China downgrades U.S. debt

A publicity-minded Chinese rating agency has added its two renminbi to the cacophonous debate over the Fed's latest tilt at money-printing.

The state-backed Dagong Global Credit Rating Co. on Tuesday downgraded its rating on the United States to A-plus from double-A, maintaining its negative outlook.

It warned that the Federal Reserve's plan to buy $600 billion of Treasury securities over eight months in its second go at so-called quantitative easing could trigger a creditor crisis.

"The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S.," Dagong writes in its latest report on its U.S. rating. "Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government's intention of debt repayment."

This is a salient point because China is America's biggest foreign creditor, with official Treasury holdings creeping up on the $1 trillion mark and unofficial holdings expanding rapidly as well.

The United States and its trading partners have had a disagreement or two in recent days over Fed chief Ben Bernanke's decision to expand his holdings of Treasurys in a bid to further bring down interest rates. Lower rates tend to equal a lower dollar, which tragically enough mucks up everyone else's plans to export their way to prosperity. (more)