How Long Will US Debt Remain the Destination of Choice for Global Capital?

"Mitch McConnell is apparently promising that last week's histrionics over the debt ceiling were merely a prelude to a lengthy drama in which we re-enact this battle every time the debt ceiling needs to be raised.

"What we have done, Larry, also is set a new template. In the future, any president, this one or another one, when they request us to raise the debt ceiling it will not be clean anymore. This is just the first step. This, we anticipate, will take us into 2013. Whoever the new president is, is probably going to be asking us to raise the debt ceiling again. Then we will go through the process again and see what we can continue to achieve in connection with these debt ceiling requests of presidents to get our financial house in order."

Just how bad you think this is depends on how unlikely (or undesirable) you think it is that we will ever again run a surplus. But even an optimist would have to admit that it's pretty bad. As Karl Smith says, "This is the type of thing that should encourage banks and governments around the world to intensify the search for an alternative to the dollar and US Treasuries."..."

at http://www.theatlantic.com/business/archive/2011/08/how-long-will-us-debt-remain-the-destination-of-choice-for-global-capital/243027/