CHARLOTTE, NC (WBTV) - Prepare for impact. The United States loses its sterling credit rating in part, because our elected leadership gave the appearance they can't work together.
Now, the possible ripple effect.
From Wall Street to Tryon Street.
Stocks tank while Charlotte waits to see if and how the backlash hits home.
Standard & Poor's lowered the nation's rating by one notch to AA+ with a negative outlook. But on Monday, President Obama played it cool.
Said Mr. Obama, "Warren Buffett, who knows a thing or two about good investments, said, "If there were a quadruple-A rating, I'd give the United States that." I, and most of the world's investors agree."
Maybe not. Wall Street investors disagreed at least on Monday. The Dow Industrials dropped below 11,000 on Monday. More than 600 points lower.
Investors are worried that fear in the market will reinforce itself, as it did during the financial crisis of 2008.
Sometime these things become a self-fulfilling prophecy.
What is certain it's raised Americans' collective blood pressure at a time when the economy was already giving many people heartburn.
Look around the stores over the weekend and it looked just like the good old days.
Cash or credit, it didn't matter. The tax-free holiday in North Carolina and South Carolina got people in the mood to spend.
Wake up Monday morning and harsh reality sets in.
"Firing back and forth.. firing you all. this administration is failing."
Bickering over raising the debt ceiling led the S & P to lower the U.S. government's top-notch credit rating.
In the situation with the federal government, just like with consumers, a lower-credit score reflects a high-risk. And higher-risk borrowers pay a higher interest rate.
A downgrade for Uncle Sam could lead to higher interest costs for the United States and for anyone who borrows.
However, Jay Bryson an economist for Wells Fargo Securities says they don't expect interest rates on mortgages or credit cards to jump significantly right away. A marginal rise is expected.
"For the average Joe," said Bryson, "they're probably not going to really notice it unless financial markets really continue to do what we've been seeing."
Which is tank. All the gains made this year have been wiped away.
"It's scary. It's scary."
Mortgage broker Angelo Datseris president of Leverage Lending Group says even before the downgrade there was nervousness among home buyers and those wanting to refinance.
Congress and raising the credit limit - cast a cloud over mortgage rates for weeks. The latest news has gotten those on the fence in Datseris' office now.
"Where there was maybe a thought.. three or six months down the road.. it's now.. they're pressed to go ahead and do something," he said.
The real fear is that the downgrade will add to building uncertainty in the stock market and give rise to an economy that seems to be weakening.
Bob Morgan, president of the Charlotte Chamber, said, "Nobody likes uncertainty.. business people are not going to make investments if they don't have some clear understanding of what the future holds. There's more uncertainty today than there was two weeks ago."
Added economist Bryson, "If we lose our collective nerve here then there could be some more weakening of the economy and then people will start to notice that."
What's his advice to businesses and consumers? When it comes to the market don't do anything rash at this point.
People are always saying should they be selling their stock portfolio at this point? Most advisers will tell you never to sell on emotions and when things are really volatile.
What kind of effect with this have on governments who borrow?
The jury is still out. Because cities, counties and states rely so much on federal government for revenue they could see their credit ratings downgraded slightly as well.
Mecklenburg county officials told us there's been no change to the county's AAA bond rating.