China Urges US to Protect Creditors by Raising Debt
China, a major lender to the US, urges the president and US Congress to reach agreement on lifting the nation’s debt limit, so that bills can be paid. “China holds more than $1 trillion in United States Treasury securities, making it highly sensitive to any developments that could lower the value of those holdings,” reports the New York Times. Statutory limits have been in place since 1917, an attempt at self-discipline on spending. The US, which borrows more than 40 cents of every dollar spent, holds a top credit rating. That has made US Treasury bonds an attractive, safe holding place for global investors. Major credit-rating agencies, based in the US, have warned that the US rating could be downgraded, hiking borrowing costs. Increased interest rates would mean a tax on all Americans. The Moody’s and S&P warnings could be a response to complaints from Europe that the rating agencies show bias; Exhibit A was missing the US subprime mortgage bubble that triggered a global debt crisis. – YaleGlobal
China Urges US to Protect Creditors by Raising Debt
By toying with debt default and global calamity, the US invites fresh scrutiny on its spending and politics from China and Europe
Friday, July 15, 2011
Bettina Wassener reported from Hong Kong and Matthew Saltmarsh from Paris.
http://www.nytimes.com/2011/07/15/business/global/china-urges-us-to-take-respons...
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