U.S Economy put on negative watch by Chinese rating agency
Chinese rating agency puts U.S. on negative watch
By Chris Oliver
Dec. 26, 2012, 12:00 a.m. EST
HONG KONG (MarketWatch) — Chinese rating agency Dagong Global Credit Rating Co. on Tuesday put U.S. sovereign debt on a negative watch and highlighted what it said was a lack of political consensus on how to tackle Washington’s debt problem over the long term. In a statement on its website, the rating agency said “each political party insists on the proposition favorable for its own interest. Therefore, it is difficult to form a long-term consensus on solving the debt problem ultimately, which leads to the unceasingly fiscal deterioration of the government.” Dagong said outstanding U.S. federal debt will rise to 105% of GDP and 609% of fiscal revenue by the end of 2012. It warned that the “solvency of the federal government is on a descending trend.” It also warned of a difficult 2013 if there was no resolution on how to avert the fiscal cliff of austerity measures due to take effect at the start of the year. “The U.S. economy will probably fall into recession in 2013, and stay weak in the long term, which will further weaken the material basis for the government to repay debt.” In August 2011, Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth.