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Jeremy Hobson: It's already turning into another rough day for global stock markets. And with the stock market drop comes a drop in the interest rate the government is paying on its debt. At one point yesterday, Uncle Sam was paying less than 2 percent interest on ten year government bonds. That's the lowest rate in at least 50 years. And it comes despite S&P's downgrade of the US credit rating.

Marketplace's John Dimsdale reports from Washington.

John Dimsdale: With the downgrade, it should cost the government more to attract buyers of its bonds. Instead, just the opposite has happened. Partly due to the shaky overseas economy, Treasury bonds remain a safe investment. Demand is up and Uncle Sam is borrowing even more cheaply than before.

University of Maryland law professor Michael Greenberger says S&P's move damaged its own credibility.

Michael Greenberger: Pre-September 2008 subprime junk was getting AAA ratings. And then, the United States, who is deemed to be a safe haven for investors, was given a AA+. That just doesn't make sense.

The two other big rating companies are maintaining the government's top grade. Still, S&P's action shook up Wall Street and has had ripple effects for local governments. Counties and cities put a lot of their tax revenue and pension money in Treasury bonds.

Dan Wolfson: The full faith and credit of the United States to us, you know, still means something.

Dan Wolfson is the finance director for Manatee County, Fla. Thirty percent of the county's investment portfolio is in Treasuries, and Wolfson says S&P's downgrade undermines the portfolio's value.

Wolfson: We were somewhat incredulous given everything that's happening in the European market sector. They chose to downgrade the U.S. debt ahead of possibly that of France or even Germany.

The county has been paying S&P to rate its investment fund to reassure taxpayers. The S&P contract just came due and the county board decided not to renew it.

In Washington, I'm John Dimsdale for Marketplace.

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