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Dagong Downgrades The UK From AA- To A+, Outlook "Negative"

Tyler Durden's picture




 

With everyone trading the GBP in the overnight session eagerly awaiting the leaked Moody's report that the rating agency, which has yet to be at least 2 years behind the curve, is set to downgrade "more than a dozen British financial institutions to reflect the eventual withdrawal of Government support for the banking industry", China has gone and upstaged the beating around the bush poser by downgrading the UK outright from AA- to A+, with a negative outlook. The premise: stagflation and deteriorating "debt repayment capability." Poor fools: they have yet to meet the full debt repayment capability of 20 Primary Dealers.

From Xinhua:

China's first domestic rating agency, Dagong Global Credit Rating Co. Ltd., on Tuesday downgraded the local and foreign currency long-term sovereign credit rating of the United Kingdom by one level to A+ from previous AA- with "negative" outlook.

The Chinese rating agency said the downgrade reflected the UK's deteriorating debt repayment capability.

The GDP growth rate of UK in 2010 was 1.3 percent, lower than average growth rate of the world economy, with budget deficit accounting for 9.8 percent of its GDP. The sluggish growth momentum continued in the first quarter of 2011, Dagong said.

The rating agency said the British government's move to revive its economy would not substantially reverse the trend of increasing the government's fiscal deficit and debt burden in the long term.

Dagong predicted the growth rate of UK economy to be between 1.3 percent and 1.5 percent in the next two years. And its budget deficit would exceed the targeted 7.9 percent to 9 percent.

If history is any indication, just like Dagong was the first to downgrade the US, so its action on the UK will be followed by a round of serious introspection on behalf of the rating agencies, whose purpose in life, now that CDOs are still completely dead, and any corporate bond getting priced at 5% or below no matter if it is AAA or CCC, escapes us.

We will provide you the full report as soon as we have it.

 

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Tue, 05/24/2011 - 01:18 | 1304232 Ahmeexnal
Ahmeexnal's picture

Time for the royals to suck long dong Dagong while smoking their crack bong!

Moody's is following suit:

 

http://www.marketwatch.com/story/moodys-may-downgrade-uk-banks-sky-news-...

Tue, 05/24/2011 - 01:50 | 1304270 Selah
Selah's picture

 

Bang Dae Gong!

 

Tue, 05/24/2011 - 02:52 | 1304321 cossack55
cossack55's picture

Well stated.

Tue, 05/24/2011 - 04:51 | 1304378 writingsonthewall
writingsonthewall's picture

This is no surprise - we all know these nationalised banks (oop's not supposed to call them that) are going to go down if the EU crisis means haircuts for the bondholders.

The only surprise is it lasted this long.

The world is slowly turning, it can be painfully slow at times but there are definitely changes going on.

Long term unemployed in Britain are rising, like the US - those jobs are never comig back. Just like the money invested in those bailed out banks - we're never getting that back - ever.

The rough break even point for Lloyds and RBS are 75p and 50p respectively (not accounting for opportunity cost - I mean why would you? - it's only taxpayer money, opp. cost is for bankers only!.

 

Currently the shares stand at:

RBS 41.00 0.29% LLOY 50.35 -1.02%

 

It does not look good I'm afraid - we have Billions 'invested' in those - you wait until the sheepeople work out that they swapped their free education, free healthcare and support services for worthless bank shares.

Like Queen Victoria - they will not be amused.

Tue, 05/24/2011 - 04:58 | 1304382 Harlequin001
Harlequin001's picture

'free education, free healthcare and support services'

You're joking, right?

Tue, 05/24/2011 - 07:02 | 1304428 TIMMAYYY
TIMMAYYY's picture

are you wondering about whether this is a true fact?

or are you saying the nothing in this world is "free" therefore there is some kind of hidden cost.

 

And you would be right on both counts. These are the 'benefits' of sleeping with lizards....the slim and dodgy eyes are just a few of the negatives.

Tue, 05/24/2011 - 07:06 | 1304431 writingsonthewall
writingsonthewall's picture

It's not free - it's surplus.

 

As I said above you choose to subsidise big business with your surplus - each to his own I guess. Just try explaining that to all the people who have become ill right after their health insurance expires - just when their job did.

 

Good luck with that too!

 

Now who is sleeping with the lizards? - at least my lizard provided free education - your lizrd did nothing for you other than strengthen their position to screw you over even more at a later date.

Tue, 05/24/2011 - 07:03 | 1304429 writingsonthewall
writingsonthewall's picture

No - why what did your Government spend it's taxes on?

