Top 12 Countries Most Likely To Go Belly Up

asiablues's picture

By Dian L. Chu

Risk analysis firm Maplecroft just released its new fiscal risk index ranking of 163 countries. Europe trumps all other regions with 11 out of twelve courtiers rated as "extreme risk." However, quite surprisingly, only one PIIGS country--Italy which takes the top spot--is in the top 12.

The others include many big economies in Europe - Belgium (2), France (3), Sweden (4), Germany (5), Hungary (6), Denmark (7), Austria (8), United Kingdom (10), Finland (11) and Greece (12). Japan at No. 9 is the only other country not in Europe within the highest risk category (See map below).

Aging Demographics

While high national debt and public spending are two common denominators, the study finds it is the aging demographic that puts these countries at extreme fiscal risk. An aging population will place increasing pressure on public expenditure such as pension and health care, while a shrinking working-age population means less productivity and less tax revenues to support public spending and debt payments.

High Dependency Ratio

Aging population also means high dependency ratio, or the number of people 65 and older to every 100 people of traditional working ages. For example, according to Maplecroft, the dependency ratio in France is 1 to 47 (i.e. 47%), Germany at 59%, Italy with 62%, and Japan at the very top with 74%, while the ratio in UK is currently 25%, and is forecast to rise to 38% by 2050.

Source: Maplecroft

Low Senior Labor Participation Rate

Another problem within Europe is that it has the low labor participation rate in the 65+ age bracket. In fact, the labor market participation of age 65+ amongst the ‘extreme risk’ nations range from 1.4% in France, 7.71% in UK, to 11.7% in Sweden, vs. a 28% average across all countries ranked in the index.

Maplecroft cited pensions and discrimination as two examples that would push people away from the work force. 

U.S. – High Fiscal Risk

Although the United States is not ranked among the "extreme fiscal risk," the nation is nevertheless classified as "high risk", along with Spain, another PIIGS country, Australia, Canada and Russia.

Let's take a look at the two metrics mentioned here.

The dependency ratio in the U.S. is 22 in 2010, but is projected to climb rapidly to 35 in 2030, according to the U.S. Census Bureau, mainly due to baby boomers moving up into the 65+ age bracket. The ratio then will rise more slowly to 37 in 2050.

The labor participation for age 65 and over in the U.S. is at 17.5 according to data at Bureau of Labor Statistics (BLS). This is better than most of the European countries, but below the overall average of 28%.

U.S. in Wave 2

Most people typically associate a country’s fiscal risk to its government’s monetary and fiscal policies, and Lehman Brothers has taught us that banking and housing crisis could push the entire world into the Great Recession.

While these are all definite risk factors, a highly productive labor force and relatively young population makeup tend to ensure more sustainable prosperity and better odds at climbing out of a hole.

The Maplecroft study concludes:

" high risk countries, it is increasingly likely that the private sector will be called upon to contribute in the form of pensions and private health care.... Without significant adjustments, such as raising taxes or reducing spending, countries risk going bankrupt."

So, while Europe is being forced to do all that amid sovereign debt crisis in the middle of widespread protests over raised pension age and austerity measures, the U.S. and other "high fiscal risk” countries seem be set up as the wave 2 of this global fiscal chain of events.

Feb. 24, 2011 | Facebook Page | Post Alert | G Buzz | Kindle

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BigDuke6's picture

Anyone newly arriving to europe should remember they get mad every 50 to 100 years and kill 10% of their own population.
i suspect they'll do it again within 20 years from now.

My rank of european fuck ups

1. Greece
2. UK
3. Ireland
4. Italy
5. Portugal
6. France
7. Sweden
8. Spain

For things to get nasty Germany has to go up and that will happen but take a while.

falak pema's picture

Lol, your reasoning is like 'clockwork orange'. Every 50 years the Germans wake up and say "Yawol, achtung" and the French "Merde! Les Boches". Let's hope they've broken that ticky-tock...If having an aging population helps...'zen thank God for leeeetle girls" like old Maurice sang. 

gwar5's picture

Sweden... again?

