America is living through torn times.

Torn by the wasting war in Afghanistan – make no mistake, the loss of more than thirty Special Services personnel, some of whom were from the very squadron that killed Bin Laden is desperate news in a country that is so interwoven with the military. Torn too by the Standard and Poor’s downgrading of America’s prized AAA rating.

On the one hand, the country is dismayed and jolted by S&P’s move. Jolted by the recognition that their country is in serious debt and that there is no quick fix means of remedying it.

Worse, Communist China no less, has told Washington, in no uncertain terms, to “get your house in order“. It is both humiliating, and worrying, and speaks to many here in the US of a tomorrow they never dreamt would come.

A tomorrow in which some one else flexes bigger economic muscle than the USA for the first time since the nineteenth century. That tomorrow is not immediate, but to hear many here, it feels horribly possible.

But America is also perplexed by who these ratings people actually are. S&P is only one of three key rating agencies that vet the US’s credit worthiness. The other two have sustained America’s top notch status. But who are the “grey men” who decide this stuff for S&P? People are beginning to ask.

For in their draft assessment of the US economy sent to the US Treasury before publishing the downgrade, S&P made – according to the US Treasury – a staggering error of some $2 trillion MORE than the debt actually added up to.

We are told the discrepancy was resolved in a phone call. If S&P can be so wrong about so critical a sum, what else can they get wrong?

Well most notoriously the credit worthiness of Lehman Brothers shortly before they hit the wall. But don’t stop there. This is one of the agencies that rated the CDOs that underpinned the sub prime mortgage disaster in 2008 as AAA status.

Perhaps in the end it matters not who S&P are and whether they are any more reliable than anyone else in judging an economy or a financial instrument. Perhaps in reality, the American people were waiting for nurse – any nurse – to tell them their economy was as sick as their daily experience told them it was.

Then, goddamnit (as they say here in the US) the unemployment figures were better than anyone forecast, just. Maybe nurse, who is now known to get things wrong, got this wrong too.

Alas for Mr Obama, not many people believe that. So he is left on deck at the moment most American learned what a downgrade was. That emotional experience – being downgraded overwhelmed any residual worries about either nurse’s identity or her integrity.

Follow Jon Snow on twitter: @jonsnowc4

President Barack Obama comes to town tomorrow for his UK state visit (he’s in Ireland today). Boris Johnson, Mayor for London, wants him to settle his embassy’s multimillion pound unpaid congestion charge fines.

Protesters will be out too, outside Buckingham Palace where he is staying as a guest of the Queen. The focus of the noise will be the very blind eye that the UK and the US are together turning on the atrocities being perpetrated in Bahrain. Armed with US supplied weaponry, Saudi forces continue to assist local Bahraini troops and thugs in the oppression and suppression of the majority Shia population.

Despite these micro and macro problems Obama may be forgiven for sparing a thought for how much longer he’s likely to be in what once was regarded as the”‘most powerful job in the world”. If the reign of the lone superpower had peaked under George Bush, it has continued its slide under Obama. And it is economic power rather, more than diplomatic and military muscle, that is orchestrating the new world order.

And yet, listening to Obama’s assured performance with a forgivably star-struck Andrew Marr yesterday, the President presented an extraordinarily spontaneous breadth of knowledge, and certainty in the rightness of American power. It was even a refreshing contrast from Bush who frequently seemed to act as if he wasn’t entirely sure how he’d ever landed up with the job.

Today yet another Republican challenger for next year’s White House race has refused to run – the uncharismatic but fancied Governor of Indiana, Mitch Daniels. At the same time, the godfather of Godfather Pizzas, the all but unknown Herman Cain, has declared he IS running. Looks like the competent Mitt Romney will end up being the most credible Republican trying to unseat Obama. Last time many mused upon whether America was ready to elect an African American. This time at least as many may well query whether America is ready for a Mormon.

Still, however economically challenged, however poor the field, Obama still intends to raise and waste a whole one billion dollars to enable him to enjoy another four years of Boris Johnson’s congestion charge demands, the noisy voices of disappointed Bahrainis and the rest.

