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Brett Arends' ROI
April 13, 2011, 12:00 a.m. EDT
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"¹ Previous Column
Why Europe's debt crisis isn't over
First Take "º
Newsweek savior Harman dies at 92
By Brett Arends
LONDON (MarketWatch) "” Is anywhere safe?
Wall Street will tell you that government bonds issued by advanced Western countries are the safest investments money can buy.
But recent events have made a mockery of that idea. If it weren't for international rescue packages, Greece, Ireland and Portugal surely would have defaulted on their bonds.
Picturesque Norway
Don't think the trouble's going to end there. Spain's finances are in trouble. Italy's net debts are 100% of its gross domestic product.
Germany's OK and so is Switzerland. But how much of Europe's bad debts are their banks holding? Money men here in London suspect that the German banks are the new Lehman Brothers Holdings Inc. /quotes/comstock/11i!lehmq (LEHMQ 0.04, +0.0004, +1.04%) , hiding massive losses in places like Spain down in the fine print.
Elsewhere, public finances are in disarray. Japan's debts are off the charts, more than twice the size of the economy.
America's net national debt is just hitting 100% of GDP and is rising quickly. The country can't even fix its own problems. Last Friday was a harbinger: The United States came within an hour of an embarrassing government shutdown. That crisis probably won't be the last.
Yet Wall Street continues to insist that U.S. Treasury bonds are "risk-free."
In this mess, who can you trust? If you fear a meltdown, which countries, if any, actually have safe and sound public finances?
There aren't many.
Not only are yields moving against it, but debt-default fears and reserve diversification are conspiring to ensure that the dollar doesn't have an early recovery.
According to the International Monetary Fund, only a handful of countries are really rock solid.
They include Australia and New Zealand, as well as the countries of Scandinavia "” Denmark, Finland, Sweden and Norway.
While most developed countries have racked up huge debts, these guys have kept their liabilities small in relation to their economies, according to the IMF. They have well-funded public pension plans. A few have no net debts at all.
The country with the strongest finances? Norway.
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, "Storm Proof Your Money," has just been published by John Wiley & Co.
Sidney Harman, who died of acute myeloid leukemia on Tuesday night in Washington, will always have a special significance among the people who read and work for Newsweek, writes Jon Friedman.
10:59 a.m. Today10:59 a.m. April 13, 2011
"The safest bonds in the world http://on.mktw.net/ftH0Ws" 11:33 p.m. EDT, April 12, 2011 from MKTWArends
"Why Europe's debt crisis isn't over http://on.mktw.net/gKcxCj" 11:08 p.m. EDT, April 11, 2011 from MKTWArends
"Is America the next Portugal? http://on.mktw.net/gf7KHk" 11:48 p.m. EDT, April 7, 2011 from MKTWArends
"The truth about hedge funds http://on.mktw.net/fdx311" 12:02 a.m. EDT, April 6, 2011 from MKTWArends
"Is Ireland really going bust? http://on.mktw.net/e5cXGm" 11:36 p.m. EDT, April 4, 2011 from MKTWArends
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