8/06/2011 PERMALINK
Germany's top financial newspaper: "We are not far away from the abyss." The foreign response to the dollar downgrade by S&P has been scathing. Not just the tabloids, even the editorial in the Xinhua, the official party news agency in China, and Germany's top financial newspaper condemned the malfeasance in office of America's clueless politicos.

Here's a summary of what Xinhua said:

The recent downgrade of America’s credit rating by Standard & Poor’s showed the need for America to cure its addiction to debts and to reestablish the common sense principle that one should live within its means. China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets.
The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered. The U.S. 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.
Dagong Global’s initial downgrade last year was met then with a sense of arrogance and cynicism from some Western commentators. But now the Standard & Poor’s downgrade has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth.
The fiscal problems in the U.S. make clear the necessity to begin the discussion over introducing a new global reserve currency to replace the U.S. dollar.

Handelsblatt's top story was to quote the Chinese view of the downgrade. Then they concluded:

Because of the importance of the U.S. dollar as reserve currency and because the world economy already is suffering from the euro crisis. This could put the situation into a tailspin. Nevertheless, France's Economy Minister François Baroin does not worry about the U.S. economy. "France has a full confidence in the stability of the American economy," he said on Saturday. Baroin praised the U.S. government for their "decisive action" to get the debt under control and said that the downgrade of the U.S. credit rating should not be overestimated.

Handelsblatt normally is a very conservative newspaper, not in the habit of calling a minister's statement bull. But that is pretty much what they did above, which vividly illustrates just how far confidence in politicos and governments has fallen worldwide. None of them seem to have a clue.

The second story on Handelsblatt's front page was an analysis of the overall situation, with a giant headline summing it up:

"We are not far away from the abyss." The situation is so grim that conservative financial newspapers are now running tabloid headlines.  Because they've become true.

The extraordinarily expensive and deceptive measures that governments have undertaken to try to preserve an obviously flawed and failed status quo. Have left all of them so financially weak and has so utterly destroyed their credibility with their citizens and markets. That the end game of the world's current financial troubles could well unfold exactly like slipping on a high trail and plunging into the abyss.