The View from China

Niall Ferguson reminds us that it’s not what the ratings agencies say, it’s what our creditors say.

Yesterday he shared the view of our largest creditor, China.

He explains: “As Beijing sees it, the last three months have furnished ample evidence that—regardless of what the American rating agencies may say—the United States is no longer creditworthy.”

China is still going to keep loaning us money, because they are obliged to do so.

But they will manage their investments carefully. They do not want to get sucked into America’s maelstrom.

In Ferguson’s words: “China has its own economic problems, to be sure. But they are the problems of a rising power. From Beijing’s standpoint, America’s problems are plainly those of a power in decline. We didn’t just raise a ceiling last week. In Chinese eyes, we also fell through a floor.”