After Friday's market close rating agency Standard & Poor's (S&P) dropped a tape-bomb and downgraded the sovereign credit rating of the United States.

Rumors of an impending downgrade had been floating around the market since Friday morning.

What did Treasury bonds do in reaction to the downgrade?

They rallied hard…throwing mud in the face of S&P (and the other rating agencies).

The market essentially said that AA is the new AAA.

Asian investors demonstrated (with their actions) that they do not see any viable alternatives to U.S. government debt.

To say that the timing of the S&P downgrade was dubious (or highly irresponsible) would be ironic.

The deficit picture was as dismal a year ago as it is now; where were the rating agencies one year ago?

Unfortunately stocks tanked as the herd mentality turned decidedly bearish and panicky.

Stock indices from Asia to Europe opened much lower bleeding deep hues of red.

The ECB (European Central Bank) announcement that it would buy Spanish and Italian bonds in the secondary market in size was initially greeted with cheer but was faded fairly quickly by the market.

The S&P stock index closed at the lows of the day; down 6.66% lower.

Unlike the infamous "flash crash" of May 2010, this sell-off was a sustained sell-off and not a sudden drop.

The implied volatility index VIX got as high as 47 intra-day, the highest level since March of 2009.

Was the drop in stocks due to the ratings agencies?

One could plausibly make the case that stocks should not have been trading where they were up until a few days ago in the first place.

Easy credit in the form of loose monetary policy created a massive asset bubble (in stocks, in credit, in…you name it…) and we may simply be seeing those chickens coming home to roost.

Corporate credit spreads continued to re-price significantly with bank and financial bond spreads another 50-70 basis points wider.

Bank of America was hit particularly hard (with its stock down more than 20%) as the insurer formerly known as AIG announced a lawsuit dating back to events around the 2008 mortgage meltdown.

High yield names got burned closing down anywhere from 5 to 10 points lower.

Oil tumbled to close at $80 a barrel while Gold prices set new nominal highs closing well above $1,700 an ounce.

Set amidst this backdrop of deep malaise, Texas Governor Rick Perry's weekend prayer rally took on an almost messianic quality.

Governor Perry has a remarkably strong record on the Texan economy, an economy equivalent in size to that of Canada's, and he may be just the man that the economy has been yearning for.

This player had the distinct feeling that he was listening to the next President of the United States…

Fiscal reforms are needed urgently; much more so than the stop-gag measures conjured up by the debt ceiling drama.

Away from the markets, highly coordinated and state-sponsored hack attacks continue to hit the infrastructure and systems of banks, government agencies, and other corporations.

Cyber security breaches cost the global economy many billions of dollars each year in direct thefts; the indirect cost is much higher.

This phenomenon shines a light on the potential for small companies with ground-breaking technologies in the realm of cloud computing and cyber-security.

Companies such as SolidPass offer two factor authentication systems that are immune against the types of breaches that sector leader RSA had fallen victim to.

In the Middle East, Syria's brazen defiance of the world continues; judging by the chatter, the Syrian regime may have sealed an ignominious fate for itself.

The near-term outlook for the markets will remain volatile and choppy.

The panic experienced today will fade once players realize the exceptional role the United States plays in the global capital markets.

The institutional factors that make the United States the world's economic leader are unrivalled in the world: the rule of law, labor market flexibility, a creative and meritocratic education system, and economic competition.

It is not the arbitrary ratings assigned by a rating agency or the plaudits of a pundit that make the United States the world's preeminent economy.

With the right set of fiscal reforms, detractors will be proven wrong faster than anyone expects; just look at history to Reagan's revival.

Strap in your seat-belts; when it comes, the short-covering rally will be vicious.