the market is scared but it does not believe S&P

The way stock markets tumble around the world following S&P's downgrade of the U.S future financial strength, is a clear proof to rating agencies ability to scare investors. But investors, as a scared as they may be, are clearly Not Believing S&P. How else can you explain their choice to drop their stocks and purchase U.S bonds ? You don't but an asset you don't believe in at a time of panic, do you ?

Another possible explanation is that investors are hysterical and beyond their senses. They understand they can trust no one. They dropped stocks in an attempt to find some shelter. But after realizing that there is none, they chose to return to the safe old rock, even though the announcement that  this rock may be sinking was the initial cause for their flight for safety. Sadly, this flight for safety which has sent the markets way down, has probably sent many other investors into a plight of their own, and has left everybody in turmoil.

I believe it is high time to reconsider forbidding or limiting short-selling, and maybe it is also time to reconsider the liability of  credit agencies ?