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China Proves The Best Time To Kick A Rating Agency Corpse Is Right Before It Stinks Up The Place

Tyler Durden's picture




 

Last night we referenced an article by the WSJ which essentially confirmed that the death knell for the rating agencies is being rung. Today, China proves that the best time to kick a body (or a rating agency) is just after it has been shot in the back of the head and before it is begins stinking up the place. And in doing so, it has officially put a stake in for the role of primary global credit rater, citing China's unique role as the world's primary creditor. Of course, if that were to occur, the US rating may promptly be impacted just a tad more than the record 2 Years and just below record 10 Years would suggest is agreeable. As was posted previously, Dagong already issued a rating grid in which China, not at all surprisingly, came on top of both the US and UK, neither of which has any possibility of paying back the trillions and trillions of debt accumulated over the years. Now whether China would be willing to suicide itself and junk the US, is a different question.

More from Dow Jones:

Guan Jianzhong, head of China's biggest credit rating agency, blames his Western counterparts for the global financial crisis and says China, as the world's leading creditor nation, should have a greater say in how sovereign debt is rated, the Financial Times reports Wednesday.

Rating agencies such as Moody's Investors Service, Standard & Poor's and Fitch "are politicized and highly ideological and they do not adhere to objective standards," Guan, who is chairman of Dagong Global Credit Rating, said in an interview on the U.K. newspaper's website.

He also argued that the three big Western agencies are too close to the corporate clients they are supposed to be assessing objectively. Echoing a complaint from regulators in several Western countries, Guan singled out the practice of "rating shopping" by companies who offer their business to the agency that provides the most favorable rating.

Guan said his privately held, 16-year-old company's methodology reflects a more objective view of a government's fiscal strength and stability. Last week, Dagong published its own sovereign credit ranking in what it called a first for a non-Western rating agency. The results differ greatly from those issued by Moody's, S&P and Fitch: China ranked higher than the U.S., the U.K., Japan, France and most other major economies.

One thing is certain: credit analysts are about to become in very big demand, now that idiot money, hedge funds, and virtually any asset manager will no longer be able to rely on "someone else's rating" for their investment decision (right or, much more likely, wrong).

 

 

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Wed, 07/21/2010 - 16:43 | 481817 buzzsaw99
buzzsaw99's picture

It's a moot point. Everything not guaranteed by the usa treasury is junk. Everything that is is one notch above junk.

Wed, 07/21/2010 - 16:48 | 481835 poorold
poorold's picture

 

quite correct.

 

Will one of the ratings agencies actually have the balls to issue the truth.  start small with some state bond issues...You are UNLIKELY to be repaid in full, and on the off chance you are, the dollars you receive will be worth significantly less than the dollars you invested.

 

lol.

Wed, 07/21/2010 - 19:06 | 482144 Bartanist
Bartanist's picture

I am in a value adding business (clue: we make stuff... but not things) and we service businesses globally. What the US has to wake up to is that we are in fact not ceded supremecy just because of our good looks and historically we filled a void when everyone else was crawling out of the primordial ooze. The US and all of its businesses are in a competition for survival. You want to know why we have high unemployment? It is because we, as a country, are not working as a team. China works as a team. They know what they want. We have no clue. I read an article the other day that said there are three things needed for success: IQ, a clear goal, persistence (thank you Calvin Coolidge). We have the brains. What we lack is a clear and shared goal (China has one, but it might disintegrate ... JMHO), and with uncle Sam and uncle Ben handing out free money we don't need persistence. All we need is a heartbeat.

Thu, 07/22/2010 - 02:38 | 483011 Hedge Jobs
Hedge Jobs's picture

You have a clear and shared goal.......its called the constitution and things had been working just fine for a few hundred years until it came under attack by the elitists not so long ago.

Divide and conquer Bartanist. thats what the enemy within is doing to you

Wed, 07/21/2010 - 16:43 | 481818 Dr. No
Dr. No's picture

If the worlds largest creditor chooses a new rating agency to rate its purchases, the new agency becomes the defacto standard.

Wed, 07/21/2010 - 21:06 | 482348 SWRichmond
SWRichmond's picture

I believe you are correct, sir, and succinctly put.  China seems less willing to take shit from the U.S. with each passing day.

