III. Only by Constructing a New International Credit Rating System Can the World Get Rid of the Credit Crisis 
    The world economy based on credit relationship has its special laws governing the movement of the internal contradictions; our capabilities to deal with the crisis are subject to our perceptional level to the laws.
     (I) Credit crisis is a process to adjust the credit relationship.
The global credit crisis is a violent damage to the international credit system triggered by the credit defaults arising from the most fragile section in the global credit chain; it is a process that virtual credit relationships are dissolved and real credit relationships are established. 
    Since over half a century ago, the global credit revolution led by Western developed countries has promoted credit socialization, credit relationship globalization as well as credit system internationalization; this process has built the new world economic system characterized by credit economy; this system consists of two parts, namely the credit creation system and value creation system, the essence is the relationship between production and consumption. Briefly speaking, the former creates market consumption demand via credit relationship socialization, while the latter is the material wealth production system, and the two systems are mutually conditional. To be more specific, the credit creation system is comprised of three types of systems, namely, the money, credit and rating systems, among which the credit system is the core carrier; the money system is the value comparison system for the credit system; the rating system decides the formation and development of the credit system; the value creation system consists of three types of systems, namely, the investment, trade and production systems. The international credit system is a credit chain set up by every creditor and debtor, it is the sum total of global credit relationships; it configures the credit resources for the value creation system by means of credit and debt, it is the capital flow artery underpinning the global value creation system, so its circulation status directly decides the trend of the world economy. As the credit relationship is established according to the rating information, so the quality of information provided by the international credit rating system decides the status of the international credit system. Practice and studies indicate that the social credit relationships are virtualized and have bubble qualities because the current international rating system continuously outputs wrong rating information; every credit relationship unsupported by real solvency in the international credit system faces debt repayment crisis, with the rupture of the U.S. subprime loan credit relationship – the most vulnerable section in the global credit chain as the breach. The direct indication of credit crisis is the deleverage of funds supply, which makes the parties concerned amid the credit chain in a funds-exhaustion status of crisis. 
    The credit relationship adjustment will experience four phases as per its intrinsic development logic: 
    1. Debt crisis, refers to the overall turbulence of the international credit relationships triggered by the exacerbation of credit risks of the heavily-indebted countries, and the global credit-debt relationship enters a phase of overall adjustment. The financial system of big debtor countries is the section with the most concentrated international credit relationships. When the long-accumulated contradiction between the credit relationship and wealth creation capability exceeds the critical point, the financial tower built on layers upon layers of credit relationships get to the edge of collapse in an instant. The shock wave thus generated instantly triggered the domino effect for the international credit system. The security of the financial system concerns the survival of a nation; the government relieves the crisis provisionally by means of injecting credit into financial institutions; however, when the government is deeply in debt, it can only rely on increasing the government debt size to implement such a huge bailout program in a short term, which further intensifies the government's credit risk. Consequently, the debt crisis in the financial sector is soon turned into a sovereign debt crisis. The sovereign credit relationship that is at risk of breaking instantly threats the normal operation of the state apparatus; at this moment the government starts to adopt the extreme measure of currency depreciation to prevent the drastic damage of credit relationship as it is unable to address the crisis by continuing to raise huge amount of debts. Thus debt crisis evolves into the currency crisis phase. 
    2. Currency crisis, the debtor country that is entitled to issue international reserve currency takes the extreme economic action of currency depreciation in an attempt to contain the collapse of the regional credit system; it induces the depreciation of various local currencies one after another, with the currency prices dramatically deviating from the value. The original currency comparison pattern in the international monetary system does not exist any longer, and the currency crisis will expedite the course of credit relationship adjustment. The act of enabling the bill printing press to provoke the world credit war demonstrates the helplessness, hysteric and hopelessness of the crisis-ridden country. Global currency depreciation is extremely harmful: The continual dramatic depreciation of the monetary system with the value measurement function is undoubtedly a fatal blow to the crisis-plagued international credit system; currency crisis makes the global creditor assets shrink, and debtors' solvency decline completely; the credit relationship will undergo adjustment in the form of more default cases. Currency crisis will take on a complicated situation that both the international reserve currency and the international credit system experience adjustment in parallel; the international reserve currency that lacks support of wealth creation capability will be replaced by another currency that has a solid foundation of wealth creation capability; the change of the value measurement basis makes it more difficult to measure the debtors’ default risks. Currency crisis indicates the overall crisis of the entire world value creation system following the rating crisis and credit system crisis; all the constituents of the value creation system are in crisis, which will severely hit the wealth creation capability of the real economy, pushing the global credit crisis to the economic crisis phase.  
