Everything is in the rating:

Monday- August 8, 2011

Everything is in the rating:

When you don’t know about something or question something, you might look at a rating to determine an opinion or to get the needed information to make a decision. For instance, there are consumer ratings to view for products, such as toasters and cars. When you read a review for a play or a movie you are reading a rating. When you go to a fine restaurant that is rated a two star or a three star you are going there, because of that rating. However, sometimes ratings get clouded with personal perspectives, personal feelings and personal politics.

This is also true of credit and financial outlook ratings. As you know, the United States of America had its debt rating lowered last Friday evening. Our rating was considered a Triple AAA since 1917. For the first time in our history, it went from the gold standard of that triple AAA to a rating of double AA. This is because there is a lack of confidence by the S&P in our ability to pay our debts. This is because our debts are riseing faster, as compared to the GDP nothing more nothing less. Moody’s and Fitch, two other rating services, have now issued concerns over downgrading their triple AAA rating of the United States to that of what the S&P downgraded us to.

All of these ratings are applied with the same criteria to other countries and other financial instruments around the world. This is not confined solely to the United States alone. France and other countries in Europe and Asia now have a higher rating than we do.

To understand the ratings and what these levels mean you must know the basic levels and what they mean. Every time you go down in the rating it is considered a downgrade.

The S&P defines there ratings as:

The triple AAA means the Borrower has an extremely strong capacity to meet their financial commitments.

The double AA means there is a very strong capacity to meet or pay back financial commitments.

The single A rating means there is a strong capacity to meet financial obligations, but they are more vulnerable to changing economic conditions and or other changing commitments.

A Triple BBB rating is the lowest grade suitable for investment.

A D rating is the worst it signals a possibility of financial default.

However, there is no such thing as the “tea party down grade” that seems to be the talking point of the day. David Axelrod, the president’s wordsmith, coined that term on CBS’s Face the Nation. John Kerry said the same when he went after the Tea Party; saying the Tea Party didn’t wanted tax increases and that is what caused the debt crisis and the subsequent downgrade. He went on to say, “The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is factual.” John Kerry ABC News - August 5, 2011.

The Tea Party has been demonized as being the creator of this debt crisis. The Tea Party did not spend the nation’s wealth. The Tea Party did not put the country into a financial tail spin. The Tea Party simply wants the country to live within their means, so that there is a country left to live in. These are my talking points and mine alone.

The S&P warned us that if our debt and spending habits were not addressed there would be a downgrade. Our debt and spending habits were not addressed in the debt deal and the S&P made good on their warning. Say what you will this happened on this presidents watch and no bodies else’s.

Some say the S&P has missed every financial debacle in recent history. Don’t forget the others like Moody’s and Fitch have too. They only give a rating on the information they have. For example, the Democrats made it a point to say that the S&P missed the housing crisis. They did, but everybody else did as well, and don’t you think the information they got was the same that every other investor got? Don’t you think that Congressman Barney Frank and Senator Chris Dodd gave a robust picture of Fannie Mae and Freddie Mac? At the time, Barney Frank said that Fannie and Freddie were stable and safe and a good investment opportunity. If you view history, through the prism of fact, you will see how the housing crisis started and how it burst. Again, we have the Democrats not stepping up to take the responsibility.

Today, the President made a speech. The President played the blame game nothing more and nothing less. The market has lost 1,100 points in two days of trading. Today was the biggest one day loss, since 2008. Today is day 800 that this President and this Senate have not submitted a budget. Today, our debt rating is a double AA, instead of the triple AAA that the president inherited.

If I were the S&P, I think I would have given a lower rating of a single A or a triple BBB, because this government has no intention on curbing their spending or their borrowing. Our government has no intention on stopping the growth of government either. This President has proven that he is a borrow and spend President. He is not a save and pay President. Past history has proven that, as well.

Part of the equation of solving the debt is getting a handle on three entitlements: Social Security, Medicare and Medicaid. When these entitlements were created there were 35 people working for every 1 recipient. Today there is 1 person working for 35 recipients. Until we, as a nation, can get a handle on this and realize that growing government is not the answer and that partisan politics will not return our triple AAA debt rating it will only get worse.

A plan to create jobs through taking down the regulations and the dismantling of hurdles that this president has put on small business is crucial. A review of governmental agencies to reduce redundancy and a plan to perform due diligence is needed. A balanced budget is needed to reign in spending and curb borrowing. And finally a commitment to end partisan politics through statesmanship is required.

A plan to create jobs through reducing the small business tax will turn the economy around because there will be more tax payers. When there are more tax payers paying taxes then a plan to create a surplus must be implemented. When Corporations are given the incentives to create jobs here and produce their products here then we will not have the need to borrow for the expenses that the government is obligated to pay. However this all hinges on getting a handle on the entitlements that have proven to have cost us dearly.

Hear is the good news and the bad news: The bad news first: no jobs, the value of real estate is still in the dumps, because of the Obama downgrade interest rates will now jump, but the good news is that the price of oil is coming down, because the demand is now decreasing.

Now I have a request of you. Come up with your own rating system of your government and your president. I currently give our government an E. I give the President an F. But then again, that’s just me talking about my rating system.

Gregory C. Dildilian
Founder and Executive Director
Pinecone Conservatives

A footnote: Everything is in the ratings. It can make you go to a movie, eat in a restaurant, buy a car or it could make you not want to invest in one thing and make you invest in the other. Unfortunately, that is what is happening now. The United States is not considered a safe bet. That is something a new president will now inherit!