 

War, Halliburton subsidies and Coca-Cola?

 

You see each man in his daily produce creates a surplus (it's called surplus value) - in some countries we try to pool this surplus for good use. Hospitals, Schools, social centres - you know, the sort of things which benefit society and progress it as a whole.

 

Whereas in the US......you allow this surplus to be taken by the wealthy and spent...and best of all you admire them for doing it!

 

We may not be perfect - but at least we're making progress. In the US all that has progressed in the last decade is the efficiency in which you can kill others - with depleted uranium etc.

 

Good luck with that.

Tue, 05/24/2011 - 01:17 | 1304236 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

I ran a very successful brothel in London in the 1990's...very highly rated.

Tue, 05/24/2011 - 01:37 | 1304255 Shell Game
Shell Game's picture

I'll BTFD..  ;-)

Tue, 05/24/2011 - 03:05 | 1304328 luciusfargo
luciusfargo's picture

+1

Tue, 05/24/2011 - 05:57 | 1304399 Oh regional Indian
Oh regional Indian's picture

Bear smells a honey TRAP! ZH studs, watch out!

;-)

ORI

Tue, 05/24/2011 - 12:24 | 1305463 PY-129-20
PY-129-20's picture

haha - +1, ORI.

Tue, 05/24/2011 - 12:54 | 1305612 falak pema
falak pema's picture

rule britannia, rule britannia...from under the bed sheets!

rule britannia, rule britannia...britannia rules the waves...from under the sea;

in its sunk Arc Royal, after the financial debacle.

Lets hope it becomes the Nautilus!

Tue, 05/24/2011 - 01:23 | 1304238 TruthInSunshine
TruthInSunshine's picture

James Brown is dead.

 

As are the credit ratings (really, even though the credit rating agencies are usually full of shit) of all sovereigns. The U.S., European Union Members (not just PIIGS+UK, aka PIIGSUK), Japan, Vietnam, Thailand, Russia, etc.

Thanks, John Maynard Keynes! Your failed neoclassical economic model did the world in! Even Asia was suckered into its infinite and galaxy sized pool of logical fail!

Paul Krugman, get back into your hole and get back to masturbating to the centerfold of Ben B52 Bernanke (aka Shiva, Destroyer of Organic Economic Growth) that appeared in the latest glossy edition of Case Studies of Epic Failures of Men, Economics, Common Sense, Virtue & Rationality, you ivory tower troglodyte.

 

Tue, 05/24/2011 - 02:55 | 1304324 cossack55
cossack55's picture

Yet Iceland broke free of the Keynsian Death Trap and is even now telling the Euro thugs "See if you can fly your G20s in this shit". Hahahahah

Tue, 05/24/2011 - 07:08 | 1304433 writingsonthewall
writingsonthewall's picture

"Keynsian Death Trap"

 

Surely it was Capitalism which demanded austerity to begin with by collapsing and once again resulting in Marxist overproduction.

 

How you get to blaming Keynes is beyond me. It's like you are blaming the commentator at a football match for the bad passing of your quarterback.

Tue, 05/24/2011 - 01:34 | 1304252 scratch_and_sniff
scratch_and_sniff's picture

If the west reverted to the gold standard it would do China up like a kipper, they are only holding ~1000 mt, so i hope they realise who the daddy is, still lol. In the meantime, downgrade away, no one cares. Ha ha, it took them how long to dg UK??

Tue, 05/24/2011 - 03:01 | 1304327 cossack55
cossack55's picture

I think your 1k mt is not correct and China is the #1 producer of gold.  Also, when was the last time that Ft. Knox was 100% audited, inventoried and assayed? Answer: NEVER

Tue, 05/24/2011 - 12:58 | 1305631 scratch_and_sniff
Tue, 05/24/2011 - 01:40 | 1304258 steve from virginia
steve from virginia's picture

Pretty funny, Gagong is my fav rating agency, way 'front of $&P(ences) and Mooodies.

USA is no. 18 or something, where we belong. Who is no. 1? Denmark? Guruguay? Where is it they ('They') grow the most pot?

Dagong, sorry ...

Tue, 05/24/2011 - 01:42 | 1304260 silberblick
silberblick's picture

Cornel West calls out Obama and challenges Americans to rise up like people in Europe and the Middle East are doing. Read here:
http://redpillfactory.blogspot.com/2011/05/cornel-west-calls-out-obama.html

Tue, 05/24/2011 - 02:01 | 1304277 All is chosen
All is chosen's picture

This is an outrage! They can't downgrade the UK. It's unthinkable. The situation is different here, (ask any BTL landlord). It's a different kind of debt, & 'they' obviously don't understand.

