From FT Alphav­ille, via Naked Capitalism:

The US has been so hurt by the finan­cial tur­moil that mar­kets now view its credit wor­thi­ness as akin to - or even worse than - that of McDonald’s, a shock­ing fact even if you believe that both are fronted by clowns.

One broker quoted McDonald’s CDS at about 26.5 basis points, com­pared with 30bp for the US, on Friday morn­ing and another desk quoted both about 25bp. The pic­ture has wors­ened since the news that politi­cians and public ser­vants in Wash­ing­ton failed to seal a finan­cial bail-​out deal on Thurs­day night. McDonald’s closed at 28bp versus 25bp for the US on Thurs­day, accord­ing to Markit.

Krug­man, on last night’s bailout blowup:

How did we get to this point? It’s the cul­mi­na­tion of many past betrayals.

First of all, we have the Repub­li­can Study Com­mit­tee blow­ing things up with a com­plete non­sense pro­posal — solv­ing the crisis with a hol­i­day on cap­i­tal gains taxes. How is that pos­si­ble? Well, if a party runs on eco­nomic non­sense for 25 years, even­tu­ally many of its foot sol­diers will be people who actu­ally believe the nonsense.

More specif­i­cally, though, the fail­ure to get a deal reflects the betray­als of the Bush years. Democ­rats weren’t going to trust Henry Paul­son, because behind him they see the ghost of Colin Powell (and Paulson’s “all your bailout are belong to me” pro­posal, aside from being bad eco­nom­ics, showed an incred­i­ble tone-​deafness.)

And after the way the Bushies and their allies double-​crossed the Democ­rats again and again in the after­math of 9/11 — demand national unity, then accuse you of being soft on ter­ror­ists anyway — there’s no way Pelosi and Reid will do the respon­si­ble but unpop­u­lar thing unless the Repub­li­cans agree to share ownership.

So what we now have is non-​functional gov­ern­ment in the face of a major crisis, because Con­gress includes a quorum of cra­zies and nobody trusts the White House an inch.

As a friend said last night, we’ve become a banana repub­lic with nukes.

We all know by now–because it’s been repeated to us by our news­pa­pers and inter­nets and tele­vi­sions ad nau­seam–that the fun­da­men­tal prob­lem at the heart of this whole eco­nomic crisis is the so-​called “toxic assets” held by banks, many (but not all) of which have the form of mortgage-​backed securities.

But if you’re like me you may be won­der­ing what the scale of that tox­i­c­ity is. How bad are things really?

Now we have a number.

McCain sur­ro­gate Sen. Lind­say Graham has learned from the master about the joys of errati­cism. From Politico this morning: