U.S. President Barack Obama remained largely silent as China, the largest foreign holder of U.S. debt, demanded Saturday that America confront its "addiction to debts" in the wake of Standard & Poor's decision to downgrade the U.S. credit rating.


A statement from Carney said talks that produced Tuesday's $2 trillion US compromise on raising the country's borrowing limit had been too drawn-out and "divisive." But the statement didn't directly address Friday's move by Standard & Poor's to drop U.S. government debt to AA+ from triple-A.

However, later in the day administration officials sharply disputed S&P's judgment and challenged its numbers, saying the deal's deficit-cutting value had been drastically understated. They charged the company's analysis was rushed and faulty.

"The magnitude of their error combined with their willingness to simply change on the spot their lead rationale in their press release once the error was pointed out was breathtaking," said Gene Sperling, head of the White House council of economic advisers. "It smacked of an institution starting with a conclusion and shaping any arguments to fit it."


The downgrade delivered a potentially serious blow to the nation's struggling recovery, raising the prospect of higher interest rates and continuing stock market losses after the big selloff of the last two weeks.


The day began with Chinese officials issuing a blistering commentary on the situation.

Official response



China, as the largest creditor of the United States, says it 'has every right now to demand' the U.S. address its structural debt problems and 'ensure the safety of China's dollar assets.' (Tyrone Siu/Reuters)




With Obama absent in replying to the S&P downgrade, it was up to aides to defend his administration, noting that two other ratings agencies — Moody's and Fitch — are for now keeping the triple-A rating for U.S. debt.


Accept supervision


Last month, China's top general, Chen Bingde, also linked America's financial woes to its military budget and asked whether paring back on defence spending wouldn't be the best thing for U.S. taxpayers.




Jitters felt in Asia


