China Blasts US Debt Problems, Urges New Reserve Currency Published: Saturday, 6 Aug 2011 | 2:47 AM ET 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. In a harshly-worded commentary by the official Xinhua news agency on Saturday, China gave its first official comments on the United States losing its gilded AAA long-term credit rating from Standard & Poor's. "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," Xinhua said. China also urged the United States to apply "common sense" to "cure its addiction to debts" by cutting military and social welfare expenditure. "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," Xinhua wrote. http://www.cnbc.com/id/44043828 Very strong words from China, it looks like the cat is surely out of the bag now.
"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. War soon? whos placing bets?
That's the last thing China wants. They'd loose all their USD holdings if that happened. Just a not-so-subtle reminder that China owns America now. They don't need to pwn them as well.
According to Wikipedia at least 60% of China's 3 trillion reserves are in USD. Would they be willing to take a hair-cut on that figure as i'm sure they know through dollar devaluation they will end up being payed in money that may not be worth as much as it was on the day of inception. That said, China may have significantly more than it's stated as the government is extremely secretive. Wiki suggests China's reserves do not include that of Hong Kong and Macau and China also manages 400-500 billion off the books. http://en.wikipedia.org/wiki/Foreign_exchange_reserves_of_the_People's_Republic_of_China
This puts it into perspective.....just in case anyone wants a good visual of this train wreck economy:- http://usdebt.kleptocracy.us/
Israel V Iran> 1-x Nobody wins , like in Libya, just oil skyrocket and kill everything what survived QE3.
not sure if it has been posted here yet but, Tim Geithner (Treasury Secretary) in an April interview; From ZH: http://www.zerohedge.com/news/and-j...ould-lose-its-aaa-rating-tim-geithner-no-risk The arrogance with which he answered that question in the video is simply astounding. The whole video is sickening really. How can anyone trust these guys at all?
Also the US Treasury is now coercing S&P to revise their downgrade according to an unidentified source, reported on Bloomberg, linked to CNN which just links back to Bloomberg. Sounds pretty dodgy. http://www.bloomberg.com/news/2011-...owngrade-unidentified-official-tells-cnn.html So while there isn't strictly a legal mandate for a massive sell-off on monday i think the writing is pretty clearly on the wall to even the most brain washed observers.
This was from Armstrong on the 1st prior to the downgrade. http://armstrongeconomics.com/martin_armstrong_writings/
Maybe they learned their lesson from five years ago about giving AAA ratings to crap paper issued by fools... Of course the U.S. government is, like, totally different to those CDOs though. Completely different.
Computer programs cannot assess creditworthiness. They can, however, tell the difference between AAA and AA+ - or any other rating which has been programmed into them. And that is where the ratings agencies come in.
S&P Analysis Was Flawed by $2 Trillion Error, Treasury Says Aug. 6 (Bloomberg) -- Standard & Poor's decision to downgrade the U.S. credit rating was flawed by a $2 trillion error, according to a Treasury Department spokesman. S&P lowered the nation's AAA grade one level to AA+ yesterday, after warning on July 14 that it would reduce the ranking in the absence of a "credible" plan to lower deficits even if the nation's $14.3 trillion debt limit were lifted. The outlook was kept as "negative." The Treasury disagreed with S&P's assessment because the analysis was carried out hastily, said a person familiar with the matter who declined to be identified because the discussions were private. The ratings firm erred in estimating discretionary spending levels at $2 trillion higher than Congressional Budget Office estimates, the person said. S&P, in a statement, disputed the Treasury's assertions and said using the department's approach to the CBO figures didn't affect the ratings decision. The Treasury's $2 trillion figure was derived by calculating government debt over a 10-year period, S&P said. "Our ratings are determined primarily using a 3-5 year time horizon," S&P said in the statement. When projecting government debt through 2015, the discrepancy between the Treasury's approach and S&P's approach to the CBO figures amounts to $345 billion, the ratings firm said. "The primary focus remained on the current level of debt, the trajectory of debt as a share of the economy, and the lack of apparent willingness of elected officials as a group to deal with the U.S. medium term fiscal outlook," the firm said. "None of these key factors was meaningfully affected by the assumption revisions to the assumed growth of discretionary outlays and thus had no impact on the rating decision." Moody's, Fitch The S&P decision went further than Moody's Investors Service and Fitch Ratings, which affirmed their AAA credit ratings for the U.S. on Aug. 2, the day President Barack Obama signed a bill that ended the debt-ceiling impasse that pushed the country to the edge of default. Moody's and Fitch both said that downgrades were possible if lawmakers fail to enact debt reduction measures and the economy weakens. Steven Hess, a senior credit officer at Moody's in New York, said at the time that while the compromise between Obama and members of Congress was "a positive step" toward reducing the deficit, "we do think more needs to be done." S&P, in its earlier statement explaining the downgrade, said that the deficit-cutting plan signed by Obama after months of wrangling with Congress falls short of what "would be necessary to stabilize the government's medium-term debt dynamics." U.S. Politics After being alerted to that, S&P lowered its calculations by $2 trillion and then relied largely on judgments about U.S. politics to support the downgrade, the person said. The Treasury was presented with the S&P analysis shortly before 2 p.m. yesterday. S&P said in its statement that it may lower the long-term rating to AA within the next two years if spending reductions are lower than agreed to, interest rates rise or "new fiscal pressures" result in higher general government debt. The wrangling over raising the nation's debt ceiling indicates that "further near term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process," S&P said. S&P currently gives 18 sovereign entities its top ranking, including Australia, Hong Kong and the Isle of Man, according to a July report. The U.K. which is estimated to have debt-to-GDP this year of 80 percent, 6 percentage points higher than the U.S., also has the top credit grade. In contrast with the U.S., its net public debt is forecast to decline either before or by 2015, S&P said in yesterday's statement. New Zealand is the only country other than the U.S. that has a AA+ rating from S&P and an Aaa grade from Moody's. Belgium has an equivalent AA+ grade from S&P, Moody's and Fitch. --With assistance from John Detrixhe in New York and Michael Shanahan in London. Editors: Christopher Scinta, Christopher Wellisz To contact the reporter on this story: Ian Katz in Washington at [email protected]; Vincent Del Giudice in Washington at [email protected]
Send this to Bloomberg to wake them up. Let see what were the figures that the US Treasury challenged? The Treasury's figures projected a cumulative increase in government debt of $US 20.1 TRILLION. S&P used their own economic modelling and came up with a figure of $US 22.1 TRILLION. The US Treasury is projecting average annual increases in US "discretionary spending" of $US 2.01 TRILLION every year for the next ten years. S&P is projecting average annual figures of $US 2.21 TRILLION over the same period. Leave aside the fact that ten years ago, the US Treasury was projecting the elimination of US funded debt by 2012-13.
