The latest odd twist in this new world economy has me more uncomfortable than most people.
A country with questionable credit worthiness is not something that makes you rest easy. It just takes one country — like Dubai, which in the past year had to solve a major credit crisis with last-minute financing assistance — to churn things up.
Serious problems have emerged around the world with countries — not companies — wilting under the weight of unmanageable debt.
In Europe, Spain’s credit rating was lowered this week, making global investors nervous, particularly in light of Germany having to offer reassurances that Greece would not be allowed to go under. Portugal’s debt rating — a gauge of financial strength that typically determines financing rates — also was cut by a leading monitoring agency.
You might have noticed this, but it’s so unnerving that it bears repeating: The situation in Greece is so bad that the country’s bond rating wasn’t just lowered, it was lowered to junk status. That’s why Germany’s leadership had to chime in, calming the financial world by making it clear that Greece would not be left in financial ruin.
Several European countries, Spain in particular, suffered pain similar to the agony America went through during the recession — a bursting housing bubble — but to a larger degree.
Bailing out struggling economies is not cheap for governments, and almost all developed nations have to chip in from North America to Europe. Now, people are getting back on their feet, but governments are feeling the pain.
I’ve been figuring that China, the still-stirring economy that’s been fast on the emergence track, might leap-frog everybody else.
But then I talked with a friend this week who recently returned from there. I asked him what surprises he found in his inaugural visit to the country. He noted that there is a burgeoning housing bubble in that country and that the people there have a lot of the same concerns as us.
E-mail David Magee at damagee@timesfreepress.com.