Tyler Cowen writes

Of the world’s share of AAA sovereign debt, we issue 59 percent of it. (Next is Germany with ten percent and then France with nine percent of the total.) You can read this a few ways:

1. Wow, we really abuse that AAA privilege.

2. Losing the AAA rating would spell disaster for repo markets and the like.

3. The world trusts us enormously, isn’t that wonderful?

4. All of the above.

I would say “read the whole thing,” but you just did. Sorry Tyler, but it was too pithy to excerpt. I will toss in

5. The international financial order is based on people treating the U.S. as AAA from a credit standpoint. This has essentially nothing to do with the credit rating agencies. It may not have much to do with how the debt ceiling theatrics unfold. But at some point, investors may become convinced that the U.S. just does not have the will to fix its budget. If that happens, then the international financial order will collapse, and something else will have to pick up the pieces. I see the Kipper- und Wipperzeit as the relevant precedent.