Italy downgraded by S&P; repercussions expected across Europe, and possibly the US as well

This time S&P might actually have a point.

If things continue like this, then countries are going to start falling out of the Euro and pretty soon only Germany will be left.

"Coming at a time when the world's financial markets are on edge, warily watching for a default by Greece with knock-on unknown effects on the financial system, the optics of this downgrade stink," said Carl Weinberg of High Frequency Economics.

"Perceptions are more important than realities," he added.

"Investors will be shaken, as if they are not shaken enough already, by what appears to be decaying conditions for another sovereign issuer."

Black Wednesday, the day that the pound fell out of the ERM (that preceded the Euro) is starting to look like one of the luckiest escapes that Britain has had since Dunkirk.