China Downgrades US Again, From AA To A+, Outlook Negative, Sees "Long-Term Recession", Blasts QE2, Expects Creditor Retaliation

Tyler Durden's picture

With apologies for the Zagat-style headline, but, well, it's on ladies and gents:

Dagong has downgraded the local and foreign currency long term sovereign credit rating of the United States of America (hereinafter referred to as “United States” ) from “AA” to “A+“, which reflects its deteriorating debt repayment capability and drastic decline of the government’s intention of debt repayment.

The serious defects in the United States economic development and management model will lead to the long-term recession of its national economy, fundamentally lowering the national solvency. The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S. Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government’s intention of debt repayment. Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation. On the contrary, it is likely that an overall crisis might be triggered by the U.S. government’s policy to continuously depreciate the U.S. dollar against the will of creditors.

Full report (pdf):

Dagong US

h/t Pedro

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juangrande's picture

Hi Ho Silver! Away!

Fish Gone Bad's picture

Its the end of the world as we know it.

Gene Parmesan's picture

Am I the only one who doesn't feel fine?

OldTrooper's picture

No.  It's pathetic that we have to get real news on the state of our economy from the commies.  Welcome to the Matrix.

A+, Outlook Negative -- They are being generous.

duncecap rack's picture

I thought they were being generous too. When I read it it seemed like they made a pretty good case for BBB. My favourite line was saying QE 2 was analagous to drinking poisin to quench your thirst.

Revolution_starts_now's picture

"Its the end of the world as we know it."

and I feel fine.

Cruel Aid's picture

Stipe is nuts, so his opinion doesn't count. And that's ok.

Whizbang's picture

Hi-Ho parabolic blowoff in silver! Away! The good news is that you can now buy precious metals with only 25% down!

Nothing to see here, no bubble in commodities happening at all right?


Also, you should know that this downgrade is nothing more than some petulance from the chinese 'people' because obama is pushing to allow india onto the u.n. security council.

tmosley's picture

Feel free to go all in short.

Reap your reward for being so smart or stupid.

Shameful's picture

Where can I buy physical for 25% down?

Also have to agree, feel free to short silver/gold. Maybe it's not a bubble in commodities and the bubble that is the dollar deflating. But hey I could be wrong, gold back to $35 an ounce?

goldsaver's picture

$35? Shit, I would be orgasmic over $350! Give me a chance to buy a whole lot more!

Turd Ferguson's picture

Btw, Rand Paul was on GB this morning. Regarding the debt ceiling, he said he'd vote "no" on raising it but he expects it to pass. Signals he will not filibuster.

Ragnarok's picture

Put your money where your mouth is and start selling treasuries already. 

Minion's picture

Maybe they're waiting for the JUMBO POMO's to begin!

Ragnarok's picture

I hope so, plus we don't know if the number of bonds they are holding is accurate.  They may have already sold a large portion.

illyia's picture

HA! Almost forgotten.

Apparently they were "bearer bonds" meaning that whomever has them owns the loot. But they were rendered illegal (to produce more of) long ago. These were left overs but still legal tender. They were possibly part of a postulated dollar refunding program that was sponsored by China and the English Queen but nixed by Geithner et al. Apparently the FedTreas wanted control of the funds for themselves.

The guy who reported on these things died last July under mysterious circumstances and accused USoA Ops of doing him in in his last post. He was a fine man.

He was an upstanding English gentleman who had been slandered for his reporting of, what he then called, the derivatives "Octopus" - or the "Financial Carrousel" - foreshadowing Matt T's later Vampire Squid.

We will never know all of it. But the Japanese incident was an attempt to cash in on old collateral. We may hear many rumors of like incidents in the future. Unlikely we will ever hear the real news...

If you have certain security systems they will block the deceased reporter's site. However, his archives are still up - last I checked - except for the last post... that one was removed.


DaveyJones's picture

Yeah, always thought that was an interesting one. Would make a nice little documentary. Can you give me a link to this site? Thanks

illyia's picture

You asked for it.

Last post (snippet of archive) 7-10-10: He died four days later 7-14-10.

