A China credit rating agency, Dagong Global, the equivalent of Moody's and Standard & Poors, came out with a blistering critique of the latest US$600bn quantitative easing manoeuvre by the U.S. Federal Reserve announced on 3rd November.
"Though it is likely for the current loose monetary policy to postpone the occurrence of difficulties, yet in the long run, it will be proven to be a practice resembling drinking poison to quench thirst."
Timed for the Seoul G20 meeting, the drumbeat of anti-American economic policy management is building. Germany weighed in this week with their finance minister pronouncing the U.S. Federal Reserve "clueless".
Based in Beijing and founded in 1994, this is the same agency which in July announced credit downgrades to several western nations stripping them of their AAA status (Germany AA+, USA AA, Britain AA-, France AA-).
Watch for further announcements from Dagong...it is demonstrating to be a robust counterweight to the systemic biases embedded within the western ratings agencies who totally failed to anticipate the risks that unfolded leading up to the 2008 financial crisis.
Time will tell whether it proves to be a good leading indicator of the Chinese government's thought processes on western monetary policy management.
Saturday, 13 November 2010
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