thoughts of the driverSteinn Eldjarn Sigurdarson on tech, tel, digital freedom and possibly his life..

This morning, radio journalist Sigurður G. Tómasson of Útvarp Saga, had as a guest an Icelandic economist and assistant professor of economy at Reykjavík University, Ólafur Ísleifsson. They discussed the commitments of the new ICESAVE agreement entered into by the Icelandic government. Pundits are expressing extreme concern over the agreement’s terms, which are said to include the right by either of the other parties (British and Dutch governments) to call in the loans before their due date for several reasons, such as the Icelandic government not honoring any payment of any loan of (approx.) 10 million pounds or more. Ólafur Ísleifsson said dishearteningly that he hadn’t read a single agreement or treaty between sovereign nations, where one party was addressed so one-sided-ly and defeated-ly, except for the treaty of Versailles.

For some very fuzzy/suspect reasons it was only “released” (leaked actually first) yesterday, while apparently signed by Steingrímur J. Sigfússon, finance minister of Iceland, on the 6th of June this year, myself and many other interested Icelanders have not yet had the time to read the agreement and come to any conclusions, but this comparison made by Ólafur this morning is very depressing, especially in the light of numerous legal experts of different nationalities who are claiming the legal grounds for the Icelandic government to assume these responsibilities are far from stable, and this matter is a matter for the courts to decide.

Naturally, I’m not a proponent of running to the courts every time you make a mistake, and indeed the Icelandic financial authorities may have made mistakes or failed to act. Why that happened, whether incompetence, corruption, or insufficiencies of the legal infrastructure has yet to be discovered, and as I pointed out in an earlier entry, the cost of those mistakes may just be too great for Iceland to pay.

Anyone interested in the actual agreements, here they are, courtesy of Economic Disaster Area.

I heard an interesting thing today, from an Icelandic economist, who recently joined the parliament. The Icelandic debts due to Icesave and other failed banks, valued at $5.8 billion, would be a huge burden on the Icelandic economy — paying these debts would require several years of reduced infrastructure (healthcare, education, social services), as well as selling some natural resources (at a time when it’s a buyers market, no less). He said, that if you take this debt as a proportion of the UK’s GDP, and and then multiply that percentage with the Icelandic GDP, the resulting number would be something rather trivial — around 300 million ISK (if I heard him correctly), which is equivalent to about 2.5 million dollars. Pocket change for a big country, right?

Now, because I thought this was pretty amazing, I went ahead and did some of my own calculations, and based on the GDP figures for Iceland and UK, as reported by Wolfram Alpha, and the (700.000.000.000 ISK = $5.8 billion) icesave-related debt, I decided to do some calculating.

As you can see here, I calculated that for an economy of the size of UK, to pay off the $5.8 billion, would be about the same load relative to the GDP, as if Iceland was paying off a debt of $39 million. Now, that’s obviously more than an order of magnitude away from what the Icelandic MP quoted (although him being an economist, and me being a programmer, I left the fields on my little calculator open for change!), it’s maybe not what I’d consider pocket change for the Icelandic government, as 0.21% of a country’s GDP shouldn’t be, but it’s a damn sight more possible than the possibility of paying more than 30% of a country’s GDP. To put the debt into more perspective, the entire Icelandic government budget for 2009 is $4.6 billion.

So, the idea of the exercise was pretty much to verify my MP’s claim, but on further examination, I figured out a couple of interesting things as well: what is currently happening to Iceland, if it were to happen to the UK, at the same scale the UK public would be asked to accept liabilities of around 864 billion dollars. Now, I’m not defending any bankers, but I’m pretty sure that UK public opinion on that kind of “bailout” would be rather divided, to say the least.

I Hope to get some reactions — especially in case I’ve made some drastic mistake somewhere (excuse: this was a quick hack at the end of the day, in order to procrastinate a bit!).

A small update in reference to this, a post I wrote earlier about upgrading my WordPress, and also a javascript method to safely check if a js library has already been loaded in a parent system of a widget or module.

I don’t know about you guys, but in my case, my earlier code would start acting up on my firebug sometimes, and it would force me to step through the exception which it was catching — very annoying, so I made another version which doesn’t use exceptions.

if (typeof(MooTools) !== 'undefined')
{
                // We have MooTools, is it recent?
                var numv = parseInt(MooTools.version.replace(/\./g, ''));
                if (numv < 122)
                {
                        // old version, what do we do?
                }
                else
                {
                        // new version woohoo! do nothing!
                }
}
else
{
        // Failure, we assume MooTools is not setup, and we include it
        // XXX: check here for prototype/jquery and abort in that case

        var head = document.getElementsByTagName("head")[0];
        var newscript = document.createElement('script');
        newscript.type = 'text/javascript';
        newscript.src = '/blocks/indicators/code/mootools-1.2.js';
        head.appendChild(newscript);
}

I do however think that my firebug and firefox combo on the windows machine are simply f*!@#$% …. but who cares… more code, another post, we happy! =)