After debt drama, Putin calls U.S. a "parasite"
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Bob Moon: Even as the Senate prepares to vote on the debt-ceiling compromise, fears persist Uncle Sam could lose that all-important triple-A credit rating. Treasury Secretary Timothy Geithner tells ABC he doesn’t know if the battle will still end up bruising our credit, but he fears, in his words, world confidence was damaged by the spectacle.
Standard & Poor’s has warned of a 50-50 chance of a downgrade, without some kind of meaningful deficit reduction — and that shoe is yet to drop. We have heard from world leaders about the deal — and one of the most outspoken was Russia’s prime minister, Vladimir Putin, who said the U.S. is living beyond its means, he says we’re “like a parasite” on the global economy.
As Peter van Dyk reports from Moscow, the debt debate may help Russia distance its economy from the United States.
Peter van Dyk: Putin says the problem isn’t just the United States itself, but the U.S. dollar.
The dollar has become currency of choice for the world. Oil is traded in dollars, gold is in dollars, and when the world economy gets scary, investors flock to safety, in the form of U.S. Treasury bonds.
Chris WEAFER: Both Putin and Medvedev have made it very clear they would like to see the U.S. dollar having less of a role in global trade.
Chris Weafer of ING investment bank in Moscow says Russia is trying to convince the rest of the world to use other currencies besides the dollar in foreign trade.
WEAFER: Russia is likely to bring this up again at the next G20 meeting and next time round they might find more of a receptive audience, particularly among the emerging market countries, because of what has happened with the dollar and the euro this year because of the debt issues.
Russia has almost $250 billion in its foreign reserves, mostly treasuries. And because its major exports like oil and gas are priced in dollars, Russia has to keep plenty of dollars, at least for now.
In Moscow, I’m Peter van Dyk for Marketplace.
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