It is a mistake to simply disregard the downgrade by S&P.

The S&P downgrade is a reaction to 'the politics' behind the spectacle of the USA House over the President's request for a "Grand Plan."  There was an unthinkable approach to the Debt Ceiling in believing it is okay to play politics with a sovereign debt.  There were 'elements' of the Tea Party stating it didn't believe Secretary Geithner in that August 2nd was a cut off date to the Debt Ceiling increase.  Those members of the House were willing to impale the USA's sovereign debt without knowing what they were doing and denying the authority of the Secretary of the Treasury.

Secretary Geithner took an oath of office no different than any other member of the cabinet and to believe he was 'fudging' his math and making political projections is hideous and ridiculous.  The entire episode which required the involvment of the USA citizens to bring pressure on these legislators was a clear demonstration of how the power of the USA, in the wrong hands, can be hideously played with while there is a global economy attempting to recover.

I strongly believe the rating agency, Standards and Poors was very rattled by the entire circus that lasted far too long.  The House never took the reassessment of Secretary Geithner seriously to finally end any and all debate in a three month window to ensure the nation's credit worthiness.  It was completely ridiculous.  Why should anyone believe this 'arm' of the Republican Party would not do exactly what is claims it will do after this clear demonstration of abuse of power.  S&P is correct to some extent.  While the Treasury Secretary is confident of the ability of the USA to pay its debt, the fact of the matter is he can't speak to any of that beyond his term.  There are issues here and S&P decided to act on those issues while other agencies decided the American people are more powerful than the bozos at the center of the main ring of the Republican circus.

I believe it is a very big mistake to see this downgrade by S&P as a fear of the USA politics that does repeat itself from its history.  It was a logical step for them.  The math was not the focus with S&P so much as the unbelievably hideous actions and statements of House members.  This agency felt 'threatened.'  That can't be completely dismissed as a math error.

By Randall Forsyth (click title to entry - thank you)

The market relevance of S&P’s stripping of the U.S.’s AAA rating is plain in the rise in price and fall in yields on U.S. Treasury securities. That is, nil.

The benchmark 10-year note yield is back below 2.5%, down 10 basis points from Friday at 2.46%, as investors continue to seek U.S. government securities as the safest haven in a turbulent world, notwithstanding S&P’s protestations. At the same time, the two-year note yield is at “two bits” again, or 0.25%, down four basis points. And the long end, which did sell off initially Sunday evening, has come roaring back with the 30-year bond yield off seven basis points, at 3.77%. (Newbies note: prices and yields of bonds move inversely.)

The market is behind the move in U.S. Treasuries, unlike those of the sovereign debt of Italy and Spain. Those truly impaired credits have been bolstered by the decision of the European Central Bank to buy those bonds, which are rated not far below those of the U.S. Italian 10-year yields plunged more than 60 basis points, to below 5.5%, while the Italian equivalent yield is down about three-quarters of a percentage point (74 basis points), to 5.30%. Italy and Spain are not assured of being able to refinance or repay their debts, which are issued in euros, a currency not under their direct control. By contrast, the U.S. can pay its bonds in the world’s reserve currency which it uniquely can print....