China's Rating Agency Downgrades US To A+

[LegendKiller]

And the world laughs...


http://noir.bloomberg.com/apps/news?pid=20601087&sid=axU3JwwSG5Rc&pos=3

I mean, really, your country is the epitome of QE as you manipulate your currency like hell to improve your economy, driving inflation into the 6-8% area and perform multi-trillion dollar stimuli to prop up your unsustainable housing economy. Yet you rate your commy bonds higher than the US?

 

[PeshakJang]

Hey... good for them.

 

[matt0611]

This does not surprise me.

BTW, how exactly does China manipulate its currency? How do they keep it so undervalued?

 

[LegendKiller]

This does not surprise me.

BTW, how exactly does China manipulate its currency? How do they keep it so undervalued?

They flood the domestic market with easy credit through the command economy and flood the currency market with Yuan while keeping a currency peg. Without the peg the higher demand for Yuan to buy products would inflate the currency, however, the peg prevents the float upwards, preventing equalizing.

What this effectively does is keep the price of their products depressed relative to everything else, spurring demand.

 

[ElFenix]

to keep the peg they have to buy up dollars and any other currency they have targeted (if i remember foreign trade class at all).

 

[RocksteadyDotNet]

LOL @ America.

 

[RocksteadyDotNet]

This does not surprise me.

BTW, how exactly does China manipulate its currency? How do they keep it so undervalued?

It's not floated. It's pegged to the dollar.

 

[Bitek]

Hey! I just thought of something...
I think China just may be a bunch of dicks who are trying to screw us!

Sincerely,
USA

 

[LegendKiller]

to keep the peg they have to buy up dollars and any other currency they have targeted (if i remember foreign trade class at all).

That is correct.

 

[ShawnD1]

And the world laughs...


http://noir.bloomberg.com/apps/news?pid=20601087&sid=axU3JwwSG5Rc&pos=3

I mean, really, your country is the epitome of QE as you manipulate your currency like hell to improve your economy, driving inflation into the 6-8% area and perform multi-trillion dollar stimuli to prop up your unsustainable housing economy. Yet you rate your commy bonds higher than the US?

China's trade balance: highest in the entire world
USA's trade balance: lowest in the world

Which country is more likely to pay back bonds... Hmm I wonder. Like if there's a guy making $50,000 per year and a guy who's unemployed and losing $30,000 per year, I really can't tell which one has more power to pay back loans. It's just impossible to tell.

 

[LegendKiller]

China's trade balance: highest in the entire world
USA's trade balance: lowest in the world

Which country is more likely to pay back bonds... Hmm I wonder. Like if there's a guy making $50,000 per year and a guy who's unemployed and losing $30,000 per year, I really can't tell which one has more power to pay back loans. It's just impossible to tell.

China's economy: Completely dependent on the US paying back its bonds.
USA's economy: Completely dependent on China's cheap trash.

Which country is more likely to pay back bonds? The one that isn't in uber-mega-bubble mode 100% dependent on the US to put up with its currency manipulating bullshit.

We can buy cheap trash for any number of countries in the world, they cannot sell cheap trash to every other country in the world as those countries are actually sane.

 

[RocksteadyDotNet]

China's economy: Completely dependent on the US paying back its bonds.
USA's economy: Completely dependent on China's cheap trash.

Which country is more likely to pay back bonds? The one that isn't in uber-mega-bubble mode 100% dependent on the US to put up with its currency manipulating bullshit.

We can buy cheap trash for any number of countries in the world, they cannot sell cheap trash to every other country in the world as those countries are actually sane.

You overestimate your importance to China. Only 20% of their exports go to the U.S.

The U.S. becomes less important to the global economy every day. It aint the 80's anymore.

 

[LegendKiller]

You overestimate your importance to China. Only 20% of their exports go to the U.S.

The U.S. becomes less important to the global economy every day. It aint the 80's anymore.

What would happen to China if 20% of their market disappears? It doesn't take 30-50%. Their pricing is dependent on that 20% also.

 

[RocksteadyDotNet]

What would happen to China if 20% of their market disappears? It doesn't take 30-50%. Their pricing is dependent on that 20% also.

They would be fucked.

But no where as fucked as you would be if they dumped your bonds.

 

[xaeniac]

Don't forget China is an enemy to the USA. Of course they would do stupid things like this. Americans should stop buying their Chinese junk at Walmart

 

[ShawnD1]

What would happen to China if 20% of their market disappears? It doesn't take 30-50%. Their pricing is dependent on that 20% also.

Losing 20% still sucks, but it's not the end of the world. At the end of the day, all you need to know is that China is making lots and lots of money right now. The US is losing lots of money. Your bond rating is slashed because there are serious concerns that you guys aren't going to fix your government and be able to pay back your loans as well as fund stuff you promised to fund such as the social security funds people have been paying into for the past fitty years and are going to start withdrawing from in 2011 (baby boomers officially retire and go on SS/medicare, age 65, in 2011).

The tea party has it right. You guys gotta knock that shit off and slash the budget while jacking taxes through the roof. You're getting to that point where your debt is so large that all you can do is pay the interest on it.

 

[senseamp]

A+ is still pretty good

 

[LegendKiller]

They would be fucked.

But no where as fucked as you would be if they dumped your bonds.

What would happen if they dumped our bonds? Foreign goods would become more expensive and domestic goods cheaper, massively so. Interest rates internally would increase to counter the inflation, but, overall, we would do OK.

