What the S&P debt downgrade in Europe means to you at home

CLARKONOMICS: Now that Standard & Poor’s has downgraded the debt standing of nine European countries, what does it mean to us here at home?

Italy has the same financial rating as Kazakhstan. Portugal is now considered a junk bond country, just to name two examples. So many countries were living on deficit spending. We’ve heard about Greece and its possible default. Europe is facing a possible recession, the euro could blow up and countries may have to go back to their own currencies.

While we could be affected some to a lot by all of thise, the reality is we need to get our own act together and focus on our financial house here at home.

You may recall that America’s debt rating was downgraded back in August 2011 because Congress turned the debt ceiling debate into political theater. Now two new surveys show that the American people have a record high contempt of Congress — regardless of their party affiliation.

Let’s face it, both political parties are just rhetoric machines right now. We don’t want to follow the path of Europe into financial Armageddon. To avoid it will require a real discussion about Medicare, Medicaid and Social Security, the latter to a lesser extent.

In the short term, I’m expecting we’ll get just a glancing blow from the problems in Europe. That’s becasuse these are known problems; what’s really concerning are the unknown problems, such as when Japan was hit by the tsunami that disrupted manufacturing all around the world.

So yes, Europe is a problem and could affect us. But the real thing we need to focus on is us and our finances here at home.