As he prepared to escape the heat of Washington last Friday, Barack Obama would have been forgiven for looking forward to the cooler climes of Camp David, his weekend retreat some 60 miles from the White House, tucked away in Maryland's Catoctin Mountain Park.
Sleep-deprived after days spent brokering the compromise between Republicans and Democrats that averted the US defaulting on its debt for the first time in its history, Obama must have thought the worst was behind him.
True, the US stock market was plunging, but so was every major index around the world, spooked that the Greek debt crisis would soon be replicated in Italy and Spain. And, besides, far stronger than expected employment figures offered the president hope that better times lay ahead.
But as Obama was preparing to leave the White House, his aides delivered a bombshell, one that now threatens not just his ambitions for re-election but the future credibility of the eurozone, the UK's largest trading partner.
Obama was told that the ratings agency, Standard & Poor's, was intending to downgrade America's top-notch AAA credit rating, the first time this had happened. "He was briefed before he left for Camp David and has been receiving updates through the night," a White House official confirmed. The news was dismal but not unexpected. Ratings agencies always give debt issuers the opportunity to review their downgrade before it is made and so the US Treasury had known bad news was on the way.
Indeed, in the 24 hours before S&P took its historic decision, there was something of a Mexican standoff between the ratings agency and the White House, as the two sides argued fiercely over its logic. White House sources accused the agency of making a $2 trillion error in its calculations about the state of America's finances, an argument that seems to have been accepted by S&P which, at the 11th hour, removed the figure from its explanation.
But S&P stood by its downgrade. "We take our responsibilities very seriously, and if at the end of our analysis the committee concludes that a rating isn't where we believe it should be, it's our duty to make that call," said David Beers, S&P's managing director of sovereign and international public finance ratings.
On the short helicopter ride from the White House to Camp David, Obama and his aides would have been pondering the impact of S&P's decision which was not merely symbolic. Lower debt ratings means a country has to pay higher interest rates on its bonds – to take into account the increased risk of a default. For those holding US debt, the downgrade was worrying.
China, with $1.2 trillion of US Treasury debt, is the largest holder of the country's bonds. It took the unusual step of publicly expressing frustration with America's reluctance sufficiently to reduce its expenditure in austere times. The Xinhua news agency issued a commentary declaring that "to cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means".
But more worrying was the signal the downgrade sent to the markets, with traders expressing fears that the world's biggest economy may be heading back into recession, dragging others with it.
S&P's decision could not have come at a worse time for Europe. With practically every European leader on holiday, there was a palpable sense the crisis was not receiving the leadership it needed.
The European markets had been in meltdown for days. Earlier in the week, they had anticipated that the eurozone countries would make a concerted effort to buy up Italian and Spanish debt. Their failure to do so prompted panic as traders speculated the two countries would go the way of Greece, unable to meet its debt obligations.
The mass panic saw the yield on Italy's 10-year bond rise to 6.09%, ahead of Spain's equivalent of 6.04%, not far from the levels that forced Greece, Ireland and Portugal to seek international financial help.
With the equity markets seemingly in freefall, and a second recession on its way, share prices experienced the sort of drops not seen since 2008. In a desperate attempt to agree a common line, Europe's leaders made a flurry of frantic phone calls. The German chancellor, Angela Merkel, who is on a hiking tour in the Italian Alps, and France's president, Nicolas Sarkozy, on holiday in the French Riviera, both talked to Obama after the US markets closed.
Prime minister David Cameron, who is holidaying in Italy, rang the Bank of England governor, Sir Mervyn King, chancellor George Osborne, who is in California, and Merkel. Osborne also talked to his French counterpart, Francois Baroin, who returned to Paris on Friday from his holiday break to help tackle the crisis.
Merkel is understood to have vented her anger to Cameron about comments made by the European Commission president, José Manuel Barroso, who warned governments should rapidly reassess the size and implementation of the European financial stability fund designed to reduce risks spreading.
Barroso's comments helped fuel jitters about the enormity of the crisis and raised fresh concerns in Germany about the size of the contribution it may have to make to bail out the debt-ridden eurozone countries.
The coalition's critics decried the government's response to the crisis as inadequate. Labour's former deputy prime minister, Lord Prescott, took to Twitter to claim that No 10 was being run by Larry the Downing Street cat, while shadow chancellor Ed Balls accused the government of failing to offer leadership and being "absent from the global economic debate at this critical time".
In the absence of a cohesive response, it was left to the Italian prime minister, Silvio Berlusconi, to make the most dramatic intervention, promising to bring his country's budget into balance in 2013 – a year ahead of schedule.
Some analysts question whether Italy has the political resolve to achieve such a feat. But the business secretary, Vince Cable, played down concerns that Italy, which has $130bn worth of gold reserves, would end up defaulting, a seismic event that would prove highly damaging to the credibility of the entire eurozone. "It is in a rather different position from Greece," Cable said. "There is a problem of confidence, they may need access to this emergency fund of money, but I think the prospects of Italy defaulting, let alone leaving the eurozone, are very far-fetched."
Cable repeated his belief that a fresh round of quantitative easing – effectively the printing of money by central banks – may yet be needed, but acknowledged that this was "not on the agenda at this precise moment".
Chillingly, Saudi Arabia's stock market dropped 5.5% to its lowest close in nearly five months as its petrochemical shares took a battering.
Analysts were chiefly betting that global demand for oil would decline in the coming months – a key sign that another recession is looming. Further clues will come when the markets reopen, having had the weekend to digest the S&P decision. How they respond may depend largely on an emergency conference call between G7 finance ministers, expected to take place within the next day or so, and which may outline how the eurozone intends to respond to the problems engulfing Italy and Spain.
Some old hands were cautioning against reading too much into what happens to stock markets during the summer. Lord Oakeshott, a former Treasury minister who has worked in the City for 35 years, was sanguine, explaining that he was an enthusiastic buyer of shares on Friday as the markets were falling.
"Markets often overreact in August," he said. "All the top fund managers and traders are sunning themselves. The B-teams are on the desks and they tend to run scared."
But others are less sure. Michael Hewson, an analyst at CMC Markets, warned: "This crisis will run and run, and could make Lehmans look like a Tupperware party."