    3.Economic crisis, referring to the continuous recession in the global consumption and production as the credit bubble is squeezed out due to the credit relationship adjustment, and this will be the turning point for the credit relationship adjustment.  The economic crisis in the process of the credit crisis is different from the traditional economic crisis in that it does not generate products surplus, rather, it is damage to the existing production capacity of the real economy resulting from the reduction of credit consumption and funds supply during the credit relationship adjustment. The deleverage of funds supply manifested in the debt crisis takes on a reduction status to all debt consumption, including the production consumption engendered in the form of debt; the previous balance between production and credit is broken, and the production sector cannot maintain normal production due to lack of sufficient funds support. Although currency crisis increases funds supply, the macroeconomic and credit environment deteriorates, unconventional liquidity surplus creates overall inflation, making the production sector all the more difficult; in this context, the debtor economies will get into an economic recession period, while the creditor economies will also start to lower their economic growth velocity. The overall long-term downturn of the world economy thus begins, and the credit crisis will evolve into its overall crisis phase. 
    4. Overall crisis, the deep adjustment of international credit relationship results in the value regression of the world credit creation system, extremely compressing the space of increasing the consumption scale on credit, and the world value creation system deprived of the support of credit consumption enters an overall recession phase. In accordance with extent of deviation of the credit relationship from the material wealth creation capability, the credit relationship takes on three morphologies, namely the realistic, future and virtual credit relationships. These three credit relationships represent the depth in credit relationship adjustment as well as the level of impact to the value creation system. The evolving process of the three forms of international credit relationship has such a pattern: the countries entitled to issue international reserve currency make the world credit creation system while the emerging creditor economies make the world value creation system; the essence of this pattern is that some countries whose own production cannot meet their consumption demand create credit purchasing power to consume the material wealth produced by other countries. Fundamental changes will taker place to the status that the contradiction between production and credit is the driver for the world economic growth across the globe along with the deep adjustment of credit relationship. The deep adjustment of credit relationship is the overall adjustment of credit resources status decided by value creation capability to the credit creation capability. The possession of the right to issue international reserve currency, international financial center (credit transaction center) and say in international credit rating sector enable Western developed countries to have super credit creation capabilities, and to occupy over 90% of the global credit resources through credit relationship; yet the value represented by the credit resources occupied is far deviated from their own wealth creation capabilities. The crisis in the previous three phases fundamentally undermines their credit creation capabilities. The credit relationships broken by the debt crisis cannot be restored to form new credit demand, the currency crisis set the direction that the existing international reserve currency will exit from the leading position, the recession of the real economy ensued from the economic crisis intensifies the deviation of credit relationship from the real material wealth. At this junction, the international financial center and the say in the credit rating sector will move to the emerging creditor economies; the world credit creation system will witness an overall decline, exerting tremendous and far-reaching impact on the world value creation system. The future and virtual credit relationships with developed debtor economies taking too high a proportion will witness dramatic adjustment as they deviate too much from the wealth creation capabilities of their own countries, to realize the self-balance between the credit and production; the immanent laws governing money supply, wealth creation capabilities and inflation will play their roles once again; the states are no longer able to resort to monetary and fiscal means to maintain the credit relationship deeply in crisis; their local value creation system will also suffer from fatal impairment. It still takes more time for the bubble credit relationship formed in an unconventional manner in the creditor economies when they are coerced by the global inflation to be subdued; as their space for credit creation is so limited that it is difficult to make credit relationship creation as impetus for economic growth; the vanishing of the credit creation system manipulated by Western debtor countries forces emerging creditor economies to reconstruct external economic growth driver; from now on these countries will witness a low economic growth period.  The overall crisis is the terminal point of the credit crisis, while building a brand new balanced relationship between global production and credit will signify the end of crisis. 
