If you think that the credibility of international credit rating agencies passed from AAA to BB- during the 2008-09 global financial meltdown, think again. They have lost none of their edge when it comes to working up market fright. Witness this week's turmoil in international financial markets wrought by Standard & Poor's (S&P) downgrading of the US credit rating from AAA to AA+ on August 6. But the other two premier global rating agencies, Moody's and Fitch, have not downgraded the US. So, it's odd that this time around, there was no chorus demanding 'rate the rating agencies'. That was the call heard often during the financial crisis as securities based on US subprime mortgages that were rated AAA by S&P and other agencies turned out to be highly toxic and caused financial ruin across the world. They had also given similar gilded ratings to Lehman Brothers and AIG just before they went belly up. Some say S&P is playing smart now. However, the talk this time was, 'let us not shoot the messenger'. It was apparent for some time that the US economy was heading towards the dumps, and the world fretted about it. Three days before the S&P downgrade, China's largest state-approved rating agency Dagong had slashed US credit rating from A+ to A-, citing the deteriorating debt repayment capability. Last November, Dagong had downgraded the US after the Federal Reserve decided to continue its ultra-loose monetary policy. So, the Chinese were quick to jump on S&P's move. In a scathing editorial on August 6, the state-run Xinhua heaped ridicule on US financial policies and declared the downgrade was an "overdue bill that America has to pay for its own debt addiction". It said the US spent too much on military and entitlement programmes, lived beyond its means, and should expected more downgrades if no substantial reforms are enacted. "The US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," the editorial went on. For some time, the Chinese state-run media has been busy inventing a fantastic dark world of American-style capitalism's decline. But note the high road of sermonising taken now, in English, for foreign audience. Reports suggest that the reaction of the Chinese media in Mandarin was a cross between schadenfreude and outright gloating. Anyway, Xinhua didn't let any prized US state secret out. Everyone knows that if the US doesn't trim its fiscal and trade deficits and curb its debt-induced spending binge, it was asking for trouble - and for others as well. That's econ 101. And no one doubts China's right to criticise the US. With its stockpile of $1.16 trillion in US Treasury bills - and likely more amassed through overseas entities - China is the largest foreign holder of American debt.

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