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China's Dagong ratings agency downgrades the U.S. from A+ to A with negative outlook, saying the...

China's Dagong ratings agency downgrades the U.S. from A+ to A with negative outlook, saying the debt ceiling agreement means there will be no "positive changes in factors that will influence the country's debt-paying ability in the long run." Dagong last downgraded the U.S. in the wake of QEII's start.
Comments (18)
  • Bouchart
    , contributor
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    Can't argue with that.
    2 Aug 2011, 09:45 PM Reply Like
  • Neil459
    , contributor
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    Predicted that in another comment. Fitch, Moody's & S&P are all pandering to the Administration and they'll downgrade 90 days after we hit rock bottom have the revolution at the ballot box.
    2 Aug 2011, 10:16 PM Reply Like
  • Fin858
    , contributor
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    Haha, another "ratings" agency downgrades yet Treasuries rallies.

     

    I've said it once and I will say it again

     

    Ratings agencies are MEANINGLESS for sovereigns like the US

     

    The bond market prices and "rates" bonds, not some agency.

     

    Yields fell again today. 'nuff said.
    2 Aug 2011, 10:31 PM Reply Like
  • Bouchart
    , contributor
    Comments (730) | Send Message
     
    It's true that there's a problem with conventional ratings for sovereign debt for a country that can print its own currency. We can't default due to lack of dollars, but we can choose to default for whatever political reason. Also bondholders can take a real loss if there's a sudden bout of monetization.

     

    Maybe the bond rating in this case is just a reflection of political instability and an unexpected jump in inflation.
    2 Aug 2011, 10:36 PM Reply Like
  • Fin858
    , contributor
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    Youre kinda missing my point.

     

    The bond market for Treasuries is so deep and so liquid with so many players, you would see when they go nervous with inflation, default, too much printing, etc.

     

    right now with lowered yields deflation is more of the concern
    2 Aug 2011, 10:52 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Not really. Your point about the size of the market is absolutely correct, yet you draw the wrong conclusion. The people buying up those Treasuries are mostly TBTF banks that borrow at 0.08% to buy them, and know that they'll never suffer any adverse consequences even if there is a default. You don't see EU residents who want to save up for a US holiday buying Treasuries, and you certainly don't see Americans putting them into their IRAs.
    2 Aug 2011, 10:56 PM Reply Like
  • The Last Boomer
    , contributor
    Comments (873) | Send Message
     
    "Unexpected jump in inflation"
    If it is unexpected, how would the rating agencies know it is coming so they can use this in their ratings?
    And anyway, how can we possibly have any inflation in an economy that just came to a grinding halt while unemployment is 9.2% and capacity utilization is about 4% below the average for the last 40 years? That was a rhetorical question.
    2 Aug 2011, 11:25 PM Reply Like
  • Fin858
    , contributor
    Comments (460) | Send Message
     
    Yet AGAIN another poster who says things they THINK are true without actually going after the data.

     

    Banks, thrifts and brokers hold 3% of US Treasuries.

     

    www.google.com/imgres?...
    3 Aug 2011, 07:11 AM Reply Like
  • davidshelton
    , contributor
    Comments (309) | Send Message
     
    Rating downgrades will have other consequences though : Right now USD seems very weak considering a deal was struck, Gold and silver surging, Swiss Franc and Yen strong vs USD and the less immediate the negative effect on the wider bond and equity markets.....
    2 Aug 2011, 10:37 PM Reply Like
  • La Marque
    , contributor
    Comments (1531) | Send Message
     
    This is just another warning from China that they may not hold much more US debt.
    2 Aug 2011, 10:48 PM Reply Like
  • Ranni
    , contributor
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    Yeah, they are worried US treasuries, and same time hoarding PIIGS sovereign debt. Not too rational, in my view. Chinese rating agency seems to be even bigger joke, than US counterparts.
    2 Aug 2011, 11:21 PM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Well, the Chinese ratings agencies, like everything else in China, are more overtly political; they exist to serve the Communist Party's agenda. Their statement about the so-called US debt deal is spot-on perfect. The "deal" is a non-event, the supposed savings will never materialise, and the credit risks associated with lending to the US Treasury continue their upward march. But the Chinese government thinks it can curry favour in Europe -- most likely to get the major powers there to give it a free hand in Africa -- by helping to bail out the PIIGS, so they do. Even so, it's not like they've stopped buying Treasuries. At the end of the day, they have so much money coming in that they're bound to spread it around even while their various mouthpieces try to get them a little bit extra. Pretty sharp, it you ask me. Not subtle, or genius, or innovative, just bold and ballsy and we-don't-give-a-shit, we're-taking-what's-ours. The attitude comes with the money.
    2 Aug 2011, 11:29 PM Reply Like
  • Ranni
    , contributor
    Comments (142) | Send Message
     
    I agree, it’s their political arm. Like EZ-leaders argued some weeks ago, that they too should have own rating agency ( so it could be easier mislead market participants and rate their junk paper higher).

     

    I think, only reason why Russian & China keeps supporting that doomed Euro-project, is simply, because, they would hate to see, how it disappears. Only international alternative which remains after that is US dollar.

     

    The real truth of the matter is, Mr. Bernanke is only who can provide (read: print) real safety.
    3 Aug 2011, 12:08 AM Reply Like
  • anonymous-JohnD
    , contributor
    Comments (100) | Send Message
     
    I wonder when some one will call gold, as the new "world reserve currency".
    3 Aug 2011, 05:08 AM Reply Like
  • bearfund
    , contributor
    Comments (1534) | Send Message
     
    Why would anyone say that? There has never been a time since the agricultural revolution when gold was not the world reserve currency. After all, if the Treasury and Fed really believed that their paper had displaced it, they wouldn't bother keeping their own 8000 tonnes of gold. And if the rest of the market really believed gold useful only for jewelry and a handful of niche industrial applications, it would be priced like gemstones: either dirt-cheap or supported by a cartel. Witness instead E&P going gangbusters and paper prices rising steadily. Central bank sales are almost nonexistent. The behaviour of all market participants says that gold is the world reserve currency, and history agrees. The Chinese probably understand all this very well and are quietly buying up their domestic production while continuing to report very small official reserves. When they amass an amount they're comfortable with, it will be added to the official data and used to bully others politically and financially. Easy game!
    3 Aug 2011, 10:31 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
     
    They stop buying treasuries and start dumping them like the Russians, then I'll believe their rating..otherwise this is just posturing.
    2 Aug 2011, 11:19 PM Reply Like
  • inquisitivemind7
    , contributor
    Comments (208) | Send Message
     
    nothing but words, but they capture the sentiment of the American people. We need to stop spending money we don't have at absurd rates and using QE to temporarily make it all better lest we steal from our children.
    3 Aug 2011, 12:30 AM Reply Like
  • New Century
    , contributor
    Comments (130) | Send Message
     
    yawn. free your people... float your currency... then cast judgement
    3 Aug 2011, 01:13 AM Reply Like
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