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China Downgrades US Again, From AA To A+, Outlook Negative, Sees "Long-Term Recession", Blasts QE2, Expects Creditor Retaliation
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):
h/t Pedro
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Hi Ho Silver! Away!
Its the end of the world as we know it.
Am I the only one who doesn't feel fine?
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.
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.
"Its the end of the world as we know it."
and I feel fine.
Stipe is nuts, so his opinion doesn't count. And that's ok.
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.
Feel free to go all in short.
Reap your reward for being so smart or stupid.
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?
$35? Shit, I would be orgasmic over $350! Give me a chance to buy a whole lot more!
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.
Put your money where your mouth is and start selling treasuries already.
Maybe they're waiting for the JUMBO POMO's to begin!
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.
whatever happened to this?
http://seekingalpha.com/instablog/420590-marli/8420-did-the-japanese-try-to-dump-135-billion-in-us-bonds-on-the-black-market
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.
i.
Yeah, always thought that was an interesting one. Would make a nice little documentary. Can you give me a link to this site? Thanks
You asked for it.
http://www.edwardharle.com/news
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.
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.
seems that way
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.
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.
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.
You know the world is upside down, when the Chicoms are on the leading edge of bond rating.
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.
How bad is it going to be, Daddy?
"Every thing's going to be fine Honey. Daddy would never let anything bad happen to you."
Well as long as it's decomposing it will float, once it stops their dead too.
Agreed.
But kick the can is the only game in town.
That´s the right answer for stupid beyond all imaginations FED governors-especially Bullard. Did this guy ever attended primary school ?
"indicating the decline of the U.S. government’s intention of debt repayment."
can something that does not exist lose value?
Yes it seems value is just in the eye of the beholder....as things that used to be SCOFFED at as valuable suddenly shoot up in demand....PM's, ammo, weapons, food...all going parabolic.
Weaponry still a good buy, especially those durable AK variants.
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.
Yeah, food. Frankly, the world's food production system scares the shit out of me more than anything else
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.
you'd be amazed what size you can get done in the swaps market if you are patient...
Indeed.
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.
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?
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!
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.)
Buzzsaw lulz frequently.
Shadenfruade bitchez!
(can't spell German so much...)
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?
LOL
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.
LMAO
Heh heh heh..
Why not just stick the Obama logo on it? His Believers will feel better seeing the mark of their savior...
;o>
.
...said our largest creditor and deficit trading partner.
I'm taking this one with a big grain of salt (or in this case, MSG).
This is it. NICE.
China downgrading the debt they own probably makes them wish they hadn't played mercantilists with a country that prints the trade currency. Maybe China man not so smart.
OR....they have us RIGHT where they planned to have us ALL ALONG!
Forgive me for stating the obvious but why do we still have AAA ratings from Moody's, Fitch, and S&P? Hee hee...
Even China's rating of the US is INFLATED at A+/outlook negative. 'careful not to crash those bonds before selling them...
Paraphrasing Admiral Josh Painter from Hunt for Red October...
(ChiComs) don't take a dump, son, without a plan.
Siege is the worst way to defeat an enemy. But in the end, as Georgy Zhukov said when confronted by Western journalists post-WWII and the larger number of Russian soldiers lost in battles vis-a-vis the Nazis: perfect is the mortal enemy of quite good enough. China will take the victory even if it means it is holding a bunh of worthless treasuries.
Hmm.... so this is what happens, if you f*ck with your creditor. Interesting!
Now we at least know that the Chinese are mad. Does it actually matter?
Maybe.. seeing how they have nukes, more warships, and a hell of a lot more manpower than us.
Nukes appear to be equal opportunity items worldwide:
http://www.guardian.co.uk/world/2010/nov/07/nuclear-material-black-marke...
It's all gunna crash and burn one of these days... Sure wish I could buy more ABK.
Hmmm stocks seem to LOVE it!! LOL Bizarro World deluxe.
damn them chinamen. cancel them 65,000,000 ship loads of plastic crapolas I had ordered. I'll find a non-uppity Vietnamese to make it fer me instead. they'll rate our FED money AAA.
And where are the Vietnamese going to buy the raw materials and components to make all your crapola? The Vietnamese cannot make crap unless everything required to make the product is shipped into the country. Funny thing is much of it has to come from China....
ni hao, bitchez
"In essence, the U.S. government's move to devalue the dollar indicates its solvency is on the brink of collapse".
"In essence, the U.S. government's move to devalue the dollar indicates its solvency is on the brink of collapse".
