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China Credit House: US Already Defaulting

From the Agence France-Presse:

China ratings house says US defaulting: report

June 10, 2011

BEIJING — A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

"In our opinion, the United States has already been defaulting," Guan Jianzhong, president of Dagong [sic] Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said

He’s right, you know. And, as we have said before, it’s the same thing the Weimar Republic did to try to get out from under the war debt from the Treaty Of Versailles. And we all know how well that turned out.

The US government will run out of room to spend more on August 2 unless Congress bumps up the borrowing limit beyond $14.29 trillion — but Republicans are refusing to support such a move until a deficit cutting deal is reached.

Wouldn’t raising the borrowing limit weaken the US dollar even more? Which, by China’s logic, means defaulting even more? So why bother?

Ratings agency Fitch on Wednesday joined Moody’s and Standard & Poor’s to warn the United States could lose its first-class credit rating if it fails to raise its debt ceiling to avoid defaulting on loans…

Because the best way to get a good credit rating is to just keep raising your limit, even though you are already the biggest debtor on the planet. That should be plain to all.

China is by far the top holder of US debt and has in the past raised worries that the massive US stimulus effort launched to revive the economy would lead to mushrooming debt that erodes the value of the dollar and its Treasury holdings.

And they were right, of course. But then again, the Chinese probably don’t understand how hard it is for the Democrat Party to buy votes otherwise.

Beijing cut its holdings of US Treasury securities for the fifth month in a row to $1.145 trillion in March, down $9.2 billion from February and 2.6 percent less than October’s peak of $1.175 trillion, US data showed last month.

Yes, we remember all the headlines about that. Just kidding, of course. Our media watchdogs don’t want us to hear about that.

Besides, this begs the question, if we do raise our debt limit whom are we going to borrow from?

Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt "effective measures to improve its fiscal situation"

Measures such as cutting spending, and not increasing our debt limit, which will just lead to more spending.

This article was posted by Steve on Friday, June 10th, 2011. Comments are currently closed.

5 Responses to “China Credit House: US Already Defaulting”

  1. richb says:

    The AFP says “China is by far the top holder of US debt…”

    What, the Federal Reserve doesn’t exist?


    How much AFP spin are we supposed to stomach?

  2. GetBackJack says:

    Boy, you’ve really jumped the shark when COMMUNISTS start lecturing you about fiscal restraint.

  3. Liberals Demise says:

    Maybe we should seek a loan from Hamas or Hezbella. Hell, they will never repay what we’ve loaned them.
    Never mind…….this is all a HNIC Obamao scheme to undermine the people of America. To diddle dick us into Third World poverty.

  4. Anonymoose says:

    I remember when the stimulus bill was passed and the “cash for clunkers” program was going full steam one of the political cartoons was showing a tiny, shrieking republican going on about how much money it cost, and a tall, heroic UAW worker marching into a factory saying, “Yeah, but it’s putting me back to work!” That cartoonist’s attitude is exactly what’s wrong. It was “good” because the Democrats were behind it, but it was still just borrowing ever more money we don’t have. I’m sick of this, the never ending doom and gloom, the idiots who can’t manage their own bank accounts managing the budget. When will this ever end?

  5. bobdog says:

    Well, of COURSE we’re defaulting on our debt. Otherwise, we might have to stop spending like there’s no tomorrow, or raise taxes like there’s no tomorrow. Because, as far as Democrats are concerned, there IS no tomorrow. Their world ends next November. They’ll just leave the dinner check on the table.

    For their part, the Chinese should be grateful we didn’t simply devalue our currency all at once, like a banana republic. At least we’re polite enough to monetize our debt slowly, although the result is the same.

    Don’t these folks feel any gratitude at all?

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