Ratings

The Chinese have ceremoniously downgraded US government debt from AAA to AA something. It is not clear which credit rating matrix was employed but at the very least consideration of the dollar as the reserve currency and medium for oil purchases seemed irrelevant to the calculation.

The Chinese, though, have increased the purchase of US agency debt (fannie and freddie) to keep the US homeowners in their homes, leveraged, and willing to buy cheap Chinese stuff at Walmart. The Chinese had to because the Fed is rolling over maturing Agency payouts into Treasuries.

The Chinese downgrade, though viscerally pleasing, has no practical effect on global capital markets in 2010 but foreshadows say 2030 when the Chinese exchange dollar reserves for Martian development rights