The tension caused by our USGovt insanity is now palpable in the most powerful places of the world.
Anyone who has not hedged their FRN/USTreasury exposure is going to be very, very sorry in the months coming ahead...
I think I saw a movie where the Chinese were overwhelming a U.S. position during the Korean War and the U.S. commander called an air strike on his own position. Maybe this is what Bernanke is doing. You want to be paid? Take these worthless dollars, sucker.
That only speeds up the demise of the US. You can't just devalue your currency with ONE creditor nation - it would be across the map.
I'm reminded of how the US destroyed the USSR; an expensive arms race that we could afford and they could not, because we could print the global currency and they could not. You can say all you like about the fall of the USSR, but that's the usual story. Reagan did it, did it deliberately, and it worked. We're still paying the bill of course and the RBN is doing really well and might pwn our butts someday, so "worked" is a relative term.
Act II: China Syndrome. We don't have to do great if China does extremely shitty and dies before we do. Our balance sheet would look really great if China came completely unhinged and imploded, allowing us to skate away.
Though we'd still be stuck with another bill. They'll have to inflate that away I guess. Going to be a bumpy ride.
+1
Chosin Reservoir
It is obvious that China & the US struck a deal at the conference in Japan over the weekend & that it will play out thus: The US et al will make no substantive move against China at the G20 and China et al will make no substantive move against QE2.
That said, now both sides have to bluster to appear "honest".
The net result will be a weaker dollar & China doing as it wishes.
+1. Agreed.
The exchange was reported in Bloomberg & frankly, I thought it (& it's ramifications) was the biggest news story in the past couple of weeks, but no one else picked up on it.
mysterious missle launch last night off the US west coast:
http://www.cbsnews.com/stories/2010/11/09/national/main7036716.shtml?tag...
George Ure is wondering if it might be China. crazy tinfoil? perhaps, but gold & silver is telling us something well beyond QE2.
I saw that article too. Very strange really. The Navy was quick to deny any launch. Well, if it wasn't the U.S. Navy launching from a sub, which Navy was it?
The above event is more than a wee bit disconcerting after just reading One Second After.
http://www.amazon.com/One-Second-After-William-Forstchen/dp/0765317583
It was nothing more than a jet contrail. Happens frequently and depends upon angle of view and lighting.
We all know that is not true. I pray that your cruel statement will not achieve its intended result.
This submarine launched ICBM is a ransom note. Plain as day. The negotiations, like all ransoms, are being conducted in secrecy.
Not cruel. Here, read this: http://contrailscience.com/a-problem-of-perspective-in-the-oc-new-years-...
Clearly a jet contrail. No question about it.
Fine to read Harry's site and watch the video before making your own decision, but then make sure you read this, too, friends.
http://www.onesecondafter.com/pb/wp_194d9c9d/wp_194d9c9d.html
If that was a jet contrail they better be looking for it to see if it had a rocket strapped to its ass becouse there is no dought that that was rocket propelent not jet fuel spewing out. 6 year Navy vet here and I've seen my share of rockets and jets and the only plane currently in the inventory that uses rocket assest is the C-130s and they only use them for take off from short runways and that was no C-130. If the US Navy does not come out and clame this as one of there own Obama is going to have some explaining to do when/if he gets home.
My guess is it landed in very deep water (Marianas Trench?) to drown the smell of kimchi.
In what I am not so sure is totally unrelated news, Carnival Cruise liner off of So Cal loses all power yesterday and needs to be towed in: http://www.cbsnews.com/stories/2010/11/09/national/main7037086.shtml?tag=topnews
And also two Nuclear reactors are shut down within a half hour of each other:
http://homelandsecuritynewswire.com/two-nuclear-reactors-shut-down-sunday-because-problems
This tinfoil PASGT is starting to feel more and more comforting.
Oh Harry harry boy,
STFU! Seriously, I'm so sick of you fucking shills. Karma is a motherfucker asshole! Your eventual payback will definitely be in spades. Put that in your pipe!
Ransom note from whom? the good guys or the bad guys?
No wait...there aren't any good guys left.
harry, i see dozens of contrails a week from my vantage point on my roof. UNLESS they're speeding up the video and playing around with after effects (see that orange glow in one of the shots), that was no jet. with that said, i would like to hear some eyewitness reports just on the odd chance that a local TV station is digitally manipulating 'reality' for whatever reason.
If you look at the still photos from the site of the contrail it is very different from what the "news" shows. So, perhaps the news did manipulate the video to make a story out of nothing.
