PrintJune 20, 2011
The Insolvency Index
In the early 1970's economist Arthur Okun developed the Misery Index. This was intended to measure or put in some context the real-world suffering of the individual during an economic downturn. It was also simple in its nature, as the index was a combination of the inflation rate and the unemployment rate; as such it was easy to understand and relate to.
Today the issue is not just the suffering of individual citizens in countries throughout the world (and the United States) but the financial survival of these nations. Never before in history have so many countries, particularly in the West, faced such dire economic prospects.
A snapshot of the present-day health of any nation can be ascertained by reviewing two factors: annual government budget deficits as a per cent of Gross Domestic Product and the unemployment rate. The accelerated level of deficit spending, except in times of a major war (such as World War II), is indicative of a lack of fiscal...(Read Full Article)
