Who's Laughing Now? (BJ)


benedikt12bwSome people claim to be friends of Iceland but really seem to think that the country exists as some sort of museum for odd people who don’t want to mix with the rest of the world. And love being second class.

A self-proclaimed admirer of Iceland, Daniel Hannan, states in his blog: “Leftie bloggers keep returning, as a dog returneth to its vomit, to my admiration for Iceland. The fact that I praised Iceland's economic model is a source of constant delight to them. Yet they are starting to look badly behind the times. Iceland is growing faster than the eurozone and, because its government didn't make the mistake of assuming private bank liabilities, its recovery is not burdened by European-level debt-to-GDP ratios. Small wonder that, according to the most recent poll, 67 per cent of Icelanders oppose EU membership.”

“A dog returneth”. Elegant text indeed. As for the vomit, it adds class.

It is true that about two thirds of Icelanders say they would say no to EU membership. Some other facts should be borne in mind as well. Iceland has indeed devalued the krona, the smallest and weakest currency in the world. In 2007 300 thousand Icelandic kronas were a common monthly salary in Reykjavík. That was 3.450 euros at the time.

After the crash of 2008 many people got a 10% cut in salary. That has been reversed now and it would not be unreasonable to assume the salary would be 360 thousand Icelandic kronur. Twenty percent more than before the crash. How about that? And that is exactly … 2.130 euros. A 38 percent cut. Let’s see Daniel. Who’s behind the times?

In February 2007 the unemployment rate in Iceland was 1.4%. In February 2012 it was 7.3%. It is now four times what it was before the beginning of crises. Not bad. Really?

Still, Daniel might say, 7.3% unemployment is still not high by European standards. In the euro area it was 10.7%. But in Germany, a euro country if memory serves me right unemployment stands at 5.8%. In Finland, another euro country, the only Nordic country with the euro, unemployment was 7.6%. Denmark, which has pegged its currency to the euro, the unemployment was 7.9%. The UK, a non-euro country, unemployment was 8.3%.

Boring, boring.

In the years 2009 to 2011 more than 25 thousand people have emigrated. That’s 8% of the population. What a great economic model we must have.

The euro area inflation in March 2012 is estimated at 2.6%. That is very high by European standards. And in Iceland, that made no mistakes, the inflation in March 2012 was … 6.4%.

To be fair, Daniel Hannan was not talking about this. He did talk about “its recovery is not burdened by European-level debt-to-GDP ratios.” According to Eurostat the debt-to-GDP ratio in the Eurozone now stands at a miserable 87.4%. And in lucky Iceland it is as low as 93%.

That must be a mistake. Never trust a European statistics bureau. So I looked in Statistics Iceland. Surely they would not lie to me. And to my relief I found that the ratio is … 128.3%.

I am all confused.

How about GDP? The best economic indicator. The Eurozone has done terribly. Its GDP at the end of 2011 was only 98.5% of what it was before the crises.

And in Iceland we are now producing 92.2% of what we did before. Remind me, Daniel. Small is beautiful, isn’t it?

But as Mr. Hannan says: “Leftie bloggers keep returning .. “ so why should anyone listen to me?

Wait. I am a righty blogger. I belong to the Independence party, the only party that fights for free enterprise in Iceland. How can this be?

Daniel ends his elegant article by saying:

“As they say in Reykjavík: Hver hlær núna? Who's laughing now?”

Who indeed, Daniel?

Benedikt Jóhannesson  bj@icelandreview.com

Views expressed here are the author's own and do not necessarily reflect the opinions of Iceland Review.