CHINESE AGENCY DOWNGRADES U.S. CREDIT RATING. By Wayne Hodges
BEIJING – President Barack Obama can’t seem to catch a break. First, he’s referred to as a ‘tar baby’ by Rep. Doug Lamborn (R) of Colorado.
Now the unthinkable.
In the aftermath of Congress’ embarrassing debt ceiling negotiations, the U.S. just learned its borrowing power has been reduced to ‘Pay Day Loan’ status.
The Dagong Global Credit Rating Company, China’s leading credit rating agency founded in 1994, downgraded U.S. sovereign debt to an “A” grade amid heightened concerns over the White House’s long-term ability or inability to satisfy its debts.
Keep in mind, Dagong’s assessment score is considerably lower than the AAA ratings given to the U.S. by the so-called ‘Big Three’ Western credit agencies of Moody’s, Fitch and Standard and Poor.
Hell, just last November, Dagong lowered the U.S. rating to an “A+” upon learning the Federal Reserve was operating too loosely with its monetary policy.
A few months prior to that (in July), the agency shocked the world by giving China a more favorable credit ranking than both the United States and Japan.
As of today, Dagong is responsible for rating 67 countries. However, the company expects to double that number by the end of the calendar year.
Deficits aside, the Chinese cited a lack of cohesion between Republicans and Democrats as the primary reason for doubt.
“The squabbling between the two political parties on raising the U.S. debt ceiling reflected an irreversible trend on the United States’ declining ability to repay its debts,” Dagong Chairman Guan Jianzhong told CNN.
“The two parties acted in a very irresponsible way and their actions greatly exposed the negative impact of the U.S. political system on its economic fundamentals.”
Ouch!
The credit rating hurts the U.S. No doubt about it. But China is indirectly affected too. After all, it’s the largest foreign owner of U.S. debt with holdings in excess of $1.1 trillion.
If the U.S. goes down, China could soon follow.
“Our downgrade simply reflects reality,” Guan said. “Our rating didn’t cause China to lose any money — it was the inappropriately high ratings for the U.S. by Western agencies that had led China to make risky investments in U.S. debt.”
In other words, the Chinese feel duped.
Tricked.
Bamboozled even.
Now, you get the sense China will never trust Western credit reporting agencies again.
“People are used to credit ratings issued by the ‘big three,’ but the financial crisis has clearly proved them wrong,” Guan said. “They can no longer shoulder the responsibility of rating the world. That’s the role we are striving to play.”
Hmm… maybe I should consider creating a consumer credit agency as a viable alternative to the ‘Big Three’ of Equifax, Experian and TransUnion?
Who knows?
Maybe China is on to something?
Wayne Hodges, an MBA from St. Mary University, is the Editor-in-Chief of “Mass Appeal News.” He also serves as a contributing writer to YourBlackWorld.com, he’s a Democrat reporter for the Examiner, and he’s a film critic with ILoveBlackMovies.com. Wayne welcomes your comments 24/7 at whodges@massappealnews.com 
