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Chinese rating agency downgrades US credit rating
Though the US successfully reached a debt ceiling compromise
and was temporarily relieved from the risk of going into default,
US debt will still jump
from US$14.3 trillion
to US$16.4 trillion.
International governments question the US'
ability to pay off its debt
when so much money is owed.
International rating firms have
after the US upped its debt ceiling,
also warned that
it appears that the US economy will
be downsized earlier than predicted.
American debt is like a rotten apple with hidden holes,
but the three major ratings firms: Fitch, Moody and S&P
still maintain their AAA ratings for the US.
However, China, the biggest holder of US debt
and with its hand full of rotten apples,
is placed in an impossible situation.
To express its dissatisfaction with the US' handling of its debt,
a Chinese ratings agency yesterday
made financial world history,
by downgrading the US' credit rating
from A+ to A.
Experts say China's apparent fearlessness in downgrading the US' rating
might impact upon the US$1.16 trillion in bonds the US owes it
and can be interpreted as a sign of protest to the US.
People's Bank of China president Zhou Xiaochuan yesterday said
the unpredictability of the US debt has slowed the recovery of global economy.
Russian President Vladimir Putin on Monday said
that the US lived on borrowed money
and called it a "parasite: on the global economy.
As the US dollar is expected to depreciate long-term,
central banks in rising economies
are selling off their US dollars and buying gold instead.
With hot money flowing into hedge funds,
gold prices yesterday shot up to
a historic high of US$1,670 per ounce.
Apple Daily News