“Father [S&P], our heart breaks for America,” Texas Governor Rick Perry said as he led the crowd in prayer. “We see fear in the marketplace. We see anger in the halls of government and as a nation, we have forgotten who made us, who protects us, blesses us, and that we cry out for your forgiveness.” ***
The Chinese government jumped on the downgrade and demanded protection of its dollar assets. QE, coupled with the monetization that more debt would likely require, has raised the specter that the Chinese government would diversify out of its dollar holdings or retaliate in some way. Robert Rubin who was guiding Obama through his acolytes has openly and repeatedly spoken over the last year of the need to get the US fiscal house in order to make sure confidence in the dollar (and the trade in dollar-denominated assets) remains strong. A one-two punch from the Chinese government and Goldman Sachs seems to have given the S&P the confidence to issue a historic downgrade in the credit worthiness of the most powerful state in the world.
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