What are we as Americans to think of the downgrade of America’s AAA credit rating by Standard and Poor’s? Well, the stock market definitely responded negatively so far. But let’s keep a few things in mind about ratings. The first question I always think of is who is doing the rating? Secondly, what is their track record on other ratings in the past? Standard Poor’s has been fantastic over the years, except for some huge cataclysmic failures. Standard and Poor’s had high ratings on World Com, Enron, Orange County California city bonds. Now we might say this is recent history but how about Lehman Brothers, Country Wide and AIG ratings before the meltdown…?
Again, great ratings in companies that were huge financial companies that squandered billions and billions of dollars, tens of thousands unemployed, billions in retirements up in smoke and all were examples of the most egregious violations of business ethics, risk management and investment mismanagement.

Take the rating downgrade with a grain of salt . First of all, if America’s credit rating is going down what about everyone else’s. Do you think investors are going to start loading up on Euros? Foreign companies know that America has solid judicial systems where even foreign countries can get their day in court. Can you say this about Russia, China, Saudi Arabia, India, Pakistan, Mexico, Brazil, Indonesia? Hell no. Then it gets down to Australia, Canada, Britain, Switzerland and Japan. These countries as financial options have been there for decades. Other than Switzerland, the others are our best allies already with their own economic struggles.

Also, consider the times. This is uncharted water for every single person and country involved. Gone are the days of easy credit, home equity loans and job security. Yes, Wall St. got bailed out the TARP program. Main St. is still trying to bail itself out in rising water. Most small businesses are using personal investments and their own assets to fund their operations since easy bank money has dried up. In short, if you are not giving people solid good paying jobs, affordable homes and access to credit the American dream grinds to a halt. I say this because now is the opportunity. Some of the greatest gains are made in the worst of times. What is the difference between a high yield bond and junk bond? It depends on when you buy it.