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| China-Japan-Koreas |
| China has right to demand US address debt problem |
| 2011-08-06 |
| Looks like China wants the US to be placed under protective adult supervision. China "has every right" to demand the United States address its debt problem following its downgrade by Standard and Poor's, the official Xinhua news agency said on Saturday. Standard & Poor's has cut the US rating a notch from the top flight triple-A to AA+, saying its politicians were becoming less able to get to grips with the country's huge fiscal deficit and debt load. In a stinging commentary, Xinhua said Washington needed 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". S&P gave a negative outlook for the US, saying there was a chance its rating could be cut again within two years if progress is not made cutting the government budget gap. China, sitting on the world's biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasuries. Xinhua said that unless Washington made substantial cuts to what it called the "US gigantic military expenditure and bloated social welfare costs", the downgrade would simply be a "prelude to more devastating credit rating cuts". "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," the English-language commentary said. "To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means." "The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered," said Xinhua. The commentary also hit out at "short-sighted political wrangling", saying Washington had allowed domestic electoral politics to take the global economy hostage. The downgrade serves as a warning about the sustainability of US government finances, Xinhua said, urging Washington to stop relying "on the deep pockets of major surplus countries to make up for its perennial deficits". Xinhua, which on Wednesday slammed the deal to raise the US debt ceiling as failing to defuse the country's "debt bomb", said international supervision "over the issue of US dollars" should be introduced. It questioned the dollar's status as the world's dominant reserve currency, saying "a new, stable and secured global reserve currency may also be an option to avert a catastrophe called by any single country". The US Treasury has challenged the downgrade, saying said there was a "two trillion dollar error" in the S&P analysis. US lawmakers wrestled for months before finally agreeing a deal to raise the debt ceiling and slash the deficit last Tuesday, as the country was on the verge of default -- a fight that had sent jitters throughout the world economy. |
| Posted by:tipper |
| #9 As per FREEREPUBLIC, CHINA = also is seemingly calling for "INTERNATIONAL SUPERVISION" of the US + its anti-Debt efforts. ["RED DAWN I/II" MOTHERLY COMMIE-DPRK AIRBORNE, ANTI-US, OWG-NWO WEAK USRoA GLOBAL SSR = United Socialist Republiks of Amerika = North Amerika here]??? |
| Posted by: JosephMendiola 2011-08-06 21:39 |
| #8 I agree that we need to ensure an ability to repay our debts, particularly to the Chinese. Let us start with a 25% targeted deficit reduction premium on imports from China to be used to purchase our bonds back from China. |
| Posted by: Perfesser 2011-08-06 20:45 |
| #7 AA+ is extremely generous for a country at 100% debt to GDP. We should be kissing their ass for an AA+. I'm inclined to agree. While Japan, with its AA- rating, is at 200%, Indonesia has a BB+ rating despite only having a public debt to GDP ratio of 26%. The key difference between Indonesia and both Japan and Uncle Sucker? With the exception of below-market price gasoline, produced from Indonesian oil reserves, Indonesia has essentially no welfare state obligations. And Indonesia has been reducing the gasoline subsidy over time, whereas the developed countries have been feverishly adding to already lavish welfare state benefits. |
| Posted by: Zhang Fei 2011-08-06 17:46 |
| #6 AA+ is extremely generous for a country at 100% debt to GDP. We should be kissing their ass for an AA+. |
| Posted by: bigjim-CA 2011-08-06 16:07 |
| #5 I think the Chinese need to pay back the pre-Communist Revolution debt, 100% of which they repudiated, before they can start talking about demanding anything from Uncle Sam. Besides, like everybody else, they are entitled to sell their Treasury holdings and stop hanging on to US dollars. Of course, that would entail appreciating the RMB against the dollar, which might just zero out their trade surplus with the US. Can't win 'em all... |
| Posted by: Zhang Fei 2011-08-06 14:06 |
| #4 Mr. Debt Problem 77 Tulip Square of the Revolution Shanghai, PROC 32303 Dear Sirs, Go to the end of the line. Thank you. |
| Posted by: S 2011-08-06 11:39 |
| #3 "To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means." 1.3 billion additional members of the Tea Party. |
| Posted by: Matt 2011-08-06 09:00 |
| #2 Of course it did, P2k. But the Chinese have no qualms about exploiting us when we make it so easy ... not to mention their joy as we lose face. That said, they're nervous - and should be. |
| Posted by: lotp 2011-08-06 08:33 |
| #1 Of course the refusal for a decade-plus to allow the Chinese currency to float against the dollar, thus allowing the 'invisible hand' of commerce to make its own adjustments [such as raising the price of Chinese goods and thus decreasing demand], compounded the current situation. |
| Posted by: Procopius2k 2011-08-06 08:27 |