Where they would be uber-mega-fucked is when 20% of all of their industrial demand is gone overnight. That means that a huge % of their workforce would be laid off, overnight. That means that, overnight, there would be tens of millions of people out of work.

Now, America would be in a bad spot and we'd have to slim down a lot. However, where do you think that puts their government?

Hmmm....


Wait, I have the answer.

Dead.

 

[LegendKiller]

Losing 20% still sucks, but it's not the end of the world. At the end of the day, all you need to know is that China is making lots and lots of money right now. The US is losing lots of money. Your bond rating is slashed because there are serious concerns that you guys aren't going to fix your government and be able to pay back your loans as well as fund stuff you promised to fund such as the social security funds people have been paying into for the past fitty years and are going to start withdrawing from in 2011 (baby boomers officially retire and go on SS/medicare, age 65, in 2011).

The tea party has it right. You guys gotta knock that shit off and slash the budget while jacking taxes through the roof. You're getting to that point where your debt is so large that all you can do is pay the interest on it.

Our bond rating is being "slashed" by a corrupt command economy which only has one way of growing, utterly manipulating its currency. Now how exactly is that not hypocritical of the Chinese rating agency?

We are countering with our own style of manipulation, if they want to throw a hissy fit and have their "rating agency" downgrade us, go right ahead. All it does is undermine their non-existent credibility anyway.

The TeaBaggers are wrong.

 

[BoberFett]

What would happen if they dumped our bonds? Foreign goods would become more expensive and domestic goods cheaper, massively so. Interest rates internally would increase to counter the inflation, but, overall, we would do OK.

Where they would be uber-mega-fucked is when 20% of all of their industrial demand is gone overnight. That means that a huge % of their workforce would be laid off, overnight. That means that, overnight, there would be tens of millions of people out of work.

Now, America would be in a bad spot and we'd have to slim down a lot. However, where do you think that puts their government?

Hmmm....


Wait, I have the answer.

Dead.

If China stopped shipping their stuff over here, the US is as dead as they are. You think you're just going to source the consumer heart of this country from somewhere else overnight? Stores would be picked clean within a week. The retail base of this country would disappear and everything else would soon follow.

 

[Generator]

So basically the credit agencies still have been giving triple A ratings since the crash. Looks like nothing has been learned in this country. Good for China, they don't have to put up with this bullshit.

 

[ElFenix]

If China stopped shipping their stuff over here, the US is as dead as they are. You think you're just going to source the consumer heart of this country from somewhere else overnight? Stores would be picked clean within a week. The retail base of this country would disappear and everything else would soon follow.

we can survive a bit without a ton of mass produced crud on the shelves, long enough for vietnam or india to step in. china would be in a civil war.

 

[ShawnD1]

Our bond rating is being "slashed" by a corrupt command economy which only has one way of growing, utterly manipulating its currency. Now how exactly is that not hypocritical of the Chinese rating agency?

We are countering with our own style of manipulation, if they want to throw a hissy fit and have their "rating agency" downgrade us, go right ahead. All it does is undermine their non-existent credibility anyway.

The TeaBaggers are wrong.

1 simple question for you. Do you have serious doubts about the US debt load at this time? It's just a yes or no question. If there's absolutely no doubt that it will all be paid back in full on time with no missed payments and without inflating your currency, then you get the AAA rating. If there's a chance your government will miss payments and jack the inflation rate, your credit rating is slashed down to something shittier.

To get an idea of how this works, the bond rating for Ford is B2. It is expected that company will miss payments or go belly up.

http://en.wikipedia.org/wiki/Credit_rating
Top 10 least risky countries to lend money to:
Rank Country Overall score
1 Norway 94.05
2 Luxembourg 92.35
3 Switzerland 90.65
4 Denmark 88.55
5 Finland 87.81
6 Sweden 86.81
7 Austria 86.50
8 Canada 86.09
9 Netherlands 84.86
10 Australia 84.16

 

[LegendKiller]

If China stopped shipping their stuff over here, the US is as dead as they are. You think you're just going to source the consumer heart of this country from somewhere else overnight? Stores would be picked clean within a week. The retail base of this country would disappear and everything else would soon follow.

What basic necessities are needed?

Food, shelter, water, all are made here. Consumer goods, such as clothes, are made in India, Thailand, Vietnam already. Electronics in Malaysia among others.

We do not need China, China needs us far more.


They only buy US debt because they must, not because they want to.

 

[Darwin333]

And the world laughs...


http://noir.bloomberg.com/apps/news?pid=20601087&sid=axU3JwwSG5Rc&pos=3

I mean, really, your country is the epitome of QE as you manipulate your currency like hell to improve your economy, driving inflation into the 6-8% area and perform multi-trillion dollar stimuli to prop up your unsustainable housing economy. Yet you rate your commy bonds higher than the US?

Don't we need them to buy our bonds? Besides Bernake and the Fed, who else is going to buy a trillion+ a year plus the enormous amount of rollover which is about 1/4-1/5 of our ENTIRE debt (at least the debt that we are legally obligated to pay others) a year added to the new borrowing. I just round it down to a "shitload".

Hypocrisy aside, I assume you are in favor of QE2? After all, its purpose is to cover the losses of the industry you work in.

In your own opinion, what do you think the recent ramp in commodities will do to the poor and middle class and do you think that QE1, QE2, and the actions of the Fed in general had the slightest thing to do with that ramp?