Reuters has put out a great piece on how a fallout from a downgrade will effect average Americans, and one of the questions they had was this:
Will interest rates on mortgages, car loans, student loans [my emphasis] and credit cards rise?The answer:
Yes. Like any average Joe or Jane who misses a credit card payment, the United States will be socked with higher borrowing costs if it defaults on its debt. If the country loses its coveted triple-A rating, which is expected to happen, the cost to service its debt will probably rise. And that will have a significant ripple effect.So, what does this mean for borrowers in the next coming months? What will happen to those of us who have interest rates that are variable? It sounds safe to now say that they will definitely go up, and that's probably going to bring people closer to financial ruin, and that is if they aren't already there. We are being terrorized by our own politicians. What is the indentured educated class to do about these economic terrorists in D.C.?
As Senator Bernie Sanders said today, "this will devastate education . . . and the American people." It will devastate Americans, as he emphasized, on so many levels.
Senator Barbara Boxer said this evening, "if we fail this, I hope the President will invoke the 14th Amendment . . If we can't get together, the President will have to take this responsibility."
Some are also theorizing that Standard & Poor's is threatening to downgrade the ratings status of the U.S. in order to push away the possibility of being investigated.
"22 trillion Social Security Surplus revealed on C-Span," Daily Kos, July 30, 2011
Senator Bernie Sanders, "Why Americans Are Angry," WSJ, July 28, 2011
"House Panel Plans to Question Ratings Agency Over Downgrade Threat to U.S.," NYT, July 26, 2011