A detailed report on this assassination attempt and the horrible illness inflicted on the Editor as a consequence will be published as soon as feasible.
We now have proof that the CIA/MI6/Obama/Bush/Cheney issued an assassination order against this Editor. We have proof that they are surprised that the Editor is not dead.

truont's picture

I think that China is being smart about their move out of Treasuries.

I think they are trying to directly swap their Treasuries for hard assets/commodities/companies/strategic resources around the world.

They don't want to spook the Treasury market just yet--they are working on their escape plan.

AbandonShip's picture

Absolutely.  They need to exit quietly so as not to move the price against their large UST position too quickly. Hard trick to pull off.

SheepDog-One's picture

Exactly, China is dumping treasuries, probably at a good discount, in order to stock up on commodities. When the trade becomes a wash for the Chinese then its on. But they are quietly getting rid of their US Treasury debt no doubt.

Vampyroteuthis infernalis's picture

I believe that is what Bennie wants. To chase all foreign creditors out of the UST market including China. Defaulting on your own citizens is much easier than a foreign nation.

kaiserhoff's picture

You know the world is upside down, when the Chicoms are on the leading edge of bond rating.

Cognitive Dissonance's picture

This has everything to do with them climbing on top of the dead and decomposing body of America in order to save themselves from drowning.

Cognitive Dissonance's picture

"Every thing's going to be fine Honey. Daddy would never let anything bad happen to you."

Running on Empty's picture

Well as long as it's decomposing it will float, once it stops their dead too.

Cognitive Dissonance's picture


But kick the can is the only game in town.

MrTrader's picture

That´s the right answer for stupid beyond all imaginations FED governors-especially Bullard. Did this guy ever attended primary school ?

DaveyJones's picture

"indicating the decline of the U.S. government’s intention of debt repayment."

can something that does not exist lose value?

SheepDog-One's picture

Yes it seems value is just in the eye of the things that used to be SCOFFED at as valuable suddenly shoot up in demand....PM's, ammo, weapons, food...all going parabolic.

ZakuKommander's picture

Weaponry still a good buy, especially those durable AK variants.

SheepDog-One's picture

Still a good buy yes...but I harked way back to the good ol days (3 years ago) where you could buy an SKS and 1,000 rounds for $100. Look at an SKS today, $350 or so, and the ammo has tripled.

DaveyJones's picture

Yeah, food. Frankly, the world's food production system scares the shit out of me more than anything else

vote_libertarian_party's picture

They have so much to learn.


If you are holding a massive amount of an asset (Treasurys) and you think they are junk but you want to sell then you tell everybody they are a BUY BUY BUY.

A Man without Qualities's picture

you'd be amazed what size you can get done in the swaps market if you are patient...

lolmao500's picture


As many analysts said, they should have started buying stuff with their US dollars a few years ago and be done with US dollars by now.

Now they are just committing suicide.

tmosley's picture

I guess you didn't hear about how they have been acquiring gold on the sly for years, or where they have been buying up commodities and producers worldwide?

SheepDog-One's picture

Yes but those who were warning of China and others acquiring gold on the sly years ago were called 'consipracy kooks' 'tin foilers' as 'all was well' and the economy = A-Ok!

SheepDog-One's picture

OH now the Chinese should have listened to the US economists who have of course gotten everything right all along? LULZ!!

(Maybe the first time 'LULZ' has ever been used on Zerohedge before, but oh so fitting.)

JohnG's picture

Buzzsaw lulz frequently.

Shadenfruade bitchez!


(can't spell German so much...)

packman's picture

Odd - there's no header or source information on that paper.  Not that I doubt it, but shouldn't there be some official-looking header page and such, indicating what is the source of the info?


LMAO's picture


Some official-looking header page = credibility

Like in the logo from: "Board of governors of the federal reserve system"

and the document beginning with: "We the people"


If you see anything resembling an official-looking header you know you are in trouble and you better start running.


Mariposa de Oro's picture

Why not just stick the Obama logo on it?  His Believers will feel better seeing the mark of their savior...


macholatte's picture

I Am Jack's Complete Lack of Surprise

Agent P's picture

...said our largest creditor and deficit trading partner.

I'm taking this one with a big grain of salt (or in this case, MSG).