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article imageOp-Ed: U.S. is Insolvent and Bankrupt According to China

By Kelly Bowlin     Jun 10, 2011 in Politics
Guan Jianzhong, chairman of China’s largest credit rating agency: Dagong Global Credit, slams U.S. credit rating as false, propped-up and unsustainable. Was he trying to be subtle?
The Financial Times reported that Guan said: “The western rating agencies are politicized and highly ideological and they do not adhere to objective standards. The financial crisis was caused because rating agencies didn’t properly disclose risk and this brought the entire US financial system to the verge of collapse, causing huge damage to the US and its strategic interests.”
A recent editorial published by Xinhua, China’s official state newswire, praised Dagong’s report as a significant step toward breaking the monopoly of western rating agencies of which it said China has long been a “victim”.
“Compared with the US’ conquest of the world by means of force, Moody’s has controlled the world through its dominance in credit ratings,” the editorial said...
Ugly talk. Kind of what it feels like when a creditor, who’s been hassling you for month, pulls in front of your house and a mean looking goon dressed in black exits, cracks his knuckles and heads for the front door. If it’s me, I’m out the back and over the fence, but the United States can’t run, and they certainly can’t hide.
Is it true? Is the U.S. no better than a financial junkie, tapped out of supply, printing its own fix in money shops working overtime? It’s no big secret. We’re at our debt ceiling right now. It’s all over the news. We either have to raise our own debt ceiling or default on our obligations. Sound healthy to you?
The Ugly Truth About Ugly Paper That’s Invisible
In 2008, when the financial markets melted down faster than the reactors at Daiichi, investment vehicles with sexy names were sporting debt-to-capital ratios of 40-1. In layman’s terms, for every $100,000 of hard assets floating around (you know, like a typical mortgage) there was $4,000,000 in funny paper being traded by smart guys at Bear Stearns and Lehman Brothers and countries like Iceland and Greece and gulp…even pension funds managed by some really big municipalities. The volume of these paper-thin, ponzi-like, investments was, and still is, in the trillions. They didn’t just disappear, (well maybe the equity in the hard assets like that $100,000 mortgage did, in fact it’s worth about $50,000 today and continuing to slide), there was too much floating around. No, the bad paper is like an incurable contagion hovering over our financial bedsides ready to infect us like it did to countries like Greece and Portugal and Iceland. Hey, if the U.S. has maxed out its metaphorical credit cards on trips to places like Iraq and Afghanistan, where does that leave countries that can’t prop up their economies with such onerous consumption?
Uh, The Check’s in the Mail
The U.S. Government is going to have to face the fact it’s in way over its head and the sharks are starting to circle. Yea, China, is one of those sharks. In purely political terms, China hasn’t done anything wrong, in fact, it has stood on the sidelines while we continue to muck around in Iraq and Afghanistan and spend money we don’t have. They must be scratching their heads when they watch our cable feeds, at all the big car commercials that are right back on prime-time, where they were two years ago, pre-$4.00 gasoline. Guan Jianzhong would probably have us bend over on his lap for a couple of bare-butt swats, or perhaps have us stand in front of a chalk board and write, “corporate greed is bad” 1,000 times and then stand in the corner and repeat, “we promise to never spend more than we have in our checkbook and if we do, we’ll live with the consequences and not just print more money”.
Guan Jianzhong is right!
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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