http://www.bloomberg.com/news/2011-08-15/the-real-u-s-crisis-is-not-a-debt-downgrade-commentary-by-simon-johnson.html

By Simon Johnson - Aug 14, 2011

The U.S. has a fiscal crisis, but not the one that everyone is talking about. Standard and Poor’s proved beyond a reasonable doubt that the U.S. still has the world’s preeminent reserve currency. When shocks hit -- and investors have no idea who or what might be next in line for a downgrade -- they buy U.S. government securities.

Downgrades don’t usually have this effect. For example, if S&P or other rating companies downgraded France, that would set off a crisis within the euro region -- pushing up interest rates on French government debt, undermining euro-area banks, and perhaps putting pressure on the fabric of the European Union itself. With a one-notch downgrade of the U.S. government, on the other hand, S&P inadvertently managed to lower the U.S.’s borrowing costs, both at the federal level and for homeowners who refinanced their mortgages.