When a Country, state, county, town, or company issues debt, the rate the entity has to pay is an indicator of risk. For a low-risk debt note, the company pays less interest than a high risk debt note.
Pretty simple.
California is now a "higher risk" for bond purchases than Kazakhstan, Uruguay and Lebanon. The question is, how much interest can we all pay as a debtor nation before it spirals out of control?
Let's hope we never find out.
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