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Yoorah wrote on 2011-08-07 03:27
Quote from CBC:
China, the largest foreign holder of U.S. debt, demanded Saturday that America tighten its belt and confront its "addiction to debts" in the wake of Standard & Poor's decision to downgrade the U.S. credit rating.
China currently owns $1.2 trillion of U.S. Treasury debt, the largest stake of any central bank. The commentary carried by the state-run Xinhua News Agency was Beijing's first official response to the S&P decision.
"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 said.
It said the rating cut would be followed by more "devastating credit rating cuts" and global financial turbulence if the U.S. fails to learn to "live within its means."
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets," it said.
Xinhua said the U.S. must slash its "gigantic military expenditure and bloated social welfare costs" and accept international supervision over U.S. dollar issues.
Last month, China's top general, Chen Bingde, also linked America's financial woes to its military budget and asked whether paring back on defence spending wouldn't be the best thing for U.S. taxpayers.
Such comments reflect Beijing's desire that Washington reduce its military presence in Asia. The U.S., rattled by China's military buildup, also routinely chides Beijing for its fast-growing defence spending.
Xinhua also suggested a new global reserve currency might be necessary to replace the dollar, a position China has frequently advocated.
"Mounting debts and ridiculous political wrestling in Washington have damaged America's image abroad," Xinhua said. "To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means."
Jitters over the U.S. handling of its debt problems were also being felt elsewhere in Asia, said Kishore Mahbubani, Singapore's former ambassador to the United Nations.
The dean of Singapore's Lee Kuan Yew School for Public Policy said the last-minute agreement by the U.S. Congress to lift the debt limit and avoid default has policymakers in Asia questioning the stability of U.S. global leadership.
"It's definitely undermined U.S. credibility," Mahbubani said late Friday. "Everyone is wondering if you have such a dysfunctional political process, how can you provide global leadership. It's very dangerous for the world."
Their tone is funny, but they speak the truth.
One thing you have to understand is that the US has an exclusive financial advantage compared to everyone else in the world--the US Dollar is the world's reserve currency. Long story short, the US can always print more money to pay their debts with. This lowers the value of the USD, as you would imagine--however, since it's the world's reserve currency, and other countries posses huge amounts of USD for the purposes of investments and trading, they get dragged along with whatever the US decides to do and this provides a cushion for the US (at the expense of other countries).
This works while other countries still see the USD as a reliable world currency. If this ceases to be the case and a new world currency is designed, the US will be totally screwed. There are some plans to make this happen, and they will gain support if the US keeps being stupid about it.
This is why many sane people call the political BS going on in Washington the equivalent of kids playing fire with dynamite sticks.
Another interesting point I'd like to make is that China isn't really the largest holder of US debt, at all. Most of the US debt is actually bought within the US, in the form of investments by various groups. So, if the US debt issue were to collapse somehow, it will be a direct hit to Americans themselves, and not just China or other foreign countries.
Quote from Business Insider:
Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)
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EndlessDreams wrote on 2011-08-07 03:32
Just another day in the political arena, I guess.
While I agree that the US should drastically cut military expenditures, and stop sending troops everywhere in the world, many politicians and Americans think otherwise. If the US put a tax on churches, they would probably earn a lot of revenue as well, lol.
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Cynic wrote on 2011-08-07 03:35
Quote from EndlessDreams;541570:
Just another day in the political arena, I guess.
While I agree that the US should drastically cut military expenditures, and stop sending troops everywhere in the world, many politicians and Americans think otherwise. If the US put a tax on churches, they would probably earn a lot of revenue as well, lol.
^ but then again, America lovvvess butting into everyone's business and spreading their Americanism.
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TA wrote on 2011-08-07 03:40
It is our military budget, to be honest. They're absolutely right. We also need to increases taxes. It's the only way. See
my thread about our budget...
I suppose what we fear though is that we reduce our military then someone like China secretly builds theirs and invades while we're in our weakened state.
And yes, our political wrestling is just
stupid.
We're in dire need of serious political reform and we certainly don't deserve to be making decisions for the world when we can't even make our own.
Though, most of our money we do pay is wasted due to unorganized wasteful spending.
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EndlessDreams wrote on 2011-08-07 04:05
Quote from TA;541577:
I suppose what we fear though is that we reduce our military then someone like China secretly builds theirs and invades while we're in our weakened state.
Except this could never really happen because China and the US is tied too much economically. Also, China has a tendency to just stay out of everyone's internal problems while trying to spread business.
Yea, balancing the US budget is definitely no easy task though.
