Chinese agency downgrades US credit again

[Hand]

Im curious to see how the members of this forum would predict the repercussions of this article.

Link (http://inventorspot.com/articles/us_credit_rating_downgraded_again_chinese_credit_r ating_agency)

While the last-minute deal done in Washington to temporarily solve a looming debt default crisis has U.S. politicians cheering, the reaction in Beijing was much more subdued to say the least. Putting their money where their mouths are, Dagong Global Credit Rating Co. has downgraded America's credit rating from A+ to A with a negative outlook.

This isn't the first downgrade Dagong has conducted, either, having previously (in November of 2010) downgraded the U.S.'s credit rating from AA to A+.

“The downgrade is a result of fights between U.S. political parties over debt issues,” said Dagong Global, “which reflects the government's inability to completely solve the debt problem.” Dagong Global went on to say that “The interests of the country's creditors are short of systematic protection both politically and economically.”

Since China, who is the largest holder of U.S. debt by far with holdings amounting to $1.15 trillion (as of April 30th) might indeed consider itself “short of systematic protection”, one wonders about the country's continued willingness to buy U.S. treasuries.

[MtnGoat]

Like to see how this gets played out in MSM.

Big business leaders don't care about this. They are looking at what they can Getty now. Just like Citi shareholders denied increase to CEO pension. This is what it will take, common citizens taking action. Stockholders & voting out politicians.

Sad state we are in.

[Richard]

That article came out last summer.

The MSM was all over it in August.

Found any repercussions in your searches?

And so it goes...

Richard :munchin

[Hand]

That article came out last summer.

The MSM was all over it in August.

Found any repercussions in your searches?

And so it goes...

Richard :munchin

No sir, of the few this seems to be about the gist of it here: Link (http://www.bloomberg.com/news/2012-04-05/egan-jones-cuts-u-s-rating-one-step-to-aa-citing-growing-debt.html)

By John Detrixhe - Apr 5, 2012 5:50 PM ET

Egan-Jones Ratings Co. cut the U.S. credit rating one step to AA, the second downgrade in nine months and two levels below its highest grade, with a negative outlook citing the nation’s increasing debt burden.
U.S. debt has increased to 100 percent of gross domestic product, while debt climbed 23.6 percent from 2008 to 2010, the credit-rating firm said in a statement today. Egan-Jones lowered the U.S. grade to AA+ in a July. Treasuries have gained 4.6 percent since the company first lowered the U.S. rating, according to Bank of America Merrill Lynch index data.
The downgrade was based on “the increasing debt load coupled with the fact that there has been no tangible progress in addressing the country’s growing debt to GDP” ratio, Sean Egan, president of Egan-Jones in Haverford, Pennsylvania, said today in a telephone interview. “Unfortunately, the debt is growing fairly rapidly while the GDP is not.”
Standard & Poor’s cut the U.S. grade by one step to AA+ on Aug. 5 and has a negative outlook on the country’s debt. Moody’s Investors Service and Fitch Ratings assign the nation their top Aaa and AAA ratings respectively and also have negative outlooks.

Or is that your point... Nothing?

What I should have said was I wonder about the repercussions to those of us who are out here footing the bill for the spending spree of the last 4 years. The article posted above hints that the stock markets will likely see the effects. Will there be more?

[mark46th]

Someone smarter than I once said, If you owe the bank $500.00, you have a problem. If you owe the bank $1,000,000.00, the bank has a problem." The Chinese may have a communist government but they understand very clearly the principles of capitalism.

[GratefulCitizen]

There's Chinese currency and US currency floating around.

China prints some yuan and uses them to buy dollars.
They use these dollars to buy US debt.

There's now more yuan in circulation, and the same amount of dollars in circulation.
This causes the dollar to appreciate relative to the yuan, giving the Chinese a trade advantage.

The Fed shrugs its shoulders, prints more dollars, and buys US debt.
Now there's more dollars in circulation.

The Chinese respond...
The net result is a contest to see which country can more successfully slave drive their people in order to give stuff to the other country in exchange for domestic inflation.

The Chinese have been winning this battle.
I hope it continues.

Meanwhile, in the good 'ol US of A, our big economic problem is unemployment and our big health problem is obesity.
So...the Chinese slave drive their people so we can "suffer" from being overfed and underworked.

If the game stops, our unemployment problem goes away.
Just don't see the problem.