China says US borrowing days are over Reuters

Here is one of the signs we have been looking for as far as the RV But this is not good for the US as a nation...The politicians have been out of control for way to long and here ii just one result of there evil ways...rick152

By Walter Brandimarte and Melanie Lee

NEW YORK/SHANGHAI (Reuters) - 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.

The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.

"The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.

French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.

In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.

"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," it said.

It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

"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.

In Washington, President Barack Obama urged lawmakers on Saturday to set aside partisan politics after the debt battle, saying they must work to put the United States' fiscal house in order and refocus on stimulating its stagnant economy.

S&P blamed the downgrade in part on the political gridlock in Washington, saying politics was preventing the United States from addressing its deficit and debt problems.

Obama called on Congress to back measures to give tax relief to the middle class, extend jobless benefits and pass long-delayed international trade pacts.

"Both parties are going to have to work together on a larger plan to get our nation's finances in order," he said.

"In the long term, the health of our economy depends on it...in the short term, our urgent mission has to be getting this economy growing faster and creating jobs."

STAY COOL

In contrast to the Chinese criticism, France's Baroin said France had faith in the United States' ability to get out of this "difficult period."

Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction, he said.

"Therefore, one should not dramatise, one needs to remain cool-headed, one should look at the fundamentals," he told France's iTele.

While the impact of the rating cut on financial markets when they reopen on Monday may be modest because the decision was expected, the shift may have a long-term impact for U.S. standing in the world, the dollar's status, and the global financial system.

"I think even if it was half-expected, the consequence will be far reaching," said Ciaran O'Hagan, fixed income strategist at Societe Generale in Paris.

"It will weigh on secure assets. The bigger reaction will be on risky assets, including equities and on agencies (Freddie Mac, Fannie Mae) and states backed directly by the federal government."

But he added: "U.S. Treasuries will remain a benchmark. This is a ship which takes a long time to turn around."

Norbert Barthle, a budget expert for German Chancellor Angela Merkel's conservatives said the downgrade would certainly provoke further turbulence in markets.

"I'm not surprised about the U.S. rating downgrade, rather I am astonished that for weeks, international rating agencies have focused their attention on the European debt situation but not the American one. For a while, there have been clear worries about America's economic woes but also the fact the U.S. is heavily indebted."

NO EARLY ITALIAN ELECTION

In Europe, Italian Prime Minister Silvio Berlusconi on Saturday ruled out calling early elections to stem market panic that has pounded Italian assets and forced his government to bring forward austerity measures.

Italy buckled on Friday to world pressure by pledging to bring forward cuts to balance the budget in 2013 in return for European Central Bank help with funding.

European policy makers are concerned that a debt emergency in the euro zone's third largest economy could completely overwhelm bailout mechanisms set up to help smaller troubled countries like Greece or Ireland.

Italy is due to go to the polls in 2013 but Berlusconi dismissed any suggestion of emulating Spain, where Prime Minister Jose Luis Rodriguez Zapatero has called an early election to tackle the crisis.

"This has absolutely not been talked about," Berlusconi told reporters. "This has never been an option."

The European Union's top economic official praised Italy's decision to accelerate budget-balancing measures and structural economic reforms and said swift implementation was now crucial.

"I strongly support this announcement and call on the authorities to quickly translate it into concrete measures," European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in a telephone interview.

"This will help to boost potential growth, secure budgetary retrenchment and bolster market confidence," Rehn said.

The European Central Bank sources said the bank remains divided over whether to buy Italian government bonds but even some of those who favor the move say Italy should do more to front-load austerity measures.

Two sources said they expected ECB President Jean-Claude Trichet to hold a teleconference of the bank's policy-setting Governing Council over the weekend to discuss how to respond to turmoil in financial markets and Italy's latest measures.

China and Japan have called for coordinated action to avert a new worldwide financial crisis. India's finance minister Pranab Mukherjee told reporters: "There is no need to unnecessarily press the panic button."

