You call Greece a crisis?

Try the U.S., says China

Edmund Downie

A day after the Greek parliament passed another round of austerity cuts to stave off the country’s financial ruin, the third quarter economic outlook report released yesterday by the Bank of China is more worried about the situation in the U.S.:

The U.S. sovereign debt problem is more hazardous than the European debt crisis, economists from Bank of China Ltd. said Thursday in the bank’s third quarter economic outlook, predicting that the U.S. sovereign debt risk will continue to intensify in the next few years.

U.S. public debt stood at around 65% of the country’s nominal gross domestic product in the first quarter, exceeding the "safety line" of 60%, according to the report by one of China’s big four banks. The U.S. still hasn’t come up with any effective solutions, and the possibility that it will face a sovereign debt crisis is increasing, it added.

The op-ed page of state-owned outlet China Daily contains a similar message:

… The debt crisis in Europe and uncertainty in Japan could mean that there will be no strong alternatives to dollar assets, so it has a great chance that the US might walk away from its debts and, at the same time, borrow more money from other countries.

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