Worst of All Possible Worlds: Which Country’s Debts are Truly the Worst?

By Damien Hoffman

February 09 2010 Email

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Last year, the US Dollar was the butt of monetary jokes. In fact, some suggested it was worth as much as toilet paper. With Trillion dollar deficits and 0% interest rates, those with common sense looked to other currencies for capital preservation.

In a moment of cosmic irony, some global investors are now fleeing to the safety of the US Dollar. Headlines about Greece possibly defaulting on their debt has investors wondering which is truly the worst of all possible worlds?

Last week, Ben Schott put together an incredibly valuable chart showing the S&P credit ratings of countries and US states. This is an excellent resource to keep on hand for those Candide moments when your mind wanders:

(Hat Tip: Barry Ritholtz)

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JohnnyD

All these stupid numbers mean is that in the eyes of nations who offer credit, the United States is exactly like the average over-leveraged, debt-ridden American consumer was before the crash:

An endless source of regular income, because we never pay off our debt, and just keep accumulating more, and only pay the minimum on our scheduled payments.

We all saw how well THAT ended for average Americans. Wait until the same thing happens at the global level. And do I have to point out that prior to the crash, all the worthless "toxic junk" being peddled also had a AAA rating?

So take these figures as a positive sign if you want, I see them as a sign of the impending disaster they actually represent.
WallStCS

Yes. These numbers paint a sketchy situation. Wait until the downgrades arrive.
Andrew

Whether people like to believe it or not, the United States doesn't deserve the AAA credit rating because it'll be impossible to pay off the $13 trillion national debt and the other $56 trillion in expenditures and liabilities.

The U.S. is doomed, heck Warren Buffett doesn't deserve the AAA rating... wait, he doesn't have it anymore!
Damien Hoffman

I agree. There is a lot of speculation as to whether that rating will drop this year.
Joshua Konov

My personal observation says that when to invest underwriting must be done by putting side by side prospective to get you money back with profit and have equity to backup your investment, therefor to put US next to someone like Estonia is just inadequate
Joshua Konov

The right question here is what was the "Enron" ratings a month before its defolt.
Sincerely,
Jim

Libya and California have the same credit rating. Given the leadership of the California Legislature and the Libyan leadership, sounds about equal. There is symmetry in the world
Damien Hoffman

LOL
Upnorth

It is hard to believe Minnesota has a AAA rating when they have halted payments to school during March and April because they do not have the money.
Damien Hoffman

The ratings agencies have problems.
gurmeet

if greece gets a better rating than india, then surely there is something wrong in the rating system.

india is one of the few countries unaffected by
Damien Hoffman

I agree that seems weird now that Greece is in the news.
mfm9800

Greece is rated as BBB+. Hmmmm..........how am I to believe any of the other ratings?
Damien Hoffman

The S&P data is not real-time. It's probably from last quarter.

BTW: BBB+ is not so great.