Archean
Posts: 5,652 +103
China has scolded the US over its "addiction to debt" after rating agency Standard & Poor's downgraded the US' top-notch AAA rating to AA+. The downgrade ended a week of growing uncertainty for the world economy. Fears that the US might be headed for a double-dip recession and the eurozone's debt problems were set to spread to Italy and Spain saw stock market sell-offs around the world.
Although I am not a big fan of rating agencies, and think that they are part of the problem which first created the bubble upto 2008 financial markets crash, I believe the US debt is heading to dangerous levels now, and if nothing concrete is done in near future, the likes of China (who already have started changing strategy with regard to $ along with other BRICS countries) will probably move away from dollar, weakening it further, which in turn will hurt the economy even more. Interestingly they also want printing of US currency to be checked, perhaps put under some sort of international control, now that is like opening Pandora's box.
Although I am not a big fan of rating agencies, and think that they are part of the problem which first created the bubble upto 2008 financial markets crash, I believe the US debt is heading to dangerous levels now, and if nothing concrete is done in near future, the likes of China (who already have started changing strategy with regard to $ along with other BRICS countries) will probably move away from dollar, weakening it further, which in turn will hurt the economy even more. Interestingly they also want printing of US currency to be checked, perhaps put under some sort of international control, now that is like opening Pandora's box.
