The five trading days that followed America's historic downgrade saw the US Treasury barely break a financial sweat in selling a total of $72bn in bonds. The last week has also underlined the advantages that the US has over other countries, including Britain, that are faced with large deficits.  Alongside gold, the Swiss franc and the Japanese yen, the $9trillion US Treasury market remained the safe-haven of choice for global investors seeking refuge from the turmoil.  "The market is transparent and very liquid," said Rich Tang, who is head of fixed-income sales in the US at RBS, one of the 20 banks on Wall Street that help sell the government's debt. "You can do a $1bn ten-year bond trade and you're not going to leave a footprint."  But the extra cards that America still has in its deck, including the dollar's status as the world's reserve currency, are beginning to cause concern of their own. Will they be used by Washington to put off the country's day of reckoning with its $14trillion debt pile?  The Congressional Budget Office, an independent arm of government, has in its bleakest scenario forecast that the ratio of debt compared to the size of the economy will reach 190pc by 2035 if nothing changes. Even its more optimistic projection puts the ratio at 90pc by 2021 without a combination of reductions to key pension programmes such as Social Security and healthcare ones like Medicare, as well as tax increases. It's averaged just under 40pc for the last 40 years or so.  "Our form of government works best under pressure," said Bill Frenzel, the chief Republican member of the House of Representatives Budget Committee during the 1980s. "In my judgement S&P had to make the first step and I think it's a necessary first step."  Financial markets have spent the last year twitching, and often doing considerably more, in reaction to the successive efforts of European leaders to solve the region's debt crisis. But with last week's downgrade, and a Presidential election fast-approaching in which the deficit will be a central issue, it's politicians on Capitol Hill who will have to get used to more intense scrutiny from the world's financial capitals over the next 12 months. "The centre of finance is now in Washington DC," said Tang of RBS. "You have monetary and fiscal policy driving markets and I don't see that going away any time soon."  With the world's biggest economy averaging growth of just 0.8pc during the first half of the year, America has this month become the latest country to have to walk the tightrope between introducing a measure of fiscal austerity and ensuring the economy doesn't slide into another recession.  It wasn't in the script at the start of the year written by either The White House or the Fed, which had both forecast the recovery would be much stronger by now. It's why the focus of some in Washington and on Wall Street is turning to Britain, where the Coalition Government has embarked on a £110bn plan to eliminate the structural deficit by 2015.  "Britain has a plan," says Al Simpson. "We just need to give the world a plan." There aren't many people who have spent more time thinking about America's public debt than Simpson, a former Republican Senator from Wyoming. He was the co-chairman of the National Commission on Fiscal Reform and Responsibility, which last December presented President Barack Obama with a 60-page plan to begin to balance the country's books.  "We both know we're in the same boat," Simpson says of Britain and the US. The usual conversational icebreakers may not have been needed when he spoke to the Chancellor George Osborne for the first time earlier this year.  Whatever the Chancellor told Simpson, Britain's example so far offers one clear lesson for the US, according to Michael Saunders, the chief UK and European economist for Citigroup in London.  "Announce early a credible fiscal plan that cuts the deficit over a long period," says Saunders. "By detailed, I mean what does it mean for the police? What does it mean for other budgets? It shows you're serious."  This month's bitter wrangling over raising the country's $14.3trillion debt ceiling suggests the lesson has yet to be absorbed. The deal that eventually saw the borrowing limited lifted at the eleventh hour agreed about $900bn of spending reductions and created a bipartisan Congressional committee to find another $1.5trillion of cuts over the next decade.  Voters were left underwhelmed, according to a poll this week in the Washington Post, with almost 75pc of people no longer believing that politicians are capable of addressing the country's economic challenges, including a budget deficit that's forecast to reach an annual record of $1.4trillion this financial year.  But the depth of the division between Republicans and Democrats over spending and taxes also alarmed investors. "Most US investors were surprised by the degree of divergence in ideological views and by the inability to come to some middle ground over cuts for the next 10 years," says Saumil Parikh, a fund manager at Pacific Investment Management Co (PIMCO), which runs the world's biggest bond fund.  And attention is already turning to the 12-person panel, known as the Joint Select Committee on Deficit Reduction, whose final three members were named last Thursday. Should they fail to find common ground on reducing the deficit by November 23, then automatic spending cuts of $1.2trillion will be triggered. "We'll be looking for a move away from something intransigent to a more balanced approach," explains PIMCO's Parikh. "It will be watched very, very closely."  The expectation is that, shaken by the recent turmoil in the stock markets and the downgrade, the panel will manage to cut the deficit by $1.5trillion over the next decade. But the early signs aren't immediately encouraging. Nancy Pelosi, the chief Democrat in the House of Representatives, made her three appointments to the panel last week, arguing that it must also deliver ways of creating new jobs. The six Republicans on it are likely to balk at any such suggestion unless growth slows much more rapidly over the next three months.  As the Obama administration and the Fed again struggle to reignite the recovery, a minority in Washington and on Wall Street remain hopeful that the committee will be galvanised to beat expectations. This would involve agreeing to reduce the deficit by at least $4trillion over the next decade, and confronting the politically explosive issues of spending on healthcare and raising taxes. Tax revenues as a share of gross domestic product (GDP) fell from their historic average of about 18pc to 15pc in 2009, and the CBO expects them to stay at those levels this year. Spending on healthcare, meanwhile, has soared from 4.8pc of GDP in 1960 to 16.5pc in 2009.  And Simpson, the former Senator from Wyoming, argues that what financial markets, as well as the American public, want in different ways is some clarity and detail on reducing the deficit over a 10-year horizon.  "All you need is a plan. You don't need to give the baby teeth straight away," he says. Our report "didn't do BS and didn't do mush, and they're (the public) very appreciative of it," he says.  But with an election just over a year away, the betting remains that politicians will push back the tough decisions until 2013. "I think that's an enormous misjudgement," says Frenzel, who believes the economy is in need now of the clarity a long-term agreement could bring.  The advantages that the US has as a borrower won't melt away in the space of a year.  But if the country's politicians fail to rise to the national debt challenge sometime over the next 18 months, then it may be the last time the government can hold a fantastic bond auction in the week after a downgrade.
A week after its historic downgrade by Standard and Poor's, investors have    been piling their money into US bonds.