The dreaded ‘D’ word

The dreaded ‘D’ word

Following on from our Talking Point last week, the potential for a US government debt default has continued to grab headlines in China.

Local agency Dagong Global Rating has annnounced that America’s rating is on review for a downgrade (it previously cut Treasury debt to A+ in November last year, judging US government paper no longer risk-free). And Dagong says a further downgrade is just a matter of time, given the size of US borrowing.

Separately, the Securities Daily insisted that the risks associated with Chinese local government debt “can’t compare” with the looming US bond crisis.

CCTV also ran a special show on Monday evening in which it predicted a default would lead to the end of the current global financial system, and raised the possibility of a return to the gold standard.

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