    Essentially, the global credit crisis is the contradiction between the credit and debt as a consequence of the imbalance between production and consumption across the globe when the Western developed countries take advantage of the right to issue international reserve currency and the say in the international credit rating sector, persistently over-consume the material wealth through liabilities beyond its own wealth creation capabilities, so that the world wealth production can hardly sustain the consumption of these countries; and the contradiction is presented in the form of credit crisis. Such dramatic adjustment of credit relationship directly impacts on the interests of debtors, and they will resort to every means to maintain the existing credit-debt relationship; such an action are interactive with the force of credit economic laws. This situation determines that the adjustment of credit relationship will undergo an extremely long period, and man will experience the trial of the most grim moment in the global credit crisis. 
     (II) The traditional way can hardly check the recession of the world economy. 
    In the second fifty years of the 20th century, the driver of the world economic development changed from the contradiction between production and consumption to the contradiction between production and credit; the form of expression of contradiction also changed from economic crisis to credit crisis. Therefore, the approach that mankind deals with the crises should reflect their different essential requirements. 
    The economic crises happened in history were production surplus crises in the advanced economies, and the crisis-stricken countries adopted credit expansion policies to increase the market consumption capabilities, which enabled them to survive one crisis after another. To rescue economic crisis through repeatedly expanding credit scale is a process to successively accumulate debts and to promote the credit risk from quantitative change to qualitative change. The power of capital promotes the combination of credit with consumption: being in debt becomes a mode of consumption, credit consumption becomes an economic system in developed countries; the development and occupation of the credit resources is a new form of capital appreciation and the principal means to resolve economic crises, the fields and scope of the development of credit resources embody the width and depth of credit consumption as well as the level of debt burden. The scope of the development of credit resources includes the country, society and the entire world; the depth of the development of credit resources is presented as the realistic, future and virtual credit; the form of the development of credit resources includes monetary and fiscal policies, various market financing instruments and various financial derivatives. The crises in the past 50 years have repeatedly proven: Stimulating consumption increase by means of credit makes the total level of debt of the major developed countries exceeds multiple times of the amount of wealth created in the year; over-consumption of the future makes these countries so highly indebted that it is absolutely impossible to repay the debt through wealth increase, approaching the critical point of credit crisis. 
    The ongoing credit crisis is the consumption surplus crisis in developed economies, so it is difficult for the debt-ridden countries to survive this different crisis by resorting to expanding credit once again. Consumption surplus means the consumption capabilities that the developed economies have acquired in the form of credit and debt far outweigh their realistic material wealth production capabilities; it is the absolute surplus of virtual consumption that severely lacks the support of real wealth, whose essence is the excessive imbalance between the consumption and production as a result of the stimulation of the consumption growth by a long-term reliance on expansion of debt size. The fundamental difference between consumption surplus and production surplus is that the former is the surplus of consumption capability developed in the form of credit, and what the credit consumption capability represents is the virtual wealth surplus, a manifestation of consumption capability exceeding production capability; while the latter is the surplus of real wealth creation capability and products, a manifestation of production capability exceeding consumption capability. In the twentieth century, what the developed capitalist countries faced were largely production surplus crises, and three different approaches were used to resolve the crises: One approach was the hard-landing way by which production capacity was cut and excessive products disposed; another approach was the war way; still another was the credit way. Especially since the world credit revolution, after the dollar became the form of expression for the value of the material wealth in the world, a broad global consumption market could be provided for capital by increasing the dollar supply and continuously tapping credit demand by means of credit, which resolved the problem of production surplus to a certain extent; the historical change in the real economic structure made it difficult for production surplus in the general sense of the term to appear again in developed capitalist countries; actually, the advanced economies that are entitled to issue international reserve currency and the say in the credit rating sector controlled the leading power to adjust the global consumption demand through the way of credit; this has enabled them to create the legend that production surplus crises could be successfully resolved one after another by means of credit such as exploiting monetary and fiscal policies in half a century. Long-standing and excessive credit consumption makes the accumulated debts of these countries overwhelmingly exceed their real wealth creation capabilities; by the end of the last century, the major capitalist countries in the world had already been in the eve of credit crisis. In the first decade of this century, the unprecedented credit crisis broke out in the home town of economic crises, and this crisis engulfed the entire world with a momentum like a tsunami, this is by no means the transmigration of the economic crisis occurred eighty years ago, which was engraved on the memory of several generations of people; rather, it is a consumption surplus crisis that is completely different from economic crises and that the human society has never experienced before. The crisis-stricken countries continue to adopt the credit way to rescue this deeply influential credit crisis; compared with the last century, the current government could not remain calm and unhurried as it does not enjoy the credit resources advantages any longer, because there is no room to adjust interest rate and exchange rate, fiscal deficit is at a very high level, and monetary and fiscal policies perform practically no function; raising the debt revenue and increasing bill printing amount become the last credit resources to which the government can resort. Injecting funds into the financial system at the forefront of the crisis resulted in the government holding the financial shares while the financial institutions holding treasury bonds, and it triggered sovereign debt crisis while containing the financial system from crash. The decline of the government's solvency will surely push the crisis in the financial system to a new stage; in order to relieve the sovereign debt crisis, the austerity policy adopted by the government will trigger social and political crises. The act of exporting debt through currency depreciating by countries that issue international reserve currencies brought about other countries’ following devaluation of their local currencies, pushing the credit crisis to the phase of global currency crisis, increasing the credit supply by abnormal approach failed to effectively prevent the deepening of crisis as well as the consequential economic and social impact; additionally it deteriorated the international macro-economic and credit environment, further impaired the balance between the production and consumption across the globe, making the prospects of the world economy look even dimmer. Cognitive and interest limitations are the root cause of people’s difficulty in finding the right approach to rescue this crisis. Up to the present people are still using the concept of financial crisis to define the credit crisis, which makes it difficult for the human society to discover the inherent law of development for the crisis using the right cognitive methodology, to break through the constraint of traditional theories and methods and to innovate a constructive idea to rescue crisis.  The crisis-affected countries are not willing to lose the vested interests by cutting the excessive consumption, and run the risk of retaining the credit consumption bubble that is doomed to burst. Cutting the surplus consumption in order to realize the balance between consumption and production is the essential requirement of the credit economic law for the world economy to get out of the crisis; economic recession is the inevitable turning point for the crisis-ridden countries to touch the bottom of crisis and realize economic recovery. Any means and approach that is deviated from the immanent law of development of credit crisis would be difficult to save the world economy. 
    (III) Reconstruction of the double systems is the only way for the world economic recovery 
    The double systems refer to international credit system and rating system, treating the reconstruction of these two systems as the roadmap for the world economic recovery is decided by their position in the world economy.
Modern world economy is a credit economy composed of global credit creation system and value creation system; the credit creation system is a system to create consumption demand through credit supply while the value creation system is a system to produce material wealth. Essentially, the world economy is the process of movement of the relationship between production and consumption or between production and credit. The consumption created by credit is fulfilled by the interaction of the money system, credit system and rating system, among which, the money system is the foundation of measuring the value of the credit system, the rating system is the premise to establish and stabilize the credit system, and the credit system assumes the function of providing funds for various economic and social organizations, resembling blood transfusion, it can be compared to the heart and engine of the world economy.  Credit vs. rating is the principal contradiction of the world economy, and rating is the principal aspect of the contradiction. Objectively, the credit socialization is a process that credit relationship is established and credit system is formed, it relies on the credit risk information provided by rating for survival and development, and the quality of credit system is subject to the rating quality. The global credit crisis is the general outbreak of the contradiction of untrue credit relationships established on long-standing wrong rating information by the international credit system and rating system in violation of objective laws. The adjustment process of the credit system is a process of dissolution of the credit relationships that are not underpinned by real solvency, it is presented in the form of debt crisis, and its essence is that the proportional relationship between the credit creation system and value creation system is adjusted across the globe to solve the problem of the extreme imbalance between production and consumption. 