Too many promises have been made by politicians that can't be kept.


Ahmeexnal's picture

Europe is heading towards war unless they dump Germany out of the Euro.

Mercedes and Ferrari? You have to be joking. What can you do with that junk without oil?

falak pema's picture

Germany today has a positive net export and current account balance. It can import all the ME oil and russian gas it wants. It's in an economic virtuous circle. The only down side for Germany is the toxic shadow banking debt linked with tie ins with US economy and also the PIGS liability in the peripheral rim of EU. These are not Germany's own making but it can suffer from collateral effect of other's people's shenanigans.

walküre's picture

This map is uber bullish for the Euro.

Seriously? Who dreams up this garbage? Since when does fiscal health matter in countries that produce Mercedes and Ferrari.

Notice the lesser risk in countries such as Lybia, Algeria and the United States.

If you based your investment and business decisions on this map, you'd be desperately looking for deals in the "low risk" countries.

If that's what rocks your boat, here's my free investment advice of the day.

Buy as many treasury bonds as your FRN will buy from countries like Burma, Laos, Uganda and Paraguay. They're all green!!!! Green shoots! Remember? It's a good thing!

Bicycle Repairman's picture

The US may be in danger for a number reasons, but whatever solutions are implemented, working the baby boom generation into the grave will be the key feature of any economic program.

Hopefully that will be enough for generations X & Y.

Myzery's picture


I guess it's time to buy farmland in Cambodia.


Facukin Libya, Egypt, et. al MEA is lower risk then half the developed world?


age != productivity




You're color coding fisical risk just like the homeland security terror altert.






Gene Parmesan's picture

You have it wrong. You buy farmland in Burma so you can holiday in Cambodia.

topcallingtroll's picture

We are potentially in the sweet spot and not as bad off as europe and japan. There is so much USA hating on this site that peoples' anger blinds them to some realities. We are developed like europe but still growing almost like a semideveloped third If we could just cut taxes and social services, increase productive immigration, and incentivize work we could.easily pull ourselves out of this. We have to remove barriers to employment. All businessmen know what they are. And nonproductivity should not be subsidized.

falak pema's picture

You are right, barring all the debt accumulation. Start from a clean sheet...means ten lost years...That's a no dealer, for the powers that be in USA...So, it's gonna be QE-III or bust!

Kayman's picture


"and nonproductivity should not be subsidized."

So once the Criminal Bankers and Government leeches are gone, then and only then will the turnaround begin.

Printing money by the world's largest Debtor Nation seems a bit cheeky. No.... ?

americanspirit's picture

Considering that the US has 50 states in wildly different stages of going belly-up it is hard to see how one can assign a single value to the liklihood of the country as a whole turning its navel to the sky. It might be more instructive to take the 10 worst and 10 best sets of states in the US and assign each set a score, or something like that. I think that the domino effect of one or more of the weakest states - say California, Illinois and Michigan - going belly up may carry more weight as far as potential belly-upedness than an aggregated value for the whole mess.

Stuck on Zero's picture

A few facts and a lot of nonsense.  Here are some of the problems with the above arguments:

1)  Productivity is a key determinant.  Age is not.  Sub-Saharan Africa has a high ratio of young to old.  Are they fiscally stable? 

2)  Outsourcing.  Saudi Arabia can get as old as it wants with no aging problem.  It can buy labor from outside. 

3) The young are unstable.  Instability is a key cause of financial destruction.  Riots and civil wars occur very frequently where populations are young.

4) Quality of the young.  Germany and Japan have high quality young people who stay out of prison and produce a lot.  The USA has a lot of its youth tied up in prison, drug dealing, crime and smoking pot on the beach.  Do they help or hurt?

5) Labor surplus.  The world has a surplus of labor.  We could all get by on 10 hours of work a week. 

6) Technology.  WHo knows what robots will be doing for us in twenty years?


