STEVE CHIOTAKIS: Just about everything we’ve reported about the downgrade of the U.S. credit rating has focused on the havoc it’s caused. But the saying goes — there are two sides to every story.
So Marketplace’s Jeff Horwich is here to tell us about any upsides to this downgrade and market madness. Good morning, Jeff.
HORWICH: Hello, Steve.
CHIOTAKIS: Let’s start with markets. Is there any upside for investors?
HORWICH: So one of the perverse effects of the last few days is that people ran to the very thing that got downgraded: U.S. Treasuries. If you were invested there, you did OK. Precious metals, also a safe haven — so if you’re Scrooge McDuck already sitting on a big pile of gold, you’re happy. And then there’s the general upside of a stock market rout, which is that at some point it turns into a bargain. Frank Fantozzi of Planned Financial Services believes that point is now.
FRANK FANTOZZI: Savvy investors should recognize this is an opportunity to buy in at a discount considering this is comparable to the low point in 2009 when we were in our financial recession.
CHIOTAKIS: So all right, that’s the stock market — are there other upsides out there?
HORWICH: You see the price of oil is down — that could mean lower gas prices. It also, in a bigger sense, helps cool worries about inflation. Let’s say the downgrade is helping usher us into another downturn — retail expert Randy Allen at Cornell’s Johnson School of Management says hard times lead to good deals.
RANDY ALLEN: You know the drop in the stock market makes consumers feel less wealthy. If the house prices start to decline again I think consumers will tighten up and retailers will be forced to react, which will create opportunities for consumers for good buys.
HORWICH: And finally let’s not forget the big potential upside to the S&P downgrade: that it actually has the intended effect of kicking our politicians in the pants. That’s not so evident yet, but S&P just gave a whole bunch more reasons for politicians to feel the heat from voters — at least voters other than Scrooge McDuck.
CHIOTAKIS: All right, Marketplace’s Jeff Horwich. Jeff, thanks.
HORWICH: You’re welcome.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
