The Federal government is still AAA, but every municipal debt issuer is now suspect and shaky according to Moody's.

For the first time ever, the ratings agency placed all munis on negative outlook, a precursor to potential downgrades. Historically, the agency looked at munis individually and considered them to be too diverse to make blanket statements about.

But it seems overspending and the hollowing out of the revenue base is a nationwide phenomenon affecting cities and states everywhere.

And of course the US government is affected by those same phenomenon -- we think the government's revenue expectations remain wildly optimistic, given the slowdown and the collapsing of the income gap -- but alas the Fed still has the printing press and should be able to hold onto its AAA rating for awhile longer.

Meanwhile, New York actually managed to float a bond at a 5.55% interest rate and a 2036 maturity. Who'd have guessed?