YHC-FTSE's picture


Good points.....Although, 

1) I think we all know that old age certainly affects productivity. As countries increase the pensionable age limit, we are bound to see average productivity with age go up, but you can only fight nature for so long. 

2) Yep

3) Yep

4) Yep

5) In an ideal world, we could all get by on probably less. I've read postulations on divisions of labour to run a sciety smoothly, but exploitation, laziness, greed, and plain old stupidity make that ideal world an impossibility.

6) Who knows what robots will be doing for some of us who can afford it in a few years? Again the world ain't perfect. We live in a world of guilds who jealously guard whatever knowledge they possess in science and medicine even to the extent of patenting nature, of global corporations whose mantras of growth and profit translate into products of addiction and reliance, of megalomaniacs in government with twisted visions of the world in their own image. Automation will not free human beings to higher levels of existence, but will be just more consumer devices to buy, or in the case of militarized nations, use to kill. We've had industrial robots for over 30 years, and I haven't met an auto worker who became enlightened because of them. When robots become sentient and are much more capable of complex tasks, perhaps even within our lifetime, then that would be the starting point of a slave economy, with all the moral complexities of enslaving a sentient lifeform that represents. 

topcallingtroll's picture

There is no such thing as surplus labor. Any productive asset will be utilized up to its highest marginal rate of productivity absent barriers, regulations, wage restrictions, etc. I wouldnt mind having a full time housekeeper at the right price.

In a pure free market the only unemployment is frictional

hardcleareye's picture

"I wouldnt mind having a full time housekeeper at the right price."

A very interesting and telling comment.   Are you saying that a full time housekeeper paid "slave wages" or less, would be morally acceptable to you?

And if "slave wages" are not what you had in mind, what would be the "right price" for a full time house keeper?

Can that person live in a basic/simple reasonable manner off those wages?  And please don't forget to include the cost of health care in your consideration. 

Take it the next step, the wage you offer doesn't make "ends meet".  What happens to the long term "productivity" of that person?  How are they suppose to live, what do they do if they get sick?  What happens to countries "economic engine" if much of the middle class falls into proverty?  Demand for goods are going to fall off the cliff? 

What are you suppose to do, if an honest days labor doesn't produce enough for a roof over your head and food on your table?  Third world countries have been dealing with this issue for some time, education declines, shanty towns grow and crime rates skyrocket, social unrest increases, (Haiti, extreme case). 

At the end of the day your productivity decreases.  Be very careful of what you wish for.......


AnAnonymous's picture

Wonderful comment.

No waste in a waste economy. How do you manage that?

Jasper M's picture

 Your #s 3 & 4 would seem to be more of a freedom barometer. If young people are in a free society, they are less likely to be violently frustrated, and, and less likely to be imprisoned for consensual 'crimes'.

  And we have a labor surplus At Current Prices. Let the rates fall to equilibrium. Or Rise – people will find productive things to do. The world could have 'gotten by' without Apple, but Mr. Wozniak felt creative.   

ATM's picture

I'm scratching me head over this one. If Greece goes so goes all the banks in Germany and France et al. How can the contagion problem be seperated?

They're all high risk as is any country with a debt load as large as the US who cannot possibly ever pay off the debts it has incurred. There can only be two outcomes - default or devaluation, but they're really the same thing aren't they?

falak pema's picture

EU cumulative bank debt exposure in Greece is 250 billion USD. All of that is not sour.

The total world banking exposure for 4 PIGS countries is 2300 billion USD. This cumulative bank debt means the current EU safety net is short and requires substantial hair cuts by private sector banks, in addition to loads of ECB paper treasury notes/bonds emissions which  are being sold to the Chinese currently. Merkel has declared that the sovereign risk of nations associated with this private sector banking risk (except for Greece where govt. risk is the majority) will have to be weeded out before END 2013. So everybody is scrambling desperately to get their public deficits down by then so as to cut debt payments to an acceptable level before the Merkel axe falls. If the USD tanks before 2013 in its own crisis the Euro will be under less pressure from markets as a lot of hedge funds involved in current attacks on EURO will have tanked as well. He who lives will see how the cookie crumbles! Its a wretched, dirty, beggar-thy-neighbour free for all. Ugly and dangerous!

