Helen Whalen Cohen
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Last night, Standard and Poor cut the United States credit rating from AAA to AA+. Now, China (which currently holds 1.2 trillion in US debt) is demanding that we get our fiscal house in order. If this isn't a wake up call, I don't know what is.

 

China, America's largest creditor, said it had every right to demand the nation address its structural debt problems and ensure the safety of the $1.2 trillion of US debt that it holds.

It warned that the rating cut would be followed by more "devastating credit rating cuts" and global financial turbulence if the US fails to learn to "live within its means".

"The US 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," China said in a commentary carried by the Xinhua News Agency.

Vince Cable, the British Business Secretary, said the downgrade was an "entirely predictable consequence of the mess that the Congress created a few weeks ago when they couldn't agree on lifting the debt ceiling."

Francois Baroin, France's finance minister, said his country had total confidence in the US economy, while India called the "situation was grave" and Russia said it would keep the level of dollar investments in its national reserve funds, adding: "There is not a great difference between AAA and AA+."

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Helen Whalen Cohen

Helen Whalen Cohen is Associate Editor and Community Manager at Townhall.com.