Thu, 07/22/2010 - 01:26 | 482960 Oh regional Indian
Oh regional Indian's picture

As it should SWR.

To my cynical eyes, this is all prelude to a war to actually end all wars (there will be a few serfs and some cylons left to fight).

Given that China is a US (West) creation, I believe this is all part of the act to divide. When the US population really, really hates the Chinese (could happen if a Chinese downgrade somehow destroys the dollar).

They will make that call at some appropriately inflammatory or otherwise potentiated juncture.

I wish I was wrong but know I am not.

ORI

http://aadivaahan.wordpress.com

Sun, 07/25/2010 - 00:03 | 487260 GoinFawr
GoinFawr's picture

I rate that AAA

You Know, Dr.No. I no Dr.No, Yes Dr.!

 

Wed, 07/21/2010 - 16:43 | 481821 LeBalance
LeBalance's picture

Whether the Members of the Central Committee would be willing to make a chess move that would place them closer to Global Dominance and loose a few hundred million of their serfs?

I believe the delay would be shorter than the amount of time it took for SkyNet to decide our fates in Terminator.

0.0001 sec.

Wed, 07/21/2010 - 16:50 | 481839 traderjoe
traderjoe's picture

It won't happen for awhile. They will continue to use their paper reserves to buy actual resources and production. They will continue to build their military capability. No need for the large scale defense systems. Missiles and tactical weapons better then a huge blue water navy. Continue to build credibility and power in their region. More economic ties. Building the largest consumer market in the world (and the only large one with growth). Keeping gates on the market, slowing taking intellectual property. 

And when the ultimate crash comes, they won't be completely ready, but close enough. 

Wed, 07/21/2010 - 16:45 | 481827 Duuude
Duuude's picture

 

"China is playing Go...not checkers."

 

http://jessescrossroadscafe.blogspot.com/

 

 

 

 

Wed, 07/21/2010 - 17:52 | 481985 carbonmutant
carbonmutant's picture

Do we get a handicap?

Wed, 07/21/2010 - 18:59 | 482135 Jesse
Jesse's picture

 'Do we get a handicap?'

 Yes, Geithner and Summers.  aka Flopsy and Mopsy.

 

Wed, 07/21/2010 - 16:53 | 481847 The Alarmist
The Alarmist's picture

You assume this is a case of MAD for both countries ... suppose China sees it as giving up a finger or a foot in order to avoid gangrene taking out the whole body.

 

Wed, 07/21/2010 - 17:05 | 481874 Testicular Cancer
Testicular Cancer's picture

"Rating agencies are highly politicized & ideological." I never thought I would hear the day when Red China accuse US/UK of being highly politicized & ideological. Not that they are wrong, but, God, in my lifetime.

Wed, 07/21/2010 - 17:47 | 481977 Grand Supercycle
Wed, 07/21/2010 - 17:57 | 482002 carbonmutant
carbonmutant's picture

Key Point. Where do we find an objective observer?

"He also argued that the three big Western agencies are too close to the corporate clients they are supposed to be assessing objectively."

 

Wed, 07/21/2010 - 18:16 | 482041 Lapri
Lapri's picture

Schroedinger's Cat.

There's no such thing as "objective observer".

Wed, 07/21/2010 - 19:09 | 482148 ozziindaus
ozziindaus's picture

Right on. Any prospective investment could boom or bust, you just don't know until you become the subjective observer, and by knowing, you've really effected the outcome.

Rating agencies operate the same way. We take their word for it on whether their rating/guess accurately reflects the current state (live cat, dead cat, two cats-one live one dead) until a series of seemingly random events occur revealing the truth, only to be discovered once you make the observation. 

Wed, 07/21/2010 - 20:11 | 482257 Privatus
Privatus's picture

If you observe so.

Wed, 07/21/2010 - 20:26 | 482277 carbonmutant
carbonmutant's picture

OK how 'bout a  "Fair Witness"?

Wed, 07/21/2010 - 23:41 | 482751 GoinFawr
GoinFawr's picture

@Lapri

Yeesh, that's deep man but I'm hoping you can admit there are differing degrees of subjectivity/objectivity. Sophist.

Next we'll be questioning the existence of the color 'green'.

This site ain't epistemology 101, hippie.

(jk, it probably is... or isn't it?!)