Nice try. But it's easier to manipulate a still image than a video.
Missile. Of some kind. Get over yourself.
And my son came in just after dark in No. Cal and reported seeing 2 stealth bombers flying overhead? I thought he was seeing things, however it was about the same time...just before dark???
There were Apache helicopters flying all around Houston last night. I saw two myself.
Ellington Field. Texas Army National Guard. They train around Houston (even above downtown) very regularly.
Is he Air Force Reserve or Mil-Int? Professional pilot? Would he know a bomber of any kind if he saw one? Some people would think a private jet casting itself in shadow would qualify as a stealth bomber. Just say'n
h/t pedro
thanks pedro, what else u got for us?
Time to foment a war.
War with China, whether over Taiwan, North Korea, or in the Pacific; even a limited naval incident - would be reason to rescind our "debts" to them.
Problem solved.
No, I don't think this is a good idea, but it is I'm sure part of the contingency plan.
I guess their models allow negative numbers.
With the first down grade by Da Gong agency I told many of my friends living here in China that, "It's the first shot across the bow of a trade war."
The response was such that I was obviously a dim wit, "Da Gong aint no US credit rating issuer so pull your head in."
The subtleties in the Chinese approach are missed by many. I know from bitter personal experience, first they give you enough rope........
Time to start selling those crotch shots of Paris and Britney instead of giving them away for free on the internet. Then we can even out the trade balance and have some good things start happening. Short of that, I can't think of any way the U.S. can compete with a nation of a billion people whose youngsters actually believe in learning and building rather than sucking and f___ing for a living.
Who the heck is DA GONG? Is that the dude from the GONG show?
Man with fly down have problem with gong showing...
HAHAHAHAHA!! Just made my day!
Fan, meet shit:
Tyler,
You always maintain your civility of introduction. English breeding? Charm school?
Does anyone remember the fretting that went on in the Summer of 2008 over the GSEs? Pulled the wool over on that close call eh? Now, look what is coming back around.
The US is about to learn just how hard it is to fuck a Chinaman.
WBInfinity: Born 198_ Died 20__
Artistic talent and word smith, caring individual, frequent contributor of: −459.67°F Bush (formerly Zero Hedge).
0-700 in attempts to have sex with a Chinaman. Passed on this information freely November 9, 2010.
What got the DXY positive?
well China get ready to see a lot more of our warships in the South China Seas.
China got nukes correct?
And they have more warships than us.
And we can't detect their subs, even when they are within striking distance of our carriers.
U.S. playing this card while it still can support its military. Don't have to pay debts if you're the biggest bully on the block. Just ask Tony Soprano.
I think anyone who thinks we now go and bully China around militarily has their head in the clouds. Or someplace far more stinky. I just left the US Navy, the Chinese now routinely surface their new subs (the ones we cant detect) right in the center of US carrier groups, much to admirals and top brass' surprise.
This idea we go boss around China with our military is a desperate pipe dream, far from reality.
++++ Exactly right.
You'd think the collective US boner for their military would have been stunted a bit by our inability to subdue a "buncha pissed off ragheads with AK 47s and a few RPGs"
You are right about Chinese subs, too. I spent some time operating in that area - Japanese subs are equally proficient. Diesels are undetectable.
I find it funny how we concede that they have "caught up" making all sorts of things but deny that they could produce a competitive military
Well that sucks!
You're serious? So much for cowering Chinaman, eh?
Eat shit China. Big helping on the way.
blow-off top in silver? Commodities in a bubble? Gold is not money, but is accepted as collateral? Right. How many times do the "precious metals are in a bubble" crowd have to be wrong before they shut up??? Will metals always go higher? No, but wither will stocks, psst, look at the 10 year return on the S&P 500. However, silver is in demand, industrial and investment, with the Fed printing like madmen, this is bullish for silver, but all metals will benefit. Get a clue man. Just because you missed the ride you want to talk down metals, that ain't my fault. Hell, I missed the ride in Amazon.com, but do you hear me whining about it? No, because I am up 120% in silver, dumbasses.
You mean we can't print monopoly money to pay-off our debt!
Ponzi coming apart at the seams.
I may be interesting to watch if the Fed directly buys China's UST as part of QE2. Even a de minimis change in China's exposure would signal an important move. Yet, China sells us stuff and we give them more paper. Priceless.
Business Insider calls Dagong "rogue rating agency" in their headline
http://www.businessinsider.com/dagong-downgrades-us-credit-rating-2010-11
My Lovely Chinese please do not play with the LION TAIL!!!
