Begin forwarded message:
> From: dasg...@aol.com > Date: August 3, 2010 1:18:23 PM PDT > To: ramille...@aol.com > Cc: ema...@aol.com, j...@aol.com, jim6...@cwnet.com, christian.r...@gmail.com > Subject: China Calls Our Bluff > > China Calls Our Bluff: > The U.S. is Insolvent and Faces Bankruptcy as a Pure Debtor Nation > > > http://globalresearch.ca/index.php?context=va&aid=20449 > > America's biggest creditor -- China -- has called our bluff. > > As the Financial Times notes, > http://www.ft.com/cms/s/0/5632a0b8-94b7-11df-b90e-00144feab49a.html > the head of China's biggest credit rating agency has said America is > insolvent and that U.S. credit ratings are a joke: > > The head of China’s largest credit rating agency has slammed his western > counterparts for causing the global financial crisis and said that as the > world’s largest creditor nation China should have a bigger say in how > governments and their debt are rated. > > “The western rating agencies are politicised and highly ideological and they > do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong > Global Credit Rating, told the Financial Times in an interview. > > He specifically criticised the practice of “rating shopping” by companies who > offer their business to the agency that provides the most favourable rating. > > In the aftermath of the financial crisis “rating shopping” has been one of > the key complaints from western regulators , who have heavily criticised the > big three agencies for handing top ratings to mortgage-linked securities that > turned toxic when the US housing market collapsed in 2007. > > “The financial crisis was caused because rating agencies didn’t properly > disclose risk and this brought the entire US financial system to the verge of > collapse, causing huge damage to the US and its strategic interests,” Mr Guan > said. > > Recently, the rating agencies have been criticised for being too slow to > downgrade some of the heavily indebted peripheral eurozone economies, most > notably Spain, which still holds triple A ratings from Moody’s. > > There is also a view among many investors that the agencies would shy away > from withdrawing triple A ratings to countries such as the US and UK because > of the political pressure that would bear down on them in the event of such > actions. > > Last week, privately-owned Dagong published its own sovereign credit ranking > in what it said was a first for a non-western credit rating agency. > > The results were very different from those published by Moody’s, Standard & > Poor’s and Fitch, with China ranking higher than the United States, Britain, > Japan, France and most other major economies, reflecting Dagong’s belief that > China is more politically and economically stable than all of these countries. > > Mr Guan said his company’s methodology has been developed over the last five > years and reflects a more objective assessment of a government’s fiscal > position, ability to govern, economic power, foreign reserves, debt burden > and ability to create future wealth. > > “The US is insolvent and faces bankruptcy as a pure debtor nation but the > rating agencies still give it high rankings ,” Mr Guan said. > > A wildly enthusiastic editorial published by Xinhua, China’s official state > newswire, lauded Dagong’s report as a significant step toward breaking the > monopoly of western rating agencies of which it said China has long been a > “victim”. > > “Compared with the US’ conquest of the world by means of force, Moody’s has > controlled the world through its dominance in credit ratings,” the editorial > said... > > China is right. U.S. credit ratings have been less than worthless. And -- in > the real world -- America should have been downgraded to junk. See this, > this, this, this, this,this, this, this and this. > > China is not shy about reminding the U.S. who's got the biggest pockets. As > the Financial Times quotes Mr. Guan: > “China is the biggest creditor nation in the world and with the rise and > national rejuvenation of China we should have our say in how the credit risks > of states are judged.” > Might Makes Right Economic Collapse > > Indeed, Guan is even dissing America's military prowess: > “Actually, the huge military expenditure of the US [depends on] borrowed > money, which is not sustainable.” > As I've repeatedly shown, borrowing money to fund our huge military > expenditures are -- paradoxically -- weakening our national security: > > As I've previously pointed out, America's military-industrial complex is > ruining our economy. > > And U.S. military and intelligence leaders say that the economic crisis is > the biggest national security threat to the United States. See this, this and > this. > > [I]t is ironic that America's huge military spending is what made us an > empire ... but our huge military is what is bankrupting us ... thus > destroying our status as an empire ... > > Indeed, as I pointed out in 2008: So why hasn't America's credit rating been > downgraded? > > Well, a report by Moody's in September states: > > "In superficially similar circumstances, the ratings of Japan and some > Scandinavian countries were downgraded in the 1990s. For reasons that take > their roots into the large size and wealth of the economy and, ultimately, > the US military power, the US government faces very little liquidity risk — > its debt remains a safe heaven. There is a large market for even a > significant increase in debt issuance." > > So Japan and Scandinavia have wimpy militaries, so they got downgraded, but > the U.S. has lots of bombs, so we don't? In any event, American cannot remain > a hyperpower if it is broke. > > The fact that America spends more than the rest of the world combined on our > military means that we can keep an artificially high credit rating. > > But ironically, all the money we're spending on our military means that we > become less and less credit-worthy ... and no longer able to fund our > military. > > The Scary Part > > I chatted with the head of a small investment brokerage about the China > credit rating story. > > Because he gives his clients very bullish, status quo advice, I assumed that > he would say that China was wrong. > > To my surprise, he simply responded: "They're right. What's scary is that > China knows it." > > In other words, everyone who pays any attention knows that we're broke. > What's scary is that our biggest creditor knows it. > > Tricks Up Their Sleeves? > > China has been threatening for many months to replace the dollar as the > world's reserve currency (and see this). And China, Russia and other > countries have made a lot of noises about replacing the dollar with the SDR. > See this and this. > > Gordon T. Long argues that the much talked about gold swaps are part and > parcel of the plan to replace the dollar with the SDR. Time will tell if he's > right. > > China, of course, is not without its own problems. See this and this. > > In related news, Germany's biggest companies are starting to shun Wall Street > as too risky.
