NEW YORK/SHANGHAI, Aug 6 (Reuters) - The United States lost its top-tier AAA credit rating from Standard & Poor's, drawing a blast of criticism on Saturday from its biggest creditor China and deepening investors' alarm over the euro zone crisis. With financial markets in turmoil, finance ministers and central bankers of the Group of Seven major industrialised nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said. China said Washington only had itself to blame and called for a new stable global reserve currency. "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," China's official Xinhua news agency said in a commentary. The S&P cut in the U.S. long-term credit rating by a notch to AA-plus resulted from concerns about the nation's budget deficits and climbing debt burden. The move is likely eventually to raise borrowing costs for the U.S. government, companies and consumers. By calling the outlook "negative," S&P signalled another downgrade is possible in the next 12 to 18 months. Worries that the United States was slipping into recession and the euro zone debt crisis was spreading drove a week-long rout in which $2.5 trillion was wiped off global markets. The European diplomatic source said the downgrading of the United States' credit rating had added a global dimension on top of the euro zone's debt crisis, raising the need for international coordination. "The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said. French Finance Minister Francois Baroin, who would chair such a meeting under the French presidency of the G7 and G20, said in a radio interview it was too early to say whether there would be an early G7 meeting. In the Xinhua commentary, China roundly condemned the United States for its "debt addiction" and "short sighted" political wrangling and said the world needed a new stable global reserve currency. "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said. It urged the United States to cut military and social welfare expenditure. It also said further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil. "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," Xinhua said. S&P blamed in part the political gridlock in Washington, saying politics was preventing the United States from addressing its deficit and debt problems. http://www.reuters.com/article/2011/08/06/crisis-idUSL6E7J603S20110806
That is the true point at which we'll have to pay the piper. Until then we can more or less continue borrowing and spending too much. Once we lose the server currency status, IT'S ALL OVER.