Dagong: US Solvency on the Brink of Collapse
By Rocky Vega
11/11/10 Stockholm, Sweden – Founded in 1994, Beijing-based Dagong Global Credit Rating Co. is making headlines once again… this time for downgrading US debt from its already world’s lowest, if not most credible, assessment of double-A, to a lower by one level A+ with negative outlook.
The lowered rating is mainly due to round two of Fed quantitative easing. Among other problems, Dagong highlights “serious defects in the US economy,” including lowered “national solvency,” and “long-term recession.” In this process, the China-based credit rating agency is of course also describing, in a backhanded way, how its own home nation’s biggest foreign reserve holding, US bonds, is deeply flawed.
From The Telegraph:
“The Dagong Global Credit Rating Company analysis is highly critical of American attempts to borrow their way out of debt. It criticises competitive currency devaluation and predicts a “long-term recession”. Dagong Global Credit says: ‘In order to rescue the national crisis, the US government resorted to the extreme economic policy of depreciating the U.S. dollar at all costs and this fully exposes the deep-rooted problem in the development and the management model of national economy.
“’It would be difficult for the U.S. to find the correct path to revive the US economy should the US government fail to understand the source of the credit crunch and the development law of a modern credit economy, and stick to the mindset of traditional economic management model, which indicates that the US economic and social development will enter a long-term recession phase.’