    The essence of the world economic recovery is to realize the rebalance between production and consumption; in the premise of the credit relationship as economic basis, it means to cut the surplus consumption shown in the credit relationship lacking the support of solvency, in order to make the relationship between production and credit regress to a reasonable level. The idea that the world economic recovery means the world economy should be restored to the pre-crisis level or maintain a strong growth deviates from the essential requirement of credit crisis; the act of increasing credit supply to rescue the credit crisis is the very expression of such an idea. The above-mentioned analysis tells us that human beings must seek the solution to the crisis from studies on the cause of crisis.  
    1. It is fundamental for the world economic recovery to establish a new international credit system.
The process of credit socialization promoted by the world credit revolution is the process for the international credit system to come into being; when the international credit system unnoticeably became the basis and core component of the world economy, the contradiction between capitalist production and consumption made this system gradually deviate from the support of the wealth creation capability to evolve into the virtual and bubble-featured development stage. From the macro perspective, the current international credit system consists of the credit system and debt system, and the credit system distorted normal credit-debt relationship and developed in an imbalanced way for a long time; developed debtor economies enormously occupied the material wealth created by the debtor economies in the form of debt in the context that their wealth creation capabilities were insufficient by means of lavishly issuing of currency, excessively developing the future credit resources, and “innovating” credit relationship; however, the developed debtor economies have not made their due contribution to the world economic growth, and it is out of the question that they could repay their debts through their own material wealth creation; rather, they could only break through the debt ceiling time and again and maintain their survival by continuously eroding the interests of creditor economies. Actually the current international credit system serves as a tool to transfuse the interests of the creditor economies to the debtor economies in the form of credit and debt; the collapse of the solvency in the debtor economies enabled the process of adjustment for this system, thus the world economy lost the driving force for growth and entered an unprecedented term of recession. Practice tells us that what is presented by the global credit crisis is a world economic crisis triggered by the severely imbalanced international credit system, creating a new international credit system that fully represents the fundamental principles of credit relationship is actually recovering the world economy. The international credit system concerns the secure development of the world economy, this perspective that the holistic interests of the human society is concerned, must be adopted in putting forward the principles and objectives for constructing a new international credit system. The guiding principle for constructing the new international credit system is to comply with the decisive role of wealth creation capability on the credit relationship and to develop credit relationships based on real solvency; its fundamental principles are: (1) To effectively contain the countries entitled to issue international reserve currencies from creating credit demand by over-issuing currencies beyond their wealth creation capabilities, and to encourage the currency that is underpinned by value creation capability to be emerging international reserve currency; (2) To strictly limit the development of credit demand based on the material wealth that could be created in the future, and to include the debt ceiling into the global economic governance mechanism; (3) To strictly prohibit the innovation of virtual credit demand. Every set of credit relationship need to be guaranteed by the debtor’s solvency, the credit system of all countries and regions should have the balancing capacity to repay the debt, the international credit system should achieve the overall balance between the debt service resources and debt level so as to make the international credit system become a credit consumption system with adequate solvency as the precondition, and also become a positive force to push forward the balanced and sustainable development of the world economy. The current and future material wealth creation capabilities are the cornerstone of new international credit system, and the credit consumption capability indicates the ceiling of the world economic growth; human beings must discard the model of the world economic growth that is driven by debt increase and at the cost of credit crisis; promoting the world economic recovery is to achieve the balanced growth between production and consumption and production and credit. Therefore, the first and foremost task of the world economic recovery is to enable many tremendous proportional relationships in the world economy to get into a healthy development status and to achieve a quality growth by cutting the surplus credit consumption and adjusting unreasonable credit relationship. For this purpose, economies in the creditor’s and debtor's status alike should assume the responsibility of reforming the international credit system. 
    The economies whose debts exceed their own solvency should take the initiative to lower the systematic risk of debt service by cutting the debt volume, instead of trying to maintain the fragile credit relationship by borrowing new debts to pay back the old; these economies will face a protracted period of economic recession, instead of growth; economic recession is an indispensible course of recovery, and this historical process in the world economy should be taken on their own initiative. 
