CHINA: “America Needs To Accept The Painful Fact That The Good Old Days Are Over!”

China PM Hu Jintao (AP)

China’s official comment on the S&P downgrade was quick, harsh and condescending. Released through Xinhua, 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.

China is America’s largest foreign creditor. China said it will accelerate diversification away from US treasuries – easier said than done. US treasuries are, by far, the largest and most liquid assets of its class. With an uncharacteristic assertiveness, Xinhua said “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!”

The underling truth of the matter, and reason for China’s irritation, is that this downgrade has cost China several billions dollars. Sure, I would be pissed too!

The official statement repeated China’s call for a new global currency to ween the world off of the U.S. dollar: “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”.

No statement was provided by the Obama administration.