At Sixth Avenue and 42nd Street New York, the intersection of a building, there is a 26-foot screen, this is the famous "national debt clock" .1989 old when Bush took office has established the "national debt clock" I hope to remind Americans more for the sake of future generations, on economic issues, not "living beyond."

August 2, at a distance of breach of contract deadline less than 10 hours, Barack Obama signed by both houses voted to increase the debt limit motion and today the number of national debt clock national debt exceeded the legal limit of 14.29 trillion U.S. U.S., continues to grow.

Although the United States at the last moment to avoid a technical default, but the fundamentals of the U.S. economy and the intensification of the conflict and the global economy has not improved. August 3, China's first Grand International rating agencies lowered the credit rating the United States, August 5, International one of the three major rating agencies Standard & Poor's will be America's long-term sovereign credit rating from "AAA" down to "AA +", rating outlook is negative, this is the first time in American history, losing AAA credit rating.

August 4, due to fears the U.S. economy may fall into the second round of the recession and slow to solve the debt crisis in Europe, three major U.S. stock indexes fell more than 4% of the global stock market crisis of 2008 ushered in the darkest day since.

Being underweight or short-term U.S. debt

For China held $ 1.16 trillion national debt, the Treasury faced selling pressure due to price drop, the Chinese hold the book facing the loss of bonds.

As the U.S. dollar is the world's reserve currency, the U.S. financial market is the world's most developed financial markets, which led to the U.S. Treasury has enjoyed the highest sovereign credit rating one hand, the U.S. government can rely on the rating advantage to obtain financing at lower cost, and the other On the one hand,U.S. Treasury bonds as the world's most liquid within the safest financial assets.

However, this advantage and trust are changing. August 5, the U.S. S & P long-term sovereign credit rating to AA +, this is the first time in American history to lose the AAA credit rating is currently 10-year U.S. Treasury bill rate remained at 3% the lower level, after losing 3A rating may be short-term needs of investors in a hedge holdings of U.S. Treasury bonds, lower prices will drive their higher yields, the cost of new debt will also rise.

JP Morgan head of fixed income Terry Belton, global strategy that the credit rating to "AA" grade, long-term U.S. Treasury interest rates may rise 60 to 70 basis points means that the government issue bonds to pay higher interest rates, that may be so to pay $ 100 billion interest.

According to media reports, the Nobel laureate in economics Paul Krugman has repeatedly warned that China, as America's largest creditor nation in danger, either the dollar or the downgrading of U.S. debt, could lead to China investment impairment of the carrying amount of U.S. Treasury bonds to reach 20% to 30%.

Once the sell-off will lead to devaluation

As of May this year, the U.S. public debt is $ 14.3 trillion, including China's central banks and investors accounted for 31%, which means that central banks and investors are tied to the chariot of the U.S. debt.

"The U.S. national debt limit increase to suspend bond defaults, but the solution to the crisis by non-stop printing money to increase global liquidity and leverage, the crisis will no doubt be further expanded." Independent economist Andy Xie said.

U.S. Treasury data show that since 1960, Congress has 78 times to raise the debt ceiling increased on average once every eight months.Since Obama January 20, 2009 Since becoming president, Congress has increased the debt ceiling three times, a total of $ 2.979 trillion increase.

A U.S. non-government organizations also opened a "U.S. debt clock," the Web site, in the middle of the Home of the most prominent position, listed in American society is facing a total debt: about 55 trillion dollars. In 2010 the total U.S. annual GDP compared to $ 14.5 trillion, the value of U.S. annual GDP is nearly four times the average debt for each U.S. citizen $ 176,000 per U.S. household debt reached $ 660,000.

Finance and Renmin University of China Zhao Xijun, vice president of finance that the cure depends on the U.S. debt crisis, the U.S. government debt management capability. The United States, this pattern of debt debt will not make a fundamental change, which is its model of economic development decision.

Large part by the U.S. Treasury pay for the global economy as of May this year, the U.S. public debt amounted to $ 14.3 trillion, including China's central banks and investors holding $ 4.45 trillion. CLSA China strategist Andy * Rothman said, even though China may sell part of U.S. bonds, which will cause other nations to sell their holdings of U.S. bonds, which led to devaluation of bonds held by China. "For China, it would be financial suicide." Rothman said.

Foreign exchange reserves decline in purchasing power

In fact, the risk of holding U.S. debt is not paid from the risk, so far there has not been paid the U.S. debt problem, but with a weaker dollar of U.S. debt may be other reasons, resulting in a loss passive holders of U.S. debt.

China's foreign exchange reserves exceed $ 3 trillion, as of the end of May China $ 1.16 trillion U.S. Treasury holdings, was the first U.S. Treasury bonds held by the main body, accounting for up to 12%Than 2 percentage points higher than the Fed and China's external financial assets, 71% of U.S. dollar assets. In other words, the United States in the relationship between the United States on the issue of debt is a "common lot."

Chicago-based financial services firm Mesirow Financial HoldingsInc. Swank, chief economist, said: "The United States addicted to consumption, and China is the only one able to satisfy our desire for this country. You want to quit this addiction, and not easy. "

China's foreign exchange reserves in dollars, the dollar's purchasing power is the purchasing power of China's foreign exchange reserves, as China's foreign exchange reserves in foreign investment, the U.S. dollar against the euro, British pound, Japanese yen and other non-RMB currency movements, will directly determine the China Foreign Exchange the purchasing power of reserves, however, the U.S. dollar against a basket of currencies reflecting changes in exchange rates of the dollar index fell from 93.34 in 2005 to the current 74.6 in the vicinity, down more than 20%. In addition, the international commodities are all denominated in dollars, If the depreciation of the dollar prices of these commodities will prices, resulting in a decline in real purchasing power of China's foreign exchange reserves.

"U.S. Time" website to the Consumer Price Index as a base to calculate the 1914-2010 changes in the purchasing power of $ .1990 U.S. $ 1 purchasing power equal to 1.71 in 2010 dollars, that is, 1990, need to buy something for $ 1 to spend $ 1.71 in 2010 to buy.

This chaptersource:China Trade Information (http://en.zgxu.com),Reprinted Please note Ming.