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Yoorah wrote on 2011-08-07 04:08
I wouldn't put the blame on the US defence budget, or at least not before fixing other things, like the tax system, medicine and other waste in the form of inefficiencies. I mean, sure, you have to keep it in check to make sure the huge sums of money are used to the best benefit within it (which is insanely hard, but whatever). Having a global military presence and having the world's top defence industries and R&D has its own economic advantages. It's a very complex issue, and saying "just bring everyone home" would be kinda dumb, even if there was no threat of invasion. China only singles it out because they don't want to be restrained by US military presence in Asia, like they are now.
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Blassreiter wrote on 2011-08-07 05:56
No one is going to invade. That's not going to happen so don't get your panties in a bunch. Fear the possibility of invasion only if a second large scale depression hits a country hard, this is nothing.
IMO every country should just lower their military spending slowly. It's no good to be strong in military if you're the only one. Why can't you just stick with national guards? But America is too into the White Man's Burden.
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Mentosftw wrote on 2011-08-07 06:02
^ Once one person has had a stick, the adjacent person will want a bigger stick.
Cutting back spending on the military is logical but the fear of a more powerful neighboring country is more than enough to sway this decision.
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TA wrote on 2011-08-07 06:06
Honestly, we'd be more likely to raise taxes than lower military spending, sadly...
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Cynic wrote on 2011-08-07 06:11
Quote from TA;541733:
Honestly, we'd be more likely to raise taxes than lower military spending, sadly...
Which is hilarious, since it only makes the poor suffer more. Which is the reason we're complaining in the first place.
I would rather tax the rich and lower military costs. But aye, as you said, that's unlikely.
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BobYoMeowMeow wrote on 2011-08-07 06:18
cynic
we need to revamp taxing
taxing the rich doesnt work because of the stupid loopholes.
apparently revamping anything costs money
doesnt matter too much if it goes up
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TA wrote on 2011-08-07 06:21
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Cynic wrote on 2011-08-07 06:22
Quote from BobYoMeowMeow;541742:
cynic
we need to revamp taxing
taxing the rich doesnt work because of the stupid loopholes.
apparently revamping anything costs money
doesnt matter too much if it goes up
It doesn't matter if taxes go up? Uh, yes it does, since it hurts the poor even more.
Take it from me. I live month-- nay, week to week with my Mom. If things get any harder, then the poor (which make up most of the US) are pretty much going to be an extinct frickin' majority. I don't even want to think about it.
@TA; while I would approve of that, I somehow still doubt it. People (with money) can sign a paper and get that money back anyways, making it redundant.
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Blassreiter wrote on 2011-08-07 06:50
Quote from Mentosftw;541729:
^ Once one person has had a stick, the adjacent person will want a bigger stick.
Cutting back spending on the military is logical but the fear of a more powerful neighboring country is more than enough to sway this decision.
Who needs sticks when you can learn martial arts??
:smoke2:
I know, it's instinct to become the most powerful. The only way to stop military spending is when we as the world encounter beings that are insanely stronger and need no weapons to pwn us ([S]Fomorians[/S])
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Cathaoir wrote on 2011-08-07 07:14
In my own, honest opinion, we either need to raise taxes or cut social spending. We want all these social programs in America, but at what cost? We need to get that money somewhere. So if social programs(such as welfare, medicare, medicaid, unemployment, etc.) want to continue to exist, then we need to revamp those and increase taxes. Yes, I am part of the lower-working class, but even I understand the need of taxes. Everything costs money, and you have to have some kind of revenue to be able to pay for that. The revamp to social programs is because we spend too much into it, just so that people take advantage of it. I know some people who were on unemployment. They chose to not look for a job, because, "why work when I'm getting this money for doing nothing?" That is the mentality of most people who use the social programs. I know there are some people who actually deserve it, but the majority of users really don't. All it makes is lazy Americans that don't want to do anything and live of off the Government. And take it out of social programs that we don't need. Don't take it out of things like law enforcement and education.
We can't cut military spending. One of the advantages we do have is that we are currently one of the most powerful nations in the world(military wise). If there's a problem, other nations ask us for help. If we cut spending and open ourselves up, then we could get attacked. There are many, many countries that do not like us. If a bunch of rebels attack us while we are at the top, imagine what could happen if a powerful nation decides to attack us when we put our guard down?
We can't tax corporations/big companies without doing so universally. Reason for this is because of greed. Companies want a certain revenue. If we tax them more, then they will have less money. If they have less money, that's less jobs that they can supply. The last thing we need is more unemployment. If we have more unemployment and we keep the social programs we have now, that just means more money to put into unemployment, which would take us nowhere.
That is my opinion, you have the right to disagree.