If we can't get the deficit under control and begin paying back this debt, we will be mortgaging the future of our children and grandchildren.

BBC: Ex-Archbishop Carey attacks bishops over benefit cap

Bonds sold off from the start of trading, and the selling accelerated after Moody's Investors Service said that the U.S. sovereign-debt could be negatively affected by the extension of tax cuts and if the government can't get its growing debt under control.

WSJ: Tax-Cut Deal Results in Turmoil for Bonds

But while US politicians were arguing over whether to inject more stimulus into the economy, the euro was creaking under the strain of forced austerity, and a new coalition government in the UK was promising to raise taxes and cut spending to get the economy under control - Thomas Herndon's homework assignment wasn't going well.

BBC: News

"I am afraid we can't let up on the difficult decisions we have made to cut public spending and to get our deficit under control, " he said.

BBC: David Cameron and Nick Clegg: No let-up in tough decisions