Everyone was prepared for it and markets were reasonably calm, focused more on the implementation risk from the latest Greek bailout than on the US debt drama, which most expected to be solved at the 11th hour, which it was.

Since then, US GDP came out weaker than expected (with a huge downward revision to Q1.) and ISM and other US data have trended to the soft side. PMI figures from around the globe were underwhelming as well. Volatility across the financial markets is at its highest since the teeth of the global financial crisis which accompanied the fall of the House of Lehman.

Those fruitcakes at S&P have decided that the democratic process is a bit messy for their effete tastes and have downgraded the benchmark for global credit in an effort to earn back the street cred they blew to kingdom come during the US housing bubble when its freshly minted MBAs and CFAs stamped “AAA” across every issue that crossed their desks.

The spike in volatility of late could change the way the market reacts to the downgrade, in the short-term. It could be a very ugly open in Asia on Monday. Longer-term, expect the downgrade to have minimal lasting impact on the US’s dominant position in the credit markets. The alternatives were too few before the downgrade and they will be too few after, as well.