China Joins Russia in Blasting U.S. Borrowing!

• Signs of desperation by the Chinese government? How do they get out of their US$2T USD denominated reserves mess without causing global financial upheaval? Not a chance they can do it successfully. The foreign reserves are still rising because of their massive exports to America (and Europe). It is a question of how much they will lose when they dump the USD. 30%, 50% ?? Of course, it is financial Armageddon when they do dump the USD! I will not recommend that you wait around to find out. Got gold yet?
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  China Joins Russia in Blasting U.S. Borrowing
  By Bloomberg News
  China, the largest foreign investor in U.S. government securities, joined Russia in criticizing American policy makers for failing to ensure borrowing is reined in after a stopgap deal to raise the nation’s debt limit. People’s Bank of China Governor Zhou Xiaochuan said China’scentral bank will monitor U.S. efforts to tackle its debt, and state-run Xinhua News Agency blasted what it called the“madcap” brinksmanship of American lawmakers. Russian Prime Minister Vladimir Putin said two days ago that the U.S. is in a way “leeching on the world economy.”
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  The comments reflect concern that the U.S. may lose its AAA sovereign rating after President Barack Obama and Congress put off decisions on spending cuts and tax increases to assure enactment of a boost in borrowing authority. China and Russia, holding a total $1.28 trillion of Treasuries, have lost nothing so far in the wake of a rally in the securities this year.
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  “It’s probably frustration more than anything else for China,” said Brian Jackson, a senior strategist at Royal Bank of Canada in Hong Kong. While the nation has concerns, “they realize there’s not a lot of options for them out there and so they need to keep buying Treasuries.”
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  China held $1.16 trillion of Treasuries as of May, U.S. Treasury Department data show. The nation has accumulated the holdings as a by-product of holding down the value of its currency, a policy U.S. officials have said gives China an unfair advantage in trade.
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  China’s central bank welcomes this week’s legislation that raised the U.S. debt limit, preventing a default, and will“closely observe” the implementation, Zhou said in a statement on the central bank’s website today. Xinhua said the move“failed to defuse Washington’s debt bomb for good,” in a commentary dated yesterday.
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  “They are living beyond their means and transferring part of the problems onto the world economy,” Putin told a youth camp at Lake Seliger outside Moscow Aug. 1. “In a way, they are leeching on the world economy.”
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  China’s Dagong Global Credit Rating Co. today cut its grade for the U.S. to A from A+ with a negative outlook. “China hopes the U.S. administration and the Congress would take responsible policy measures to handle its debt issue,” Zhou said. He highlighted the global role of U.S. Treasuries, saying that any “large fluctuations and uncertainties” in the market for the securities would undermine financial stability and hinder the world economic recovery.
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  ‘Madcap Farce’
  The Xinhua commentary said that the higher debt ceiling and plans to reduce spending were not enough to make any sizable dent in the nation’s fiscal burden. It referred to a “madcap farce of brinksmanship” before the agreement was reached. A previous Xinhua commentary on clashes between Republicans and Democrats said that “the ugliest part of the saga is that the well-being of many other countries is also in the impact zone when the donkey and the elephant fight,” referring to the symbols often used for the Democratic and Republican parties.
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  The Asian nation will continue to “seek diversification in the management of reserve assets, strengthen risk management, and minimize the negative impacts of the fluctuations in the international financial market on the Chinese economy,” Zhou said. China will also take “effective measures to maintain relatively rapid growth to safeguard economic and financial stability,” he added.

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