Market signalling concern over economy, not debt levels.

Fascinating.  Despite the lack of progress on the debt ceiling with a threat of a ratings downgrade, the bigger news has been the dismal economy, with Q1-2011 restated much lower than expected at 0.4% GDP growth, and Q2-2011 came in at 1.3%...not exactly booming.  The threat of a double-dip recession seems to have weighed in on markets more heavily than the debt ceiling deadline, as 10-year US Treasuries had fallen through July, most notably today after the GDP announcements.

The GDP numbers were also revised going back to 2003, showing how much more dramatic the recession of 2008 really was. Also worth noting, is that after 2003, the economy slowly began to sag, with each subsequent peak lower than the previous, and each subsequent valley lower than the previous.  In effect, Mark Zandi's 2008 testimony to Congress about stimulating the economy was correct:

• Permanent Tax Cuts
• Extend Alternative Minimum Tax Patch 0.48
• Make Bush Income Tax Cuts Permanent 0.29
• Make Dividend and Capital Gains Tax Cuts Permanent 0.37
• Cut Corporate Tax Rate 0.3

That is to say, that the Bush tax cuts and capital gains reductions were useless.