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  1. #1
    Senior Member HAPPY2BME's Avatar
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    China blasts US over credit rating downgrade

    China blasts US over credit rating downgrade

    CBS Money Watch
    AP

    China said Washington only had itself to blame and called for a new stable global reserve currency.
    BEIJING — China, the largest foreign holder of U.S. debt, demanded Saturday that America tighten its belt and confront its 'debt-addiction' in the wake of the Standard & Poor's decision to downgrade the U.S. credit rating from AAA.

    China currently owns $1.2 trillion of U.S. Treasury debt, the largest stake of any central bank. The commentary carried by the Xinhua News Agency was Beijing's first official response to S&P decision.

    It said the rating cut would be followed by more "devastating credit rating cuts" and global financial turbulence if the U.S. fails to learn to "live within its means."

    "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," it said.

    Xinhua said the U.S. must slash its "gigantic military expenditure and bloated social welfare costs" and accept international supervision over U.S. dollar issues.

    It also suggested a new global reserve currency might be necessary to replace the dollar, a position China has frequently advocated.

    "Mounting debts and ridiculous political wrestling in Washington have damaged America's image abroad," Xinhua 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."

    Source: http://moneywatch.bnet.com/investing/ne ... z1UFMLymi2
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  2. #2
    Senior Member HAPPY2BME's Avatar
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    You are about to see a full-frontal global attack on the US Dollar.

    related

    WRAPUP 4-China flays US over credit rating downgrade

    Reuters

    * China renews call for another global reserve currency

    * S&P cuts U.S. AAA credit rating on debt concerns

    * ECB demanded reform as price of support for Italy

    (Recasts, adds Britain's Cable, India comment)

    By Walter Brandimarte and Melanie Lee

    NEW YORK/SHANGHAI, Aug 6 (Reuters) - The United States lost its top-tier AAA credit rating from Standard & Poor's, drawing a blast of criticism on Saturday from its biggest creditor China and deepening investors' alarm over the euro zone's debt crisis.

    China said Washington only had itself to blame and called for a new stable global reserve currency.

    "The U.S. government has 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," China's official Xinhua news agency said in a harshly worded commentary.

    The S&P cut in the U.S. long-term credit rating by a notch to AA-plus resulted from concerns about the nation's budget deficits and climbing debt burden. The move is likely to eventually raise borrowing costs for the U.S. government, companies and consumers.

    By calling the outlook "negative," S&P signalled another downgrade is possible in the next 12 to 18 months.

    Worries that the United States was slipping into recession and the euro zone debt crisis was spreading drove a week-long rout in which $2.5 trillion was wiped off global markets.

    Better-than-expected U.S. jobs growth in July helped support Wall Street on Friday but stocks slipped back into the red in late trading.

    China roundly condemned the United States for its "debt addiction" and "short sighted" political wrangling and said the world needed a new stable global reserve currency.

    "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," the Xinhua commentary said.

    It urged the United States to cut military and social welfare expenditure. It also said further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil.

    "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.

    British business minister Vince Cable backed China's call for a new stable global reserve currency but said that for the moment the U.S. dollar remained key.

    "This argument's been around a long time and it would be a sensible way for the world to move but it's not something we're going to do overnight," Cable told BBC TV.

    Cable has been a vocal critic of the U.S. Congress's protracted arguments to agree a deficit-cutting deal and had warned Washington's sovereign debt rating was at risk.

    "In the short run, the United States dollar is the key international currency and although, frankly, the American legislators made a terrible mess of things a few weeks ago, they have now got back on track, they have undertaken to manage their debt in a prudent way," he said.

    S&P blamed in part the political gridlock in Washington, saying politics was preventing the United States from addressing its deficit and debt problems.

    http://www.reuters.com/article/2011/08/ ... 2C20110806
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  3. #3
    Senior Member BetsyRoss's Avatar
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    It's funny that China should be saying that now, because all along China's economic plan has been that they will make stuff and we will buy it from them. This has devasted America's industrial base and thrown tens of millions of Americans into unemployment or lower-paying jobs. That this was an unsustainable situation was obvious to anyone with even a little math aptitude.
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  4. #4
    Senior Member HAPPY2BME's Avatar
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    Quote Originally Posted by BetsyRoss
    It's funny that China should be saying that now, because all along China's economic plan has been that they will make stuff and we will buy it from them. This has devasted America's industrial base and thrown tens of millions of Americans into unemployment or lower-paying jobs. That this was an unsustainable situation was obvious to anyone with even a little math aptitude.
    =================================

    You are spot on, BetsyRoss

    related

    Retailers report solid sales gains for July
    http://www.alipac.us/ftopic-245983-0-da ... rasc-.html

    Adding to that, this fall shoppers will face higher price tags as retailers try to pass on higher labor costs in China and raw material prices.
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  5. #5
    Senior Member BetsyRoss's Avatar
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    My understanding is that China is anxious to keep its people employed to prevent unrest and unraveling of their empire. We could rain on their parade if we would just be careful to read labels at the store.
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  6. #6
    Senior Member HAPPY2BME's Avatar
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    Quote Originally Posted by BetsyRoss
    My understanding is that China is anxious to keep its people employed to prevent unrest and unraveling of their empire. We could rain on their parade if we would just be careful to read labels at the store.
    ===========================================

    If it only were that simple.

    Every major retail chain in the United States (WalMart, Target, Costco, Dillards, Home Depot, etc.) would not be able to stay in business because of their dependence on foreign made products.
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  7. #7
    Senior Member HAPPY2BME's Avatar
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    related

    Illegal Immigrants From Texas Are Heading Home to Find a Job
    http://www.alipac.us/ftopic-245893-0-da ... exico.html
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  8. #8
    Senior Member oldguy's Avatar
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    Quote Originally Posted by BetsyRoss
    It's funny that China should be saying that now, because all along China's economic plan has been that they will make stuff and we will buy it from them. This has devasted America's industrial base and thrown tens of millions of Americans into unemployment or lower-paying jobs. That this was an unsustainable situation was obvious to anyone with even a little math aptitude.
    America's down fall begin during trading agreement with china, greed consumed the American business man who wanted to buy tennis shoes for $5 and sell them for $100. Don't misunderstand I believe in making money but not at the expense of America and it's workers.

    We will never have the quality of life and jobs we once had unless we regain our manufacturing base. Look through your homes and see the place of manufacture 8 of of 10 items is normally China made. Each time we shop we purchase another rifle for the Chinese army. Time to end the trade deficit.

    Capitalism is the best system going however it too can fail without morals, values, standards and love of country.
    I'm old with many opinions few solutions.

  9. #9
    Senior Member HAPPY2BME's Avatar
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    Quote Originally Posted by oldguy
    America's down fall begin during trading agreement with china, greed consumed the American business man who wanted to buy tennis shoes for $5 and sell them for $100. Don't misunderstand I believe in making money but not at the expense of America and it's workers.
    =========================================

    No misunderstandings here - you are 100% correct.

    This all began around 1979 and grew from Nike and Jordache shoes into the largest trade deficit in world history.

    It went from shoes, belts, and jeans to televisions, refrigerators and cars in just 30 years.

    The United States doesn't even manufacture such critical equipment as electrical power generators for our own electrical power generation plants. They are now made in China
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  10. #10
    Senior Member HAPPY2BME's Avatar
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    related

    WRAPUP 7-China tells US "good old days" of borrowing are over
    http://www.reuters.com/article/2011/08/ ... 4R20110806

    "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

    It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

    "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
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