Roundup of Reactions to the Downgrade of the World's Largest Debtor Nation

Mark Steyn envisions Thunderdome in the not-too-distant future.

"Cutting federal spending by $900 billion over 10 years" is Washington-speak for increasing federal spending by $7 trillion over 10 years. And, as Washington had originally planned to increase it by $8 trillion, that counts as a cut. If they'd planned to increase it by $20 trillion and then settled for merely $15 trillion, they could have saved five trillion...

...And, if none of these parties seems inclined to pay down the debt now, what are the chances they'll feel like doing so by 2020 when, under these historic "cuts," it's up to $23 trillion-$25 trillion?

...Last week, the firm of Macroeconomic Advisors, one of the Obama administration's favorite economic analysts, predicted that interest rates on 10-year U.S. Treasury notes would be just shy of 9% by 2021. If that number is right, there are two possibilities: The Chinese will be able to quintuple the size of their armed forces and stick us with the tab. Or we'll be living in a Mad Max theme park. I'd bet on the latter myself.

Walter Russell Mead takes an historical view:

China, Europe, America, Japan: each of in its own way is moving toward comprehensive bankruptcy: financial, spiritual, social. Recent tremors in world financial markets are a warning from the invisible hand that we are skirting dangerously close to that final frontier, but we will miss the point if we do nothing more than put our financial affairs in slightly better order.

The blunt and truthful Michele Bachmann piles on:

This president has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling. President Obama is destroying the foundations of the U.S. economy one beam at a time.

As reported by China's state news Xinhua, even the Communists want to take control of Ben Bernanke's printing press:

China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets. The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.

International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.

And Tyler Durden teases a reaction out of the federal commissars:

Presenting the joint statement by The Fed, the FDIC, NCUA, OCC. In essence: the Fed tells S&P to go fornicate itself...

Earlier today, Standard & Poor’s rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations)


For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board’s Regulation W, will also be unaffected.

Have I mentioned before that President Obama is 'historic'?