S. Floridians React To S&P’s Decision To Lower Credit Rating

MIAMI (CBS4)- Top officials at Standard & Poor’s are not backing down from their decision to downgrade the U.S government’s credit rating, and that decision has South Floridians, including financial analysts, watching closely.

The credit rating agency announced that it is cutting the country’s top AAA rating by one notch to AA-plus. The credit agency said late Friday that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country’s debt situation and that the policymaking is not stable or effective as needed to address the current economic challenge.

It’s similar to your credit rating and when the score dips the price of living goes up, CBS4 Tiffani Helberg reported.

The decision was a historic move. America’s gold-plated credit rating took a hit after nearly a century of perfect credit.

“It’s the first time in the United States history that our credit rating, the nation’s credit rating, has been lowered,” said South Florida financial analyst Jack Howell said.

It’s something financial analysts, including Howell, are watching very closely. Howell founded the American Institute for Financial Education.

“It is a big deal and we are really in unchartered waters,” Howell said.

The White House said the talks that led to this week’s deal on hiking the borrowing limit “took too long” and were “at times too divisive.”

President Barack Obama predicted the move would inflict pain across the board.

“A lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans and their credit cards,” he said.

That’s bad news to South Floridians trying to pull through in an already difficult economy.

“I have a car loan which if my interest rate goes up is going to make me take money away from other things that I might be spending it on,” South Floridian John Quimby said.

The news has some thinking proactively about their savings.

“That means, you know, less time to go out to spend money,” Marco Espinoza said. “(I have to) just be more conservative about saving my money, you know.”

Some say the stock market saw this coming since this past week was its worst week since the 2008 financial crisis.

“Some investors have been leaving the stock market and have been shifting their capital into quote, unquote safe havens which are generally U.S. treasury bonds,” Howell said.

Howell added that, “individual investors should be aware that we are in turbulent times and probably will be in these times for some time to come in the future.”

S&P is also issuing the U.S. a negative outlook, which basically means if Washington cannot prove itself fiscally responsible another downgrade could be on its way.

  • Serena

    Stop spending money, USA!

    Do you realize that when you go into depression, the rest of the world will go along with you?

    Stop throwing money at every problem you see!

    Stop sending billions to other countries! It only helps the rich people who run the country – the poor people never see a dime!

    If I don’t have money, I cut back on my spending – why don’t you do the same, USA?

    • Ricardo Perez

      You are 100% right.

      That is exactly what Standard & Poors just said.

  • danvass

    much reaction over nothing. this is still the greatest economic power on the planet and America will always be strong

  • Phil Landers

    ^ is a little naive eh? 235 years was a pretty pathetic run, the Empire is crumbling right before our very eyes. I don’t believe it is by chance either, I believe it is by design. Unless we manufacture something it’s never going to come back, thanks Reagan. It really makes no difference for there are greater forces at work than that which is readily perceivable.

  • Mike R

    The people of The USA should take this as a hint for the next election and replace everyone of these useless people in the House and Senate. we also need to put term limits on these positions so we can have constant change not another era of some Senators spending 20 years in that position. It should be an Honor to serve not your second career. How many times did one of them say they were fighting for their “POLITICAL CAREERS” I thought they were suppose to be fighting for the people who put them in office and OUR best interests not theirs.

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