The story of an Icelandic man and his slow descent into madness. Along his journey he meets Dagný, the initial cause of his breakdown. Other people he meets in the asylum have been committed for various reasons, such as signing cheques for Adolf Hitler and, believing themselves to be writing songs for the Beatles and telepathically transmitting to the band.

Latibær is full of colourful characters who have a very negative attitude towards physical activity, healthy food and so on. They prefer to stuff themselves with sweets and watch television all day. As a result they are all weak and flabby. To change this, the Sports-Elf arrives, and through his positive attitude, driving magnetism and by not taking no for an answer, he persuades the inhabitants to change their destructive lifestyle.