And now US debt has been downgraded…by China.
The Shanghai Daily reports that the US debt levels were savaged by Dagong Global Credit Rating Co., a Beijing-based rating agency and one of four dominant agencies in China which has just published its first sovereign risk report.
Dagong takes a very different line from western ratings agencies like Moody's, Fitch and Standard & Poor's. As you can see from the table below, it rates the US as a bigger risk than Norway, Australia, Denmark, Luxemburg and New Zealand.
Meanwhile, President Obama's Bipartisan Commission on Fiscal Responsibility and Reform, run by former Republican senator Alan Simpson of Wyoming and Erskine Bowles, White House chief of staff under President Bill Clinton has warned that US debt is now a cancer destroying the country. It says the US can't grow out of it, it's just too big, and can't tax its way out. Which means the only answer is severe spending cuts.
According to the Commission, the US government only has enough money to pay for Social Security, Medicare and Medicaid. It has to borrow to pay for education, defense, roads, research and absolutely everything else and $920 billion of the money it borrows comes from China. By 2020, the US could be paying $1 trillion a year in interest on its debt.
Not sustainable and signs of an empire falling apart.