Al-Quaida has taken credit, no surprise there. I hate to say it, but at some point - and this may be that point, if 9-11 and Madrid weren't already it - the only solution will be to "go medieval" on somebody. An appropriate response at this point might be to promise that whatever part of the world that is currently harboring bin Laden will - once we find out where it is - be turned to glass and rendered unhinhabitable for centuries. It might not be very libertarian of me, but there may not be any solution short of purging the earth of anyone and everyone who even remotely supports this kind of thing.
One bright spot - and it's a very faint candle in a very dark day - is that this probably means no more anti-capitalist protests at the G8. I don't imagine the British police having much patience in the next few days for masked anarchists shutting down streets and breaking windows. Even those miscreants will probably realize that violent protests now will only serve to associate themselves with those who did this.