– CHINA: “America Needs To Accept The Painful Fact That The Good Old Days Are Over” (Business Insider, Aug. 6, 2011):
China’s official comment on the S&P downgrade was harsh and condescending. Released through Xinhua (via Reuters) the statement condemned America for its “debt addiction” and “short-sighted” political wrangling.
“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,” Xinhua wrote.
America’s largest creditor, China said it will accelerate diversification away from US treasuries, and that meanwhile it demands reform: “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,” Xinhua said.
The statement also called for a new global currency: “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.
People and countries that invest money must accept some risk that the recipient of the money will fail.
Europe has tried a centralized currency, to stabilize something, and it is failing quite badly. Trying to set up a global currency will fail even faster.