The United States faces a crisis not seen since the Depression

Maybe it's because Boston is different, a semi-detached city in one of the US's most liberal states. But the news that the world's biggest economy had had its creditworthiness challenged for the first time by the upstart rating agency Standard & Poor's (S&P) hardly seemed to register with the locals.

No one I met fulminated about loss of economic sovereignty or that S&P, whose purblind approval of junk mortgage debt as triple A was one of the causes of the financial crisis, had finally over-reached itself. Bostonians seemed unconcerned. Perhaps this was because it was just one more surreal moment in the pantomime that is American economic and political life.

That was how the markets judged the news. There was a momentary tremor in the Dow Jones. Some analysts shrugged it off; others thought it profoundly serious. But soon the markets were on the rise again as if nothing had happened.

The Obama administration played it down. Tim Geithner, the secretary of state for the Treasury, said that S&P was behind the political curve; the prospects for a bipartisan deal were now better than they had been for months. If the hope was to provoke a change in the debate about the US's record budget deficit, S&P must have been disappointed.

The Republicans rehearsed their battle cry that Obama was mortgaging the future and that the only plan in town to respond to the agency's "wake-up call" was their own – to take federal spending back to pre-modern levels, while offering further tax relief to the rich. To all this Democrats are ferociously opposed. (read more)