Economics Experts In Philadelphia See Little Effect From S&P Downgrade Of US Credit

August 8, 2011 2:03 PM

Reporting Pat Loeb

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PHILADELPHIA (CBS) - The stock market is taking a beating, but does a small investor need to worry? We talked to local economists about that question.

Wharton professor Kent Smetters says all the concern about Friday’s credit downgrade were unnecessary.

“What we’re seeing is just the opposite of what everybody predicted. We actually saw a good run on bonds,” he says. “People are demanding government bonds.”

Smetters says bonds prices already reflected a certain level of risk so there won’t be the expected disaster for consumer credit.

eileen appelbaum Economics Experts In Philadelphia See Little Effect From S&P Downgrade Of US Credit

(Eileen Appelbaum. File photo)

But stock prices are another matter.

Former Temple University professor Eileen Appelbaum (right), now with the Center for Economic and Policy Research, says the downturn has nothing to do with the US economy.

“This is really due to what is happening in Italy and Spain,” she told KYW Newsradio, “and if the European Central Bank will step up to the plate, the stock market will stabilize.”

Smetters, of the Wharton School (right), thinks the stock market is reacting to the realization that the recovery may take years. He says investors should avoid risk, even if it means a lower return.

On the bright side, oil prices went down today so gas prices should soon go lower.

Reported by Pat Loeb, KYW Newsradio 1060

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Mike

I wonder how many of you people realize that when the Creditworthiness of the USA was downgraded by the S&P it also eventually affects everyone’s Credit Score and ability to borrow as well. Many banks on USA soil are now foreign owened and capitalized with a mix of both US and foreigen financial instruments and funds. Do you not see that those lenders will also lump ordinary Americans into the mix as bad credit risks as well? It’s happened in Greece, Spain and Italy with their citizens and it’s likely to happen here too. Best you keep an eye on your Credit Score from this point onward!
WE THE PEOPLE

I just wonder how many of the board of directors at the s&p are republican?Is this just econmic terrorism by our (rich folks) oh sorry job creaters.If you tax me I will close my plants, if you want a contract you will lose your jobs.The corporate amerian dream,1912 here we come. Why are we letting corporations run the U.S. government? If you want a free economy, don’t demand your subsidy& tax brakes to create jobs in china.
Carolyn

Let’s face it, all of the pols had a hand in the debt crisis, DEMS AND REPUBLICANS, so let’s get a whole new crew in CONGRESS and the SENATE!!!
Poseidon

“On the bright side, oil prices went down today so gas prices should soon go lower.” Ha, I loved that quote. Basically, your economy is spinning out of control right down the toilet, but you might be able to fill your car up for 80 bucks instead of 90. Thanks…
Samuel A. Maffei

You say this as the Dow is down 450+ points right now. If this continues, the Dow will have lost 10% of it’s value in less than 2 weeks. Bah!
Hater

How many times in the past year or so have these “economics experts” been “unexpectedly” incorrect? I know they don’t want to cause a panic but we’re all not total idiots. Next year, vote American. Please! obama the terrible and the Demoncrats are destroying our country.

Angelo

I Agree!!!
“Markets will rise and fall,” Obama said. “But this is the United States of America. No matter what some agency may say, we’ve always been and always will be a triple-A country.”

oh yeah i forgot S&P is just “some agency”…………anyone that believes anything obama says is clearly not very bright