Gloating China Says "Has Every Right To Demand US Address Its Debt Problem", Asks For New Global Reserve Currency

Tyler Durden's picture

China has released a scathing op-ed in Xinhua, the official Chinese news agency, in which the authors waste no time to humiliate a "debt-ridden Uncle Sam" following the S&P downgrade, in the most violent surge in the recent war of words between the ascendent and descendent superpowers. Some choice selections: "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." It doesnt stop there, "[the US] 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." China takes the opportunity to give the US a little lecture on a broken way of life: "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." And lastly, China once again gets back to its pissing contest about whose reserve currency is bigger: "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." Just wild fun. Read the whole thing below.

From Xinhua:

After historic downgrade, U.S. must address its chronic debt problems

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 way.

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 finances.

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.

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Mongo's picture

icanhaszloty?

FEDbuster's picture

Dollars. Spend 'em, if you got 'em.

Convert them to something real (food, gold, land, etc...)  The era of paper IOUs is over.

http://www.youtube.com/watch?v=7GSXbgfKFWg

Atomizer's picture

Certain parties view the US economy as, "Drive it like you stole it." 

FEDbuster's picture

That's because they are stealing it.

24KGOLD FOIL HAT's picture

The rotten scums are looting us b4 we go to austerity.  Wall St knew in 2003 we were goin down.  They are gettin while the gettin is good.  They issue large bonuses to each other.  They know the gravy train will soon end.

When we take over DC we will deputize about 400,000 unemployed veterans to hunt em down.  Each scum will have a prize, I mean bonus, I mean bounty of at least $100 NEWdollars.  Them vets deserve a bonus for each one they "locate."

sterling effort's picture

Can we have their pictures on a deck of cards like in Iraq?

I'll start; Blythe can be the Queen of Hearts and Benny can be the Joker.

First person to allocate the King of Spades to Barry gets to go to the naughty corner for a long long time.

Bananamerican's picture

and allow me to elaborate because THIS comment got 10 thumbs up down thread...

"Fuck China. Fuck trade agreements. Raise tarriffs now. I will be happy to pay a little more for MADE IN AMERICA, in fact I already do so when I can. But good luck trying to find anything made by Americans except financial fraud"

reader2010's picture

Marc Faber once said that only beer and prostitues are made in USA now. You've got to do your part, dude.

Bananamerican's picture

I'm a welder bitch...

how bout you?

China is the Plantation state for the decadent western world

Ramboy's picture

Jewish and jewified  American girls now suck cock for 10 dorrar.  

monoloco's picture

Yeah, Fuck China, we financed their move into the first world by letting them have our manufacturing base then buying up all the cheap shit they could produce. Let them take the hit just like the rest of us.

Pegasus Muse's picture

China calling the USA over-spenders is the pot calling the kettle black.  Bert Dohmen talks about China's own domestic currency over-printing and over- producing of materials just to keep its population from rioting.  He says China will implode.  Interview starts at about the 18:40 mark.   

http://www.financialsense.com/financial-sense-newshour/big-picture/2011/08/06/01/bert-dohmen/the-next-perfect-financial-storm

StychoKiller's picture

So, you're copacetic with the bowtie and cuffs then?

Ramboy's picture

Let me tell you about the state of the American people.  they're like the dirty skank women in nyc who watch housewives of ny and say what a bunch of pathetic moneygrubbing sluts they are.  millions of american hillbillies watch the hills have eyes and albino farm and comment how retarded they are.  ONE WORD:  DENIAL.

24KGOLD FOIL HAT's picture

-17...wonder what Asian citizens are klikin the red arrow?

HAL 9000's picture

I can see you're really upset about this...I honestly think you ought to sit down calmly, take a stress pill and think things over.

