Beijing Downgrades US-Treasury to A+ - Is Anybody Listening?

Source

 
Global Money Trends newsletter
 
Of the big-3 credit rating agencies, only the S&P rating agency had the courage and fortitude to speak the truth, about the severe deterioration of America’s financial status. S&P shocked the political establishment in Washington, by following through with its threat to downgrade US Treasury debt to AA+ on the evening of August 5th. S&P added that the US Treasury debt could be downgraded further, if the crooked and inept politicians in Washington haven’t taken any meaningful moves to cut the size of its mounting debt.
 
Yet the most important voice in the debate about the credit worthiness of America’s debt, is not the twisted opinions of the US-credit rating agencies, but rather, that of China’s credit rating agency - Dagong Global Credit Rating, which downgraded US-Treasury’s debt from A+ to single-A last week. “The US decision to raise the borrowing ceiling will not change the fact that the growth of its debt has outpaced its overall economic growth and fiscal revenue. “It may further erode the country’s debt paying ability in the coming years,” Dagong Global said. It also issued a negative outlook.  “The rise of the US-debt ceiling helped temporarily avoid a debt default but has not improved its solvency and the increasing government debt burden will deteriorate the US sovereign debt crisis.”

Wow, the people that have the majority of the debt are saying it is not so good.

This is becoming a bad situation, and more people should be paying attention. S&P's was nit good but this one is just as bad...

When SHTF people will be saying 'there were no warnings', well here they are...

Any thoughts?

Pred...

reply to post by predator0187


To bad China down graded the US on August 3 two days befor the S&P down grade. The article you have fails to mention when this down grade came. Seems they are just trying to blame the US for the EU crashing. EU crashing is the turmoil the stock markets are seeing now. The S&P was just a blip compared to the EU. And China is suffering from inflation that is about to shut there country down cold. When there products can't be sold in a dollar store any more due to Chinas inflation there economy will crash.

edition.cnn.com...

Chinese agency downgrades U.S. credit ratingBy Steven Jiang, CNN
August 3, 2011 -- Updated 0334 GMT (1134 HKT)

Hold onto your poo umbrella!! Ive said it once and I will say it again...
Its hitting the fan!!!

reply to post by predator0187


Link?

Originally posted by STEADFast
reply to post by predator0187

 

Link?

It says source at the top of my post. It is a link to the original article...

Pred...

The next step is obvious. The debt based money system just doesn't cut it and actually won't even allow to fight a meaningful war at this point. Fire the Fed and put our future back in the hands of a peoples bank. Then take China down.

They will sacrifice anything and everything before they admit their policies aren't working. The blame will be spread far and wide with everyone saying " I tried to tell them, tried to do something but my hands were tied" Obama has already said it's not HIS fault. It's time for heads to roll.

reply to post by DAVID64


Heres a article that tells the story about whats going on right now.
www.stuff.co.nz...

French President Nicolas Sarkozy cut short a vacation and pledged to slash France's huge debts on fears that the country may lose its AAA credit rating. Although rating agencies reaffirmed France's top-notch rating, the downgrade of US debt by Standard & Poor's last week fuelled worries that France could be next to lose the coveted and rare rating if it contributes to further bailouts of eurozone countries.

Investors are already worried Italy and Spain will be the next countries unable to repay their debts. The European financial system has been battered by fears about banks holding bonds of heavily indebted countries such as Greece and Portugal.

The concern is that if European governments default on their bonds, it will hurt the European banks that own them. That could start a chain reaction that hurts the United States, because large US banks have loans to European banks. Investors looking for a safe place to put their money pulled out of stocks and snapped up precious metals contracts

The US S&P rating only effects the US. France s worried about there rating because of the effect on France. The EU is going to break apart or drag all the countries in the EU down together.

China downgrades USA's rating? The same China that had been faking and selling contaminated foodstuff to the world, and you still dare believe in their fairy tales? Lol! Pigs will fly when the CCP gov and their mouthpieces start being honest instead of propaganda and murdering of their own people.

