Guangming Daily published an article analyzing four areas in which the US debt crisis caused damage to the world’s politics and its economy. 1) The downgrade of the U.S. credit rating significantly harmed its reputation and the trust in U.S. treasury bonds around the world. Moreover, the economic crisis also reflects its political crisis: both parties as well as the administration and Congress have shown they are incapable of solving the problems themselves. 2) As the U.S. is the most influential country, the debt crisis had a deep impact on the rest of the world. The downgrade of the U.S. credit rating caused the world market to fluctuate drastically. The recovery of the world economy has stalled, thus greatly affecting U.S. global influence and resulting in other countries having less trust in and reliance on the U.S. 3) As the world’s top superpower, the U.S. carries the responsibility for the rest of the world. However the way the U.S. handled the debt crisis shows it has been extremely irresponsible. The U.S. solution was to use the superior status of the U.S. dollar, transfer the risk to other countries, and let other countries carry the burden. 4) Coordination is needed in facing the crisis. No doubt the U.S. should take the main responsibility. However, in order to pull through the crisis, the rest of the countries such as the G20 Finance Ministers and the Governors of Central Banks should also work together.
Source: Xinhua, August 10, 2011