Subject: China ratings house says US defaulting - SCMP
From: "Michael Andrews" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, "Devon Archer" <[email-masked]>, "Eric Schwerin" <[email-masked]>
Date: Fri, 10 Jun 2011 09:56:43 -0400

China ratings house says US defaulting
Agence France-Presse in Beijing
1:47pm, Jun 10, 2011	

A Chinese ratings house has accused the United States of defaulting on  
its massive debt, state media said on Friday, a day after Beijing  
urged Washington to put its fiscal house in order.
“In our opinion, the United States has already been defaulting,” Guan  
Jianzhong, president of Dagong Global Credit Rating, the only Chinese  
agency that gives sovereign ratings, was quoted by the Global Times  
saying.

Washington had already defaulted on its loans by allowing the dollar  
to weaken against other currencies – eroding the wealth of creditors  
including China, Guan said.

The US government will run out of room to spend more on August 2  
unless Congress bumps up the borrowing limit beyond US$14.29 trillion  
– but Republicans are refusing to support such a move until a deficit  
cutting deal is reached.

Ratings agency Fitch on Wednesday joined Moody’s and Standard & Poor’s  
to warn the United States could lose its first-class credit rating if  
it fails to raise its debt ceiling to avoid defaulting on loans.

A downgrade could sharply raise US borrowing costs, worsening the  
country’s already dire fiscal position, and send shock waves through  
the financial world, which has long considered US debt a benchmark  
among safe-haven investments.

China is by far the top holder of US debt and has in the past raised  
worries that the massive US stimulus effort launched to revive the  
economy would lead to mushrooming debt that erodes the value of the  
dollar and its Treasury holdings.

Beijing cut its holdings of US Treasury securities for the fifth month  
in a row to US$1.145 trillion in March, down US$9.2 billion from  
February and 2.6 per cent less than October’s peak of US$1.175  
trillion, US data showed last month.

Foreign ministry spokesman Hong Lei on Thursday urged the United  
States to adopt “effective measures to improve its fiscal situation”.

Dagong has made a name for itself by hitting out at its three Western  
rivals, saying they caused the financial crisis by failing to properly  
disclose risk.

The Chinese agency, which is trying to build an international profile,  
has given the United States and several other nations lower marks than  
they received from the the big three.