    The economies that have the real solvency should weigh their debt ceilings, raise debt rationally and have effective debt management, and avoid debt crisis; these economies are the backbone to establish the new international credit system, the balance between the debt and economic growth is decisively significant for the stability of the international credit system.  
    The economies in the creditor's status should cut their creditor investment in the economies hit by the debt crisis; these economies are the active force in promoting the construction of the new international credit system; they will certainly prevent the international credit relationship from ultimate falling-apart by sacrificing creditor’s interests; they will surely experience an economic slowdown. 
    The adjustment of the existing credit relationships and the establishment of the emerging credit relationships will accompany the entire process of constructing the new international credit system; the human society baptized by the credit crisis should have a clear understanding of this. 
    2. Building a new international credit rating system is the premise for the world economic recovery. 
That the infinity of production expansion requires the credit increase to meet its needs is the root cause of the pro-cyclicality of the world economy; the task of credit rating is to make a scientific assessment of credit resources ceiling available for every debtor, to determine the balance of credit supply and demand for every credit relationship, to realize the overall balance between the global credit supply and demand as well as the effective balance between the credit creation system and value creation system, in order to avoid solving the pro-cyclical risk of the world economy via the credit crisis. Credit rating is the only active strength that can prevent the consumption surplus crisis generated by the pro-cyclicality of credit increase to meet the demand of production expansion. The international credit rating system exerts its impact on the world economy as the credit relationship established to reveal the credit risk of every debtor across the globe determines the stability of the international credit system; thus, whether the international credit rating system can represent the essential requirements of the international credit system becomes the premise of the world economic recovery. 
    As the international credit system concerns the sound development of human economic society, the public responsibility of the rating system is decided therefrom; objectively, it requires that the benefits of credit rating agencies should be subject to the public interests; Introducing the general market principles into the credit rating sector would make credit rating agencies forsake the public interests in pursuit of their own benefits. 
    The biggest vulnerability of the international credit system lies in the interaction of credit default risk: it is a set of dominoes, the risk of each falling piece can generate systematic risk; thus the universality of the credit rating system is decided; objectively, an international credit rating agency that can represent the common interests of the human race is called for to reveal the global credit risks, as any local or regional credit rating agency can hardly assume the responsibility for the entire world. 
    What is embodied by the international credit system is the interest relationship between capital owners and occupants; this capital combination morphology realizes its appreciation through getting involved in social reproduction in the form of credit relationship, it is a cross-border interest transaction, so the impartiality of the credit rating system is decided therefrom; objectively, a credit rating agency that does not represent the interests of any particular group is called for to provide the market with impartial rating information. 
    The international credit system is a global circulation regime for capital, and the comparability of the credit information of every debtor is the basis of effective circulation of capital; so it is decided that the credit rating criteria be international and consistent; objectively, internationally unified rating criteria are called for to measure the credit risks of different debtor economies so as to ensure the comparability of the rating information.  
    The fundamental difference between the new international credit rating system and the old one is as follows: The new system embodies the essential requirements of the international credit system from the regime and mechanism perspective, represents the holistic interests of the human society; the new credit rating methodology to seek balance between credit resources supply and demand is utilized for providing early warning of the world pro-cyclical risk promoted by the infinite expansion of production; it is able to assume the rating responsibility for the world, and it is a preventive system against global credit risks in the true sense of the term; in contrast, the old system violates the development laws of credit economy from the regime and mechanism perspective, represents the interests of the world’s biggest debtor group; its credit rating methodology boosts the global credit frenzy, it is unable to assume the rating responsibility for the world, and it is a destructive force for global credit system. 
    The ideas on the reconstruction of the double systems vs. the world economic recovery go beyond the economic thoughts and theories that are familiar to the human race; when the human society still have difficulty in realizing the world economic recovery by using the traditional ideas and methods it should resort to the thought on credit economy to find the solution of rescuing the credit economic crisis. 

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