We're No. 3! U.S. slips behind Australia in financial development
The U.S. has slipped behind the U.K and, yes, Australia in the rankings of global financial development, according to the World Economic Forum's just released "Financial Development Report 2009." In addition to throwing swanky parties in Davos, Switzerland, for the most powerful people in the world (cough, Bono), the World Economic Forum likes to assess and rank and rate things. (And how. Just take a look at the full report here.)
After assigning and sorting through 120 variables spanning "institutional and business environments, financial stability and the size and depth of capital markets, among other factors," the forum figured that the U.S. now ranks No. 3., just barely edging past Singapore.
The global financial crisis our U.S. institutions helped create is to blame, according to the report's co-author, Nouriel Roubini, and he should know. Dr. Doom wasn't just the loudest, most prescient caller of the collapse -- the damn thing made his career.
Anyway, the rankings show how the crisis has turned the global world of finance upside down. And eastward. A year ago, the top five went -- pretty predictably -- like this: U.S., U.K., Germany, Japan, Canada.
Today, it looks like this: U.K., Australia, U.S., Singapore, Hong Kong.
The U.S. got nicked in the rankings largely because of its "poorer financial stability scores and a weakened banking sector," the report says. Well, duh. But who knew Australia was such a superstar?
Lots of folks, judging by the performance of the country's stock market. The Australian benchmark S&P/ASX 200 has gained 28 percent in 2009, beating the U.S. market by a full ten percentage points.
Being very rich in natural resources and close to the supercharged economies of Asia sure does help. Indeed, the economy Down Under is looking up. Witness the country's recent surprise rate hike. Australia is the first member of the G-20 to raise short-term interest rates. Policymakers only make such a move when they feel confident in economic expansion (so as to head off inflation.) And by the sound of things, the Aussies are feeling better than most.
"Economic conditions in Australia have been stronger than expected and measures of confidence have recovered," Australia's central bank governor, Glenn Stevens, said in a statement accompanying the rate hike.
The Aussies, you see, are already enjoying the fruits of their stimulus plan (ours isn't supposed to really kick in until next year), as well as growing demand for so much of the natural resources and basic materials the country exports.
So congratulations, Australia. Have a Foster's on us.