The US Will Never Lose Its

AAA Rating

To the Editor:

 Last week the rating agency Standard and Poor’s (S&P) lowered the United States’ long-term outlook from “Stable” to “Negative” but reaffirmed our current AAA rating. As Americans we shouldn’t worry about S&P’s ratings because in all honestly they’re a complete joke. For Example, yesterday, S&P lowered Japan’s rating to AA-. The reason for the downgrade is due to Japan’s ability to repay debts (bonds) after the tsunami and earthquakes. S&P must have overlooked one key point: Japan owns one trillion dollars of US Treasuries. Japan won’t default, if they need money they can sell their US treasuries, and we risk default.

How can S&P rate the US AAA and Japan AA- when we owe Japan over one trillion dollars? Easy, they’re paid. Three short years ago S&P had AAA ratings on Bear Sterns, Lehman Brothers, Washington Mutual, AIG, Freddie Mac and Fannie Mae. Scary! Standard and Poor’s and other rating agencies’ job is to evaluate the credit worthiness of countries, municipalities, and corporations. In the past three years, these “experts” missed the financial crisis and continue to give the United States the highest rating as we spend $1.43 for every dollar earned. Every day investors buy bonds based on risk vs reward. Unfortunately the incompetent rating agencies don’t understand risk.

Daniel M. Patti, CFP

84 South Main Street, Building C, Newtown             April 27, 2011