LOL dream on.
"Shit meet fan."
Hardly. Another meaningless "downgrade" of debt by the fools who keep buying it up. Haven't you guys learned by now that this type of rhetoric has been going on for decades?
"well, it's on, ladies and gents."
What's on, the same bullshit rhetoric that we've heard forever? Come on. You know this is meaningless as does the market.
'This rhetoric has been going on for decades'? Liar. Nothing like this has been going on at all.
Is this a bad time to sell China some more of our MBS. Fannie and Feddie are good for it.
If you don't read Zerohedge then you don't even know that this happened, so how could there be a reaction?
No offense but it's sort of like a National Enquirer story. Did you read that report? It's nothing but silly rhetoric and meaningless. A non-story. That's why you won't read it anywhere else.
Now the 800 pound gorilla goes ape shit on bendover/tiny timmy before the goonzi20 even begins in Seoul! Perhaps the porkin U.S. pigmen feeding at the trough of U.S. citizens are in for a real bitch slappin! Don't think a new shade of lipstick goon-a keep China from ape shitting all over the dead head fed U.S. harbored goons!!!
Yep, and basically the entire White House and thousands of entourage are over partying in sub Asia or wherever, no one really knows why....I think all this was known beforehand and staged. Setting up for a big conflict.
Remember this :
http://rawstory.com/news/afp/China_s_development_strategy_shift__0518201...
US Treasury Secretary Timothy Geithner said Tuesday that export-driven China was shifting its development strategy to rely more on domestic consumption, a move he described as "encouraging."
Let's get real. China's rating is purposeful, to make Bernanke think twice about QE2. They are not the only ones complaining either and the upshot is that Uncle Bengie may have to backtrack a bit on his "endless printing wet dream."
Note the stock markets at a standstill for two days now, gold, silver and other commodities skyrocketing, condemnation from all sides against Bernanke. The Dagong downgrade is another knife-wound to the Fed, which is well-deserved, and then there's the coming shit-storm from Rand Paul, Mike Lee and the Tea partiers. Check out the PBS Newshour, where Lee says explicitly he will vote against raising the debt ceiling and Rand Paul's comment about cutting federal salaries by 10%, followed by Jim Demint saying government workers make 50% more than the private sector..
http://www.pbs.org/newshour/bb/politics/july-dec10/teaparty_11-08.html
Bernanke's goose be cooked, bitchez!
+1
Monetization = default. Creditors are not going to take it sitting down.
Here's a little piece of the transcript from the video. Nice!
CHRISTIANE AMANPOUR, host, "This Week With Christiane Amanpour": Give me one specific cut, Senator-elect.
RAND PAUL: All across the board.
CHRISTIANE AMANPOUR: One significant one. No, but you can't just keep saying all across the board.
RAND PAUL: Well, no, I can, because I'm going to look at every program, every program.
But I would freeze federal hiring. I would maybe reduce federal employees by 10 percent. I would probably reduce their wages by 10 percent.
Paul puts up a no brainer. It is the only fair austerity solution. How can they squawk about this.
Boring... Nuke Washington DC, then put signs everywhere saying "We are here to help" or I turn the channel. Over it.
In my view, the main take away from this is the amount of pressure being applied against any further monetization. It will be very difficult for the FED to continue its policy ... and its not just the Chinese who are pissed. Its most of the world and many domestic critics. QE will be limited, de-leveraging will continue, IMHO.
It appears Geithner's last trip to China did not go very well.
Then downgrade China, or bring up the human rights issues that keep on being swept under the rug.
Human rights??
Iraq, Afghanistan = mass murder, war crimes, crimes against humanity.....
The US has been pumping weapons and money into the Chinese and Iranian hinterlands attempting to trigger multiple civil wars. What if China decides to cause mischief in our thiefdoms around the world? Won't be pretty....
Just received an email from a friend who wrote an email :
TO MOODY´S, S&P and FITCH :
Gentlemen,
I don´t know what you are doing the whole day long . At least there is ONE CREDIBLE rating agency out there realistically is downgrading the sovereign debt of the US of A.
Maybe you want to stand up from your chairs and start doing your job ! Your credit ratings are not worth anymore the paper you are writing it on !
http://www.dagongcredit.com/dagongweb/uf/USARatingReport.pdf
Just a bunch of bullshit...China steals wantonly, respects no IP...downgrade them to D-
Thanks for this report. It provides a macro-economic view on what is going on and how it affects businesses large and small including custom web design companies.