Roy wrote:We can never pay back what we've borrowed
Cog wrote:S&P will not be changing this rating back to AAA. Does anyone seriously think we will have less debt a year from now?
We are getting to see the downfall of a superpower at a very accelerated rate. Unless you are in your upper 70's you will get to see it all pretty much unwind. Aren't we lucky to be here to see it?
drgoodword wrote:The libertarians probably stand to lose the most here...poverty tends to value security of food and shelter above political freedoms.
China bluntly criticized the United States 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.
“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 commentary.
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.
Xinhua called for the printing of US dollars to be supervised internationally and repeated China’s contention that a new global reserve currency might be needed.
Analysts say neither suggestion is likely to happen. But China – the world’s largest holder of US debt – is clearly worried about its holding and also worried about criticism at home for holding so much of the country’s savings in US investments.
“The spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all,” it said.
It said the US should stop “letting its domestic electoral politics take the global economy hostage”.
It is only nice to see when a tax man is coming to tax a pile of worthless shit.
Bye bye big government.
Bye bye welfare.
eXpat wrote:Xinhua called for the printing of US dollars to be supervised internationally and repeated China’s contention that a new global reserve currency might be needed.
The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge,
PIMCO: "U.S. Downgrade Heralds A New Financial Era"
It is hard to imagine that, having downgraded the US, S&P will not follow suit on at least one of the other members of the dwindling club of sovereign AAAs. If this were to materialise and involve a country like France, for example, it could complicate the already fragile efforts by Europe to rescue countries in its periphery.
(snip)
More worryingly, there will now be genuine uncertainties as to wider systemic impact of this change. With America occupying the core of the world’s financial system, Friday’s downgrade will erode over time the standing of the global public goods it supplies - from the dollar as the world’s reserve currency to its financial markets as the best place for other countries to outsource their hard-earned savings. This will weaken the effectiveness of the US as the global anchor, accelerating the unsteady migration to a multi polar system while increasing the risk of economic fragmentation.
(snip)
For the sake of their country and the wider global economy, both parties should resist the urge to begin bickering. Instead they should seize this potential “Sputnik Moment” — a visible shock to the national psyche that can unify Americans around a common vision and a renewed sense of purpose — that of halting gradual secular decline by putting the country back on the path of high growth, job creation and financial soundness.
http://www.zerohedge.com/news/pimco-us-downgrade-heralds-new-financial-era
Sixstrings wrote:Where will new growth come from? The whole developed world has stalled for years now, it's on the decline, even China seems to be sputtering. Developing countries are still growing cuz there's only one way to go when you're at the bottom.. but the developed world just looks like toast with no way out. (other than low population first world states like Australia, they are growing)
(Reuters) - Business minister Vince Cable on Saturday backed China's call for a new stable global reserve currency in light of the United States losing its AAA long-term credit rating from Standard & Poor's, but said for the moment the U.S. dollar still remained key.
China, the largest foreign holder of U.S. government debt, has called for the creation of a secured global reserve currency amid concern over Washington's rising debt burden. On Saturday it roundly condemned the United States, after S&P's rating downgrade, for its "debt addiction.
"The Chinese have been arguing for a long time that the world monetary system needed reforming and that we need a strong reserve currency, by which I think basically they mean the special drawing rights of the IMF," Cable told BBC TV.
"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 has been a vocal critic of the U.S. Congress's protracted arguments to agree a deficit-cutting deal and had warned that Washington's triple-A sovereign debt rating was at risk.
Cid_Yama wrote:China can afford to write off their US debt as a loss if it comes to that. China has been resistant to the Yuan being fully convertible because they did not want their currency vunerable to the dollar reserve based currency system.
Asian markets have been moving towards making the Yuan their reserve currency.
What I see is China assisting neighboring Asian markets to join China in a seperate economic sphere of influence where the Yuan is the reserve currency with the Yuan remaining insular from the dollar markets.
This will result in the same situation that existed during the cold war with the Soviet Union.
China and her satellite Asian markets will go isolationist, as the western world collapses.
Cid_Yama wrote:One other thing. The dollar being the reserve currency has been the only thing that has allowed us to consume 25% of the world's resources while being only 5% of it's population. That also is now at an end.
Thank you, Republicans. Hope your dreams can survive on only one fifth of what you're used to.
You might as well tear down the border with Mexico, because we are coming down to join them.
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