Dear PGM Capital Blog readers,
Last Friday, January 13th, credit rating agency Standard & Poor, downgraded 7 European countries for which France & Austria lost their AAA credit rating. Moody’s also downgraded the US State of Illinois to A2, the lowest rating of any USA state.
We believe that within 6 – 18 months the United Kingdom will also lose its AAA credit rating and that the USA will be further downgraded to A, and that on the other hand countries like New Zealand, United Arab Emirates & Qatar, might be upgraded to AAA. A closer view of the of the list of AAA countries shows that 10 of the 14 AAA rated countries are European, and with the exception of United Kingdom & Germany all those AAA countries are either small countries or countries with a population of below 30 million people.
If we take a closer look at American continent, we see that only Canada is AAA and that for the rest there are only 6 AA and A countries, namely in alphabetic order, Aruba, Bermuda, Chili, Curacao, Trinidad & Tobago & the United states. Five of the 6 AA and A countries are either small countries or have a population less than 2 million.
In June 2011, Euro Money Country Riskproduced their bi yearly country risk-rating table.
In below table we can find the top 10 of the world’s safest countries, which comprises only current AAA rating countries, for which 8 out of 10 are European countries and 8 out of 10 are either a small country or a country with a population below 20 million people.
|
Country risk rankings (June 2011) |
|||
|
Rank |
Previous |
Country |
Overall score |
|
1 |
1 | Norway |
92.44 |
|
2 |
6 | Luxembourg |
90.86 |
|
3 |
2 | Switzerland |
90.20 |
|
4 |
4 | Denmark |
89.07 |
|
5 |
3 | Sweden |
88.72 |
|
6 |
12 | Singapore |
87.65 |
|
7 |
5 | Finland |
87.31 |
|
8 |
7 | Canada |
87.24 |
|
9 |
6 | Netherlands |
86.97 |
|
10 |
13 | Germany |
85.73 |
Based on the above we can cautiously conclude that a shift in Economic power and solvency is taking place in favor of small, well-governed, well-developed countries, which have empowered their well-educated populations.
With 10 out of 14 AAA countries and 8 out of 10 countries in the top 10 of the world’s most solvent and financially stable countries, we can also cautiously conclude, that the financial situation of Europe isn’t as bad as the media is trying to let us believe.
We believe that in this fast changing Globalized world, in which quite a few of the former Rich Countries are deeply in debt, and with a demography indicating a decrease in the productive part of the population, we would advise Investors to carefully consider all these issues when planning where to invest or have their savings.
With a world going through rapid and momentous changes, both politically, economically, financially and demographically, it is not a very friendly place and bears to be thoroughly analyzed before taking important decisions as to one’s savings and investments.
But, on the other hand, for those with a strong stomach and sharp insight in the gyrations of the financial markets and their fundamentals, there is money to be made.
Please feel free to contact us for us to talk about your future.
Until next time
Eric Panneflek
Chairman