As fuel to the fire of the Europe-is-in-trouble evidence and the bailout arms race idea, the Financial Times blog, Alphaville, reported yesterday on Merrill Lynch's economic risk assessment of the countries of the world. (Thanks to Scott Condie for directing me to this.) Below is Merrill's list of the 10 riskiest economies and the 10 safest economies. Note where most of the riskiest economies are located.
Europe holds seven of the top 10 spots. More surprising to me is that the Merrill economists consider the U.S. as the 10th riskiest economy. With the dollar, ironically, being the safe haven currency of the world, it looks as though markets think that the U.S. is one of the least risky places to park investment. Lastly, the Merrill report included the following bar chart that assesses the risk of various regions of the world. The story is the same.
Cool ranking- without the titles I thought the two columns could have been "places you'd most like to like" and places "you'd least like to live" (sarcasm).
The rankings, based on things like Debt to GDP, current account gap, etc. may signal risk, but don't they also signal confidence in your economy? As you said, it seems like the US is the safe haven- rates on bonds are super low, the currency is doing well...
As an example, check out the iShares ETFs for Australia and Mexico. Over the last 6 months, Australia, the "riskiest" country is down 24%, while Mexico, the second "safest" country is off 51%.
Jason
I love how the "Euro Area" is a risky "country."
It sounds like the Visigoths have overrun Europe again and turned it into a fashionable vacation spot.
Don't forget your bearskin tunic!