The markets are so concerned over U.S. debt and deficits that the markets have.........driven up the price of U.S. treasuries, thus decreasing their yield, thus making it easier and cheaper for the U.S. government to borrow money.
The idea that the U.S. has too much debt has allegedly "caused" a "flight to safety" which flight lands at.........U.S. treasury instruments, the, um, safest of all potential investments....???
The S&P downgrade is akin to me telling my brother, "Fuck you, I am only lending you 75% of the money I used to" and then my sister going out and telling her friends that I must be in financial trouble and that I am a major credit risk. What would her smart friends say? "Seems to me the person who we should be most worried about is HM's brother." In this example, I am the government, my brother is the economy and my sister is the S&P.
Obviously, as I mentioned earlier today, there is more going on here than is being reported.
One ironic note -- the Rich Wing of the GOP has used the Tea Party to stir up anti-Obama feelings and to basically flood the airwaves with resentment and hatred, so Rich Wing folks can avoid having their taxes raised from 36% to 39.6% Um, since the Tea Party brokered deficit reduction deal -- market has gone 10% -- so if I have $5,000,000 in the market, I am $500,000 poorer today. Worst use of a trained pit bull since Michael Vick.