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Xinhua: European and U.S. Debt Crises Represent a Failure of the Western System

Xinhua republished a commentary by Jinua Times, a daily newspaper in Beijing, arguing that the current international financial and debt crisis represent a failure of the Western system. The article states, “The financial crisis and the current ongoing European and U.S. debt crises represent … the failure of the current European and U.S. systems. These crises have shaken people’s faith in these nations’ sovereign credit and have also shaken people’s faith in the current system being able to ensure that the financial (system) can fully perform its function.”

The article laments, “World economic recovery is slow; old financial crises are not over, yet new debt problems have arisen. It makes one worry about the current system’s effectiveness.” The author listed three worries: (1) Europe and the U.S. may be trapped into paying old debts with new debts, creating a “Ponzi scheme”; (2) the U.S. may try to solve its debt problem by printing money, depreciating the dollar, and inducing inflation; (3) the downgrade of the U.S. credit rating will make the countries holding U.S. debt suffer losses in their foreign currency reserves.

The article concludes, “The current European and U.S. system won’t eliminate these worries. The crisis is with the current system and is not just a credit crisis. Since the current system cannot solve the problem, it is logical and inevitable to establish a new world order and a new national system.”

Source: Xinhua, August, 15, 2011