Beijing downgrades West's credit-worthiness
Dagong Global Credit Rating, the foremost credit rating agency of the People's Republic of China, has revoked the supreme AAA status of a range of Western nations.
The move is understood to be in retaliation against alleged “ideological” prejudice against China and other Asian companies by Occidental credit agencies, which Beijing feels have an inherent “Anglo-Saxon” bias.
The agency said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.
Thus the US, UK Germany and France have all been downgraded, with Britain joining France at the AA- mark and Belgium, Spain, Italy all being pushed to A-. The US fares best, just slipping to AA.
Dagong argues that its metrics are more weighted in terms of "wealth creating capacity" and robustlevels of foreign capital reserves than the way firms like Fitch or Standard & Poor's assess national creditworthiness.
On this basis, the PRC itself climbs to AA+ status along with the US and Germany, the Netherlands and Canada, reflecting its €2.4 trillion (£2 trillion) reserves and a 10% average growth rates, way ahead of the eurozone's expected 1% or US' 3.3 (IMF estimates).
Norway, Denmark, Switzerland, and Singapore get rated AAA.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more