By Jon C. Ogg - from MSNBC.com
The markets have been roiled about S&P's downgrade of the U.S., and the likely new recession that will come from the austerity measures. When we last covered the full list of nations that still have triple-A ratings from key credit rating agencies our point was simple: there are some strong triple-A nations and some weak triple-A nations. As of today, there are many more weak triple-A ratings than there were just six months ago.
Moody’s affirmed the U.S. government’s AAA rating, but with a negative outlook. Fitch also affirmed its AAA rating for the U.S., but warned that the rising debt profile to over 100 percent of GDP (after 2012) is not consistent with retaining the crucial AAA sovereign rating.
As a result of the weakening economy, and following the ratings agency actions, 24/7 Wall St. has decided to reassess the entire global triple-A landscape. Our previous take was that some nations already seemed to be far less deserving of the triple-A rating category than others. The key assumption here is that the U.S. is no longer a true triple-A-rated nation. This implies that other nations with similar conditions are also at risk of losing their triple-A rating, and that there are really far fewer than 16 true nations in the triple-A club now. Our review includes updated figures from Standard & Poor’s and Moody’s along with revised statistics from the CIA World Factbook. We’ve sourced also from the Economist Intelligence Unit, Fitch, Egan Jones, and elsewhere.
S&P still has a triple-A rating on Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Singapore, Sweden, Switzerland, and the United Kingdom. Other triple-A nations like Guernsey, Isle of Man, Liechtenstein, and Luxembourg we left out due to their small size and dependence upon other nations. Moody’s ratings were also used to make sure that the discrepancies are not overlooked.
Keep in mind that Japan lost its AAA rating in the late 1990s. It was further downgraded earlier this year. It was as recently as 2009 that S&P cut Ireland’s AAA rating. Italy and Spain were both AAA rated in the 1990s, but Spain was actually raised back to AAA before losing it again in 2009.
Safe AAA rating:
1. Australia
GDP per capita: $39,699.358
Australia was a solid AAA earlier this year and nothing has changed. Sure, it faces pressure from floods earlier this year, but the country is rich in natural resources that have to be used to build the world whenever the economy rises again. The low population of 21.5 million, an $882.4 billion GDP in 2010 projections, vast resource reserves, lower labor costs, and a low unemployment rate all act as a shield of global woes. Its public debt for 2010 was only projected to be 22.4 percent of GDP. The AAA rating is stable at S&P, and at Moody’s it’s AAA with a stable outlook.
2. Canada
GDP per capita: $39,057.444
Canada has a solid triple-A rating, and its deep trading ties to the U.S. does not jeopardize it, even if the U.S. has a troubled triple-A with a negative outlook. Canada has vast natural resources and its citizens mostly avoided the real estate and debt bubble that hurt the U.S. The population is under 34 million, its GDP is about $1.33 trillion, and public debt at the end of 2010 was a mere 34 percent or projected GDP. Neither Moody’s nor S&P have any issues with the triple-A ratings and stable outlook, and our take is that Canada is perhaps the safest triple-A rating of all nations in the Western Hemisphere.
I heard that the US economy is showing signs of progress over the past months. Don't lose hope just yet.
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At least with businesses, you can insure yourself from grief if you form an LLC. With countries, you have to do so much more.
DeleteI agree with the first comment. US is gaining its good economic status after the recession and continuously making its businesses stronger and better. I just hope that they will continue to do everything they can to make the nation more abundant.
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