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#229451 - 08/08/11 08:29 PM AA+ is that it?
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
I'm not really knowledgeable in the subject. But the AAA->AA+ fallout and the following news looks scary. Anyone to explain what to expect? And how to prepare to survive for an average Joe? Wondering why there is no thread about that already? Considered to be a political question?

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#229455 - 08/08/11 09:14 PM Re: AA+ is that it? [Re: Alex]
JBMat Offline
Old Hand

Registered: 03/03/09
Posts: 745
Loc: NC
Staying away from anything political.

Nations have credit ratings, much like your credit score. The higher the rating, the better the credit worthiness/ability to pay off debts.

By lowering the credit rating from basically 100 (AAA - able to pay all debt on time) to like 95 (AA+ - more likely than not to be able to pay all debts on time) Standard and Poors has stated they think the US will have trouble paying debts on time. The reasons for this are many and varied. So not going there.

What impact does this have on Joe Sixpack? Rates on credit cards, loans, mortgages and other credit may rise. The value of the dollar v. other currency may drop, making things cost more. Inflation may rise.

How to survive. Live within your means. Pay yourself each paycheck, as in put some cash away and forget about it. Don't buy stuff because you want it, get only what you need. Look at your credit cards, use the one with the lowest rate, cut up the rest and pay them off. Call your credit card company if you have good credit and ask for a lower rate. Any credit you are currently carrying, pay off ASAP and save that money. Learn to live below your current income. It's not easy, and the sacrifices are not that great.

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#229458 - 08/08/11 09:40 PM Re: AA+ is that it? [Re: Alex]
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
Thanks for the explanation, JBMat. What about investing the existing cash savings into, lets say, fine firearms right away?

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#229460 - 08/08/11 10:07 PM Re: AA+ is that it? [Re: Alex]
chaosmagnet Online   content
Sheriff
Carpal Tunnel

Registered: 12/03/09
Posts: 3270
Loc: USA
Originally Posted By: Alex
Thanks for the explanation, JBMat. What about investing the existing cash savings into, lets say, fine firearms right away?


Firearms are an investment in three different ways: protection, leisure, and future resale value. I've chosen to invest in the first two, but not the third except incidentally. What income I have available for investment is going first into tax-deferred retirement accounts, and next into carefully selected stocks. While I'm not smart about that sort of thing, I have friends who are.

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#229462 - 08/08/11 10:23 PM Re: AA+ is that it? [Re: Alex]
jshannon Offline
Addict

Registered: 02/02/03
Posts: 585
Loc: North Texas
It's bad when Standard & Poor can bring down markets with their silly ratings of a country's ability to pay a debt they never defaulted on. There should be laws against this.

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#229463 - 08/08/11 10:24 PM Re: AA+ is that it? [Re: chaosmagnet]
Paul810 Offline
Veteran

Registered: 03/02/03
Posts: 1428
Loc: NJ, USA
On the upside, if you've got a lot of gold you're willing to sell, it's now over $1700 an ounce....nearly an even trade with platinum.

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#229466 - 08/08/11 11:00 PM Re: AA+ is that it? [Re: Alex]
Arney Offline
Pooh-Bah

Registered: 09/15/05
Posts: 2485
Loc: California
Originally Posted By: Alex
Considered to be a political question?

I think you'll find that a question like this often brings out either excessively "passionate" responses, shall we say, or a lot of fringe and conspiratorial answers, like rants about the New World Order, etc. Reading the comment sections of various other websites is pretty sad reading and makes me glad to scurry back to the warmth and sanity of ETS. grin

That said, the world of economics and finance is *very* important to all of us, yet most of us are woefully unprepared to really understand much of what is going on in the world now. I have spent a lot of time in self-study but as with many things, you eventually realize that the more you learn, the more realize what you don't know.

I'll just say one more thing--no one--NO ONE--really knows what is going on now. We are essentially in uncharted waters and no Nobel laureate in economics or Chairman of the Federal Reserve or hedge fund manager or financial journalist can really predict with any certainty what is going to happen. Many are very experienced and have great insight, but things now really are incredibly volatile and perplexing to everyone. So take everything with a grain of salt and try and gain your own knowledge base so you can evaluate what you're hearing. That's good advice under normal circumstances, but even more so in these turbulent times.

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#229468 - 08/08/11 11:11 PM Re: AA+ is that it? [Re: JBMat]
UTAlumnus Offline
Old Hand

Registered: 03/08/03
Posts: 999
Loc: East Tennessee near Bristol
Quote:
Rates on credit cards, loans, mortgages and other credit may rise.


And if you're living within your means already, so should the interest rates on bank accounts.

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#229471 - 08/08/11 11:25 PM Re: AA+ is that it? [Re: Alex]
NuggetHoarder Offline
Member

Registered: 07/01/11
Posts: 145
Loc: Appalachians
My take on this may be a wake up call for some...

If you were surprised by what has happened over the past week, then you need to re-examine your belief systems, where you get your news, and who you trust for financial information. College trained economists who embrace high levels of debt and the printing of fiat money to pay those debts are not to be trusted, no matter whether they have a Nobel Prize or not.

I'm a prospector so I've been pro gold for a long time. I sold all my stocks like Ford and Apple and Microsoft in April and went to 100% gold, silver and a little cash. I, along with many others, were anticipating the latest action in the markets.

I'll leave you all with one final note. This entire topic is not about debt, stocks, or political parties. It is about the demise of the US dollar. Gold did not go up in value this past week. The dollar went down in value. The sooner you embrace that dynamic, the better.

What you are witnessing is the demise of the United States currency towards worthlessness. Protect yourself from that and you'll be fine.

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#229472 - 08/08/11 11:29 PM Re: AA+ is that it? [Re: Paul810]
Alex Offline
Old Hand

Registered: 03/01/07
Posts: 1034
Loc: -
RA, stocks, gold - are not reliable in this economy anymore, they can permanently go down with the dollar any moment. IMO, only real goods, which are hard to wear off from moderate use, compact, and in a good demand is the way to go. In the USA (hoping for the firmness of the 2nd amendment holiness) I can think of guns only.

Yep, I'm with NuggetHoarder on this situation. But gold - still not good because it's too late already. And it's useless when the market will be down to pure hand to hand trade for a while (I'm talking about investing in it, not prospecting off course).

Regarding the ban on politics. It seems to me - the rule of thumb must be: talk about what you are going to do or done yourself, not about others (like governments, politicians, bankers, etc.).

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