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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AnAnonymous's picture

 I have nothing against immigrants...


How did you come then to the conclusion that a small part is a big part?


Dr. Acula's picture

"a cosiderable part of immigrant population in countries like france and the uk does not assimilate and join the tax paying workforce"

Sounds like a good thing.

Don't be jealous just because others don't want to join you in your enslavement. (And they are probably still being victimized by robbery, e.g. sales and property taxes, but to a lesser degree.)


PolishErick's picture

Ahh, touche...


but alas, i too have my way of keeping whats mine and not rendering it unto cesar, and besides- nowhere in my post did I say that not paying taxes is a bad thing! I THINK THAT TAXES ARE THE BAD THING!! And when it comes down to being a Polack living in Poland (thats me), I think that with the current political class it is my (and every other Polaks) patriotic duty not to pay the bastards a broken dime!


Furthermore if the immigrants are squeezing the social system dry of cash- then God help them, becase once all the ponzi scheemes crash down and the beurocrats/cops/tax collectors stop getting paychecks, we can hopefully all go back to living in normal countries. I just hope it wont get too bloody along the way.


There, im not jelous of others, I do my best not to feed the machine with my taxes- you have nothing on me, my dear Doctor, and besides: "all your base are belong to us..."


lincolnsteffens's picture

Perhaps you have not considered that there are parts of Government that are very important. OK, I've believed for decades that about half of the government services we get are important and that half of everything we pay for government is wasted. I figure if government spent money as if it was their money and what they spent the money only on necessity we could cut the taxes to a quarter of what we pay now.

If you want a road, someone has to pay the expenses. If you want a standing Armed Forces with the best equipment someone has to pay. The same for law enforcement, disaster relief, emergency care for the injured that can't afford help. and on....


PolishErick's picture

Other than Armed Forces or organizing critical disaster relief the government is usually a midle man that cheats both sides of every deal...


Road construction? Here in Soviet Poland we have a highway built by taxpayer money that has become a toll road, and the money is going to a private company


emergency care (or for that matter helfcare in general) in Soviet Poland is a dissaster- people pay for it their whole lives, but end up having to pay for private service because for example (this happened to my friend): if You need a CAT scan for toomorows diagnosis you a) wait for it for 2 months; b) pay for it and get it for toomorow.


law enforcement? tooday all I see is an armed mafia wearing blue uniforms with steel badges extorting money for things like smoking a cig at a bus stop or parking in a no parking area... the only thing they enforce is the status quo. A cop never helped me one bit (and Ive had situations in my life that a real police force could help with)...


I think 10% of the money goes to keep up the ilussion that anything is being done for us, 89% is getting stolen and maybee 1% goes to iPhones bought by government employees.

Ahmeexnal's picture

Yet Poland is being touted as a european miracle, with record GDP growth, the next Germany.

Hhhmm....they used to say those same words about Greece, Ireland and Spain.

Polish bubble in the horizon me thinks.

AssFire's picture

I'll take this as sarcasm..almost had me.

Dr. Acula's picture

Which part did you think was a joke?

That they are still victimized by sales and property taxes?

Or that being part of the "tax paying" class is akin to being enslaved?


falak pema's picture

Don't you believe that. Take your coloured blinkers off. They're a potential resource pool in both countries for a growth segment like no other. They're hungry for success, they're happy to be in the West and they'll run like hell to make the best of their lives..if given a chance. They'll get it, cos nothing can stop it. Even European regression.

Dr. Acula's picture

>They're a potential resource pool

You are a potential resource pool.

Let's increase your taxes. I need more foodstamps to feed my crack babies.


akak's picture

I need more foodstamps to feed my crack babies.

I need more crack babies to get more food stamps.

I need more foodstamps to feed my crack babies.

I need more crack babies to get more food stamps ....


The economic cycle, inner city style.

Shock and Aweful's picture

Your ignorance is telling...

Just maybe you should take a trip down to a local food pantry and see just what kind of people are in these lines....I bet even an ignorant hillbilly such as youself would seee that MANY of the people there are WHITE and former members of a dying breed of Americans known as the "middle class". 

Take away food stamps from the 50 million Americans who recieve some form of assistance....and you may not like what you see in the streets....a hungry person has NOTHING to lose (except weight of course) 

Is this the best contribution you can come up with?

Cheap stereotypes? 

Burnbright's picture

I agree with Akak, however I think you don't realize his full position. Although it may seem unsensitive to cut social programs and his point is simply the abuse of such programs, we don't believe in bank bailouts either. 

Having said that I would rather see banks fail and the continuation of social programs, but if social programs as a topic comes up I am not in support of them either. 

hardcleareye's picture

BB, Reading your post, I doubt you have every volunteered and worked in a local food pantry.   You might be very surprised at the "type of people" in need of a temporary hand.....  Many (more so in the last 2 years) are people with solid work ethics, who are very embarrassed to find themselves in this situation.   If any other option existed they would not be asking for food!!!! 

The current US "social programs" are keeping a lid on Egypt style civil unrest.  And yes, there is abuse of it, but "throwing out the baby with the bath water" is not the way to address those abuses.

AssFire's picture

LMAO. They can't even hit anything they throw at.

AssFire's picture

Yes, but at least the Italians are now "fondly" remembered as the niggers of Europe.

Oh how they wish they had not allowed in the ones from the land of the sand who marry their crazy cousins.

eddiebe's picture

Mr Chu forgot to mention probably the greatest two threats of all: The derivative monster lurking and the reserve currency printing press, both of which are still running on steroids and high octane,

 then of course there are the fraudulent banking practises and the corrosive confidence destroying lies told by our leaders, elected and appointed..

but hey, we need to keep the game going or else, right?