China agency 'downgrades' US Treasuries (try to find this on CNBC or a U.S. publication)

Clancy Yeates
Sydney Morning Herald

CHINA is trying to turn the world of credit ratings on its head, by unveiling rival sovereign debt ratings that question the creditworthiness of major developed economies.

In its first report on sovereign debt, Dagong Global Credit Rating gave US Treasury bonds a AA rating with negative outlook, several rungs below the top AAA that it gave to just seven economies, including Australia.

In contrast, the major Western ratings agencies Standard & Poor's, Moody's and Fitch regard US government bonds as the world's safest asset - a view shared by markets.

Accusing the Western agencies of bias, Dagong also issued relatively low AA- ratings to Japan, Britain and France because of their large debt loads and poor growth prospects.

It warned that these countries could face higher funding costs if they failed to cut their deficits - a situation recently faced by the governments in Greece and Portugal.

China received a AA+ rating because of its ''sustainable fiscal strength'' and more optimistic economic outlook.

S&P, on the other hand, has given the world's most populous economy an A+ rating.

Dagong says its advice is independent and impartial, but the report was launched at the headquarters of Xinhua News Agency, the ruling Communist Party's main propaganda outlet.

The report covered 50 countries which Dagong said accounted for 90 per cent of the world's economic output.

Australia was one of a select group - which included New Zealand and Singapore - to receive the top rating from Dagong.

It said these governments had the strongest levels of solvency and were well placed to enjoy a recovery in the world economy.

In explaining its ratings, Dagong suggested its Western rivals were affected by ''ideology,'' and their ratings did not accurately reflect a government's ability to repay debt.

The report comes after the Chinese President, Hu Jintao, said in April that the world needs ''an objective, fair, and reasonable standard'' for rating sovereign debt.

The ratings could also have implications for the Chinese government's huge holdings of US government bonds, although the country ruled out dumping them earlier this month.

Grandpa: those crazy communists, Chinese President, Hu Jintao, said that the world needs ''an objective, fair, and reasonable standard'' for rating sovereign debt. Objective, fair and reasonable! This is the United States, home to Tim Geithner, Ben Bernanke, Larry Summers, Moody's, Fitch and Wall Street Banks. Fair and reasonable is so "old school". Keep in mind Mr. President, we are a democracy and as such the majority rules and that includes defining fair and reasonable.

With all due respect Mr. Hu Jintao, we have the best and brightest on Wall Street and in Congress. We are coming up on 2 years since the AIG bailout and our crack team of "representatives" are close to voting on a watered down, diluted and polluted financial reform bill to assure that Wall Street will once again peddle toxic financially engineered products around the globe.

Even Timmy Giethner stated our debt would never be downgraded and Ben Bernanke still references positive signs in our economy and neither would intentionally mislead the American people...would they?