Can be used in one of two instances

1. When it would be literally impossible for things to get any worse.

or

2. When things are bad, but not as bad as possible. If used in this way, things are bound to get much worse.
1.

"My house burned to the ground, my wife divorced me taking everything I could salvage from the fire, and I was hit by a truck on my way to the courthouse." said Bob.
"It could be worse" responded Joe.

2.
"Great, someone stole my car and I have to walk to work!" exclaimed Sam.
"It could be worse" responded Sue.
Upon saying this, the clouds became a dark gray followed by torrential downpours for the rest of the day.
作者 Mr. Unicorn 2010年11月20日

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