On July 13th of this year Reuters reported that the Chinese Dagong credit rating agency downgraded the US credit rating from AAA to AA. Since the Dagong is not globally recognized as a credit rating agency this was pushed to the back of the news. No one in the news reported this or even made mention of this. Not even Wall Street has paid attention to this.
In September of this year the Chinese Dagong credit rating agency applied to the SEC to become a globally recognized credit rating agency. The SEC due to regulation created as soon as the Democrats came into power in 2007, the Dagong was denied entry. This is where I start to smell a rat. The big 3 credit rating agencies still give the US dollar an AAA rating although the Chinese and the rest of the world are starting to lose confidence, especially after we’ve spent almost $6 trillion in the last 4 years under the Pelosi Speakership. The rest of the world has been warning us for some time that our debt is undermining the value of the US Dollar. The biggest red flag for me is that the big 3 credit rating agencies Moody’s, S&P, and Fitch still keep the US credit rating at AAA. Is there a reason for this, and what are the regulations that are preventing a major and emerging global lender from having any real input in the world market as far as credit ratings?
On November 9th of this year the Chinese Dagong credit rating agency lowered the US credit rating again from AA to A+. Have we heard anything about this, the answer is no. Will we hear about this, the answer is still no. Is the rest of the world paying attention, probably not. This rating change could be seen as political in nature considering the US has been devaluing the dollar to force revaluation of the Chinese Yuen. This could also be the signal to the US that we need to start paying off our debt and really acting like a responsible adult instead of a spoiled kid with an endless credit card.
As long as the Dagong credit rating agency is being kept under wraps we’re just heading towards another bubble. Could this bubble be the straw that breaks the camel’s back? Although the big 3 are telling the rest of the world that the US dollar is strong, this could be disastrous. China’s Dagong may actually be a fair credit rating agency, although it is being controlled somewhat by the state. The Chinese are a different culture than the rest of the world, so we just don’t understand that Chinese investors are more likely to listen to the Dagong credit rating agency before they listen to any US based credit rating agency. This could very well be what Glenn Beck was talking about when he said “China may stop buying US Bonds” on his November 5th show on FNC. If the Chinese investor decides to follow the Dagong credit ratings instead of the big 3 given to us by a US government agency the SEC, this could very well get ugly soon. If the US does not heed these warnings we are at the peak of a very ugly road.
My final thoughts will be short and simple. There’s a rat, I can smell it. Why does the Federal government get to use double standards on everything? We complain about the Chinese undervaluing their currency, but then we do something like QE2? Why do we get to choose who we recognize to rate our credit and use a government agency to prop up a failing dollar, but we refuse to acknowledge the truth. This is just the tip of the iceberg. I will be researching the rest of the weekend and come out with an expose on these regulations that favor the US and could possibly be our demise and I also want to know why the Degong has lowered the US credit ratings to see what other motives there are. I personally think that they’re right on target, but there could be more to it. Please tune in on Monday and I will have even more information to this big puzzle while we watch our dollar collapse.
Sources:
http://online.wsj.com/article/SB10001424052748704082104575515470951666514.html
http://ftalphaville.ft.com/blog/2010/09/27/353781/dagong-fires-back/
http://seekingalpha.com/instablog/679135-sun-kai/84377-china-s-new-credit-rating-agency-trouble-for-the-big-three
http://www.bloomberg.com/news/2010-11-09/china-s-dagong-downgrades-u-s-to-a-on-quantitative-easing-xinhua-says.html
