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To the "We're all doomed, doomed, I tell you" BGAFD school of economists,

Question 1
Who has a higher credit rating, the USA or China?

Question 2
Who owns the most of the USA's debt?

China?

Okay, I know you don't like answering questions. So here ya go.

Question 1

The USA got downgraded by one of the credit agencies from AAA to AA+.
China has a AA- rating. Bloody hell, watch your money in China lads.

Question 2

The vast majority of US bonds are owned by.............the US Federal Reserve, not China, guys. I suppose the Federal Reserve could bankrupt the US by ..... Maybe not.

No need to start selling porn to China quite yet, Frank. You can save your family having to pay for a couple of bullets for one thing and secondly the US isnt quite broke yet.

Happy Days
D

David - I know that like your occasional opponent, Mr Slip, you do not
like to lose an argument. But what I said is that we are seeing simply
Day 1 of probably a 50 year gradual decline. I will be long dead by then.
Perhaps you too.....I would add, following my bgafd comments on this
subject last week, that I see 3 trillion dollars came off shares last week
and thats before the downgrade announcement. As the Guardian said
yesterday: "Growth rates of close to 10% mean that the moment China
overtakes the US is getting closer all the time". That in essence is what
I have been saying and it will happen. We will see shortly if the other
agencies downgrade the USA. If they do it will be further nails in its
global coffin.

You could well be right. I dunno. Anything's possible in 50 years.

But what I do know is that I wouldnt put too much emphasis on the ratings from Standard and Poor's, the organisation that gave Enron a triple A rating and the various organisations selling wrapped up mortgage financial instruments that played a major part in the financial collapse in the first place.

Cheers
D

David:

The fact that the US Federal Reserve is buying US government bonds is surely a sign of weakness, not strength. The US government is "selling" its bonds to its own central bank, which presumably conjures the money out of thin air to pay for them. How long can that go on for?

As for S&P, the fact that they got Enron wrong does not mean they are wrong about this. The USA will always be able to "pay" its creditors, as it can print as many dollars as it likes, but who wants to lend a dollar and be paid back with a dollar worth 50 cents?