Hi cat,
I understand your point.
But the cost of borrowing is actually lowering. The market's panicked flight to quality is headed smack bang towards US Treasuries. Ironical, right. http://www.bloomberg.com/apps/quote?ticker=USGG10YR:IND
Of course, crowds are mad so the S&P downgrade may cause the catastrophe we have been trying to avoid. A rating isn't just a rating. It's an event. But assuming the initial panic subsides, in my view this should be a minor event rather than a major one. Indeed, the fact Treasury values are rising tends to suggest S&P's worry about US credit-worthiness is really not the underlying issue here. I suspect a good bit of what is happening is that people are worried about everyone worrying. And then there are those who are worried that people are worrying about people being worried. The usual crack pipe logic of the stock market.
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