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View Diary: S&P downgrade: John Boehner got 98% of what he wanted (293 comments)

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  •  Unless the markets are stupid/irrational (1+ / 0-)
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    Beetwasher

    It probably shouldn't have much effect. The debt ceiling shenanigans should have already been priced into bonds and interest rates. I don't see why S&P pointing out that congress is dysfunctional should be the thing that will spark the markets into realizing that congress is dysfunctional, like it was some sort of big secret.

    If it does have an effect, it will be a raise in interest rates, though I'm doubting how much. The one thing that would be a potential worry is if covenants forced funds into getting rid of their treasuries because they were no longer AAA, but that shouldn't be an issue if the other ratings agencies don't do anything.

    Japan was downgraded last decade and it didn't have much effect on their bond yields, which are also extremely low despite their truly huge levels of public debt.

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