{"id":29774,"date":"2018-01-16T08:51:36","date_gmt":"2018-01-16T13:51:36","guid":{"rendered":"http:\/\/olduvai.ca\/?p=29774"},"modified":"2018-01-16T08:51:36","modified_gmt":"2018-01-16T13:51:36","slug":"china-downgrades-us-credit-rating-from-a-to-bbb-warns-us-insolvency-would-detonate-next-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=29774","title":{"rendered":"China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would “Detonate Next Crisis”"},"content":{"rendered":"
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China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would “Detonate Next Crisis”<\/a><\/span><\/h3>\n<\/div>\n
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In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing “deficiencies in US political ecology” and tax cuts that “directly reduce the federal government’s sources of debt repayment” weakening the base of the government’s debt repayment.<\/p>\n

Oh, and just to make sure the message is heard loud and clear, the ratings, which are now level with those of Peru, Colombia and Turkmenistan on the Beijing-based agency\u2019s scale of creditworthiness, have also been put on a negative outlook.<\/p>\n

In a statement on Tuesday, Dagong warned that the United States\u2019 increasing reliance on debt to drive development would erode its solvency. Quoted by Reuters<\/a>, Dagong made specific reference to President Donald Trump\u2019s tax package, which is estimated to add $1.4 trillion over a decade to the $20 trillion national debt burden.<\/p>\n

\u201cDeficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,\u201d <\/strong>Dagong said adding that “Massive tax cuts directly reduce the federal government\u2019s sources of debt repayment, therefore further weaken the base of government\u2019s debt repayment.”<\/p>\n

Projecting US funding needs in the coming years, Dagong said a deterioration in the government\u2019s fiscal revenue-to-debt ratio to 12.1% in 2022 from 14.9% and 14.2% in 2018 and 2019, respectively, would demand frequent increases in the government\u2019s debt ceiling.<\/strong><\/p>\n

\u201cThe virtual solvency of the federal government would be likely to become the detonator of the next financial crisis,\u201d the Chinese ratings firm said.<\/strong><\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

China Downgrades US Credit Rating From A- To BBB+, Warns US Insolvency Would “Detonate Next Crisis” In its latest reminder that China is a (for now) happy holder of some $1.2 trillion in US Treasurys, Chinese credit rating agency Dagong downgraded US sovereign ratings from A- to BBB+ overnight, citing “deficiencies in US political ecology” […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,181,1547,827,17959,2721],"class_list":["post-29774","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-crisis","tag-ratings-downgrade","tag-united-states","tag-us-insolvency","tag-us-treasuries"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29774","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=29774"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29774\/revisions"}],"predecessor-version":[{"id":29775,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/29774\/revisions\/29775"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=29774"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=29774"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=29774"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}