California Downgraged

This is what should be getting the attention tomorrow instead of the Intel numbers (I won't hold my breadth) because of how explosive the situation could become. After Fitch lowered California's rating a week ago, Moody's has followed suit cutting two notches from A2 to Baa1.

From Bloomberg

California’s credit rating, the lowest of all U.S. states, was cut for the second time in as many weeks amid lawmakers’ failure to close a $26 billion deficit that left the most-populous state issuing IOUs to creditors.

Moody’s Investors Service said it lowered California’s credit rating two steps to Baa1 from A2 and said it could be reduced further if legislators don’t quickly address the state’s cash problem. The new grade is three levels above non-investment grade.

I don't have a clue how this could all play out. Not an area that I understand or that I could potentially handicap. My guess is eventually it will mean alot more debt at the Federal level.