For the first time, Iceland has finally broken the top ten of Moody’s “Misery Index”.
The Misery Index used to measure a country’s rates of unemployment and inflation, but has since been adjusted to measure instead future rates of unemployment and fiscal deficit. With those factors in play, 2010’s Misery Index will see Spain topping the list, followed by Latvia and Lithuania. Iceland has managed to hit seventh place, outranking the United States by a thin margin, but handily defeating Jamaica, Estonia and even Germany.
Moody’s also predicted a fairly action-packed 2010, with possible social unrest and creative re-management of national budgets on the horizon, and offered words of praise for Iceland’s pain-resistant people:
“In those countries whose debt has increased significantly – and especially those whose debt has become unaffordable – the need to rein in deficits will test social cohesiveness. The test will be starker as growth disappoints and interest rates rise. In several countries – including some highly advanced ones like Iceland … a great sacrifice is required from the respective populations. Cohesive and/or very enduring societies like the Baltic countries, Iceland or Ireland have accepted sacrifices (salary cuts, public spending cuts, etc.) that would have seemed unimaginable a few years ago and continue to seem hardly replicable in comparable societies. Indeed, such countries have an extremely high pain threshold.”
On a less exciting note, Moody’s notes that many AAA rated countries, such as the US and the UK, are beginning the process of realistically re-assessing their debts and how to manage them, noting that “large economies are hoping to durably influence long-term interest rates through skilful quantitative easing.”