Moody's recently downgraded China's national sovereignty and a number of state-owned entities, a move that has sparked widespread concern and speculation. Some believe that Moody's is preparing for the entry of dollar capital and a cut in interest rates, while an expert on Wall Street gives an even more sensational explanation. According to him, Moody's downgraded the rating not to support the dollar's harvest of China, but for its own profits. Moody's is a for-profit organization, and their motivation is to make money. So what kind of profit do they want to make by doing this?The answer lies in China's debt problem.
The real purpose of Moody's downgrade of China is to make a profit. They do this because they see a business opportunity in China's debt problem. China's debt has reached staggering levels and needs to be addressed urgently. This includes *** debt and local ** debt, which together exceed 60 trillion. Based on the experience of Wall Street and U.S. financial markets, direct printing of debt will not work, so other approaches are needed. Moody's sees this opportunity, and they believe that China can take two ways to resolve its debt. The first way is to package the debt as a financial product and go public. Although we ordinary people may find it strange, in fact, in the American financial market, such financial products are very common, and they can be packaged and then sold to diversify risks. The second way is to pay off old debts by issuing new ones. This method is more common, and China has begun to adopt this method, and has achieved certain results, successfully alleviating the local ** debt crisis. But this method is not bold enough, and the scale is not large enough, for more than 60 trillion ** debt, only one or two trillion new debt is a drop in the bucket.
Moody's believes that the key to whether it is a packaged debt listing or a new debt issuance, there is sufficient market demand. Many countries' bonds are issued globally, such as U.S. Treasury bonds. It may not be realistic for China to solve such a large debt problem if it relies entirely on the domestic market to cover it, so it will inevitably need to issue bonds to overseas investors. This is a matter of international credit. As a result, Moody's quickly downgraded those with higher debt** and state-owned units. On the one hand, this can prevent them from issuing bonds on a large scale on the international market, which can bring a fortune to the United States**. On the other hand, for other units in China, if they want Moody's to upgrade the rating, they will have to pay for it. Moody's behavior can be seen as a form of hooliganism, they take money at both ends and don't think too much of the capitalists in the United States.
China is currently facing a huge debt problem that needs to be resolved by taking effective measures. In response to this problem, Wall Street experts have given two main ways to solve this problem. One way is to package the debt as a financial product and the other way is to issue new debt to pay off the old debt.
The scale of China's debt problem is staggering, and it has reached a point where it needs to be addressed urgently. Together, the debt and local debt are more than 60 trillion. To solve this problem, Wall Street experts have proposed two possible options. The first option is to package the debt into a financial product and go public. We may be confused by this practice, but in reality it is very common in the US financial markets. By packaging and changing debts, you can diversify your risk and give investors more options. This approach can attract more investors, thereby reducing the pressure on China's domestic market.
The second option is to repay old debts by issuing new ones. This is a more traditional approach and one that is often adopted in many countries. At present, China has begun to adopt this approach, and has achieved certain results. By issuing new debt to pay off old debt, you can extend the maturity of the debt and free up more money for ** to grow the economy. However, at present, the scale of new bonds issued by China is not large enough, and there is still great pressure on more than 60 trillion yuan of ** debt and more than 30 trillion yuan of local ** debt. Therefore, China is likely to continue to increase the scale of new bond issuance in the future to better solve the debt problem.
The downgrade of China's sovereign and state-owned units by Moody's rating agencies will have a certain impact on China's debt resolution. Moody's actions have discouraged large-scale bond issuance by lower-rated entities on international markets, while also increasing the cost of new debt issuances.
The downgrade of Moody's rating has had a certain impact on China's debt resolution. First, Moody's downgrade will make it difficult for lower-rated units to issue bonds on the international market. Since bond ratings are directly related to the creditworthiness of bonds, lower-rated units will face higher financing costs and greater risk, limiting debt resolution. Second, Moody's downgrade will also increase the cost of new debt issuance. The downgrade of Moody's rating may have a certain impact on investors' confidence in Chinese bonds, making it more difficult to issue new bonds and higher interest rates. This will further increase the pressure on the repayment of ** debts and increase the difficulty of debt resolution.
The scale of China's debt problem is huge, and practical and effective measures are needed to resolve it. Rating agency Moody's downgrade has had an impact on China's debt resolution. However, I believe that we should not rely heavily on the rating results of rating agencies, but should focus more on our own development and risk control. Solving the debt problem requires not only active guidance and supervision, but also the effective operation and participation of the market. We should strive to promote market-oriented reforms, improve the development and regulatory system of the bond market, improve the liquidity and transparency of the bond market, attract more investors to participate in the bond market, and promote the process of debt resolution.
At the same time, we should also strengthen the construction of risk management and early warning mechanisms, strengthen the monitoring and assessment of debts, and detect and respond to potential risks in advance. In addition, we should actively promote structural reforms to reduce the debt burden and generate more revenue** by promoting economic growth, transformation and upgrading, so as to provide a more solid foundation for debt resolution. In short, China's debt problem, although huge, can be resolved through effective measures. Through market-oriented reforms, the construction of risk management and early warning mechanisms, and the promotion of structural reforms, we can effectively manage debt risks, promote debt resolution and sustainable economic development.