Let Down By Politics

Something funny happened on the road to the market crash of 8 August. As the markets opened for trading, investors rushed into the burning building that they were supposed to flee. Only three days earlier, credit rating agency Standard & Poor’s had spooked the market by downgrading US debt a notch from its long-held AAA rating. In a normal situation, you would expect punters to flee from the downgraded instruments to ones rated as more secure. Instead, the opposite happened.

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