There was a bloodbath in the financial markets all over the world, when Standard and Poors announced the downgrade of US from AAA to AA . Though it was well known that US President was fighting a running battle for authorization for securing more loans to bail out the US economy, which was inching towards sovereign default, but it would actually come to the stage of downgrade was something which many institutions and countries did not believe.


China claims it had indeed anticipated that the US economy would stand downgraded quite sometime back, but it is only now that it has been recognized and announced. It was apparent for some time that the US economy was heading towards the dumps, and the world fretted about it. Three days before the S&P downgrade, China's largest state-approved rating agency Dagong had slashed US credit rating from A to A-,citing the deteriorating debt repayment capability. Last November, Dagong had downgraded the US after the Federal Reserve decided to continue its ultra-loose monetary policy.


Chinese state media have savaged the United States over what they call its "addiction to debt," in a series of unusually critical articles. An analyst writing in one newspaper went so far as to compare US debt to a "Ponzi scheme",in the wake of an unprecedented US downgrade.


The head of China's largest domestic rating agency said that although the U.S.Congress has approved a resolution to raise the U.S. Government's debt ceiling,it does not mean the end of its sovereign debt crisis. The lifted debt ceiling indicates that the U.S. Government is legally allowed to continue operating by taking on new debts to repay the old ones, allowing it to temporarily avoid default, Guan Jianzhong, Chairman of the Dagong Global Credit Rating Company,said.


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