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World markets respond to US credit downgrade

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Shanghai and Hong Kong

The Shanghai Composite Index, which serves as a benchmark for the region, closed down 3.8 percent percent. That’s down 20 percent from its Nov. 8 high, “pushing it into official bear territory,” The Wall Street Journal reports.

Goldman Sachs has reduced its growth forecast for China and the continent. It trimmed predictions for China from 9.4 percent to 9.3 and for Asia (excluding Japan) from 7.8 percent to 7.7.

The state-run Chinese news agency Xinhua ran an editorial Monday headlined: “It’s time for the US to stop blames, take responsibility” [sic].

Before the U.S. makes any move, please remind it: don't forget your responsibility as the issuer of reserve currency to maintain the stable value of the dollar. Don't become blind to the great risks that a fluctuated exchange rate could pose to international financial markets and a weak greenback could pose to the world fragile economic recovery by lifting dollar-denominated commodities prices.

The history is a guide. What we should learn from the financial crisis is to be selfish could only hurt yourself and drag others into water.

It is time for the U.S. to tighten belts and solve structural problems, in order to resume reputation and restore world confidence.

Meanwhile, Hong Kong’s Seng index closed out the day with a 2.2 percent loss.

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