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Credit Ratings: Personal and National
It's All in the Game
When S&P decided to lower the credit rating of the most important nation on earth, this was taken as shocking, earth shaking news, but so what?
There is no major country in the world like the United States. Americans are the focus of the entire world.
The reason the US debt is so high, and America keeps raising the ceiling, is that investors and politicians in the US are at high elevations, unheard of in terms of optimism and generosity.
Statistically, the rest of the world has countries that are better at keeping their promises about paying back creditors with money that hasn't lost its value.
America is encouraging other nations to come up into the drivers seat for a chance and see what they can do to straighten out the recession that's trying the patience of everyone. But there are no takers. The blame is all placed on the USA, as is the responsibility for solving the worldwide economic crisis.
No matter what happens, a politician will use the event to leverage something out of it, such as cutting back on what he or she thinks is unnecessary and wasteful, or even horrendous and distasteful when speech-making requires stronger words.
As investors shy away from government bonds and embrace corporate securities, and as tiny countries puff up their egos knowing that their credit ratings are better than America's, many good things will come from the credit downgrading of the USA.
This shake-up might dislodge some complacency and start the ball rolling toward recovery, discovery, inventiveness, and prosperity. America should not despair because of her credit downgrading.
But what does the country's credit rating mean to an individual? Not much, because people only think of their own credit when they need a loan, such as to buy a car or a house. Your credit score alone doesn't determine your ability to get a loan. Many factors are involved when the lender wants to know whether you can handle a financial burden. But the credit score is taken into account and investigated or questioned when it seems low.
Just as with personal loans, where the history of an individual is more important than a credit rating, so it is with the USA. America is perceived as the Land of Opportunity despite the recessionary slump all over the world. The lowering of the credit rating of the nation was a sort of punishment for causing the worldwide bubble to burst, after every country was investing in the profits made by mortgage lenders to American homeowners who bought houses in the bubble economy of the high-tech revolution of the 1990's.
Therefore, the credit rating of the USA and the rating of an individual citizen are two different animals. One is a political comment, the other a personal assessment of character.
Credit and Responsibility Today
In personal life, bad credit indicates an almost antisocial and inconsiderate lifestyle. It shows a lack of consideration for society as a whole to not pay one's bills.
In national politics, the debt of a nation is different. It is like a corporation owing money to investors who've bought stock through confidence in the company's ability to succeed in the future. Personal and national debt, therefore, are different things.
America's credit rating as a nation isn't affecting her status as the most important and powerful nation on earth, with no equal in sight.
But what about the personal credit ratings of individual American families who've sustained losses of jobs and even homes during the economic turn-down that's left anyone without a high-tech background shifting gears and drifting farther and farther downward in an economic tailspin of uncertain employment?
A look at the Internet tells a sad story. Credit data has been accumulated and brought up to date as of 2015.
In 2015 Americans experience a normalcy that in previous decades would not be tolerated. This is shown by the startling statistic that the average American household has a total of more than $16,000 in unpaid and unpayable credit card debt at present.
Added to this is the impact on the American lifestyle. Instead of college graduates earning degrees in the humanities, such as history and literature, subjects that allow people to be free-thinking and independent in spirit, graduates now are regretting not majoring in computer programming.
The punishment for choosing a liberal-arts major is often a huge student-loan debt. In 2015, the average student loan debt is $32,000. This is only America. In other countries, where educational opportunities always are severely limited due to poverty or entrenched social-class rigidity, student-loan debts are nonexistent or not a newsworthy item because they are negligible.
The total consumer debt in America in 2015 for credit cars, mortgages, and student loans equals about 12 trillion dollars.
When someone defaults and sustains bankruptcy, a terrible black mark is left on that person's credit rating. And yet, bankruptcy, not repayment of the debt, accounts for more and more of the lifting of personal debts from a household.
The overall picture, therefore, is that America as a nation, compared to other countries, is still on top and unequaled. But the individual US citizens and households are still struggling for the most part due to layoffs and the lack of solid job opportunities for most people.