S&P downgrades US: Why are brokerages not so worried?

Standard & Poor's downgrade of US rating to AA+ from triple-A has spread panic across markets and there is a sense of nervousness of a possible global downturn. However, most brokerages are not so worried. Check out some of the experts' opnion:

Willem Buiter, Citigroup

We expected this, at least for S&P, including the timing. The downgrade should have happened around 2009. We are moving rapidly towards a world without AAA G7 sovereigns. For portfolio allocation, relative risk will be the driver now that 'risk free' is no longer an option. All in all, nothing dramatic, because inevitable and overdue, but still an important symbolic event in the life cycle of the former economic and financial hegemony.

Read this: AA+ not bad for US, won't impact markets much: Keki Mistry

Dominic Konstam, Deutsche Bank

US downgrade raises two main issues - impact on investors sentiment and possibility of `forced' selling. We consider funding markets of greater concern going forward, although there is no immediate threat. Interest rates might be sustainably low with growth weak.

Jan Hatzius, Goldman Sachs

Equity markets usually head lower and drift lower over a period of one month, USD weakens by a few percentage points. We don't believe there is a significant risk of forced selling of Treasury securities due to regulatory constraints of investment mandates. From an India perspective, markets will head lower on weak sentiment, but over medium-term it will benefit as investors try to diversify away from USD assets.

George Goncalves , Head of US Rates Strategy

We expect a negative initial reaction in risk assets and in treasuries, and wider spreads in agency MBS. The dollar is likely to weaken vs the Yen and the Swiss franc. We think it is too early to expect QE3 from the FOMC meeting this week.

Warren Buffett , Berkshire Hathaway

Standard & Poor's made a mistake in downgrading the US credit rating. I reiterate my view that the economy will avoid its second recession in 3 years.

Indranil Pan, Chief Economist at Kotak Mahindra Bank

This could lead to some immediate turbulence in financial markets, however, investors are likely to focus on 'relative' ratings in their investment decisions. Indian equities could also see a downward momentum as risk aversion remains a dominant theme. Reflecting this, the rupee could also see some depreciation bias in the near term

Elga Bartsch , Morgan Stanley

The euro-zone sovereign debt crisis is likely to escalate further as a result of the S&P downgrade of USTs. EFSF comes with a lag and won't be up and running until September.

Arnaud Mares, Morgan Stanley

Downgrade doesn't really increase probability of US default, it reflects degree of intensity of conflict between bondholders and other government creditors. Downgrade more damaging for Europe than US - can France and UK keep AAA rating, especially France given doesn