A Chinese ratings firm yesterday made financial history and downgraded the US' credit rating from A+ to A. Meanwhile, hot money flowing into hedge funds and gold saw gold prices yesterday shoot to a historic high of US$1,670 per ounce.It looks like the Chinese think the deal was a Satan Sandwich, too, and that we should have chosen the prize behind Door #3 instead.
Now for the deal itself.
After several days of high-stakes talks President Obama finally announced that a deal on the debt ceiling had been reached.As an example of politics as the art of the possible and business as usual, the debt ceiling deal belongs in a textbook. Unfortunately, these aren't business as usual times, and what is considered possible may just not be sufficient for the task.
The deal will raise the debt limit by $900 billion and will tide the treasury over until after the 2012 election.
It will include $900 billion in spending cuts including $350 billion in defense cuts, while a special congressional committee will look for a further $1.5 trillion in savings.
Likely targets are Social Security and Medicare. The compromise means neither side is entirely happy.
Finally, what Next Media Animation had to say before the crisis was resolved.
Since coming to Washington, the 'Young Guns' of the Tea Party have caused nothing but havoc.Next Media Animation loves the Tea Party as fodder for comedy, but they don't seem to think much of them otherwise if they protray them as poop-throwing, gun-toting babies. Hey, Tea Party! Debt Ceiling Cat is watching you negotiate!
House Speaker John Boehner has told Republicans to 'get their asses in line' behind his budget proposal. But some in the Tea Party remain insolent.
The Tea Party's refusal to cooperate means Congress could miss its best chance of reaching a budget ceiling compromise by the August 2 deadline.
Fears the US may miss the deadline have already spooked financial markets, prompting a global equities sell-off and higher interest rates on US bonds.
Doubts about where interest rates are heading have frozen activity in the credit markets.
Long-term, higher borrowing costs for the government and consumers could wreck the American economy.
Even if John Boehner can win support from a few 'Young Guns', he must still deal with opposition from the Democrats in the Senate.
Isn't the political immaturity of the 'Young Guns' just setting up the Democrats nicely for 2012?
What will happen next?