Originally posted by SeekerofTruth101
China downgrades USA's rating? The same China that had been faking and selling contaminated foodstuff to the world, and you still dare believe in their fairy tales? Lol! Pigs will fly when the CCP gov and their mouthpieces start being honest instead of propaganda and murdering of their own people.

They own the debt. If they talk they should be listening.

It like the old saying 'gotcha by the balls'. Well China has them and they are the ones that can choose to crush the US.

Pred...

reply to post by predator0187


China now owns $1.16 trillion of U.S. debt. They don't own it all just part of it. Total foreign holdings of Treasury debt stood at $4.44 trillion. The US itself holds the rest.

Im not touting this idea but no one is saying that this may just be by design. Remember the cold war and who won that one? Well, maybe the ones behind the scenes saw the threat of a rising China and nipped it in the bud starting in say 1998ish. Do I believe this? Well not really but that's why I get payed the little bucks!

reply to post by predator0187


I am really starting to believe that if more revenue is not brought in, we will all be in huge trouble.

If draconian cuts are implemented to programs that people need, it's going to make the situation worse....people without jobs...nor any other kind of income will no longer be able to spend...many will go hungry...if the situation does not change,

Eventually there will be social unrest.

China's assessment is sounding more realistic about the situation, being independent helps with a more accurate rating. It is kinda dumb how perception is interlinked with the economy so all these games of my rating is bigger than yours go on. There are literately millions of factors involved in a nations economy with some more influencing than others.

Competition over power and control is going on behind the scenes with a public front looking for stability. There is still a lot of toxic assets and questionable accounting practices going on as well as diverse implementation of national economic policy making for a mixed bag of complex problems and issues. One way or another they will eventually be solved. I do hope reason wins out over ego in the discussions.

I would say the EU could possibly go to war with each other if the bail outs and failures don't stop. Just think about any society right now. The rich seem to be getting richer and the poor seem to be getting poorer. The poor are begining to fight back and start riots. Now look at the EU in that picture France keeps doing good while other EU countries are failing and being bought out with bail outs from the EU. Now France and Germany are ready to say no more bail outs we might get hurt and the other EU countries needing bail outs might feel like the poor man being taken advantage of. Except when they riot it will be wars between countries.

Just some thing to think about. The next big war could be the EU members them selves.

reply to post by JBA2848


French Revolution.

Originally posted by SeekerofTruth101
China downgrades USA's rating? The same China that had been faking and selling contaminated foodstuff to the world, and you still dare believe in their fairy tales? Lol! Pigs will fly when the CCP gov and their mouthpieces start being honest instead of propaganda and murdering of their own people.

Are you sure you want to state this as your basis for condeming China's decision to downgrade the USA's rating? Is any country, not just the USA, guilty of human right issues, dishonesty to towards it's people? Is ATS not filled enough for you with the way the USA Goverment (not the people) conduct's its shady business?. Or perhaps you think the US Goverment (not its people) are shining examples of how other goverments should aspire to.

Please enlighten us.

Originally posted by JBA2848
reply to post by predator0187

 

China now owns $1.16 trillion of U.S. debt. They don't own it all just part of it. Total foreign holdings of Treasury debt stood at $4.44 trillion. The US itself holds the rest.

Can you just begin to imagine a debt repayment plan, on junk status with that sort of debt held internationally?

Seen the news lately Greece, Spain, Israel, London etc...

This IMHO is the biggest single threat to everyone at the moment.

Rome fell you Know?

Seems hints of western capitilistic culture, and technocratic fundamental ones to are very much shifting a lot at the base, grass roots.

The smell Is certainly in the air?

Just dont know how far away the smell is.

kind Regards,

Elf.

reply to post by MischeviousElf


with everything i know (which I can put on a post it note) who is paying what back to who??

All the money is made up because its not backed by Gold anyone, who buys debt like that?

