by Martin D. Weiss | May 4, 2011 4:55 am
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 …
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:
These are precisely the things I have been warning about in my new video, American Apocalypse … and if you haven’t yet seen it, I encourage you to watch it now.
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
Source URL: http://investorplace.com/investorpolitics/weiss-ratings-rates-us-credit/
Short URL: http://invstplc.com/1nBt6Bs
Copyright ©2014 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.