THE DORK OF CORK's picture

I never truly understood the ageing profile argument - we have a slave economy , it is no longer Louisiana or Hispaniola slaves , it is brent crude , WTI  etc. - most of the workers in the west have no wealth generational role , there role is to best exploit this energy into usable stuff and services but it has little impact on the debt servicing of the world economy - everything is just shuffling the energy credits.

A mercantile economy such as Japan has a role in manufacture - it could not expand as its savings are used in the global carry trade and not internal wealth generation - it would not matter if it has a old population or not - it has been given a energy ration.

Only a select few scientists can drive real wealth - if societies can last this long with such chronic underemployment then surely they can sustain pensioners.

The sole problem with western economies is that it refuses to save and build capital for the future - both workers and pensioners are locked into the same matrix of depletion - they are almost ancillary to the mechanical reaction of the "markets"

If Japan was somehow eliminated its energy ration would be used elsewhere but perhaps somewhat less efficiently.




RockyRacoon's picture

Hey, that's a very thoughtful comment.  Gotta chew on that a bit.

Thanks for posting your thoughts.

THE DORK OF CORK's picture


 double post



falak pema's picture

Lol.. Chu Chin Chan is a guy who is doing his best to get the ever sinking US morale up. The rest is as in the famous phrase...lies, damn lies, you fuckoffee lies.. I'll have tea please...from Darjeeling.

Lord Peter Pipsqueak's picture

I gave up reading when it said the UK was 10th. 

It is right up there with the US at first equal: millions of unemployed,given the incentive to have more and more children as it ramps up child benefit,millions of economic migrants -sorry asylum seekers that realistically will never work a day in thier lives,huge swathes of the major cities where there isn't a single working adult amoung the household,unfunded pensions liabilities,massive public sector pensions timebomb waiting to go off,hundreds of billions of unfunded PFI liabilities stretching into the future, I could go on but it is just too depressing.

BigDuke6's picture

Absolutely... good author but telling us a bullshit report.

The worst thing about the uk and the reason it will go down badly is that there is a total culture of dependency among the populace, fostered by governments.
They riot for more debt.
The government ring fences spending on cushy prisons, foreign aid and hands out more passports every year no matter who is in power - like the USA with Obama and Bush there has been no difference between Cameron and Brown/Blair when it comes to action.
Its going down - plunder it of its goods as sterling goes down the gurgler. Ebay gives access.

PolishErick's picture

Im suprisd Poland isnt in the extreeme risk group- the CDS's for polish debt have hiked in price a while back... The helfcare money is gone half way into every year ever since I remember, and the post communistic criminals running the country are already jumping on the state pencion funds. Hmmm... maybee theyre just as good at covering things up as they are at robbing the sheeople that vote for them...

akak's picture

Dzien dobry Pan PolishErick!

Isc do zloto teraz!

PolishErick's picture

A, Dzien dobry Panu


Juz troche mam! I na pewno kupie wiecej!!


Haha, cheers!


akak's picture

Troche jest lepsze niz nic!

frenchie's picture

PolishErick is unfortunately right

In France for instance, the picture is very clear

Immigrants have french papers but do not integrate at all

They consider the host country as a milk cow

i will give you an extreme and maybe caricatural example but this is how it works:

immigrant get here (illegally or thanks to some law like the one allowing to "join" families so one dude can bring the whole "smala" from north africa to France) / makes a kid to be born here / the kid becomes french because of being born here / citizenship goes up to its parents / usually the immigrant is muslim so he catches a few wives and gets many kids / these women are considered as single mothers / they get social money from taxpayer / then these people arrange themselves to be considered as poor by social administration / get many subsidizes for flats, food and so on / they work undeclared (from "normal jobs" to hustling, drugs and so on) / they end up having a few houses in their homes countries

end sucker is the more or less (still ?) white taxpayer who gets up in the morning to go to his job (if he is still lucky enough to have one)


DaBernank's picture

Sounds like the Muslims will be the Jews in the next final solution.

