Yesterday we reported that German ratings agency Feri downgraded the US from AAA to AA.
Today, China's Dagong rating firm one-ups Feri, and states that the US has already defaulted on their debt, by intentionally DEVALUING the dollar against other currencies, eroding the wealth of creditors.
Ironically, this exact analysis was given by US representative and presidential hopeful Ron Paul earlier this week where Paul stated that "The only budget that counts is THIS year. This year, our obligations when you add everything up together- $5 Trillion dollars."
"They want to prevent the default, you know, we don't want to not pay our bills. But we're defaulting constantly! All governments when they get this much debt default. But they don't default by not paying the bills, we'll always pay the bills. The default comes by the devaluation of the currency! So inflation right now is at 6%, and therefore people are losing their purchasing power. So the common person, the average person, the middle class, the poor, and especially people who lose their jobs we're defaulting on them all the time! I don't want to carry on the default on the common person."
Apparently Dagong caught the interview.
From AFP:
BEIJING - A CHINESE ratings house has accused the United States of defaulting on its massive debt, state media said on Friday, a day after Beijing urged Washington to put its fiscal house in order.
'In our opinion, the United States has already been defaulting,' Guan Jianzhong, president of Dagong Global Credit Rating Co Ltd, the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.
Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies - eroding the wealth of creditors including China, Mr Guan said.
Mr Guan did not immediately respond to AFP requests for comment. The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond US$14.29 trillion (S$17.57 trillion) - but Republicans are refusing to support such a move until a deficit cutting deal is reached.
Ratings agency Fitch on Wednesday joined Moody's and Standard & Poor's to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans.
A downgrade could sharply raise US borrowing costs, worsening the country's already dire fiscal position, and send shock waves through the financial world, which has long considered US debt a benchmark among safe-haven investments. -- AFP
