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MUST READ: China’s Dagong Credit Downgrades the U.S. Sovereign Credit Ratings — “The government is still approaching the verge of default crisis”

from Dagong Credit:

On October 16, 2013 EST, the U.S. Congress approve(d) the resolution to end the partial government shutdown and raise the debt ceiling. By such means the U.S. Federal Government can avoid the default crisis for the moment. However the fundamental situation that the debt growth rate significantly outpaces that of fiscal income and GDP remains unchanged. For a long time the U.S. government maintains its solvency by repaying its old debts through raising new debts, which constantly aggravates the vulnerability of the federal government’s solvency. Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future. In light of these facts, Dagong Global Credit Rating Co., Ltd. (hereinafter referred to as “Dagong”) decides to downgrade the local and foreign currency credit ratings of the U. S., which has already been on the negative watch list, to A- from A, maintaining a negative outlook. The rationale that supports the conclusion is as follows:

1. The partial U.S. federal government shutdown apparently highlights the deterioration of the government’s solvency, pushing the sovereign debts into a crisis status. The U.S. federal government announced its shutdown on Oct. 1, 2013, a radical event that reflects the liquidity shortage aroused by depleting stock of debts without the increase of new debts, directly resulting in the federal government lack of the funds for its normal function. The partial U.S. government shutdown is an inevitable outcome of its long-term failure to pay its excessive debts.

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6 comments to MUST READ: China’s Dagong Credit Downgrades the U.S. Sovereign Credit Ratings — “The government is still approaching the verge of default crisis”

  • Ed_B

    The only thing that the US Gov really suffers from is a crisis of intelligence. This is why all politicians should have to pass an exhaustive series of tests that demonstrate their proficiency in science, math, history, geography, foreign languages, current event, and politics. The days when any bozo with a ready handshake and a big smile being the qualifications necessary to run a national government are well and truly over. We have seen the results of that approach and it is a terrible way to run a government… or anything else, other than a social club, for that matter. Most professional occupations require PROOF that the applicants know their area of expertise, so why not politics?

  • Hannon

    But Greenspan said the US can’t default. And don’t these stupid chi-coms even realize that raising the debt doesn’t raise the debt? Even Obama knows that 🙂

  • andrew james

    So why don’t they just dump the balance of their US treasury assets for their beloved precious? It’s getting pretty thick.

  • Eric

    I believe they need to roll over a bunch of treasuries in November. I’m not really paying attention to anything besides the 10 year rate but I would love to see a list of all the auctions.

  • mac

    Dagang’s report should be required reading for every USA investor. Or for any investor world wide.
    Too bad this info isn’t common knowledge. Yet.

  • karate kid

    who cares the dum Chinese bought all that stupid paper
    hows that for dumazz
    and I thought the politicans were stupid

    sure we sold them some outdated tyechnoligy too
    me china man not to happy

    to bad china man should have bought gold

    lets face it Americas money is worthless but they bought anyway hahahah

    don’t worry the polticans screwed americans too
    got gold??????????????????????????
    not to happy with that chinaman eggroll are we

    soo soo sorry
    would you like some soy sauce with that worthless paper you can eat it hahhahaha

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