What about Japan?

Despite what you're reading in the press, the US is not the first major first world sovereign to have its debt rating downgraded. Japan was downgraded in 1998. And then again in 01. And 02. Made no difference to the Japanese economy. You can read details here.

So why are markets tanking today? Who knows. Maybe it's EU, which does not have the institutional structures it needs to run a fiat money system. Maybe it's China. Maybe it's the cognitive dissonance from wanting a lower deficit and knowing that will make the economy worse.

But I don't think it's S&P