Losing our AAA status is years, maybe even decades away. It will happen though, that is a near certainty.
And I highly suggest that before it does happen, you have a basket of international currencies (not euros) so when the dollar becomes worthless you are all protected.
If you have a brokerage account at Interactive Brokers, you can convert your US Dollars to various international currencies and then invest with your currencies.
I've started doing this small and will continue to do so over the next decade until I see signs of a President and Congress that actually have a clue what's going on.
I don't know. I think it depends on what source you read. I've read if the variables don't change it could happen much sooner.
Uncle Sam Could Risk AAA Status As Early As 2012
What does it take to risk losing your triple-A status? For Moody's, your AAA-rating starts to become an issue once interest payments
reach 10% of your revenue.
Unfortunately, given rising debts and falling tax revenues, the US could hit this level as soon as 2012. While Moody's has recently stated that America's AAA isn't at risk, they have definitely started to give the US some polite nudging.
WSJ: In its report Wednesday, Moody's singled out the U.S. and the U.K. as two countries that "have lost altitude" among those with triple-A ratings, but noted they remain in the group of "resilient" economies, better placed to keep their ratings intact than Spain, which it called "vulnerable."
"Although highly unlikely, it's conceivable that a large and wealthy economy could lose its Aaa rating if it were to experience a material and irreversible deterioration in its debt conditions over the next five years or so, following the fate of Japan in the 1990s," said Pierre Cailleteau, managing director of Moody's Sovereign Risk Group.
Given the higher interest costs that would come with a ratings downgrade, hopefully the risk of losing triple-A status alone will spur increased fiscal responsibility. If this seems like a pipe dream, then maybe the ratings agencies can stretch their criteria just one more time for old times sake.
And if they don't, well, we hope they remember their privileged regulatory status...
http://www.businessinsider.com/us-debt-could-risk-aaa-status-as-early-as-2012-2009-9
Does loss of Triple-A rating matter?
Now that General Electric and Berkshire Hathaway have lost their Triple-A credit ratings, only five U.S. companies are left with that status. With fewer companies standing at the top, what does losing an A really mean? Jeremy Hobson reports.
TEXT OF STORY
Kai Ryssdal: Warren Buffett's Berkshire Hathaway holding company has gotten a financial poke in the eye. It lost its AAA credit rating today. The downgrade from Fitch -- that's one of the three big credit rating agencies -- leaves Berkshire at what's called AA plus. That means it has a slightly higher risk of defaulting on its debt than before. The decision by Fitch came just hours after S&P did the same thing to General Electric. It is now at AA plus as well. And that means each company will have to pay more to borrow money -- not a good thing in a time of tight credit. Here's Marketplace's Jeremy Hobson with more on rating deflation.
Jeremy Hobson: So, what does it mean to be AAA? It's kind of like the way the credit card companies look at you if you've got a great FICO score.
Nicki Riccio: You are going to pay back your debt without any doubt.
Nick Riccio is managing director in corporate ratings at Standard and Poors. He says the number of companies that can pay back their debt without any doubt has been falling for years.
Riccio:
There are five left. Alright? At one time that number was about 32, but over the last couple of decades, we've been kind of sliding a little bit.
More than a little bit. Riccio says the vast majority of American companies are rated junk these days. Gerald Epstein is an economist at the University of Massachusetts. He says with these downgrades, the rating agencies are just stating the obvious.
Gerald Epstein: Anybody who looks carefully at what's going on in the financial markets knows that Berkshire Hathaway is -- it has some investments that are in trouble. You don't really need the credit rating agencies to tell you that.
Epstein says agencies like S&P lost his confidence when they failed to rate mortgage backed bonds correctly. He says their ratings on companies are more reliable. But he says they're not quick enough on the draw.
Epstein: They really in a sense contribute to the business cycle by the way that they do these ratings. I would prefer to see them do ratings in a much more long-term kind of way, rather than go up with the cycle and being over-pessimistic on the way down.
Epstein says until the rating agencies get more transparent about the way they do business, that extra A in the rating doesn't mean much.
In New York, I'm Jeremy Hobson for Marketplace.
http://marketplace.publicradio.org/display/web/2009/03/13/pm_aaa/
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I am very concerned about personal finance in these uncertain times. I want to thank everyone for their input. It's nice having a civil discussion.
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