All risk is bad...the goal is to select the least bad risk

The reality is that the S&P downgrade changes nothing...a downgrade of the US in this situation amounts to a downgrade of all sovereign debt of all other sovereign states and the EU aswell...in that case, US Treasuries are still at the top of the list of least bad risks. The outlook as I have painted it remains the same. The objectives for the dollar and EURO are unchanged for me, however, we now have an idea what the impetus may be for the blow-offs in the currencies are - thy will be short lived.

The irony is that there is no reasonable way that the political leaders in Washington did not know about the coming downgrade from S&P and the failure of their efforts to avert it last week. Obama and Boehmer have a batphone to the ratings agencies CEO's and ratings agencies have a custom of negotiating the compromises that will achieve the will of the political leadership or more appropriately in this case, the financial leadership.