It appears there are multiple reactions to the S&P downgrade of US debt. S&P also (this morning) downgraded Fannie Mae and Freddie Mac’s credit ratings. Another stress point could be the derivatives market, where investors and banks often collateralize their debt by pledging US Treasuries. If lenders begin to demand more Treasuries as collateralization of debt, investors will need to sell assets to come up with the extra collateral, which will perpetuate selling within all of the markets. Warren Buffett, however, scoffed at the S&P downgrade, saying S&P rating executives worried him (Buffett) more than the downgrade. Buffett told Becky Quick of CNBC that he had more than $40 billion invested in US Treasuries and the S&P downgrade would not affect his investment strategy. S&P reacted to Buffett’s remarks by downgrading Berkshire-Hathaway (Buffett’s company) from “stable” to “negative”. Vince Farrell, an economist, says that the downgrade is a “national disgrace … a political battle that never should have been fought”. Moody’s, by the way, has not yet followed S&P by downgrading US securities.