Wednesday, November 10, 2010

Chinese Rating Agency Lowers U.S. Ratings: "U.S. Solvency On the Brink of Collapse"

Dagong Global Credit Rating Co., the Chinese rating agency says the U.S. government's solvency is "on the brink of collapse".

It has lowered US debt again, to A+.

Dagong Global Credit Rating Co. assigned a negative outlook on both the local and foreign currency sovereign credit ratings of the United States.

The agency also introduced an analysis of currency stability. "The analysis of currency stability with regard to the Fed's new round of quantitative easing is the core of Dagong's analysis on the U.S. government's repayment ability,".

"An overall crisis might be triggered by the U.S. government's policy to continuously depreciate the U.S. dollar against the will of creditors,".

"The serious defects in the U.S. economic development and management model will lead to the long-term recession of its national economy, fundamentally lowering the national solvency," analysts Lu Sinan and Du Mingyan wrote in the statement. The downgrade reflected the "U.S.'s deteriorating debt repayment capability and drastic decline of the U.S. government's intention of debt repayment".

 "...the Federal Reserve's new round of quantitative easing would further depreciate the U.S. dollar and was entirely counter to the interest of the creditors". "The credit crisis is far from over in the United States and the U.S. economy will be in a long-term recession,"

Dagong also added that that a weakening greenback will cripple U.S. capability to attract dollar capital reflow.

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