Saturday, 6 August 2011
CHINESE STATE MEDIA TELLS OFF YANKS FOR THEIR GREED
After historic downgrade, U.S. must address its chronic
The days when the debt-ridden Uncle Sam could leisurely
squander unlimited overseas borrowing appeared to be
numbered as its triple A-credit rating was slashed by
Standard & Poor's (S&P) for the first time on Friday.
Though the U.S. Treasury promptly challenged the
unprecedented downgrade, many outside the United States
believe the credit rating cut is an overdue bill that
America has to pay for its own debt addition and the
short-sighted political wrangling in Washington.
Dagong Global, a fledgling Chinese rating agency, degraded
the U.S. treasury bonds late last year, yet its move was
met then with a sense of arrogance and cynicism from some
Western commentators. Now S&P has proved what its Chinese
counterpart has done is nothing but telling the global
investors the ugly truth.
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.
To cure its addiction to debts, the United States has to
reestablish the common sense principle that one should live
within its means.
S&P has already indicated that more credit downgrades may
still follow. Thus, if no substantial cuts were made to the
U.S. gigantic military expenditure and bloated social
welfare costs, the downgrade would prove to be only a
prelude to more devastating credit rating cuts, which will
further roil the global financial markets all along the
Moreover, 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.
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.
It should also stop its old practice of letting its
domestic electoral politics take the global economy hostage
and rely on the deep pockets of major surplus countries to
make up for its perennial deficits.
A little self-discipline would not be too uncomfortable for
the United States, the world's largest economy and issuer
of international reserve currency, to bear.
Though chances for a full-blown U.S. default are still slim
now, the S&P downgrade serves as another warning shot about
the long-term sustainability of the U.S. government
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.
For centuries, it was the exuberant energy and innovation
that has sustained America's role in the world and
maintained investors' confidence in dollar assets. But now,
mounting debts and ridiculous political wrestling in
Washington have damaged America's image abroad.
All Americans, both beltway politicians and those on Main
Street, have to do some serious soul-searching to bring
their country back from a potential financial abyss.