The danger is from the spending cuts, not the potential downgrade
Posted on July 28, 2011 at 14:37 PM EDT
The headlines are all about the risks of default or a too small deficit reduction package causing a downgrade of US debt. And while markets react to those issues, they all miss the point. The consequences of a downgrade to US govt debt are minor at best. Note that when Japan was downgraded below Botswana, with a debt/GDP ratio [...]