Two Towers AU AG's picture

The era gets over and we really will feel the pinch in interest rates when China ends up with a mandate that they dont trust western credit rating agencies  and any investment product has to be rated by Dagong ( or whatever their agency is called) to get any chinese investments into it.... that is the time we will see regular visits from members of the treasury and the fed to China trying to convince Dagong that US is still a AAA, AA+, AA- AA BB+..... over period of time.. with every incremental downgrade increasing the interest rate burden...

And history teaches us.. that sovereign creditors in international bonds are in for a different game.... remember the British Pound was the worlds reserve currency till the mid 1950's... that was till the day the USA stood up and said we are willing to lose ALL our investment made in the British Pound if that finishes your global regime and ends your control over the world as the reserve currency.. the action of the USA after that is history... The Pound, well it is only worth a Pound now..and the sun then set over the British empire

The point here is we should be worried how soon before China tells us they are willing to bear 1.5 trillion of losses in the treasury if that permanantly kills the USD as the reserve currency..

Tortfeasor's picture

This hits home for me.  I've been ruminating on how people don't understand that ratings agencies affect more than just US funds.  World-wide there are funds with investment restrictions that are being boxed out from spending cash on our treasuries.  Demand destruction is demand destruction, even if it starts as just a little bit at a time.

"How'd you go bankrupt."  "Two ways, gradually and then suddenly."  - Hemingway

11b40's picture

Zat right?  Well, then who buys their shit?  If the USA & Europe go into the crapper, the Chinese will be the toilet paper....and if we start putting on tarriffs, they are dead meat.

aramsogo's picture

Doesn't work like that.  Are you actually asking who will buy their shit if they won't take our worthless paper and defaultable Treasuries????   They can sink the shit in the Pacific or bury it in the Gobi Desert.  The net economic impact is exactly the same if you are seriously asking this question.

11b40's picture

No.  You are simply wrong.  It works exactly like that.

A major decline in exports means major hardship for a poor country with virtually no safety nets for a huge, marginal population.  China is vast.  Too many Americans go to Hong Kong, and now some of the major cities on the mainland, and think China is some giant, self-sustaining economic engine.

Meanwhile, their leadership knows the difference, and they are scared to death of popular uprisings from inflation on the one hand, and economic slowdowns on the other.  Either way, it has to do with putting food on the table in a billion homes, and keeping those homes heated in the winter.  We have 1/4 the number of people, and our economy is 5 times larger.

And, by the way, if suddenly our paper is worthless, their vast dollar reserves mean double trouble for them.  They MUST import most of the raw materials they consume....and have to pay for them with something.  If you are Australia, for instance, and you see great social unrest looming in China, just how eager are you to accept payment in their currency?

We have plenty to worry about, and we are just about f**ked up to the max, but among the major developed nations, we are still the best of a bad lot.  An argument could be made for Germany, but the have a very heavy stone around their neck called the EU.  Canada is in good shape now, but still a relatively small economy with substantial dependence on the US.........have a good weekend ;-))

Independent Contractor

IQ 145's picture

Dollars; "smoke them if you got 'em"

Yen Cross's picture

   Can you write something of " value" if you are going to stomp on the threads of your Supposed Underlings" YOU TOOL!

Nikao7's picture

Who exactly crowned you moderator?

DeadFred's picture

Water empires like Western civilization can only be brought down by external forces. The game is on.

JLee2027's picture

What game? What empire?

KeyserSoze's picture

Are you shitting me? "Water empires"? Do you mean the west is fluid? Erm no. The West is relatively the new boys in town in the global world. You want "fluid" look to China, India, Iran, even African tribal people have survived it all for thousands of years.

The West doesn't need an external force to destroy it, it will destroy itself, through its own excesses. All the while, the poorer and more astute rest of the world chugs on by.

P.S. The west doesn't have any resources left, no oil and gas. It is the west that will need to invade and steal from others to stay on top. And if it does so, it will find those "brown savages" will end up destroying them. As was prophesised.

