I think the S&P was justified in downgrading the U.S. Govt. Credit Rating from AAA to AA+, only if they will be serious from this time forward on what a AAA Rating means.
Many of you may not know this, but the clowns who work at Standard & Poors, (S&P) were the same people who gave AAA Ratings to the Mortgage Trusts from 2006 through 2008, which many of the firms on Wall Street sold around the World. These Mortgage Trusts were loaded with junk loans and are largely responsible for the financial troubles we are now seeing and have seeing over the past several years around the World.
To think during 2006 through 2008, investments which were made up of good loans and several Sub-Prime loans (high risk loans) were given the highest Rating of AAA, but NOW, after people at S&P were scolded by the Obama administration, we see a decline in the U.S. Debt Rating for the first time in history.
If the U.S. does deserve a AAA Rating, yet France does, what does a AAA Rating really mean, and who really deserves to have a AAA rating. I guess it’s like an individual who makes a lot of money, always pays their bills on time, yet can’t seem to achieve a 850 credit score, which is the highest score an individual can obtain from two of three Credit Rating agencies. I guess Ratings are a guide, and we really should not treat them all that serious. the problem is, too many businesses and people rely on these Credit Ratings.
Most Americans do realize the Politicians in this country are way out of line when it comes to how they spend money and try to grow revenue through current tax policies. What is the best way to get our debt under control can be debated, what the Stock Market is saying by dropping close to 15% recently, who is going to get the U.S. back on track and how are they going to do it. Thankfully, (being extremely sarcastic) Congress is out until early September so the markets can stay down until we hear some answers. Whether you are a Republican or a Democrat, and have your own ideas on how the U.S. needs to fix things, as Americans, we should be worried about our country. Right now it seems no one is steering the ship, and we could hit an iceberg pretty quick, or did we just hit an iceberg?
One of my ideas to get the U.S. Economy back on track:
-Anyone who has been current on their Home Mortgage since 2006, automatically is allowed to refinance their home at the current Interest Rates, for a 30 year fixed rate, which is currently around 4.3% or a 15 year fixed rate, which is currently around 3.5%. This idea would qualify about 85% of all U.S. homeowners, and would allow the Govt. to back these low risk loans through Fannie Mae and Freddie Mac. My idea would allow there to be No immediate cost to the U.S. Govt, however, millions of Americans would benefit from the savings each month from a lower home loan payment. Currently, even though Interest Rates are low, people who don’t have the proper equity in their homes don’t qualify to refinance their home loan, and can’t take advantage of low rates.
I think my idea makes to much sense for today’s Politicians, cause they would argue for months as to which party gets the credit for implementing that type of program!!
Questions or comments, please email me at JimWigen@GetWealthyStayWealthy.com.
Jim Wigen
Portfolio Manager
Registered Investment Advisor
WHI Financial Services