Is there an upside to the downgrade?
An ABC News ticker reads 'Standard & Poor's downgrades US credit rating from AAA to AA+' in Times Square on August 5, 2011 in New York City. The ratings agency decided to downgrade the US credit rating after the prolonged debt-limit debate in the U.S. government.
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.