(Reuters) China bluntly criticized the US on Saturday one day after the superpower’s credit rating was downgraded, saying the “good old days” of borrowing were over.
Standard & Poor’s cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation’s budget deficits and climbing debt burden.
China — the United States’ biggest creditor — said Washington only had itself to blame for its plight and called for a new stable global reserve currency.
After a week which saw $2.5 trillion wiped off global markets, the move deepened investors’ concerns of an impending recession in the United States and over the euro zone crisis.
Finance ministers and central bankers of the Group of Seven major industrialized nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.
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I found this article to contain some very interesting information. The first note of interest is the Chinese call for a new world reserve currency to replace the unstable U.S. dollar. I have read several articles on this subject, as well as receiving alerts of this nature in a number of financial newsletters that I subscribe to. It is not only China who is calling for the replacement of the dollar as the world reserve currency, but a number of other countries as well. Already we are seeing countries in the same region begin to move away from using the U.S. dollar as the basis for their trading. Countries in Asia and the Middle East have made pacts with each other for trade affairs that exclude the use of the dollar. In our current economy, having the U.S. dollar lose its status as the world reserve currency would be a devastating blow to its value – and our ability to trade worldwide.
I also found it to be of interest to note that China is calling for the U.S. to reduce its military spending. China is increasing its military spending in spite of the fact that it is also in financial trouble and has been experiencing protests and riots among its citizenry because of it. China holds a great deal of U.S. debt. Over the last year or so, the Chinese government has taken their U.S. dollars, and have not sunk their funds into their own country and people, but have bought land in countries – many of them third world countries – all over the globe. China is currently sailing its first warship, which it received from Russia, on its maiden voyage – and is making many neighboring countries very nervous in the process. It does make one think, especially when the U.S. is as dependent on China as it is, not only with debt, but with the many, many goods that U.S. citizens purchase that are made in China.
I do agree our relationship with China is a delicate one, Mia ~ At the same time I am also concerned over the growing frustration of many Americans to understand our debt situation ~ It is not a simple answer or solution, as I know you know Mia ~ However, unfortunatley the public in general wants simple and easy answers ~ The political leaders and policy makers that created our tremendous debt love the public focus on China ~
You are so right, Coralina! The politicians would Love nothing better than for all of us to just forget about the debt, pay our taxes, and let them do as they will. Personally, I find it rather annoying that the “political leaders” in this country used to be an every day person like the rest of us, but when they stepped into “office” they suddenly become far above everyone else. Frankly, I think that every elected official should have to go through training in finance, constitutional law, foreign affairs, etc. before they are allowed to cast one vote on anything! 😉 Our “leaders” clearly do not have much in the way of knowledge of these critical elements of our country.