http://www.treasurer.ca.gov/ratings/current.asp From the above link, which might be outdated, only 9 states had AAA ratings. I saw another article which said only 4 states would be subject to possible downgrade from AAA if the debt ceiling failed to pass. So, it would seem that states can have AAA with USA being at AA. Also, S&P, which is the strictest rating agency, did not list any states in the categories for further review for downgrade after it cut the US rating. The question people should ask is how will the states react to this? It seems like an awkward situation where states are rated higher than the federal gov't. Can a state rated AAA fight in court any interest rate increases it might see due to the US government's lower rating on constitutional states' rights grounds?
Agreed. If you have a co-dependent relationship with a debtor who isn't AAA, it's illogical to be AAA yourself. Bit of a pickle, that.
USA has CA, NJ and IL. Europe has Spain Greece and Italy. Calling Germany AAA is like calling Indiana AAA.