“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Monday, July 12, 2010

China Credit Rating Agency Downgrades US from AAA to AA

Chinese rating agency strips Western nations of AAA status
China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.

By Ambrose Evans-Pritchard, International Business Editor
Published: 9:17PM BST 12 Jul 2010

Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.

The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.

Meanwhile, China rises to AA+ with Germany, the Netherlands and Canada, reflecting its €2.4 trillion (£2 trillion) reserves and a blistering growth rate of 8pc to 10pc a year.

Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.

The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.

Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.

Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.
The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.

China may start to face some of Japan's demographic problems by the middle of this decade when the working age population peaks.

The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China's political system may appear strong – as did the Soviet Union's – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory.


  1. This sounds about as stupid as Russia calling for the end of the dollar as the world reserve currency. To be replaced with what? Euros? Rubles?

    Logan Pass, elevation 6,646 feet.

  2. There's some truth in this but the timing is suspect along with the motive.

  3. Pretty, Teresita, if I remember correctly, that's where the bighorns came and begged at our car. Isn't there a mountain lodge right over there, or am I all mixed up?

  4. Two Arab woman with about six kids just left my boarding area leaving three bags on the seat. the airline gate attendant is getting nervous. I'm moving .

  5. False alarm. The Arab husband just came to collect them.

  6. Chicago police are taking him for a chat.

  7. That's scary.

    One of the reasons my wife doesn't want to fly.

  8. Bob, the critters love the park just as much as the folks.

  9. There we go, that's how I remember it, but with bighorns begging through the window of the car.

    No kidding, I rolled the window down and what am I faced with but a couple of horns.

    Isn't the lodge right over there?

  10. Amount pledged for Haiti's reconstruction over the following 18 months at the March 31 UN conference: $5,300,000,000

    Percentage of this amount that has been paid: 1.9

    But pledging other people's money always makes libs feel good.

  11. Bob, there's no lodge at Logan Pass, just a visitor's center with no amenities other than a bathroom and an information desk and a bunch of rangers standing around shooting the shit. But if you drop down from the 2000 meter hut you reach something more like a lodge.

  12. What the hell is it I'm thinking of then?

    I would swear that there's a lodge up at the top of that pass, but maybe it's just a visitors center cause we really didn't get out. Maybe it just looked like a lodge.

  13. Dick Morris appears to have growing confidence in his prediction that GOP will take the Senate in addition to the House.

    In addition, I read somewhere over the weekend that the GOP looks set to run the table in state governors elections.

    The good news is that there will be more conservatives among theses elected officials. The bad news is there are still far too many RINO's willing to spend OPM and to go along to get along.

    Doug, regarding the non-linked name, for me it is simply far easier when commenting to choose the Name/URL option and just use the name, rather than having to suffer that productivity loss involved in switching Google Accounts to post as jwillie. Since i don't have a "jwillie" blog or website, I don't have a URL. The one Google/Blogger forces one to use is worthless if you aren't actually using it.

  14. Excellent post by AJ Strata that provides a more readable version of another post by an engineer that contains most of the real engineering expertise regarding the subject of "Greenthink", that folly and foolishness which, among other knuckleheaded ideas, claims that ethanol can solve our energy problem.

  15. Again, J Wahhabi touts the Saudi line, with feelings, but no numbers. An entire story without a single reference, but opinions and hyperbole.

    Discusses corn as inefficient fuel stock, which is well known, to everyone.
    Just another Wahhabi strawman.

    Yes, ethanol is solar generated, just like the oil was, once.
    But never again.

    J Wahhabi, toeing that Saudi line.

  16. The Wahhabi theme does not begin to mention the inefficiencies of the security system required for energy from oil.

    Does not discuss the ecological damage from spews, nor the economic damage cause by the horrendous balance of payments deficit that spilling over $800 million USD a day into the Persian Gulf presents US with.

    What do the Wahhabi buy from US, other than political influence in DC?

  17. The one and only extremely clean and power packed energy source is nuclear.

    bob's had it right all along


  18. It moves
    It's the thing that moves
    Like water running
    Or the wind blowing through the trees
    So softly in the summertime
    The lapping of a lake
    A woman's voice
    Quietly laughing

  19. I can take an acre of corn, and power my car, and tractor, electrify my house, and feed a cow; and do it decade, after decade, after decade. Let's see the Wahhabi oil do that.

  20. And, since I can operate my car on an acre of corn, and since there are 2 Billion Acres in the U.S., and since we only have 240 Million Cars, I'd say the good engineer is full of shit.

  21. You can't do that on an acre of corn.

    Where you going to get the fertilizer?

    The land will give out.

    But with nuclear, all things are possible.

  22. As for the subject of the post: All I can think of is, "isn't that interesting?"

    Especially from a country that has a "Failed" Auction every time it tries to sell a few billion dollars worth of bonds.

  23. Rufus, it simply isn't going to work.

    We need some real energy in this country, and it isn't coming from corn, with nuclear, we got a chance.

  24. China is going to run dead into a wall in about three, or four years.

    They have the same glaring weakness as all "Communist" countries. They can't do agriculture worth a damned. This is really going to bite them in the ass when it comes time to move to biofuels. And, that time is rapidly approaching.

  25. Of course you can do that on an acre of corn, Bob. Your problem is you quit learning anything practical some time ago.

    And, you can't power your pickup truck on nuclear.

  26. As for fertilizer: did you miss the part about the cow?

  27. Well I may be an impractical sort of guy, I admit, my heart seems to move with the wind.


  28. Skylights that produce enough Solar Energy to power a building.

    Or, we could dig holes in the ground, and fight the savages for what comes out.

    Your call, jwillie.

  29. The World moves on. IKEA phases out incandescent bulbs.

    Or we can spend a Billion Dollars a Day getting oil from savages that stone widows to death for "adultery."

  30. The report the world is heading for a global oil supply crunch and high prices owing to insufficient investment in oil production plus a rebound in global demand following recession. It repeats warning from Professor Paul Stevens, a former economist from Dundee University, at an earlier Chatham House conference that lack of oil by 2013 could force the price of crude above $200 (£130) a barrel.

    It also quotes from a US department of energy report highlighting the economic chaos that would result from declining oil production as global demand continued to rise, recommending a crash programme to overhaul the transport system. "Even before we reach peak oil," says the Lloyd's report, "we could witness an oil supply crunch because of increased Asian demand. Major new investment in energy takes 10-15 years from the initial investment to first production, and to date we have not seen the amount of new projects that would supply the projected increase in demand."

    Lloyds of London adds its voice of warning of Peak Oil

  31. The building, for four decades the world's tallest and still the tallest in New York, is spending $13 million on windows, insulation and other upgrades to cut energy use by 38% and save about $4.4 million a year.

    Empire State Bldg goes Green

  32. What the neanderthals can't ever seem to figure out is: Green is, almost always, more efficient, and thus Cheaper.

    When you see "soot," and "steam" go into the air you're seeing unburned fuel, and wasted heat.

  33. The good news is that there will be more conservatives among theses elected officials. The bad news is there are still far too many RINO's willing to spend OPM and to go along to get along.