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China has right to demand US address debt problem
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 2011-08-06 |
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