Welcome!

Blog Feed Post

S & P Downgrade of the U.S

Let’s make clear what is happening today, what relationship this bears to the Standard & Poor’s downgrade of the U.S. financial system, and how it affects your plan for retirement.

There is some legitimacy to the concern over the debt rating reduction. For as long as anyone can remember the United States of American has been the gilt-edged standard of financial wherewithal and responsibility (70 years to be exact). To be downgraded, though somewhat symbolic, is a shock to the system.

S&P’s concern is the amount of debt we now have; in excess of $14.5 trillion today, which is $ 4 trillion more than just 30 months ago, and increasing at a DAILY rate of $4.5 billion. That’s right; the U.S. is borrowing $4.5 billion every single day. What is interesting here is that S&P (along with Tea Party members and supporters) seem to be the only ones concerned about this current, and ever increasing, debt level.

Warren Buffett seems to think this is no big deal. Senate and House Democrats characterize this as the Tea Party downgrade, replacing their normal scapegoat George Bush with the only group of Congressmen who see the ballooning debt as a serious problem.

The DEBT is the problem; the downgrade is only the symptom. The rating agencies really messed up when they rated subprime mortgage loans and derivatives as AAA before the financial crisis. Now, when they down grade U.S. debt, which should be rated lower than AA+, the same people howl from the other side of the issue.

If Social Security and Medicare were required to report their financials in the same fashion companies and pension plans are, FASB and PBGC would be taking over the operation of the government. FASB is the agency that requires companies to place the present value of their future liabilities as an entry (negative item) on their balance sheets. PBGC does the same for defined benefit retirement plans. When a pension plan is mismanaged PBGC sets in and takes over.

The present value of U.S. future Social Security and Medicare liabilities is estimated to be $61 trillion. These benefits must be scaled back in some form or fashion.

The downgrade does contribute to the market reaction today and over the past couple weeks, but it is only a small part. A major cause today is the soon to be apparent unraveling of the European Union, with Greece already consuming two bailouts without achieving a solution, Italy on the ropes (the third largest European economy), and other nations soon to follow.  For this reason, U.S. interest rates are more likely to go down in the near term, than increase - currently the U.S. is the least offensive smell in the room.  Moreover, U.S. interest rates actually dropped today...

Another major part here is the fact American politicians do not see, which the financial markets now do see, the unraveling of the EU as portending what will happen in the U.S. without significant financial changes. For crying out loud, Italy last Friday promised to pass a constitutional balanced budget amendment. Where is the U.S. leadership in this issue? Our President and Democratic majority refused to include this much-needed provision in the debt ceiling talks, which is why a stop gap measure of dubious value was passed instead.

Another major part of the issue is the failure of the U.S. government to craft and implement a legitimate growth plan which includes lower taxes and a common sense, effective regulatory plan. The U.S. corporate income tax is the highest of any developed/developing nation. It’s no wonder that billions and billions of dollars are being redeployed to other more tax hospitable locations such as China and India (all subjects of which I’ve written about before in this column).

As for your retirement, we have prepared for what is taking place. The market reaction will force a serious discussion about these issues and require changes. The good news is we are positioned to respond appropriately as things calm and legitimate opportunities present themselves.  Do you need a new source for your retirement advice?  Email or call me.

Read the original blog entry...

More Stories By Dana Barfield

Dana is the president of The Barfield Group, which has provided industry leading Financial Advice, Investment Services, and helped people Plan for Retirement for more than 20 years. He is a frequent speaker and writer for a variety of industry, regional, and national publications on business ownership and wealth building related topics.

