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China Official: It’s Too Late, U.S. Already ‘Defaulting’

Posted by Stephen on June 10, 2011

As lawmakers scramble to cut a budget deal and avoid defaulting on U.S. debt, the head of a top Chinese rating agency claims it’s too late.

Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., reportedly told state media that the United States has already defaulted by letting the U.S. dollar weaken.

“In our opinion, the United States has already been defaulting,” Guan was quoted as saying, according to AFP.

China, likewise, has long come under criticism for allowing its currency to weaken. But while Dagong Global is known for being tough on the U.S., Guan’s words carry extra sting as they follow warnings from three top rating agencies about U.S. finances.

Fitch is the latest to warn the U.S. that its sterling credit rating could be at risk if it fails to raise its $14.3 trillion debt ceiling or fails to rein in its long-term deficits.

Moody’s and Standard & Poor’s have already issued similar warnings.

Meanwhile, lawmakers and White House officials are stepping up the pace of budget negotiations as they try to reach a deal that will persuade Congress to lift the debt ceiling by Aug. 2 — the deadline Treasury Secretary Tim Geithner has given lawmakers. After that date, Geithner warns, he would run out of ways to avoid a devastating default on U.S. obligations.

Some Republicans, while wanting to avoid default, claim the administration could extend that deadline further by making severe and immediate spending cuts elsewhere.

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