Aug. 6 - China, Australia, and India react to the U.S. credit rating downgrade. Paul Chapman reports.
PLEASE NOTE: EDIT CONTAINS CONVERTED 4:3 MATERIAL Australian Prime Minister Julia Gillard is playing down the importance of the U.S. credit rating downgrade. She says Standard & Poor's decision to slash the U.S. triple-A rating to a double-A plus was flagged well in advance. SOUNDBITE: Julia Gillard, Australian Prime Minister, saying (English): "Standard and Poor's had been signalling for some time that unless they saw a certain figure of budget cutbacks out of the discussion that there's been in Washington about the American budget and fiscal consolidation, that they were intending to do that downgrade. At the same time two other major ratings agencies, Moody's and Fitch, continue to have the American economy rated at AAA." In China the official Xinhua news agency roundly condemned the U.S. for what it called its debt addiction and short-sighted political wrangling. Beijing has repeatedly urged Washington to protect its dollar investments estimated at about two thirds of its 3.2 trillion dollars of foreign exchange reserves, the world's largest. The head of India's top state-run bank says the loss the U.S. top-notch credit rating won't affect the Indian economy at all. SOUNDBITE: Pratip Chaudhuri, Chairman of State Bank of India, saying (English) : "It is America's country downgrade so America's debt will become more expensive, so right now if they are paying something like three percent for a ten years debt so they will have to pay 3.10 0r 3.15, so America's interest cost will go up. In Washington the Obama administration attacked the credibility of the analysts behind S&P's decision. Sources familiar with the discussions said Treasury officials had found a two trillion dollar error in the agency's estimates of its discretionary spending, a figure S&P later removed from its analysis. Paul Chapman, Reuters