I was making my way to my hotel here near Capitol Hill in Washington DC, when unexpectedly I ran into my old friend Jake from Baghdad in the foyer. Jake, still toiling for the UN in Iraq after four long years there, was in town with a UN Deputy Secretary General trying to drum up funding for the shrivelling civic programmes that have flowed from the Iraq war. Jake did not appear suffused with any sense of fund raising success.

No wonder: America’s two wars are costing the country several billion a week. They are still costing the UK many tens of millions a month – a poignant element that binds us to the outcome of today’s vote here.

As I write this, the polling stations are opening across America. The guy at the top won’t change. The USA will still be there when we all go to bed tonight, so what?

From war to climate change, from the state of the dollar to domestic “quantitative easing (mark 2)”, our fate is still bound to this vast all-consuming entity, which guzzles 25 per cent of the world’s energy and emits 25 per cent of global Co2 pollutants.

There will be significant numbers of politicians elected this day in this place for whom there is no place for combating climate change. There will be others who advocate trade protectionism, and still others who reject any move to further stimulate this economy – still, in GDP, some 21 times the size of China. Did I mention that the dollar has sunk to a fifteen year low against the Japanese yen, today? Fears of the cost to the greenback, of printing more money to fuel the next fiscal stimulus.

No, make no mistake; this midterm election matters both to the US, and to us. That’s why I relish being here; relish the pumpkin farm in Virginia on Halloween, talking to ordinary Americans bemused by our mutual mispronunciations of our common tongue. Relish taking to students on the campus of the black citadel of learning, Howard University in the Washington suburbs, with whom I spent Obama’s historic election night two years ago this Thursday.

Today is serious Judgement Day for the first phase of the Obama presidency. A presidency that has so far eschewed the fawning “Special Relationship nonsense”. We may be bound by that common tongue, but we are divided by it too.

Our influence on events here is waning fast – in direct ratio to the gaining of influence of many dispossessed people who barely know of our existence, let alone care.

There’s something eerie in the woodshed – and it’s not the resurrection of Sarah Palin flogging her book on Oprah’s show. “Running for the White House in 2012 is not on my radar.” Phew!

No, forget Ms Palin, and we can probably afford to for now. Let’s concentrate instead on the strengthening pound – last night up against the dollar, up against the euro. This has on a little to do with the UK’s improving prospects and much more to do with the current tussle between America and her largest investor, China.

As the dollar dives, the Chinese currency stays low – too low. The stock markets continue their insupportable surge across the world, some of the banks grow stronger, the hedge funds put on weight. The second limb of the “W” is climbing.

How rare to see an American president in China for whom castigating the Chinese leadership for their appalling record on human rights is proving far safer territory than any wholesale discussion of the value of China’s currency.

The Yuan is being sustained at artificially low levels. The effect is to give Chinese exporters a crazy advantage, swelling China’s trade surplus whilst America’s trade deficit also surges.

The Chinese manage to keep the Yuan down by buying unprecedented quantities of cheap dollars. The cheap dollar sucks in ever greater amounts of product (much from China itself), fuelling ever more dangerous levels of US unemployment. I commend Nobel Prize-winning economist Paul Klugman’s column in yesterday’s New York Times.

Nothing has changed. And that’s not the first time I have said it. I have offered the view here in Snowblog for months. The ingredients are gradually falling into place to bring about another global financial crisis – a crisis that will put unbearable pressures upon Britain’s tender currency.

Yet whilst the world economy crackles in the heat, British politicians argue about the distance the country needs to keep from the safer haven of the eurozone. Size matters in a global crisis, as Ireland and Iceland showed in their different ways the last time round.

Whilst the UK is more robust than either, this is not a moment to begin believing that UK plc can be anywhere other than in what the former Prime Minister John Major once called “the heart of Europe”.

It is 24 years since Reagan and Gorbachev opened the window on the Cold War. They met in November 1985 at a chateau on Lake Geneva.

I was lucky enough to be sent from Washington where I was resident correspondent for ITN. Today in a rather more low key moment, Obama meets Medvedev.

