Even allies are ganging up on the US

It's understandable that China has criticized US monetary policy and erected trade barriers in the form of import tariffs. Even Japan is lashing back at Washington DC for calling out Toyota executive in the brake scandal.

And now Swiss banks are declaring US government debt at high risk of default. Perhaps this is retaliation for the US attacking Swiss private banking laws.

Here's the problem I see developing: our foreign traders have historically funded our overconsumption, buying US Treasury bonds. Without their participation in future bond auctions, there will be no buyers to replace them. Other than the Fed, which means the US Treasury just has to print more money, and down the drain the dollar goes. It's already occurring, as 30-year Treasury bond yields ticked up last week. That does not bode well for an already fragile economic recovery.

And yet folks still view the USDollar and Treasury bonds as safe havens.

Notice where US sovereign debt ranks relative to the rest of the world. It may surprise you--but then again, it may not.

http://ftalphaville.ft.com/blog/2010/02/10/146606/handy-sovereign-risk-table/