We owe the FED back all the money they print. So??? If we don't have a FED we don't pay them and pay everyone else. Sounds easy we could be done by lunch whats the big deal?

A bit of background from which to view this post:

This is not a new development but part of the ongoing collapse.

Those pretty green slips of paper in your wallet commonly known as U.S. dollars are Federal Reserve Notes. Bank scrip. The Fed can print as much of it as it wants or needs to. With this in mind, consider that fully eighty percent (80%) of U.S. Treasuries (U.S. government debt) sold in 2009 were bought by the Fed because there were no other willing buyers. factsnotfantasy.blogspot.com...

Then we have Bernanke an idiot Ivory Tower professor in control of the US monetary policy!!!

The Federal Reserve doesn't use real money (wealth) to BUY US debt. They create "money" out of thin air and then tell the tax payer that we OWE them that money they just created plus interest! It is the largest FRAUD/SCAM in the world! SEE: www.bigeye.com...


When the Bernanke doubled the US money supply it was done by banks LENDING the new money into the system. That is how "new money" is created in a fiat money system.

From the beginning of 1964 ($54 billion) a time while we were still tied to gold to the end of 2010 the bankers have made $1961.967 billion dollars in fiat currency! That is the amount they increased the money supply

The Average credit card debt per household is $14,687 this does not include education loans, car loans and house mortgages. 97% of the US money supply is now in the form of banks loans.- Interesting that the US dollar has lost 96% of its value since the Federal Reserve Act.


The Gross National Product over a short term can be viewed as a "Fixed" pie. By doubling the money supply the Fed has made two 2010 dollars represent one 2008 dollars worth of that "Pie". If I was China I would be royally ticked too, because the USA just cut the value of those bonds they hold in HALF! Americans also lost 50% of their saving they just do not realize it yet.

SO, WHY doesn't the USA have Hyperinflation???

Given we are stuck with a fiat currency and the FED more than doubled the money supply, why hasn't the USA seen hypeinflation??? I finally found a reasonable explanation.

...Given the previous hyperinflation, clearly there was ample reason for currency revulsion. So you can consider this argument a necessary but not sufficient precondition. What makes the universal acceptance stick is that government accepts its own money to expunge liabilities to it. In plain English, fiat money has value because it is the only money you can use to pay taxes. ....The fact that this money is also the medium of exchange only entrenches its use. So the tax liability is a necessary pre-condition for fiat currency to work, something I will return to....

[No wonder Amendment 16 - Status of Income Tax Clarified was Ratified 2/3/1913, a couple months after the Federal Reserve Act. cv]


Weimar Germany 1919-1923

The key to Weimar's hyperinflation was two-fold.

1. The German government had a large foreign currency debt obligation.
2. The German economy lost huge amounts of productive capacity causing prices to soar as demand outstripped supply....


Zimbabwe

While the facts in Zimbabwe are different, the underlying causes for hyperinflation were the same: foreign currency obligations and a loss of productive capacity.

Zimbabwe had established Independence from Britain in 1980. Yet, by the late 1990s 70% of productive arable land was still held by the small minority 1% of white farmers in the country. After years of talk about redistribution, in 2000, the President Robert Mugabe began to redistribute this land.

The redistribution process was a disaster, .... With agricultural production having plummeted, Zimbabwe was forced to pay to import food in hard currency.

Meanwhile, the government turned to the printing presses to fulfil its domestic obligations. as in Germany, the foreign currency obligations, the loss of productive capacity and the money printing was a toxic brew which ended in hyperinflation.

Hyperinflation in the USA, May 2010

As you can see from the two most severe cases of hyperinflation, the problem in each case was a loss of productive capacity, foreign currency liabilities, and a loss of the ability to tax....

