By John Galt
August 7, 2011 10:47 ET
CNBC just broke the story (click on the title to read the story in full):
Dollar to Be ‘Discarded’ by World: China Rating Agency
By: Ee Sing Wong
The man who leads one of China’s top rating agencies says the greenback’s status as the world’s reserve currency is set to wane as the world’s most powerful policy makers convene to examine the implication of S&P’s decision to strip the United States of its triple “A” rating.
In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is “gradually discarded by the world,” and the “process will be irreversible.”
Ouch, but it isn’t really news to those who follow the flow of precious metals sales around the world.
In addition this portion of the story slams it home:
“It has been around for quite a while, but I do not know of anyone assigning risk assessment to thir portfolio according to Dagong,” said Steen Jakobsen, chief economist at Saxo Bank. “However, clearly the rating industry could do with some competition and deviance from firm beliefs.”
But Guan’s observation—made just before S&P slashed its ratings on the world’s biggest economy—now seems strangely prescient.
“I think the most pressing issue facing the U.S. at the moment is to reflect on the crisis which happened in relation with the debt ceiling,” Guan said. “They should get a clear understanding that the continuous decline of the debt service capability will inevitably result in the outbreak of a sovereign debt crisis.”
So the ChiComs are stating the obvious, CNBC grasps the severity of the situation, but the biggest part is the lack of acknowledgement of the political powers in the U.S. that the “debt ceiling” action did nothing to address the long term debt or the depths of the problems we are mired in. Do we ever live in interesting times…..
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