politics

Asia moves to calm U.S. debt downgrade fears

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© 2011 AFP

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China, which held $1.15 trillion of U.S. debt at the end of April, according to the state news agency Xinhua, has yet to react to the downgrade

here is what xinhuanet.com says : "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."

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I guess the U.S. will have to cut its economic assistance to China.

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US cut its economic assistance to China.

Are we helping China? Please give me info, thanks.

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A great risk avert and proactive political strategy from Japanese side. See how it works on monday morning. Thanks to Japan.

Hope JOB is still considering to intervene on monday. Investors are all thinking about moving to yen as there is no other safe place to park their money; no US equity market, no Eurozone equity market, no US treasury, no commodity. Yes, there is! Japanese Yen!

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It sounds like S&P downgraded the US because it doesn't like the current batch of politicians in Washington.

Pretty stupid reason to downgrade the US if you ask me, but if people want to make their investment decisions based on what S&P says, rather than by using their own brains... they are free to do so.

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"China, the largest creditor of the world's sole superpower..."

Uh wait a second, maybe largest foreign creditor, but the largest single creditor of the Untied States is Social Security at ~$2.67 tn

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Serrano, I am currently checking EPA record to see if the assistance to China story is true. I have watched the FOX news on youtube as you suggested. No more feedback from you is necessary. Thanks.

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Heh. Guess we are "too big to fail."

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Are we helping China? Please give me info, thanks.

Total foreign aid received by China: 2.6 billion

Total aid given to China by U.S.A.: 65 million

source: troglopundit.wordpress.com/2011/01/24/we-give-how-much-foreign-aid-to-china/

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I have a slightly different take on the S&P downgrade. I actually think this might be a blessing in disguise. The medicine may be bitter right now but maybe the sick patient (US government) in denial should take it. The politicians in Washington on both sides of the aisle need to sit down and construct a reasonable course of action. Both sides should stop blaming each other for the downgrade and work together towards a viable solution towards a recovery. I know , I know this sounds so simple and it isn't. As much as it hurts I have to agree with China's assessment. When an authoritarian regime tells a democracy how to run its economy it is indeed a cold, cold day in hell.

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Thanks gaijinfo. I will research. If it is true, we need to stop this pronto. China is richer than US. What on the earth do we need to send money to China?

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Tthe diet still sends billions in US Dollars in economic development aid to China. Even after China super seceded Japan as the second largest economy, the gov't won't stop the aid program because of retaliation from the Chinese gov't. Our gov't is basically paying protection money now to the chinese thugs.

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unhawk, this is quite shocking. How much money is Japan sending to China now ? For what? Any idea? Is Japan a nut?

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I disagree globalwatcher, the Yen is a piece of paper, making it an unsafe "investment". Gold and silver have been used as stores of value and as money for thousands of years, and are therefore low-risk investments.

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“The trust we have in U.S. Treasuries and their attractiveness as an investment will not change because of this action,” an unnamed senior Japanese government official told Dow Jones Newswires.

As a creditor's attitude, China is provokingly sensible. They behave like an investor and can keep RMB undervalued too. Whereas the government officials of this country only pile up the credit figures (practically irredeemable) without much success in devaluing the yen like a senile person being still trusting and swindled despite warning until they die.

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I can tell you that I have just withdrawn a couple of hundred thousand dollars from the stock market, as I am simply not willing to take these people on their word that 'everything will be OK'. I heard similar things in 2008 during the GFC - reputable economists and finiancial firms trying to assure investers that 'it can't get any worse' or that it was a 'minor correction' and that you are wise to 'ride it out'. The result? I got burnt, and it has taken 3 years to try to ride out of it. There is a hell of a lot of bad news accumulating on a number of different fronts at present, and I simply do not trust these 'experts' - they were spectacularly wrong not very long ago. I am going to err on the side of caution this time around, and nothing Japan, or Julia Guillard tells me will temper my caution.

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globalwatcher - Could you retract your 9:57am post saying I suggested you watch FOX News on Youtube? Thanks.

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I disagree globalwatcher, the Yen is a piece of paper, making it an unsafe "investment".

@jeff, a short term macro economy, it is "yes", for a long term, "No". If the US congress get act together and start investing in job growth, US is still the best bet in 18 months from now. Yen a piece of paper, yes I agree with you. We can use it to wipe our a__. It is due to a failure of Japanese fiscal and monetary policies in the past 3 decades.

@Serrano, I did some research after reading your post, found very interesting articles including FOX news. I am still waiting for a response from EPA if the FOX story is true..Thanks for the info.

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I'm thinking food stocks and maybe some companies that have been beat up like Ford are a good buy if there is any further US stock decline due to the downgrade. Right now the premarket seems to be recovering somewhat from a huge loss due to the support for the European situation. The US economy is weak, and S&P might be right to cut the debt rating to AA+, but that patient isn't as dead as people seem to believe...not sure about Europe, though. We'll see.

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