kurt_w wrote:And Wall Street responds by buying US Treasuries, which would make no sense if you believed that the downgrade was an actual sign of no confidence in US debt ... but makes perfect sense as long as you understand the downgrade as a vote of no confidence in the economic prospects for a society whose government is being held hostage by teabaggers.
The world is virtually rushing to buy US debt because nothing else seems safe.
You got it in that last sentence. Some investors believe that US debt is a better refuge at the moment with its negative real interest than the stock market. It's like, would you rather lose 1% or 10%?
There are other areas that are continuing (and will continue) to rally, like gold and other metals, but responses have been widespread and varied.