China Downgrades US Credit Rating from A- to BBB+

Source: ZeroHedge


In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing “deficiencies in US political ecology” and tax cuts that “directly reduce the federal government’s sources of debt repayment” weakening the base of the government’s debt repayment.

Oh, and just to make sure the message is heard loud and clear, the ratings, which are now level with those of Peru, Colombia and Turkmenistan on the Beijing-based agency’s scale of creditworthiness, have also been put on a negative outlook.

In a statement on Tuesday, Dagong warned that the United States’ increasing reliance on debt to drive development would erode its solvency. Quoted by Reuters, Dagong made specific reference to President Donald Trump’s tax package, which is estimated to add $1.4 trillion over a decade to the $20 trillion national debt burden.

“Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,” Dagong said adding that “Massive tax cuts directly reduce the federal government’s sources of debt repayment, therefore further weaken the base of government’s debt repayment.”

Projecting US funding needs in the coming years, Dagong said a deterioration in the government’s fiscal revenue-to-debt ratio to 12.1% in 2022 from 14.9% and 14.2% in 2018 and 2019, respectively, would demand frequent increases in the government’s debt ceiling.

“The virtual solvency of the federal government would be likely to become the detonator of the next financial crisis,” the Chinese ratings firm said.

* * *

In a preemptive shot across the bow in the coming trade wars, last week Bloomberg reported that Beijing officials reviewing China’s vast foreign exchange holdings had recommended slowing or halting purchases of U.S. Treasury bonds. That warning spooked investors worried that sharp swings in China’s massive holdings of U.S. Treasuries would trigger a selloff in bond and equity markets globally. The report sent U.S. Treasury yields to 10-month highs and the dollar lower, although China’s foreign exchange regulator has since dismissed the report as “fake news.”

Still, Dagong was quick to point out that not much would be needed to crush the public’s confidence in the value of US Treasurys:

“The market’s reversing recognition of the value of U.S. Treasury bonds and U.S. dollar will be a powerful force in destroying the fragile debt chain of the federal government,” Dagong said. . .


via China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would “Detonate Next Crisis” — peoples trust toronto

6 thoughts on “China Downgrades US Credit Rating from A- to BBB+

  1. He he, Stu; ironic and laughable when one considers that credit is merely fiat currency; the only real money is the sweat of our labour; as represented in things like gold and silver;

    The entire global federal reserve system is a bankruptcy-for-profit scheme; like peas under the cup; play with our Ponzi credit, while we finds ways to hold and then steal your gold and wealth;

    They have maxed out this game to the point of where credit is in fact a debt; and, every cent created merely adds to these inflationary bubbles of debt every country has with the IMF and that no country can ever pay back; everything has been turned upside down and back to front and inside out which is merely part and parcel of the occult black-magick conjurers; in peace


    • All you say is true, UZA – whereas if the people could collectively agree not to allow private banks not to create money any more – by restoring that function to the public all that debt could be repaid overnight. Thanks for reblogging the post.


      • Yes, Stu the power of banking must be restored to the people where it rightly belongs;

        Regarding debt there is none; we live in a pre-paid system; when you buy a car or house, the documents you sign get treated as bills of exchange, negotiable instruments; they are sold on x 10 in the fractional reserve system; your signature created money of exchange which they make 900% on and then turn around and tell them you owe them; the same is done with taxes, invoices from utility companies etc. these bills are handled thru clearing houses within every franchise;

        The biggest scam is money bill fraud; way bigger than anything else;

        Even court orders, warrants etc. are sold as money; maxim – He is guilty of barratry who for money sells justice.

        This is how the banksters have control over the BAR legal systems and corporations fronting as government; the house of cards will collapse, if the public found out;

        Every country has a Bills of Exchange Act; the U.S. has the UCC; read our Bills of Exchange page; it needs updating; do an online search on what A4V is;

        Now, we can use it to contract and settle our countries’ debt to the IMF; and declare a debt jubilee; the Hebrews knew the money system was a fraud; hence a debt jubilee every 7 and 50 years; in peace


  2. LOL!!! Unless China wants its currency to increase in value related to the dollar, and therefore, experience a significant drop in its exports to the U.S., the very thing which has funded China’s partial transformation from a third world country, it will continue to buy dollar denominated assets including U.S. Treasury bonds.



    • Excellent point, Mark. The Chinese claim they are reducing their US Treasury holdings, though I have no idea whether this is true or not, while massively increasing exports to countries other than the US. It looks to me like they are hedging their bet.


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