In the German example, the Germans had a huge foreign currency liability that it had to pay, meaning it could not make good on the liability by printing money. It was a currency user as far as these liabilities went. Meanwhile, with productive capacity limited, the government was then unable to ease price pressure through the tax lever. The shortage of goods drove up prices inexorably and the government was forced to turn to the printing press in order to meet its domestic obligations.

In the Zimbabwe example, taxes were again central. Unable to recoup enough tax revenue and with large foreign currency obligations and a loss of productive capacity, the government resorted to printing money in an environment where prices were rising.

So, hyperinflation has very specific preconditions that are not apparent in the U.S..

1. No foreign currency liability: The U.S. dollar is the world's reserve currency so the U.S. can pay for trade goods in U.S. dollars.. The U.S. does not have a peg to gold or some other currency which acts as a de facto foreign currency liability. And the U.S. government has substantially no foreign currency liabilities. All of the debt is issued in domestic currency.

2. Price pressures are still anchored: While commodity prices are rising, they are rising in all currencies, not just in USD. Moreover, their rise will create demand destruction before any hyperinflation could occur. Why? Unemployment is high and capacity utilization is low, meaning there are no inflationary pressures on that front to help push inflation higher before demand destruction sets in.

3. Currency revulsion has not set in: Tax compliance is high in the U.S. We are not talking about Russia, Greece or Argentina where government has had a difficult time in raising tax. Moreover, as the USD is still the world's reserve currency, there has been no freefall sell off of dollars, nor do I anticipate any in the near-to-medium term.

In short, there will be no hyperinflation in the U.S. any time soon.... www.creditwritedowns.com...

The article states tax compliance is high in the U.S yet the Grace Commission Report to the President (1984) states"...one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken...." Now we have a 20% unemployment rate and the retiring of the baby boomers as well as a federal debt increase from fiscal 1983 deficit of $195 billion to over $14 TRILLION (Interestingly the report projected $13 trillion by the year 2000)

We can now add to that:
1. Those earning under $33,300/yr pay about 3% of the tax burden
2. High paying jobs have been shipped overseas leaving the USA with Store clerks and Burger flippers as the most common jobs and Kelly Temp services, Walmart, Mc Donalds, Target and Home Depot the big corporate employers.
3. The real unemployment rate is around 22% when you count in those of working age who have given up.



Other countries are not happy with the situation. The Russians, China and others are calling for a different world reserve currency than the dollar and have been for the last couple of years.

The OPEC oil countries are moving to the Euro instead of the US dollar, that is the real reason for the heating up of the middle east. The Real But Unspoken Reasons For The Iraq War

The bankers despite what they say believe in GOLD. So where does the USA stand in gold reserves???

The shocking admission Ft Knox holds very little good delivery gold was made to Mr. Durell by the chief official of the General Accounting Office (GAO). This happened a few months after the September 1974 tour.

www.lewrockwell.com...

WHO owns the gold still in Ft Knox??? Seems 66% of Germany's gold (3,400 tons???) resides in fort Knox!

Jim Rickards lays out a plan to commandeer Germany’s and all foreign depositors of sovereign gold at the New York Fed as currency wars heat up... maxkeiser.com...

Also China is amassing gold:

The Wall Street Journal reports Friday that gold prices are soaring to record highs as a new powerful factor has emerged as a driver of that rally — China.

According to the Journal, China is now buying huge amounts of gold ...
key data released by China’s state-run Xinhua news agency showing that China imported 209.7 metric tons of gold in the first 10 months of this year. That’s a five hundred percent increase compared to the same period in 2009... www.moneynews.com...

Jun 18, 2010 ... As the world's largest producer of the metal, China often buys gold from its own mines and doesn't report those sales publicly... www.businessinsider.com...

The People's Bank of China(PBOC) recommended yesterday that 1 billion Chinese consider buying gold as a hedge against inflation ; blogs.forbes.com...

Last is the "foreign currency liability" and "lost huge amounts of productive capacity" (Shipping jobs, whole factories and technology overseas)

In this chart negative represents an outflow of money and jobs.

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