Everyone has been in a panic this week over America's impending fiscal collapse, but I think the reality is that America does not face an immediate debt crisis. Take a look at the simplest indicator, the day that Standard & Poor's raised its now famous warnings about America's debt, markets decided to lower America's borrowing costs and the dollar rose against its principal alternative, the euro.
The real problem for America may well be that it does not face a short-term crisis. Over the last few years, everyone has been worrying about America's debt, and despite all that public worrying, markets keep lowering the rates at which we can borrow money.
Why? Well, around the world, people, countries and companies are looking for safe, liquid investments. The market's judgment is that the safest such investment is Uncle Sam's debt.
Imagine you're the head of China's central bank. You need to invest tens of billions of dollars every year in something secure and liquid so you can get your money back when you need it. There are few good options. You could invest in European bonds, but you've been spooked by the recent series of euro crises. It's fair to ask, will the euro in its current form even be around in 10 years?
Then there are Japanese bonds. You could invest in those, but Japan has the worst balance sheet of the major countries, with debt at 200 percent of GDP, slow growth and a rapidly aging population. Plus you, the Chinese, hate the Japanese, have never forgiven them for World War II, and are not likely to do anything to shore up the yen as a global currency. You could invest in your own bonds, but that would drive up the value of China's currency and make your exports more expensive, which means fewer jobs at China's manufacturing companies.
My point is that Beijing buys U.S. Treasury bills not out of any great love for America, but for good, practical reasons. It's why others buy them as well.
The short-term news about the U.S. economy is also positive. Last week, the International Monetary Fund (IMF) issued a report on global growth that confirms that the U.S. is likely to be the fastest-growing of the world's advanced economies. In fact, the real problem is that this short-term good news means Washington isn't really acting as if it faces a crisis, no matter the rhetoric.
Democrats are still clinging to entitlement programs - Medicare, Social Security - with no talk of real cost cutting, though the current system is clearly unaffordable. Republicans are playing politics with the vote to raise the country's debt ceiling and are still blind to the inevitable need to raise taxes. People are still pushing their ideologies rather than fixing the problem.
Once again, it looks like the American economy will outperform expectations and temporarily relieve politicians from having to make hard choices about entitlements and taxes. But this will only postpone the day of reckoning and make the crash more painful.
You can read more on this in TIME Magazine this week.