Lisanomics – The Nerve of Those Credit Rating Agencies!

Over the past few months, I’ve seen a commercial on television from a credit repair company featuring a character named “Lisa”. She’s a young, attractive, visibly pregnant mother standing in front of a nice house with a nice yard. She confides in the viewing audience that she has a credit score of only 612. With her hands embracing her stomach, she explains her “need” for a loan to purchase a larger house for her expanding family. She complains that her low credit score makes creditors “think” she’s “unreliable”.

Now Lisa seems like a nice, reasonably intelligent lady. So I’m somewhat perplexed as to why she doesn’t quite seem to comprehend what exactly a credit score is.

A credit score isn’t some random number from a lottery drawing that is arbitrarily assigned to individuals. If you have a low credit score, it’s because you did something to earn it.

A credit score is a measurement of your reliability as a borrower. Before creditors lend you their money, they understandably want to consider the risk that you won’t be able to pay that money back. A low credit score is a signal to them that you are indeed… unreliable.

So if I could humbly offer a piece of advice to the lovely Lisa, I’d say she might want to consider staying in her old house for now and cutting back on the spending.

I’ll cut Lisa some slack though. After all, she’s a fictional character portrayed by an actress who was paid by the credit repair company.

It’s much harder for me to cut slack to an American president who seems to share precisely Lisa’s naivety and sense of victimization in regard to the borrowing reliability of the United States of America.

Over the weekend, Standard & Poor’s credit agency downgraded our country’s credit rating from its historic Triple A rating. This news sent Monday’s stock market session plummeting.

President Obama quickly addressed the downgrade in front of television cameras. As always, he blamed everyone but himself for our country’s economic woes.

We learned from the president that S&P’s downgrade was actually unwarranted and that there’s no concern that we won’t be able to pay off our massive debt. He cited confidence from the always ready-to-lend-a-hand Warren Buffett as proof. I feel MUCH better now.

The president also claimed that the prolonged debate over the debt ceiling was what actually prompted the S&P downgrade. Yes folks, it wasn’t our runaway spending. It was those meddling terrorists from the Tea Party again! They’re to blame!

Before he was done speaking, he reminded us once again (in case anyone forgot) that he inherited a recession from the Bush administration. I have to wonder if the president’s campaign staff has considered changing his election tag-line from “Hope and Change” to “It Wasn’t Me!”

Our debt has grown to catastrophic levels. Yet, until just a couple of months ago, there was absolutely no interest shown from this president in addressing this clear crisis. He proposed a 2012 budget with absolutely no spending cuts. In fact, it actually increased deficit spending. The budget was so ridiculous that the U.S. Senate unanimously voted it down. It took weeks of sharp pressure from Republicans to reach a last minute debt ceiling compromise with Democrats that gave us $2 trillion in savings – the highest amount in savings the Democrats would agree to. This was $2 trillion short of the $4 trillion S&P said they required to prevent a downgrade, and $4 million short of the $6 trillion we would have saved with the House Republicans’ plan. That’s right… Had the Republicans’ plan been signed into law, we wouldn’t have been downgraded. Yet somehow, the president wants us to blame the Republicans for our new credit rating. Huh?

Let’s be clear about this, Mr. President… We earned this downgrade. There was nothing random or unwarranted about it. We have become unreliable. In the midst of this crisis, why doesn’t your side of the aisle get it yet?

Maybe Lisa can explain it to me.

Author Bio:

John Daly couldn't have cared less about world events and politics until the horrific 9/11 terrorist attacks changed his perspective. Since then, he's been deeply engaged in the news of the day with a particular interest in how that news is presented. Realizing the importance of the media in a free, democratic society, John has long felt compelled to identify media injustices when he sees them. With a B.S. in Business Administration (Computer Information Systems), and a 16 year background in software and web development, John has found that his real passion is for writing. He is the author of the Sean Coleman Thriller series, which is available through all major retailers. John lives in Northern Colorado with his wife and two children. Like John on Facebook. Follow John on Twitter.
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  • Florida Jim

    In florida we have seen good neighborhoods harmed by allowing people who could not afford the houses they were moving into, very nice houses with very low downpayments.
    We have seen many of those who moved into these nice houses have lweft with the lawns growing wild, the neighbors complaining and our equity destroyed all because of the “every American deserves a home” concept.
    Only those who can pay a 20% downpayment and have a stable job with which they can keep up the property and the payments even in a difficult time should have houses. Just like we did!

  • TomSr

    We earned this downgrade? Am I part of the we you speak of? If so, how? What did I do to lower the credit rating of this once proud country?

    • John Daly

      “We” is in our country (specifically Washington politicians). Not you Tom. 😉

    • Travis

      We earned this downgrade by electing congressmen, senators, and presidents who have spent us into oblivion. We have earned this downgrade by not holding these people accountable for what they have done. We have earned this downgrade by being more concerned about who will win American idol than with who runs this country. We are all at fault for not being vigilant engaged citizens. Lets turn off Jersey shore, wake up, and earn something our kids will thank us for. Thank you John for doing your part.

  • begbie

    The S&P pointed out that part of the downgrade decision was based on the apparent indecision and lack of cooperation between the two political parties.

    They should have just called this for what it was, that our government spends too much. And because we didn’t cut spending by $4 trillion to avoid the downgrade, as they warned us with ample time, S&P followed through with the warning and immediately downgraded our rating. Seems simple to me. The S&P was very straightforward with it’s intentions and that’s fair.

    Shame on those who want to continue to deny that this country’s government is terribly irresponsible.

  • DOOM161

    The problem with your article is that the deal that gives us $2 trillion in savings doesn’t give any savings. It raises spending by $7 trillion, which is only a cut by Washington math.

    • begbie

      Democrats offered 0 cuts from the beginning. Remember the desire of the administration for a “clean” increase to the debt ceiling back in April?

      The republicans didn’t do enough, but the democrats are no option. They aren’t even willing to seriously discuss it. They were bullied into a discussion, and rightly so. About time.

    • John Daly

      Good point. But I believe even a fakey $4 trillion would have been enough for S&P.

  • John

    Shortly before reading your piece, I read an editorial by Paul Krugman in the New York Times. Krugman criticized the temerity of S&P in presuming to downgrade our credit worthiness, and took time to blame the Tea Party for putting us into our current financial crisis.

    Obviously, if you can’t solve the problem, blame those who brought it to our attention.

  • Nancye

    Maybe Lisa can explain it to Obama!