Fitch’s downgraded Ohio’s bond credit rating Wednesday.
Moody’s has warned that it will probably downgrade California’s debt rating in the near future.
Many other states are not far behind.
Downgrading a state’s rating increases borrowing costs, and thus destabilizes the state’s economy. And, of course, many states may have more problems than just credit downgrades.
As I have long argued, if the feds are going to give bailouts to anyone, it should be individuals and the states – not the big financial giants – because preserving the states which make up the United States is a lot more important than maintaining the status quo financial system.
And unless the people have some relief, they will not be motivated to borrow from the banks, so all of the bank bailouts will be useless in restarting the economy. Indeed, if the government had just given the money handed out so far to the people instead of the big banks and financial companies, we’d be on our way out of this financial crisis already.