Regards

Wed, 07/21/2010 - 18:09 | 482029 trav7777
trav7777's picture

who gives a shit what China says?  A currency manipulator talking about credit ratings???  With the shape THEIR banks are in?

Wed, 07/21/2010 - 23:39 | 482759 GoinFawr
GoinFawr's picture

I believe there may be over a trillion reasons for the US to hang upon the CPC's every gesture.

Them being the world's de facto creditor might be yet another.

What your saying is like skipping 6 car payments and then saying, "Who cares what the repo man says"; true perhaps, but only to the point that you might want to be more concerned with what he might be in a position to do while you're sleeping.

Regards

Wed, 07/21/2010 - 18:10 | 482032 Rainman
Rainman's picture

HAHAHA.....Dagong would be gong and Guan would be picking rice somewhere in the midlands if he dared to play a straight game. Too funny.

Wed, 07/21/2010 - 18:39 | 482094 ozziindaus
ozziindaus's picture

China can go fuck itself. It chose it's bed partners knowing very well they could have a scorching case of herpes under all that lippy. China lies are more outrageous egregious preposterous in regards to human rights but you're not supposed to ask. 

http://www.youtube.com/watch?v=9Ifgj8WXp8w

Sun, 07/25/2010 - 00:19 | 487267 GoinFawr
GoinFawr's picture

All true, and just as consistent with reality for the US as well ozzy; just insert 'US' where you have written 'China' and you'll see that your point is precisely as accurate.
But aside from all that, did you have anything of value to add to the substance of this thread?

Regards

Wed, 07/21/2010 - 19:45 | 482206 desgust
desgust's picture

I hope China suceeds in destroying this American hegemony. It would be liberating for the whole world. Yes, a difficult transition but not worse than PNAC, not worse than NWO, not worse than your oligarchy. Until now, you, Americans have been spared from this destruction but we, Europeans, know how your govenment has contributed in corrupting our politicians since WWII. Europe made in USA. Jesse is spot on and I hope it happens swiftly. And yes, European intectuals and informed people hate your oligarchy, your hegemony, your wars youve drag us into, your Monsanto, your chemtrails, your false flags, your CDO's, CDS and on and on. All of you have been looking only for your own smallish interests. Now you see what you've go: BP, 40m foodstampers, trillions of debt, your stupid healthcare, your miserable schools, outsourcing and dead manufacturing and on and on. And you still are "patriots"?

Go beg the Chinese to help you against your own government! Yes, maybe they are also dirty, the Chinese, but you've been a plague for Europe for hundred years. And don't tell me about European wars, today no Europeans would do such foolish things again. That is history and yours is too short to discuss ours.

Maybe the rogue countries will demolish the USA in a blodless financial war and it's up to you, the people, if you stand up for your rights or cry for Bush-like Fuehrer! It's up to you to get free from you killing-me-softly-democracy manipulation!

 

Fri, 07/23/2010 - 01:04 | 484982 Real Estate Geek
Real Estate Geek's picture

Fuck off, asshole.  If it weren't for us, you'd be speaking German--or Russian.

Wed, 07/21/2010 - 19:43 | 482207 pros
pros's picture

 

The US government controls rating agencies through the NRSRO designation, and if one of them downgraded the US they would lose the designation and have no business..

DUHHH!

Wed, 07/21/2010 - 21:05 | 482344 mark mchugh
mark mchugh's picture

Well, we've given all the other jobs away to China, so why not Wall Street jobs?  Their track record for prosecuting corruption is better than ours in the 21st century.  And as Guan Jianzh points out, they're the creditor.

But why stop with ratings?

If we get a foreign exchange swap for Bernanke and Geithner, I'm in.

And if China produced a TV show called "Crosing Bell" or something like that, I'd never have to hear that sreeching hag again.

Wed, 07/21/2010 - 23:00 | 482668 Youri Carma
Youri Carma's picture

China rating agency condemns rivals, 21 July 2010, by Jamil Anderlini in Beijing (The Financial Times) http://www.ft.com/cms/s/0/5632a0b8-94b7-11df-b90e-00144feab49a.html?ftcamp=rss

Thu, 07/22/2010 - 00:12 | 482833 Spitzer
Spitzer's picture

I like David Einhorn more every day, he is short up to his nuts on one these rating agencies.

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