The was a story in yesterday’s Shenzhen Daily with the headline “Chinese credit firm declares U.S. worse risk than China.” Dagong International Credit Rating Co. rated U.S. debt below that of China and 11 other countries. The U.S. debt was rated AA with a negative outlook.

Dagong based its rating on the high debt and slow growth prospects in the U.S. economy. As I understand things, the dominant rating agencies base their assessments on current conditions with little consideration to trends for the future. Dagong relies more heavily on future trends and less on current conditions.

Thus the booming emerging economies with their 10% growth rates like China, Brazil, and Australia, have higher ratings than the U.S. with it 3-4% growth rate and ever increasing debt load.

Makes sense to me.

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