America continues to unravel

The humbling of America — the cover theme of this week’s Spectator — continues with S&P stripping Uncle Sam of his AAA credit rating. The debt downgrade, it says, “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.” In other words: Obama’s still addicted to debt, and it’s time to stop pretending that his government’s IOU notes rank among the safest investments on earth. Its analysis seems to be pretty much that made by Christopher Caldwell in his brilliant cover story.

This move will, as today’s WSJ notes, “force traders and investors to reconsider what has been an elemental assumption of modern finance” — that is, that America is economically unsinkable. The strange thing about America is that, no matter what the credit rating agencies say, its ability to borrow cheaply will continue to be driven by the sheer volume of Asian savings.