article explained Davidsson's and Iceland's dilemma.
In 2001 Mr. Davidsson got bored. He joined one of Iceland's newly privatized banks. He got rich. Now, he says, it looks like it's back to fish. That may be true for this nation's fortunes as a whole. On Tuesday, Iceland's government seized Glitnir Bank hf, Mr. Davidsson's employer, caught up in the unfolding global financial crisis. On Wednesday, he came to the office for an emergency staff meeting. Glitnir's government-appointed receiver addressed the troops. The basic message I heard was, Go find another job.
What can we learn from Iceland's crisis response? When your world comes crashing down, sometimes your best and ONLY option is to tap back into your main strength that sustained you for the long haul. You also might have to leave your pride at the door, to find a less appealing but stable job that can keep you afloat until the storm calms.
By Matt O'Hern at 10:00 AM | Comments (1)