Since the "Debt Ceiling Crisis" has made everyone forget about Obamacare and The Stimulus and QE2, let's get back to a Reality Check. China, which is the largest holder of US Treasury debt, is not happy that we continue to print tons of Dollars thereby devaluing their holdings. At this point, they don't care that we are a huge customer for their consumer goods. They refuse to attach a falsely high value on US Dollars.
From the article:
...a failure to rein in US borrowing could “jeopardise the well-being of hundreds of millions of families within and beyond the US borders”, the official Xinhua news agency said in a blistering commentary on the deal.
“The months-long tug of war between Democrats and Republicans…failed to defuse Washington’s debt bomb for good, only delaying an immediate detonation by making the fuse an inch longer,” the commentary said.
“Meanwhile, the madcap farce of brinkmanship has disclosed yet another ticking bomb in the heartland of the sole superpower in the world — the crippling tendency to politicise the economics while trivialising the politics.”
China, sitting on the world’s biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasuries.
Xinhua’s comments came as China’s central bank said it would continue to diversify its foreign currency investments, signalling growing concerns in Beijing over the US debt crisis and economic downturn.
“China’s foreign exchange reserves will continue following the principle of diversified investment, enhancing risk management,” People’s Bank of China governor Zhou Xiaochuan said in a statement.
“Large fluctuations and uncertainty in the US treasury bond market will affect the stability of international monetary and financial systems, which will hurt global economic recovery.”
In other words, the Chinese can see that the US is circling the drain financially and they are no longer going to be tied to our cloudy economic future by making a long-term commitment to prop us up by buying T-Bills.
What will our government do in response? More "Quantitative Easing"?
Sounds like bankruptcy to me, too.