"YEA THAT IS A BIG DEAL" Some states expect to get downgraded too as a consequence. That makes it more expensive to borrow money or finance bonds.
It was already tough paying for infrastructure, schools, disaster/bad weather relief, healthcare, fire and police departments, etc. Now it will be a lot harder.
This will cut into budgets in areas already cash-strapped by reduced tax income:
1. Reduced wages (unemployment up, some workers settling for lower income jobs).
2. Reduced property tax income:
-houses lost by default or
-converted from single-family to multi-family units (children move back in with parents) or
-devaluation reduces teal estate taxes.
3. Reduced transfer tax income when people buy fewer houses, cars, etc. or buy less often.
4. Reduced sales tax as people cut back on spending.
5. Reduced income from tourists and business (conventioneers).
6. Reduced income from restaurants, hotels, etc., depending on where money flows.
7. The U.S. looks really stupid and not trustworthy/fiscally wise or sound.
8. The U.S. no longer the "go to" safe country for the world to stash cash.
9. The U.S. doesn't seem to carry such a "big stick" anymore.
10. China and Russia "proved" right for saying our financial system is damaged and parasitic.
11. Globalization doesn't seem like such a bright idea anymore.
It could make it tough for cash-strapped or small companies to get decent rates.
Out of curiosity, who makes money on this? Who reaps money from higher lending rates? Who'll buy assets when prices are low?
