Government Anger

The economic decisions of governments and central banks are often motivated politically. Short-term gains in popularity rather than long-term vision are the driving force. At the same time financial markets always over-react to political irrationality.

Implied Distress Probabilities

Distress Probability vs Well-Being Index

Youth Unemployment

Country Implied Distress Probability GDP Growth Est. GDP Growth Gov. Primary Balance Current Account Population Growth Youth Unempl. Well-Being Index

Definitions

The Implied Distress Probability measures the average likelihood assumed by market participants for a significant deterioration of the economy in the corresponding country. A significant deterioration (or distress) is defined as a Sovereign Default and/or a period of Hyper-inflation and/or a prolonged Period of Stagflation (High Inflation combined with Recession). The Implied Distress Probability is extracted from yields/spreads on long-term financial contracts (Bonds, Inflation-Linked Bonds and Credit Default Swaps) of the corresponding country, compared to classical macroeconomic indicators like Primary Budget Balance, Current Account Balance, GDP Growth and Momentum.

The TMT Well-Being Index gives a quantification the current social conditions in each country that impact the country's expected economic performance in the long run. Analysed are a broad range of factors, both statistical (like percentage of youth unemployment, trends in births and marriages, immigration trends, strengths and weaknesses of the educational system, etc.). These are combined to emotional factors like positive / negative attitudes towards the country filtered from News Websites and Social Media. The TMT Well-Being Index ranges from 0 (indicating imminent treat of severe and prolonged economic downturn for the country) to 5 (indicating excellent long-term potential).