While the Barack Obama Administration has attempted to paint a rosy picture of the economy, one of America’s largest creditors is not so sure that the United States will be able to pay its debts.
At least one credit rating agency in China, which holds $1.1 trillion in U.S. Treasury bonds, says that America is defaulting on its loans.
“In our opinion, the United States has already been defaulting,” Guan Jianzhong, the president of Dagong Global Credit Rating Co. Ltd., said, reports AFP.
Guan’s company is the only credit agency in China that gives sovereign ratings. The official also said that the U.S. was defaulting because it allowed its currency to slip compared to others.
Fox News reports that the top three credit agencies are warning that America’s credit rating might slip. According to the news source, Fitch has warned that America could lose its sterling rating if it fails to deal with its long-term deficits.
America’s credit rating will also likely be impacted by whether Congress raises the debt ceiling by Aug. 2, which is the date lawmakers have been given by Treasury Secretary Tim Geithner. Geithner said that if no action is taken by that time, the U.S. would likely have to default on some of its obligations, according to Fox.