In August of 2011 the world’s largest economy lost this prized economic rating. Almost half a year later, several countries on the other side of the Atlantic have been subjected to the same fate.
France has been swift in declaring that its economic wellbeing in the long run does not lie in the hands of a foreign credit rating agency, but the fact of the matter still is that the world’s economy as a whole is being strangled; it’s vital air supply slowly being suppressed while its many dependent organs, represented by world nations with their stock markets, are beginning to panic.
It is clear that the world cannot continue to promote the filthy rich lifestyle of get rich quick. Across all geographic lands people have been so busy trying to leave the “Have Nots” and join the “Haves” that the basic principle of wealth creation has been lost.
Years ago in the islands our fore parents would tell us that “hurry birds don’t build good nests”; however, that is precisely what our educated and civilized western society has been doing with its over dependence on credit. But it is a good lesson for us to learn that we should not spend monies that we do not have as yet.
You see, when we utilize credit we are in effect borrowing monies from our future to use in the present. It is the reverse we should be doing: paying forward monies from the present to have for use in the future. The present always passes but when the future comes it is there to stay. Our continuous present time is always leading to the future. It is in our future that we would sometime cease to be. It makes good sense then to prepare for that future.
So what is the point I am making? Governments as well as individuals must get back to the basic denominator for trading. We all must learn to use the little cash we have and make it do. Nothing good comes easy. Good wealth takes TIME to accumulate. The very sad thing about the world’s spending pattern is that even though it might be the filthy rich who spend on credit purchases it is the common man on the street who suffers the most when things get hard.
Now that countries are losing their credit ratings, their governments are going to find it that much harder to borrow monies. I know that the governments like mine in the islands have little to generate wealth for their recurrent expenditures. It has become a regrettable cycle of credit and taxation to keep government services and public goods available to the citizens.
There is nothing able to chase away potential investors more than the lowering of a country’s credit rating, signalling that its government has the odds against it when it comes time to repay the principal and its interest. The spill off on already struggling economies are possibly quite tragic. Can we really expect employment to be maintained or even grow?
I read with interest a day or so ago about the findings from a British research that suggest Somalian pirates are using their ransomed gains to actually develop the Somalian economy, primarily through construction. That is interesting because there are many struggling economies which are being kept afloat by revenue from illegal activities such as trade in illicit drugs or cargo (including people).
I suggest, in the midst of such credit rating downgrades that the G-8 leads the way in finding educational programmes and better living incentives to encourage the world’s citizens to go back to cash. They need to lead the way in practically finding ways to really share the world’s wealth—if not so much among the very poor and destitute, then among the developing world’s economies that are desperately trying to eke out a living for its needy people.