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What happens to a country after a debt downgrade?

A man walks past an electronic board showing the closing price of Japan's Nikkei share average.

Steve Chiotakis: The U.S. Senate today is expected to approve the debt ceiling bill passed late yesterday by the House of Representatives. The deal averts a possible default but there's still concern the country's top-notch credit rating could be downgraded. Now if that happens we can get an idea of what it could mean by looking at one place in the world where credit downgrades have happened before.

Japan. The BBC's Roland Buerk is with us from Tokyo. Hi, Roland.

Roland Buerk: Hi.

Chiotakis: Is there an immediate impact on ordinary people -- did loans become more expensive, and prices rise and things like that?

Buerk: Even though Japan has been downgraded earlier this year and in 2002, the government here is still able to borrow at some of the cheapest rates in the world. And that means that loans for Japanese people are very cheap as well. But that doesn't necessarily mean people in the United States can hope to live in that fortuitous circumstance. The difference between Japan and the United States is that more than 90 percent of government bonds here are held by the Japanese people. They're not borrowing from foreigners.

Chiotkais: What about the long-term effects on the Japanese people from the downgrades?

Buerk: After the boom and bust, Japan had a long period of stagnation. And that meant an entire generation of people who came of age in the 90s and the 2000s, didn't get onto the career ladder. They ended up being temporary workers. They never got to be salary men, and the problem is that even though the economy has picked up, companies have preferred to hire new graduates, leaving those people on the scrap heap, and that could be the situation for people coming of age in the United States now

Chiotkais: The BBC's Roland Buerk in Tokyo. Roland, thank you.

Buerk: Thank you.

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