 

Tue, 05/24/2011 - 04:50 | 1304377 Harlequin001
Harlequin001's picture

It's an 'older', more refined quintessentially British kind of debt...

Looks far more classy on a collapsing balance sheet ...

Tue, 05/24/2011 - 07:55 | 1304486 topcallingtroll
topcallingtroll's picture

When you are getting screwed british style just lie back and think of england.

Tue, 05/24/2011 - 02:01 | 1304280 Yen Cross
Yen Cross's picture

 Dagnabit. You are write(right) Tyler. I'm still long usd /jpy though. core position 80.5.

Tue, 05/24/2011 - 02:06 | 1304282 stopthenewworldorder
stopthenewworldorder's picture

UK currency is the most exposed of all due to its stunningly weak fundamentals - similar to the US$ and EURO for sure but doesn't have the benefit of being something anyone needs to own. Get out of Dodge...or rather London....before it resembles Mad Max's Thunderdome

Tue, 05/24/2011 - 02:11 | 1304289 Yen Cross
Yen Cross's picture

83.45 looks about right.

Tue, 05/24/2011 - 03:08 | 1304331 KlausK
KlausK's picture

Thunderdome - LOL. Just trying to imagine Mr. Brown with a chainsaw ... "You want budget cuts? YOU WANT BUDGET CUTS???"

Tue, 05/24/2011 - 04:51 | 1304380 Harlequin001
Harlequin001's picture

Just trying to imagine Mr. Brown 'under' a chainsaw...

Tue, 05/24/2011 - 02:20 | 1304294 aribabak
aribabak's picture

?? is from Chinese phrase ???? which means perfectly IMPARTIAL

Tue, 05/24/2011 - 02:31 | 1304304 Mec-sick-o
Mec-sick-o's picture

Da gong is chiming the 11th hour.

Tue, 05/24/2011 - 02:36 | 1304314 The Heart
The Heart's picture

Watch this!

Raw Video: Obama's Limo Gets Stuck

http://www.youtube.com/watch?v=5icV_mctrkE

I bet that scared the doo-doo out of the usurper!

Tue, 05/24/2011 - 03:05 | 1304329 cossack55
cossack55's picture

Typical Brits, they put their anti-carbomb system in backwards. Must be the food.

Tue, 05/24/2011 - 03:29 | 1304339 Grimbert
Grimbert's picture

That's in Dublin - They've not been British for a few years now.

Tue, 05/24/2011 - 05:07 | 1304385 Quintus
Quintus's picture

Furthermore, this took place outside the US Embassy in Dublin, and I should imagine that any and all security systems design and construction at that facility was carried out by US contractors to USG specifications.

Tue, 05/24/2011 - 04:44 | 1304376 Dugald
Dugald's picture

Makes a foin headline to be sure to be sure.....

 

       Obama humped at slow speed

Tue, 05/24/2011 - 03:21 | 1304337 Double down
Double down's picture

The best ZH quote ever:

Poor fools: they have yet to meet the full debt repayment capability of 20 Primary Dealers.

Tue, 05/24/2011 - 04:50 | 1304381 Harlequin001
Harlequin001's picture

'course we have, write 'em a check...

Tue, 05/24/2011 - 05:50 | 1304396 Tense INDIAN
Tue, 05/24/2011 - 05:54 | 1304397 Tense INDIAN
Tue, 05/24/2011 - 05:51 | 1304398 Tense INDIAN
Tue, 05/24/2011 - 07:13 | 1304435 Landrew
Landrew's picture

Along the same vein, we just guaranteed 2 billion in Egypt bonds issues ha!

Tue, 05/24/2011 - 07:51 | 1304480 topcallingtroll
topcallingtroll's picture

They really arent two years behind if you understand the language.

Credit outlook negative.......equals downgrade...."get out now"

Downgrade.......equals " we told you to get out earlier, you idiot."

Tue, 05/24/2011 - 11:09 | 1305052 AldoHux_IV
AldoHux_IV's picture

Credit ratings agencies, what are they good for? Absolutely nothing...

Credit ratings agencies, hu-ah, what are they good for? Absolutely nothing...

Good gaw, credit ratings agencies, hu-ah, what are they good for? Absolutely nothing...

http://www.youtube.com/watch?v=r-bA9FYB8HY&feature=related

Tue, 05/24/2011 - 12:46 | 1305593 Mec-sick-o
Mec-sick-o's picture

First time I see a triplicated post... on one post.

Do NOT follow this link or you will be banned from the site!