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China Credit Agency Head Calls Our Bluff:
Topic Started: Jul 24 2010, 05:43 PM (268 Views)
Baldo
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"The US is Insolvent and Faces Bankruptcy as a Pure Debtor Nation but [U.S.] Rating Agencies Still Give it High Rankings"

The head of China’s largest credit rating agency has slammed his western counterparts for causing the global financial crisis and said that as the world’s largest creditor nation China should have a bigger say in how governments and their debt are rated.

“The western rating agencies are politicised and highly ideological and they do not adhere to objective standards,” Guan Jianzhong, chairman of Dagong Global Credit Rating, told the Financial Times in an interview. “China is the biggest creditor nation in the world and with the rise and national rejuvenation of China we should have our say in how the credit risks of states are judged.”

On the corporate side, Mr Guan argues Moody’s Investors Service, Standard & Poor’s and Fitch Ratings – the three companies that dominate the global credit rating industry – have become too close to the clients they are supposed to be objectively assessing.

He specifically criticised the practice of “rating shopping” by companies who offer their business to the agency that provides the most favourable rating.

In the aftermath of the financial crisis “rating shopping” has been one of the key complaints from western regulators , who have heavily criticised the big three agencies for handing top ratings to mortgage-linked securities that turned toxic when the US housing market collapsed in 2007.

“The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests,” Mr Guan said.

Recently, the rating agencies have been criticised for being too slow to downgrade some of the heavily indebted peripheral eurozone economies, most notably Spain, which still holds triple A ratings from Moody’s....snipped

http://www.ft.com/cms/s/0/5632a0b8-94b7-11df-b90e-00144feab49a.html


What can we say? Congress & Obama are blowing money like crazy mad, don't have a budget, and we are 13.2 Trillion in debt whereas they have surplus.

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MikeZPU

We are in deep trouble BUT the US press continues to hide
bad news from the citizens of this country to shield Obama.
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Baldo
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Interesting comment about this article was posted in ZeroHedge. Of course I can't verify its accuracy but it brings up an issue. I know our technology is rapidly moving east. GM is now more profitable in China and their design center is being used as a major contributor even for US cars, and many of our largest companies are operating in China or the Far East. Apple makes many of their products there as does Cisco, Dell, etc. Boeing has transferred aircraft "wing" technology. Michael Crichton's book, "Airframe", warned about that trend way back in the mid 90's when the Clinton Administration allowed some of our technology to be transferred to China.

Even Brodhead is expanding Duke into China.

Our we being sold out by our Politicans & Big Boys?

I used to work at one of the world's largest and most well respected (if not most well known among the general population... they do not advertise) asset management firms based in the US with offices worldwide.

One of the reasons I left (there was more than one) was that I became disillusioned. How can such a great group of investors, economists, and political analysts, get things so utterly and completely and (to me) obviously wrong?

I have now moved to Asia and am working at one of the largest asset managers in China. I am a caucasian California kid. I grew up in the valley. Spicoli is one of my all-time favorite movie characters. But I want my 5-year old daughter growing up speaking Mandarin because that is where the economic (and probably military) power will be 20 years from now.

I pretty much agree with the premise of your article. It is one reason I moved to China. However, I have one small issue with one small comment:

"What's scary is that our biggest creditor knows it."

Now why would you think China doesn't know this? Most of the intellectual brain power today resides in China. Not the US. There is a serious reverse brain drain going on now. I'm part of it, but several of my friends, who are professors at University of California campuses are also moving to Asia. My PhD advisor from a top (the top) US university is now dean at a university in China. Several of my clasmates have moved back to China.

The scary thing is that people in the US and Europe grossly underestimate the knowledge and skill of the people (Chinese) they are competing against.
http://www.zerohedge.com/article/china-calls-our-bluff-us-insolvent-and-faces-bankruptcy-pure-debtor-nation-us-rating-agencie
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Mason
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Parts unknown
.
There are very serious issues in our near future.


The AP wrote a article on Geithner (in the last 48 hours) saying he was against continuation of the Bush Tax cuts for the rich (in their parlance).

The article addressed the deficit, America's financial future, and Obama's debt/deficit commission - I had to do a word check (word find) to believe it - the word "Spending" is not in the article.

.
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Baldo
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I always thought it strange that Geithner was appointed Sec of the Treasury as he was head of the NY FED Bank where the worst happened under his watch in the banking insitutions on Wall Street.

But I guess they had to keep the insiders boys in charge as is Larry Summers, Director of the White House's National Economic Council for President Obama.

I don't trust Obama nor his Treasury and economic advisers.


Edited by Baldo, Jul 25 2010, 07:41 PM.
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