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The United States Isn’t A Top-tier Creditor, In One Map

WorldCreditRisk

– Nevertheless, public debt stabilisation at such elevated levels still render the US economy and public finances vulnerable to adverse shocks and in the absence of additional spending reform and revenue measures, deficits and debt will begin to rise again at the end of the decade. The U.S. is the most heavily indebted ‘AAA’ rated sovereign, with a gross debt ratio equivalent to double that of the ‘AAA’ median. RATING SENSITIVITIES The RWN reflects the following risk factors that may individually or collectively result in a downgrade of the ratings: – Failure by the government to honour interest and/or principal payments on the due date of U.S. Treasury securities would lead Fitch to downgrade the U.S. sovereign IDR to ‘Restricted Default’ (RD) until the default event was cured. We would also downgrade the rating of the affected issue(s) to ‘B+’ from ‘AAA’, the highest rating for securities in default in expectation of full or near-full recovery. Debt securities approaching maturity or those with approaching coupon payments would be vulnerable to a downgrade. The Country Ceiling would likely remain ‘AAA’. In the event of a deal to raise the debt ceiling and to resolve the government shutdown, which Fitch expects, the outcome of a subsequent review of the ratings would take into account the manner and duration of the agreement and the perceived risk of a similar episode occurring in the future. It would also reflect Fitch’s assessment of the following main factors: – The impact of the debt ceiling brinkmanship and government shutdown on our assessment of the effectiveness of government and political institutions, the coherence and credibility of economic policy, the potential long-term impact on the U.S.

But how does the United States stack up internationally? For that we turn to the BlackRock Investment Institute, the research arm of the giant money manager. It has created the “BlackRock Sovereign Risk Index” which aims to combine key aspects of creditworthiness of 48 countries around the world. It factors in plenty of things that have to do with the substance of different countries’ finances, such as their current debt and deficit levels, banking system strength, and exposure to debt denominated in foreign currencies. But it also adds an important layer that it calls “Willingness to Pay.” It measures the effectiveness and efficiency of governments to meet their obligations, and counts for 30 percent of the total index. Perhaps it shouldn’t be surprising after the last couple of weeks of government shutdown and debt ceiling chicanery in Washington, but by BlackRock’s reckoning, the United States is not among the top-tier credit risks by this ranking. Here’s a complete map: You can check the detailed analysis for each country in an interactive graphic here . By BlackRock’s reckoning, the world’s most creditworthy nations–those with both solid finances and solid political systems that ensure bonds will be repaid–are the likes of Norway, Singapore, and Switzerland. The United States, as the map shows, is in the second tier, more similar to South Korea and Austria and Malaysia in its creditworthiness. For anyone who follows the news, it is hard to disagree. Neil Irwin is a Washington Post columnist and the economics editor of Wonkblog.