You be the judge. The “severe spending cuts” Washington recently passed at the last minute do not actually cut the debt. All the “cuts” do is slow the increase in spending. Our current national debt will still almost double in ten years and it is already unmanageable with our country borrowing about forty cents of every dollar it spends. Everyone knows this can not continue but our leaders are afraid to make the necessary cuts. We are now in the same risk class as Belgium. S&P indicated further rating cuts are a possibility as our national debt increases.
The downgrade not only could affect the borrowing costs of government but also may raise the cost of borrowing for everything from mortgages to car loans.
The White House made panicky calls to S&P Friday but to no avail. The decision had been made. Our federal government debt is now more dangerous according to ratings than Johnson & Johnson, Microsoft, ADP, or Exxon Mobil.
How will the markets react Monday? Who knows? Possibly the downgrade is already priced into the markets after the huge decline in the last few days. In any event, your retirement accounts have taken a big hit. This could not have come at a worse time in a suffering economy.
Ken Dillenburg