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….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.