Latest Stories
SYS-CON Events announced today that SIGMA Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. uLaser flow inspection device from the Japanese top share to Global Standard! Then, make the best use of data to flip to next page. For more information, visit http://www.sigma-k.co.jp/en/.
Is advanced scheduling in Kubernetes achievable? Yes, however, how do you properly accommodate every real-life scenario that a Kubernetes user might encounter? How do you leverage advanced scheduling techniques to shape and describe each scenario in easy-to-use rules and configurations? In his session at @DevOpsSummit at 21st Cloud Expo, Oleg Chunikhin, CTO at Kublr, will answer these questions and demonstrate techniques for implementing advanced scheduling. For example, using spot instances ...
SYS-CON Events announced today that Yuasa System will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Yuasa System is introducing a multi-purpose endurance testing system for flexible displays, OLED devices, flexible substrates, flat cables, and films in smartphones, wearables, automobiles, and healthcare.
Join IBM November 1 at 21st Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA, and learn how IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Cognitive analysis impacts today’s systems with unparalleled ability that were previously available only to manned, back-end operations. Thanks to cloud processing, IBM Watson can bring cognitive services and AI to intelligent, unmanned systems. Imagine a robot vacuum that becomes your personal assistant th...
SYS-CON Events announced today that Taica will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Taica manufacturers Alpha-GEL brand silicone components and materials, which maintain outstanding performance over a wide temperature range -40C to +200C. For more information, visit http://www.taica.co.jp/english/.
SYS-CON Events announced today that B2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. B2Cloud specializes in IoT devices for preventive and predictive maintenance in any kind of equipment retrieving data like Energy consumption, working time, temperature, humidity, pressure, etc.
Today traditional IT approaches leverage well-architected compute/networking domains to control what applications can access what data, and how. DevOps includes rapid application development/deployment leveraging concepts like containerization, third-party sourced applications and databases. Such applications need access to production data for its test and iteration cycles. Data Security? That sounds like a roadblock to DevOps vs. protecting the crown jewels to those in IT.
SYS-CON Events announced today that Cedexis will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Cedexis is the leader in data-driven enterprise global traffic management. Whether optimizing traffic through datacenters, clouds, CDNs, or any combination, Cedexis solutions drive quality and cost-effectiveness.
Many companies start their journey to the cloud in the DevOps environment, where software engineers want self-service access to the custom tools and frameworks they need. Machine learning technology can help IT departments keep up with these demands. In his session at 21st Cloud Expo, Ajay Gulati, Co-Founder, CTO and Board Member at ZeroStack, will discuss the use of machine learning for automating provisioning of DevOps resources, taking the burden off IT teams.
SYS-CON Events announced today that NetApp has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. NetApp is the data authority for hybrid cloud. NetApp provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with their partners, NetApp em...
Why Federal cloud? What is in Federal Clouds and integrations? This session will identify the process and the FedRAMP initiative. But is it sufficient? What is the remedy for keeping abreast of cutting-edge technology? In his session at 21st Cloud Expo, Rasananda Behera will examine the proposed solutions: Private or public or hybrid cloud Responsible governing bodies How can we accomplish?
SYS-CON Events announced today that Ryobi Systems will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ryobi Systems Co., Ltd., as an information service company, specialized in business support for local governments and medical industry. We are challenging to achive the precision farming with AI. For more information, visit http:...
Cloud-based disaster recovery is critical to any production environment and is a high priority for many enterprise organizations today. Nearly 40% of organizations have had to execute their BCDR plan due to a service disruption in the past two years. Zerto on IBM Cloud offer VMware and Microsoft customers simple, automated recovery of on-premise VMware and Microsoft workloads to IBM Cloud data centers.
SYS-CON Events announced today that mruby Forum will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. mruby is the lightweight implementation of the Ruby language. We introduce mruby and the mruby IoT framework that enhances development productivity. For more information, visit http://forum.mruby.org/.
With the rise of DevOps, containers are at the brink of becoming a pervasive technology in Enterprise IT to accelerate application delivery for the business. When it comes to adopting containers in the enterprise, security is the highest adoption barrier. Is your organization ready to address the security risks with containers for your DevOps environment? In his session at @DevOpsSummit at 21st Cloud Expo, Chris Van Tuin, Chief Technologist, NA West at Red Hat, will discuss: The top security r...