It was a rough opening earlier this week for stocks as investors absorbed news that Standard & Poor downgraded the U.S. government’s bond rating a notch, from AAA to AA+. Gold is trading sharply higher (around $1,700 an ounce), while bond yields are falling.

Pity the poor pilgrims at S&P. They graded mortgages too easily in the run-up to the 2008 debacle and took a thumping for it.  Now, having gotten religion, the S&P raters want to show they’re the tough guys.

There are some inconsistencies in S&P’s reasoning. Most obvious: Why should Britain and France continue to merit a AAA rating when those economies are far less diversified and resilient than the United States? Does the U.S. really deserve to be put on the same footing as Belgium — also an AA+ credit?

To be candid, I think the S&P team is reacting emotionally to the nasty debt ceiling debate a few days ago. My own take on the debt legislation is that it creates an important framework for reducing the growth of government spending in the years ahead.

In particular, the automatic spending-reduction feature in the law should help keep Congress’ feet to the fire. Eventually, as the markets see Washington making progress on the spending front, current fears about the quality of the government’s credit should dissipate.

Meanwhile, though, we’ve got to deal with the fact that S&P has thrown another gallon of gasoline on investors’ psychological fires.