(Additional reporting by Reuters bureaux; Writing by Angus MacSwan)

I hope we take this as a warning and stop buying chinese crap (products). Let's start manufacturing well-made products here in the US. This will fix most of our problems.

letmar321 wrote:I hope we take this as a warning and stop buying chinese crap (products). Let's start manufacturing well-made products here in the US. This will fix most of our problems.

Here is my take on Chinese products...I believe that collective barganing has a lot to do with the problem of manufacturing leaving the US, Not the Government this time. I totally understand people wanting higher wages but when you "bargan" for higher and higher wages, the time comes when wages out do the products value and you just cant be paying $67 dollars for a $20 dollar item. No one would but it. So the manufacturers had to find a way to keep the costs down. They found that by manufacturing in China not only could they keep cost down, (wages) they could boost profits at the same time, ergo more US workers unemployed, and so on...rick152

Rick, I agree with you. I think the collective bargaining is the unions. More than half of the cost of a car manufactured in the US goes to union fees. I think China has no unions, that is why the labor is so cheap. Everything needs to be balanced. The products from China have no quality. We need to start demanding american products. We can vote with our wallets.

Our trade with China goes much deeper than what has been posted thus far. To gain a complete understanding of global trade and trade balance go to Iraq Investments a blog produced by Tony Brietling he hosted an all encompassing study by Scooter. Truly worth your time and effort. You can find this study in the archives at the left side of the page I believe they started in May.

:arrow: I BELIEVE THE TRADE IMBALANCE PLAYS A PART BUT,
WITHIN ONE CENTURY WE'VE GONE FROM AN
INDUSTRIAL & MANUFACTURING ECONOMY TO
FINANCIAL SERVICES.. WE KNOW LONGER HAVE
A MANUFACTURING BASE...THERE HAS BEEN A SHIFT,
CHINA WILL BE THE DOMINANT PLAYER IN THIS CENTURY
BY DESIGN!

YOU CAN'T CREATE JOBS WHEN ALL THE MAJOR U.S.
COMPANY'S HAVE LEFT OUR SHORES BECAUSE OF DRACONIAN
LAWS THAT HINDER FREE MARKETS AND THE NAIL IN
THE COFFIN OF INDUSTRY "NAFTA."
NOW,OUR GOVERNMENT KNOWING ALL THIS AND MORE,
STILL FURTHER RESTRAIN INNOVATION WITH ALL
THOSE CONFUSING ENVIRONMENTAL REGULATIONS!
:arrow: :idea:

The solution to the problem is easy put your money where your mouth is BUY AMERICAN! Problem solved......

Texas Creek Johnson wrote:The solution to the problem is easy put your money where your mouth is BUY AMERICAN! Problem solved......

I WISH IT WAS THAT EASY!!

...finally the debt for profit inflationary federal reserve monetary system has run its course... and needs to be reformed... and problem solved.

Shut off the printing presses and cut up the credit cards! And make everyone else hold up to the same EPA regulations that we have to, China included.
Our government is going to have to live within its means like everyone of us do every day. What do each of us do when we have gotten a bit overextended? Cut the fat, period.
Now remember, the defecit that we all hear about, is AFTER Social Security funds have been subtracted. Feel all warm and fuzzy now? :bom:
OKie_GEM

While many think that collective bargaining is the main culprit on jobs being lost, I would like to propose another issue that we face here in the USA that could be sending employers to China and elsewhere. Employers in the USA are required to hire so many minorities which means so many non-whites. They almost score points for which kind of minority they hire. If we are to be competitive, then our workforce needs to be comprised of the best people for the jobs, i.e. education, experience, skill, etc. Prospective employees should be assigned a number and take job specific tests that could be researched and composed/tailored towards that employment opportunity. The best person for the job gets it. In other countries, they do not face lawsuits like companies do in the USA. In other countries, their workforces are largely, if not wholly, made up of their own race. This could cut the costs of doing business here tremendously, even if a company had bargained for employees.

I thought that affirmative action was Not appealed but for the most part totally ignored short of being set aside in the US in 1994. Although that was a big problem for the workforce and the employees alike in the late 80's and early 90's...rick152