Last week I sent out the single most important press release of my lifetime, which announced to the world that Weiss Ratings had begun issuing ratings on the credit worthiness of sovereign nations. And that we had given the U.S. a rating of C, just two notches above junk.
That ranking puts the United States in 33rd position among the 47 countries we cover. China, Thailand and Malaysia get much higher ratings. Even the government finances of the Philippines, Indonesia, Bulgaria and Mexico are stronger than ours.
Only a handful of countries get a lower rating than the U.S., including, as you might expect, Ireland, Greece and Portugal.
And ever since the initial announcement, I’ve been fielding countless media interviews and questions from everyday investors around the world.
As I’ve explained over and over again …
We Are Taking This Action for Four Vital Reasons
First, the AAA/Aaa assigned to U.S. sovereign debt by Standard & Poor’s, Moody’s and Fitch is fundamentally unfair to anyone who invests in U.S. government securities. It fails to warn you of real dangers. And it helps keep your yield far too low to compensate for the risks you’re taking. Investors urgently need a more honest rating.
Second, their AAA/Aaa U.S. debt rating is also unfair to you if you rely on interest income to help meet daily living expenses or finance your retirement. Since nearly all U.S. interest rates — including rates on bank CDs, annuities and other instruments — are tied to U.S. Treasury yields, you and millions of other investors are being severely underpaid virtually across the board.
Third, their recent commentary regarding the future of their AAA/Aaa rating is ambiguous and unclear. As long as they continue to reaffirm their triple-A ratings, any statements they might make are entirely inadequate to warn or protect you.
Fourth, their AAA/Aaa U.S. debt rating has helped foster political resistance and gridlock in Washington. If they had only issued a fair rating years ago, it could have played a pivotal role in helping lawmakers and policymakers take earlier remedial steps.
Now more than ever, we need an honest rating for U.S. government debt to help provide public support for the political compromises and collective sacrifices we must make in order to restore our nation’s finances.
Big Risks for Washington
Our C rating signals grave risks for U.S. policymakers. Unless they make an about-face in a timely manner, a further deterioration in the nation’s finances will trigger a series of events beyond their control:
- The dollar will lose its status as a reserve currency.
- Global investors, already dumping the U.S. dollar, will dump U.S. bonds in panic.
- They will demand draconian cutbacks in U.S. government spending.
- And these cuts, in turn, will bring a vicious cycle of economic declines, larger deficits and further investor demands for even greater cutbacks.
After all, it not only outlines the dangers of our country’s worsening fiscal situation, but also tells you what steps you can take right now to insulate yourself and your wealth from any fallout should lawmakers fail to take the necessary corrective actions