PolishErick's picture

Its divide and conquer... the immigrants arent the problem- the welfare state is. Without an incentive to come and milk the system the people that do come in would go and get jobs.

Now the same string pullers that set up this system will have the phony right wing stir up hate towards immigrants. I hope it doesnt come to that (but I guess it already is happening) and that this whole mess wont end in blood in the streets...

Ordo ab chao. That is what the ruling sociopaths want- its what they can get this way.


@frenchie: rowniez pozdrawiam- czy to stanczyk na avatarze? :)

JimboJammer's picture

Good  Report....  Thanks...

Impeach  Obama  ASAP..

Ron  Paul  for  Pres..

Dr. Porkchop's picture

Canada had balanced budgets in the 90s.... under a Liberal government no less! But then I believe that was all quickly pissed away. But hey, the only people that love spending more than liberal governments are conservative governments!

Dangertime's picture

Any Buffoon can Balance a budget during a historic Bull Market economy.


And apparently any idiot can foolishly attempt relating that information to Liberals versus Conservatives.

purpledinoz's picture

If any buffoon could have done it, then why was Canada the only G8 to be able to do it?

Dr. Porkchop's picture

You missed the point entirely, which was;


All governments love spending. I don't give a shit what they call themselves. Take off the partisan hat and allow the blood circulation to come back to the brain. There's a coat rack by the door.

Dangertime's picture

And you missed my point. 


It doesn't matter where you lean (I am neither Liberal or Conservative).  Economies are not Politics and the policies of any administration do not take effect immediately as much as they do in the long-term.

Carl Spackler's picture

Hey, Paraguay is a Low Risk !

falak pema's picture

This guy chews on some form of whack or crack. But so what, if it makes him feel high,mighty and important. 

falak pema's picture

France has the highest birth rate in Europe along with UK.

PolishErick's picture

Yes, but then again a big part of that high birth rate is children of immigrants, and a cosiderable part of immigrant population in countries like france and the uk does not assimilate and join the tax paying workforce- social benefits give incentive to have children and NOT work at the same time (or be employed illegaly and collect the benefits). Even worse the benefits and beurocracy that comes along are a burden on the budget too.

AnAnonymous's picture

Yes, but then again a big part of that high birth rate is children of immigrants,


Do you have any figures on that?

BigDuke6's picture

Just use google lazy git.
This is the last time...

France is the same, dunno about others.

AnAnonymous's picture

How is one birth out of four a big part of birth rate as it was claimed to be?

but then again a big part of that high birth rate is children of immigrants

To some people like me who were too lazy to learn the new math imposed by the bright minds like yours, 3 out of four is the big part and one out of four is the small part.

But I think I can learn so I'll take the lesson on how a big part of that rate is one out of four.

PolishErick's picture

maybee I do... but what if they are all compiled by racist bigots!? Oh my, what will we do now.

I sugest taking a stroll around a few cities in britan (moast likeley the same case can be made in frace) there is alot of people from other countries and cultures- fact. Some of these people (along with lots of idigenous people too I bet) take advantage of the welfare state a little to much- fact. Weather immigrant friendly or not the socialist welfare state is usualy an abused ponzi scheme and brings more harm than help- fact.


And so on, and so on... The problem lies with socialist delusions and open boarders- eaven if the immigrants arent the reason why the western social states are going down (And I think they arent- I bet politicians have ways to funle tax money out of the system much faster, by stealing it at the scource), they will be blamed for it and there will be conflict, segregation, discrimination, bloodshed, and a whole bunch of other bad stuff... I think its all just divide and conquer. I have nothing against immigrants...