THE 20 RISKIEST COUNTRIES
Worries over sovereign credit have once again become a hot topic as concerns over Dubai and Greece reignite credit crisis fears. The problem of debt continues to plague the global economy, but not all countries are at risk. In this world of global investing it’s easy to lump countries into regions – Asia, Europe, emerging markets, developed market, etc. But it’s not quite so black and white. Within these regions and markets we’ve recently learned that all emerging markets aren’t the same just as all Asian markets aren’t the same. Credit Suisse recently ranked the riskiest nations based on a number of various factors including government debt, private debt, potential growth, credit ratings and CDS spread. All of these add up to a risk score.
Many of the names at the top of the list are far from shocking, but investors might be surprised to see how poorly the United States ranks in the list.
Of course, there are two ways to view this list. The bullish take and bearish take. Some will say these nations should be avoided. On the other hand, as Goldman says about Ireland, with risk comes potentially great reward. I’ll let the reader decide which approach to take….
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Three comments:
1)This ‘riskiest’ list implies possibility of default. There are steps one can take to insure against default of, say, Latvia. In disaster recovery terms, it is like a flood or a fire, catastrophes from which recovery is painful but possible.
A default by the United States is the equivalent of a comet hitting the planet. Your chances of recovery are practically nil. In disaster recovery terms, don’t worry about where the back-up servers are located; all your ‘best practices’ just went out the window..
2) Ireland (#11) has the GDP equivalent of Nevada. It is hard to believe that what might send Ireland over the brink might send the U.S.(#14) into default.
3)Proportional to the underlying economy, Japan needs to be on that list, along with China and the EU.
Agree. Was very shocked not to see Japan ranked higher….
Where is California in that list?
Balance budget requirement which has been ignored for years..
Increasing deficits..
Hi. Pls double check private sector credit for Lithuania – it must be wrong in the table (~70% i would guess from memory)…
Hadn’t realised Greece was so close to Iceland. Wow.