When it comes to sellside research ideas (no matter how wrong) being mysteriously converted into official policy nobody, and we mean nobody in the world, is more effective at this "task" than Goldman. In addition to being a herd leader of all the other momos on Wall Street (with Deutsche Bank being dead last), what Goldman wants, whether it is QE1, QE2, or the final layout of the eurozone bailout package #2, Goldman gets. Which is why people actually do care about Goldman's research: not because it is right, it rarely if ever is, unless of course one gauges its success with the bonus pool for Goldman Sachs itself in which case it has been a massive success without fail, but because everyone in DC reads it as gospel, and whatever is advised is eventually implemented. Which is why even as we have skipped numerous analyses of what would happen to the US should its rating be cut, Goldman's is a must read, not the least because Goldman finally puts all those economic illiterates who compares a US downgrade to that of US and assume off the bat that nothing bad can possibly happen. Wrong. Just ask Jan Hatzius: "It bears repeating that no two episodes are alike – nor is any historical episode a close parallel to current US circumstances." And while even he admits he has no idea what will happen, he doesn't get paid by the blank piece of paper so the Goldman economist did have to supply 4 summary conclusions of what will happen when the US is downgraded, sometime over the next 3-4 weeks: 1. A drop in equity markets, but probably a modest one, 2. Some weakening in the currency, 3. A steepening of the yield curve and a cheapening of Treasuries relative to OIS, 4. Some weakness in the financials sector. In other words, "we have no idea, but it won't be good." We totally agree. The full note is below for those whose brains aren't petrified enough to assume that the Japanese downgrade is in any way remotely comparable to that of the US.