MarkS's picture

He probably means seafaring nations like the US.  Yes, China, India and Africa have survived for thousands of years - and are virtually in the same cultural state they were thousands of years ago...all of there advancement has come in the last few decades after being 'opened' by the West.  I'm not arguing that the West did 'good' only that the pace of advancement in the 'third world' is why we called it the third world.

P.S. - you're not just wrong on resources, you're stupidly wrong.  China has virtually no resources beyond rare earth metals.  India, can you name me their abundant raw materials?  Africa has resources and that is why the Chinese are trying to access them, but Africa is still a basket case that could not develop those resources themselves.

The Western Hemisphere is one of the few areas of the world that could actually be resource self sustaining with some of the largest natural gas and oil reserves known.  True, some of those resources are difficult to get a but there is also plenty of timber, arable farmland and other mining reources.

So, Will the West destroy itself througfh its own excess, maybe?  Then again maybe we just got a wakeup call we can't avoid.

11b40's picture

Thanks for restoring a little sanity to the conversation, Mark.

China is totally dependent on the US and Europe to keep theri evermore rstless population in check.  Now that they have had a taste of freedom and properity, woe be unto the political class if that growth and expansion stop.  Given a few more years, they just might build a middle class that can sustain their growth internally, but, as you point out, they must import so many raw materials that they can't become comfortably independent in the foreseeable future.

Pay Day Today's picture

"and are virtually in the same cultural state they were thousands of years ago...all of there advancement has come in the last few decades after being 'opened' by the West."

What a sad and inherently colonialist attitude. China, India and Iran had advanced technical and cultural civilisations while Europe was still living in an age of glorified barbarian tribes. That might also be the case in the future too, the way things are going.

By the way, China has one of the largest coal reserves in the world.

 

11b40's picture

Their coal is largely dirty, poor quality stuff....very little coking coal needed for industrial production, and last I checked, you can't eat it.

Yes, there were great Middle Eastern and India cltures, just as there were great Chinese cultures long, long ago.   Too bad for them, they coud not adapt and adjust as history passed them by.  That was then, this is now. 

You call it "a sad and inherently colonialist attitude", but you can't deny the validity of his statement.

ipunchsquirrels's picture

I junked you...without a junk button......idiot......

ipunchsquirrels's picture

and not you Marks......the dude above you, keyser.......

Bananamerican's picture

At what point shall we expect the approach of danger? By what means shall we fortify against it?-- Shall we expect some transatlantic military giant, to step the Ocean, and crush us at a blow? Never!--All the armies of Europe, Asia and Africa combined, with all the treasure of the earth... in their military chest; with a Buonaparte for a commander, could not by force, take a drink from the Ohio, or make a track on the Blue Ridge, in a trial of a thousand years.

At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.

-Lincoln

Mallenet's picture

He did buy votes, but I like him - what a man among sheep.  I had never seen the quote before - ta very much.

11b40's picture

I can only wonder who the Bozos are that junk Lincoln?

Must not be from around here ;-0

Bananamerican's picture

Sino-holes or PRC lurkers....or globalist "entrepreneurs"

snowball777's picture

The global hooker wants to complain about her john's after-shave?

Unpeg and say that shit again, bitchez!

doggings's picture

those days are over now, arent you paying attention?

snowball777's picture

A collapsing US economy is bad for both host and parasite alike; is China paying attention?

http://www.zerohedge.com/news/confidential-wal-mart-memo-discloses-subst...

Minimum Clearance's picture

China is worried that the US will pay its Treasuries off in highly devalued dollars.  If that happens (and it will), then the US will have paid what the crap from China is actually worth.

Grow up, China, and depeg your own currency.

And welcome to the NWO.

narapoiddyslexia's picture

Bingo. Hence the quote, "International supervision over the issue of U.S. dollars should be introduced..."

Snowball's chance in hell of that ever happening, because then we couldn't issue the fake dollars to pay China. Which we will.