US CREDIT RATING DOWNGRADED: Why?

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Well, well, a credit rating service has downgraded our country’s credit rating from the best (AAA) to second best (AA+). A credit rating indicates potential RISK of not getting your money back if you purchase or invest in the specific company’s financial offerings. Basically, the riskier the investment, the higher the interest rate the company is forced to pay its lenders, as it should be.

First, let me remind everyone that the same rating company (Standard& Poor) among other rating companies, are the same that rated TOXIC MORTGAGE BACKED SECURITIES AS AAA and that is a huge factor in what got this country into the worst financial disaster since the Great Depression; they made millions in screwing the nation and did they get punished…NO!

Now that I got that off my chest, let me just say that all this hand wringing over the downgrade to AA+ is for naught IF you bring in the lost art of looking at issues REALISTICALLY.

The reality is that there is NO other place in the world that affords investors the SECURITY that the American dollar offers. Why do you think CHINA invests billions if not trillions of their currency in U.S. Treasury financial instruments? Why don’t they buy French, German or Russian bonds? Well they probably do but not in the quantities they buy U.S. bonds.

So is the U.S. going to have problems borrowing because S&P downgraded their credit…NO!

I have a fundamental problem with credit rating companies like Standard & Poor; they are paid millions of dollars by companies that want their debt offerings rated. Let me make this really clear…if the rating company gives the debt offerings a low rate, the company will not use them again; the rating companies’ lose customers and revenue.

In my mind, rating companies should not be paid by the companies they are rating; that’s preposterous and open to all sorts of malfeasance.

The government has been investigating this problematic issue as a contributing factor to our disastrous current fiscal predicament but has not acted on it; they should and they should do it now before the rating companies get us into more trouble.

Instead of credit rating companies there should be an independent rating service agency that is paid by all companies requiring debt rating and in that way, all rating will be objective.

Why did S&P downgrade our government’s risk status; mainly for political reasons and I will have more on that later?

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