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All Western countries stripped of AAA rating! [Copy link] 中文

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Post time 2010-7-14 07:31:43 |Display all floors
Chinese rating agency strips Western nations of AAA status

China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.

By Ambrose Evans-Pritchard, International Business Editor
12 Jul 2010

Dagong Global Credit Rating Coused its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

Meanwhile, China rises to AA+ with Germany, the Netherlands and Canada, reflecting its ?.4 trillion (£2 trillion) reserves and a blistering growth rate of 8pc to 10pc a year.

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.
Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

"The reason for the global financial crisisand debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.

The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

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Post time 2010-7-14 10:19:56 |Display all floors
Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

I could discover at least 5 western nations here with AAA ratings...

Anyway, coming back to the ones who lost their AAA rating:
France: I agree, I wouldn't rate the republic with an AAA either, considering their economy. UK is already a little more delicate, as they at least have an indipendant currency, but maybe you can also say you give them only a AA instead of a AAA. But the US? Sorry, but they are still the world's biggest economy and the possibility, that the US government suddenly can't pay back is close to zero, as they could just ask for a little higher taxes if things get tight. Thus they are definitely a AAA. However, the most ridiculous thing is that they give China a AAA but Germany, which has a very similar structure, only a AA. The same accounts for Japan. Germany and Japan are with China among the world's biggest exporters and need to invest. So the probability that they can't pay back is very low, as their economies are already saving money.

That's why I believe this whole thing to be highly politically motivated.

From an economical point of few, it's obvious that the markets need more independent ratings, so the Dagong rating is generally a good idea. But a rating should be reliable and this rating is as unreliable as all the others are, so I don't think many investors are going to trust it.

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Post time 2010-7-14 13:17:52 |Display all floors
# 2

The ratings seem fair, just and reasonable and are certainly not politically motivated.

China isn't rated AAA  but AA+.  It says:  quote  Meanwhile, China rises to AA+ with Germany, the Netherlands and Canada unquote

What I miss is the rating for Sweden which deserves to be among the top countries.

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Post time 2010-7-16 13:18:17 |Display all floors
It's all political. Seriously, if you wanted to realistically rate the US it should be much lower because they will never be able to pay back what they borrow. But countries that lend to the USA  (China) know that and lend because they know the USA will just use that money to buy products from them so it doesn't matter.

As for China's rating, I wouldn't raise it, China's future is incredibly cloudy right now, Yeah they have lots saved but their people need jobs, their RMB needs raising, both of which are in direct competition with each other, they have a very old and getting older population with no nearly enough people to take care of them, and a housing market that is out of control. China has a LOT of problems in it's future and I hope it can solve them safely!

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Post time 2010-7-16 21:42:13 |Display all floors
Originally posted by totothedog at 2010-7-16 16:05
Stacy Herbert: "And one of the problems the chinese officials have with the Western ratings agencies is that China's debt is rated lower than many other countries and thus causing their borrow ...

Beautifully said Toto, but so very true on top of it

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Post time 2010-7-16 23:31:37 |Display all floors

i would give the usa a rating of c.

alot of americans would give usa a rating of c.
you can check out peter schiff and he will explain this. jim rogers has also shifted his money into rmb because he has no conficence in usa. something interesting is that alot of the people betting against the usa are right wingers.

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Post time 2010-7-17 05:24:52 |Display all floors

the west always blinds the east with science...

it's time for china alone to against all odds; make em understand & back off  

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