Despite chatter through all of Friday, it still took many by shock when S&P issued a press release with the official decision that the U.S. credit rating is now AA+, the first time in history that American government debt has not received its top rating of AAA. Many noted that a AAA rating is rare in business; only four U.S. companies have a higher rating than the U.S. now: Microsoft, Exxon Mobil, Johnson & Johnson, and Automatic Data Processing. But rare as a AAA is, this historic downgrade prompted severe reactions from just about everyone.
First, let's get the most serious out of the way and start with China. The New York Times reports that China is none too impressed with us and had some "harshly-worded" admonition. As the largest foreign holder of U.S. debt, just hours after S&P downgraded U.S. debt, it said that Washington needed to “cure its addiction to debts” and “live within its means.”
“The U.S. 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,” read the commentary, which was published in Chinese newspapers...
“International supervision over the issue of U.S. dollars should be introduced and a new stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” the Xinhua commentary said.
So... international supervision over the U.S. dollar. A new global reserve currency. "Painful facts." Time for something a bit more positive.