Wed 23 Apr 1:02am CDT
Register | Login

S&P downgrade forces U.S. to look in the mirror and make some changes.

I remember the exact moment I first got denied a credit card. I was just out of college, making $36,000 a year, and arrogant as hell. So I got a $500 a month car payment and racked up all this debt trying to live a lifestyle I didn’t make enough money for. That credit card denial was the best thing that could’ve happened to me because it made me look at myself, acknowledge that some things were out of order, and make some changes ahead. I made those changes, and now my wife's and my debt only consists of a house payment and a student loan. It was a good thing.

That’s how I see the downgrade of our country’s credit rating. It is like a mirror in front of our faces. According to a Wall Street Journal article, when Canada was downgraded in 1992, the government reviewed spending, reformed taxes, and got its AAA rating back.

This is our chance to get our act together and come back even stronger, just like our neighbors to the north.

Or, we can remain, as Stephen Colbert describes, “waffle-eating kiwis who put mayonnaise on our French fries with a serious Hobbit infestation.”

 

As a sales professional, author, professional speaker, and consultant, Jason Forrest helps home builders increase closings and profits through leadership sales training. His books include Creating Urgency in a Non-Urgent Housing Market and 40 Day Sales Dare for New Home Sales. He can be reached at jason@jforrestgroup.com and www.jforrestgroup.com.

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Penelope's picture
Penelope
Tue 16 Aug 4:53am
One fear in the market has been that a downgrade would scare buyers away from U.S. debt. If that were to happen, the interest rate paid on U.S. bonds, notes and bills would have to rise to attract buyers. And that could lead to higher borrowing rates for consumers, since the rates on mortgages and other short term loans with no credit check are pegged to the yield on Treasury securities. However, even without an AAA rating from S&P, U.S. debt is seen as one of the safest investments in the world. And investors clearly weren't scared away this week. While stocks were plunging, investors were buying Treasurys and driving up their prices. The yield on the 10-year Treasury note, which falls when the price rises, fell to a low of 2.39 percent on Thursday from 2.75 percent Monday.
Jason Forrest's picture
Jason Forrest
Tue 16 Aug 1:00pm

I was one of the investors you mention who was buying US Treasuries. It was my way of saying, "I believe in America."

monicaJ's picture
monicaJ
Tue 23 Aug 2:54am
talking about US debt here, everything happened like a whirlwind...all of a sudden we woke up one morning and found out that America is in state of recession which is very much alarming since it brought a lot of financial crisis not only to the government but even to us private individuals. Because of this America's Aug. 2 debt ceiling deal launched $2.4 trillion in spending cuts. But tax hikes did not make the butcher's block, regardless of what many economists classify as an obvious need. The Economist argues the average American's reluctance to tax the rich is entirely psychological, a product of what the publication calls “last-place aversion”. Resource for this article: Why average Americans fear redistribution of wealth