Wednesday, February 17, 2010

Chart of the day, cheer up America! Assets as a % of GDP, globally.

Wow.  Another graphical reason why the dollar will remain the reserve currency, because in relation to the alternatives, we're golden.....

The chart below, courtesy of Zerohedge who seems to have gotten their data from JPMorgan, shows that the assets of big US banks make up a MUCH smaller portion of our GDP than do the assets of other countries.  The point being that the USA is in much better, less leveraged shape.

It's true to a degree, but their chart simply added the top five "banks" in terms of assets, compared to the top several in other countries.  Which is fine, since it's a look at the world's top 25banks.  But what that ignores is the THOUSANDS of other institutions in this country holding assets that are susceptible to write-downs also.  Other countries certainly have REIT's and S&L's, but their assets are much more concentrated in the top couple institutions than is the case here.

When I added the assets from 695 other financial entities, it added another 47% of assets/GDP, still small compared to the leverage in those other countries.  Yet I left out insurance companies and some others.  That said, even after adding in what they left out, the USA's financial profile looks much healthier than other countries, implying that we'll continue to enjoy the "reserve currency" status we need.

 Copyright 2010 AlphaNinja

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