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Economy

ORIGINAL FRENCH ARTICLE: Tourmente américaine

by Jacques Coubard

American Torment

Translated Monday 8 August 2011, by Henry Crapo and reviewed by Henry Crapo

A sanction never before seen in the 70 year history of the credit rating agency Standard & Poor’s, the rating of U.S. government debt was lowered.

Superman has lost his wings. Struck in mid-air by a missile launched by the credit rating agency Standard & Poor’s, lowering the rating of the health of the U.S. economy to AA+, something that has never before happened in the 70-year history of of the agency. Standard & Poor’s justified its study with reference to the "negative" long-term prospects of the economy. The compromise painfully adopted in Congress last week appeared insufficient to restart an anemic economy. The planned budget reductions will do nothing to stop the degradation of the situation. The agency suggests further sacrifices in the budgets for the social services, health, and defense ...

This severe judgement coincides with the criticisms issued by the Chinese agency Dagong, calling upon the United States "to live within its means". "The days are counted in which Uncle Sam, loaded with debt, can simply squander piles of money borrowed abroad."

China, which has massively played the game of loans and purchases of U.S. Treasury bonds, will be the first to be hit by a U.S. crisis, which will come in waves, with a collapse of the value of the dollar and of world-wide values.

The two other credit rating agencies, Moody’s and Fitch, can do little but fall in line, which will deepen the tensions in the financial markets. A large number of operators, the speculators, are worried to see the interest rates on public and private debt go up, despite promises of aid.

Public opinion, if one is to believe a poll carried out by CBS - New York Times, rejects by 82% the battle of rag-sellers that preceded the compromise in Congress. These responses come not only from those contemptuous of the Federal government but equally from those who believe that the problem is not the debt, but the financial system, which has has accorded, since the 1970’s, more and more fiscal advantages and deregulation to the Wall Street empire.

The labor-union central AFL-CIO places candidates for future election on guard: "The workers do not want another, softer, version of the politics that have brought on this economic crisis (..) and which have undermined our democracy." The AFL-CIO calls for unity of a large base, allied behind an initiative that will extend all across the nation.


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