There’s a big warning for the government, the Opposition and even the balance-of-power Greens in America’s credit rating downgrading by Standard & Poor’s. It’s that Australia could face a loss of its cherished AAA rating if they’re stupid enough to allow the political process to place at risk the solid economic position the country through inaction, failure to control spending, or spending in the wrong areas.

The IMF got it right in its update on the Australian economy when it said on Saturday that Australia is well placed to limit the impact of any disruption caused by worsening international economic conditions. It’s worth quoting at length:

“If global financial markets become severely disrupted or world growth falters, macroeconomic policy is well positioned to respond. The exchange rate would likely depreciate, limiting the fall in commodity prices in Australian dollars and providing stimulus to the non-commodity tradable  sector. There is ample scope to cut the policy interest rate and provide liquidity support for banks, which proved effective in the global  financial crisis. There is also fiscal space to delay the return to surplus and, if needed, to take temporary discretionary measures, given the low level of government net debt (6 percent of GDP).”

So we have three forms of stimulus to fall back on, however much some jump up and down about debt and deficits. No wonder Joe Hockey said nothing about the IMF statement on the weekend — it doesn’t fit any of the narratives he and Tony Abbott have been running, especially when it endorsed a carbon price.

GFC Mark 1 was a crisis induced by ideology — that of unfettered free markets — and it was delivered by banks given free rein. If there’s a GFC Mark 2, however, it will have been induced by politics, and delivered by politicians. There’s elements of ideology, sure – not just in the Republicans’ hatred of requiring the rich to pay any tax, but in the neoconservative agenda of the Bush Administration that led the country into not one but two wars while cutting taxes.

But like the unfolding European crisis, delivered by a rogue’s gallery of politicians past and present, current events in the US are the product of politicians taking political decisions.

That was why Standard and Poor’s issued its downgrade. For S&P it wasn’t the current weak state of the US economy or the size of the debt or deficit that prompted the downgrade. Instead, the agency took the very contentious decision to argue that the political system of the world’s biggest economy has become “less stable, less effective, and less predictable than what we previously believed” and that the spending cuts announced last week didn’t go far enough.

“There are two things that we should emphasise. One is that the political discourse has diminished the credit standing of the United States. The other is a fiscal analysis,” said John Chambers, managing director and chairman of the sovereign ratings committee at S&P said in its statement. And S&P made a point of pointing the blame at some politicians in particular: “We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the [debt ceiling] act.”

Despite such clear fingerpointing at the Republicans, the Obama Administration is deeply unhappy with S&P’s change of approach. Various media outlets reported the brawl between the US Treasury and S&P’s, none better than the Financial Times, including S&P’s trillion-dollar counting errors. As the US Treasury pointed out in its own blog, “in a document provided to Treasury on Friday afternoon, Standard and Poor’s (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error – a basic math error of significant consequence – S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one.”

The downgrade, and the trillion-dollar error, prompted plenty of observers to correctly point out the performance of S&P and other ratings agencies prior to and during the GFC. None of the agencies have ever properly accepted responsibility for, or paid an appropriate penalty, for their performance and how it contributed to that disaster.

But that doesn’t diminish the validity of S&P’s point about the sclerotic US political system.  Another unlikely source for advice about quality governance, America’s biggest creditor the Chinese Government, made a similar point on the weekend. “The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” said the state-run Xinhua news agency. “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.”

Xinhua said the US must slash its “gigantic military expenditure and bloated social welfare costs” and accept international supervision over US dollar issues. That’s rich advice coming from an emerging military rival that refuses to disclose its own military spending and which has persistently rejected international demands that it end its currency manipulation.

But however discredited both S&P and China may be, they along with every other economy wants to see America get its house in order. The problem is that the political cycle is against it. 2011 is an electoral off-year. 2012 is a presidential election year. If you think the last few weeks have been bad, the gridlock in Washington is only going to worsen.

The lesson for Australia is that there are consequences for the way our politicians behave, and particularly for knee jerk oppositionism. The Coalition, in particular, has based its political strategy on predicting economic disaster at every turn and injecting overheated doomsday rhetoric into every policy debate. Right now we need a political class that’s committed to preserving the undoubted strengths of the Australian economy, not undermining them.