There a a numerous credit rating agencies in the world. To name a few, there is Standard and Poor's and Moody's. The agencies assign a credit rating to the issuer of a debt obligation using their assessment on the issuer's credit worthiness, which is the ability to fulfill the obligation.
As a result of the recent market crash, even countries are now being downgraded. How is a country involved in these ratings you might ask. The government bonds issued are the debt obligations of the countries and some major economies, such as Italy, have recently been downgraded. There is also talks about the US given a downgrade.
Is it time to panic? If the US gets downgraded, it would mean that the agencies, having done their assessments feel that the US might be unable to meet its debt obligations. It is quite a bad sign. Logically it should not affect the whole world but a major economy, there would be an impact on the other countries.
To conclude, it is good to prepare for the worse where there might be a double dip but keep in mind that every economy is cyclical and there would be opportunities all along the way. Be a dilligent investor and the opportunities might be yours.
