At some point, Professor Giddy said, the note "becomes worthless, because the rating gets downgraded, the interest is exorbitant and the company can't afford to pay it".
Mr. Paulsen likens downgrades to interest rate moves by the Federal Reserve.
For the first time in U.S. history, our credit rating has been downgraded, meaning higher interest rates on Americans' personal debt, like credit cards and student loans.
If that rating is downgraded, San Francisco will pay higher interest on its debt payments, which are about $300 million this year.
Earlier Thursday evening, Dallas police had posted a photo of an alleged suspect that they later downgraded to a person of interest.
Many loan agreements and issues of debt securities now include ratings triggers: if there is a downgrade, the interest rate is increased, or sometimes the debt must be repaid immediately.
Yet the Competition Commission, for whom the issue of public interest has been further downgraded, has said nothing.
A Bear Stearns analyst just downgraded the drugmaker, figuring that Alan Greenspan's interest-rate cut means that investors should move into faster-growth stocks.
Standard & Poor's said it had downgraded its rating of Iceland's local currency, and interest rates on Greek bonds rose, signaling dwindling investor confidence.
If our credit is downgraded, it would cost us billions of dollars more in interest payments on our existing debt and drive up our deficit.
