Who is worse off than you?

Growing up, whenever I screwed up in a test or assignment in school and had to face my mom, I would always preface my failure by citing more spectacular blow-ups by my classmates. The habit never escaped me.  Now instead of placating my parents, I use it as a self-administered sedative whenever things get bad.  By reminding myself that it could be worse.

It’s easy to fall into a depressing spiral these days.  There’s little voyeuristic pleasure in watching your economy on a high speed race heading for the cliff, especially when your savings and investments are wrapped in the vehicle.

But maybe you can take solace in the fact that we are all in this together.  And whichever corner in the world you might be, there’s some level of financial uncertainty, maybe even serious suffering going on.  But let’s take a break from self-pity today, and indulge ourselves in the guilty knowledge that out there in the big world somewhere, exist those that screwed up (or got screwed) way worse.


With a population of 300,000, this northern tundra is the size of Kentucky. Inheriting this insular landscape with your large extended family, gifted with little other than thermal geezers and short days, the setting is already rather glum.

Add reckless Icelandic fishermen, stir in some explosive banking capital epitomized by a stock market that multiplied nine times from 2003 to 2007, and we get the tragic climax: a bankrupt country with debt 850% of its GDP.  To put that into perspective, an average of $330,000 is owed by every Icelandic man, woman, and child to its numerous and very angry foreign debtors.

What’s worse, to get out of this mess, the Icelandic has abandoned their currency, and now needs to claw its way up Brussels’ ass to save its economy. To be allowed entrance in the EU, it will most likely have no other choice than accepting reduced fishing grounds in exchange for debt forgiveness. The monumental humiliation of it all will shatter the Icelandic collective confidence for decades to come.


Looking at the astronomical debts of the US, economists and politicians no doubt salivate at the thought of being on the other side of the balance sheet. How sweet it must be: to make things and sell them to the rest of the world, to have a manufacturing driven instead of a consumption driven economy, and to run a budget surplus instead of a deficit. Except grass is almost never greener on the other side: cue Germany.

Germany is the world’s largest exporter. Surprised it’s not China? What’s more, it’s one of the major auto manufacturing countries in the world. One in six jobs in the country is related to the auto industry. When its wealthy European and American customers halted their vehicle orders last quarter, the factories became empty – of workers, not cars.

Germany is also heavily dependent on machinery sales to Eastern Europe and Asia. With large-scale industrial projects in those regions put on the backburner amidst falling demand for finished products exported to Western Europe and America, Germany’s manufacturing orders are nearly cut by half this year.

It’s one thing to recklessly run up debt, chase property bubbles, and get punished for it. It’s another to slavishly economize your finances by pinching public spending and controlling your labour costs, and still get dragged into the mud. There’s no getting off easy for good behaviour, darn it!


Combining the worst ills of both rapidly falling exports, high public debts, lasting psychological and financial baggage from its previous decade-long recession, Japan is now dubbed the “structural pessimist”.

And who can blame them? Japan does not have the deep pockets to stimulate its economy nor placate its struggling citizens through either pumping money into public projects (i.e. China), nor going into additional debts by exercising fiscal and monetary policies (i.e. US). Clearly reeling from large public debts accumulated from the last recession, Japan is tapped out from any more public spending. Nor can it rely on the export sector Asian neighbours for sales in machinery, nor the US for finished auto and electronic products. Now combine the gloomy economic outlook with a lack of Social Security or tax-advantaged retirement plans, you get an excessively frugal population that, well, have resorted to some truly miser methods to save money, such as using old bath water to do laundry.

Surely domestic consumption cannot be the only engine driving growth. But at a time when little government stimulus will prove effective, main wealth-generation machine (export) is shut off, and now domestic consumption falling year after year, is Japan kaput?


Oh to fly so high and fall so fast. One day, you’re the Celtic Tiger, the textbook success of a low-tax and open economy, in Europe of all places. After millennia of oppression, poverty, violent clashes and petty bullying by its stronger neighbour, Ireland was finally able to stand straight and hold its own.

Corporate investments poured in from all directions to fuel its growth. Ryanair, Intel, Dell, IBM, HP, Oracle, Lotus, Microsoft, made Ireland the unlikely high-tech and investment capital of western Europe.

The commercial corporate boom led to a construction boom and exuberant optimism. Massive borrowing followed against (rising) property prices, leading to a ballooning construction industry that pre-crisis, made up one fifth of the total economy.

Then the American sub-prime crisis hit. Ireland became the first euro zone country to officially enter into a recession. With global contraction, many companies have slashed jobs or bailed altogether. The country is left with an Americanized mess that includes shaky banks, collapsed building sector, and little credit. Except in a country of 4 million, and short of a sensational Icelandic flop, the rest of the world barely hears the Irish whimper.

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