China Downgrades U.S. Debt

“China’s credit rating agency Dagong has downgraded the U.S. rating from A to A-.

“[T]he fundamental situation that the debt growth rate significantly  outpaces that of fiscal income and GDP remains unchanged,” they warned after President Obama signed a deal to end the government shutdown and raise the debt ceiling.

“For a long time the U.S. government maintains  its solvency by repaying its old debts through raising new debts, which constantly aggravates the  vulnerability of the federal government’s solvency. Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future.”

Dagong is not recognized by the SEC, and it does not have the influence of the big three: S&P, Moody’s, and Fitch.

Not many people outside of China really follow Dagong.

Still, the downgrade appears to reflect China’s deteriorating sentiment toward U.S. governance….”

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