I happen to be blogging from Geneva today. I have a day off and am doing a bit of pro bono for the World Trade Organisation (WTO), chairing a discussion on the state of the Aid for Trade project.

Geneva was a fabulously dull back-drop for so exciting a moment as that first US-Soviet summit, in which undreamt of disarmament and tension reduction were discussed.

We didn’t know it then, but the meeting was also to herald, within half a dozen years, the demise of the Soviet Union itself. And here we are with the essentially dull Mr Medvedev meeting with Barack Obama, on a dullish event in Moscow.

There seems little pre-summit evidence of Obamaski-mania. But all the signs are that another major arms reduction commitment will flow from it.

Back in 1985, it was not the American President we were mesmerised by, but the Soviet.

I remember ABC’s legendary Sam Donaldson asking Mr Gorbachev whether it was true that his teeth were made of iron. Gorby gleamed his teeth for us to show us the whites of his (presumed) ivories.

Good god, the Russian had a sense of humour!

It has not served him well. Gorby now advertises Louis Vuitton luggage, and graces weddings and funerals, reduced at home to a resented figure who stands accused of selling Russia’s greatness down the Volga.

He’ll see Obama tomorrow, not for Russian consumption but for western. Putin too tomorrow, and most reckon that’s where any serious business will be undertaken.

No one will be holding the front page as they did a quarter of a century ago; joy it was to be alive!

I must run to my WTO meeting, of which more, anon.

Perhaps inevitably, my final highlight from the last 20 years is from the day an African American man became president of the United States.

I was out on the streets early in the morning encountering the people from near and far who’d come to share in the moment.

- See the whole of Jon’s first show as main presenter, on 24 April 1989, here.

We are about to see Obama’s mettle tested domestically in America. I’m in the States this week and very struck by how his first international foray has gone down here.

To some extent its supposed success has been taken for granted. There have been comparisons with Reagan in that the office of the US president had returned to actually LOOKING presidential.

Certainly, the Michelle and Barack joint appearances served to conjure the visible teamwork of Nancy and Ronnie of twenty five years ago.

Like Reagan, Obama has also raised the prospect of a “nuclear free” world.

But the other nuances of Obama’s trip, particularly the visit to Turkey, and what he said about respect and engagement with the Muslim community, have sparked little reaction Stateside. Yet that opening is something almost unthinkably different post 9/11.

What’s interesting to note here is something else which has not been said, namely, the Israeli lobby has gone eerily quiet…

So what, beyond the abiding baptismal fire of the economic meltdown that greeted his election, is this great test of his domestic mettle?

There are two such challenges to which he has returned. Both have been previously untouchable: Cuba, and defence spending.

On Cuba, Obama’s pragmatism and determination to stick to his election promise are seemingly on show. He’s proposing to lift some of the restrictions on Cuban Americans wishing to travel to Cuba and to allow them to remit more money to their families there.

The 47-year US economic embargo on the communist island will stay, however.
 
Obama seems to have judged it well. There is little outcry even from the neo-cons. He has left it to Congress to propose the normalisation of all travel to Cuba – a move the president will be pleased neither to have proposed, nor now to resist.

Pragmatic again when it comes to spending on weapons programmes? He has left it to defence secretary Bob Gates (well clothed in Republican service to George W Bush) to propose major cuts in defence purchasing.

This is an unprecedented physical attack on what Eisenhower dubbed the “Military Industrial Complex”, from a man previously regarded as a safe pair of hands by Republicans and arms manufacturers alike.

Eighty five per cent of US Congressional districts have a high dependence on these ludicrous hi-tech stealth programmes, many of them will have little or no relevance to America’s current war fighting needs.

Obama is privately said to want much deeper cuts, though the employment implications in a recession are great.

The New York Times, in its editorial yesterday, argued too for far deeper cuts. Hence the pragmatism? Get the idea of cuts out there and let others do the talking…

The threat to Obama’s plans is neither from Conservatives, defence contractors nor lobbyists.

The challenge to Mr Obama’s entire locus remains the financial meltdown, which is still headed south.

All one can say thus far, is that his other policies play to the belt-tightening that the rest of the American empire will have to endure to survive.