US Treasury Secretary Timothy Geithner sought to reassure investors before markets opened on Monday, slamming a historic US credit downgrade as a “terrible judgment” and insisting the US economy is strong.

Geithner spoke in a television interview even as G7 central bankers and financial chiefs pledged to take “take all necessary measures” to support financial stability and growth in the wake of a Eurozone crisis and the US credit downgrade.

Stocks prices fell sharply at the opening of Asian markets but clawed back some of their losses as trading continued.

Standard and Poor’s stunned Americans on Friday when it lowered the credit rating for US Treasuries for the first time ever from a sterling AAA to AA+, pointing to the deep divisions in Washington over its long-term fiscal standing.

“I think S&P has shown really terrible judgment and they’ve handled themselves poorly, and they have shown a stunning lack of knowledge about basic US fiscal budget math, and I think they came to exactly the wrong conclusion,” Geithner said.

Geithner used the interview with NBC News and CNBC to assure investors that the US economy remains strong and resilient despite the political battles in Washington, and that US Treasuries were as safe as ever.

“There is no risk the United States of America would ever not be in a position to meet its obligations,” he said.

A deal reached by Congress to cut some $US2.5 trillion ($A2.4 trillion) over 10 years in exchange for raising the congressionally-set debt ceiling fell short of the S&P’s call for the United States to cut $US4 trillion over the same period.

Members of congress, meanwhile, spent the day blaming each other for the credit downgrade, with some Republicans calling for Geithner’s resignation.

But the White House said Geithner would stay on at Treasury, ending speculation that he would leave after two-and-a-half years in the hot seat during a period that saw the US economy plunge into the worst recession since the Great Depression.

Former US Federal Reserve chairman Alan Greenspan, speaking earlier on NBC, said he believed the markets would react negatively to the downgrade and that it was “going to take a while to bottom out”.

The credit downgrade “hit a nerve”, an indication “that there is something basically bad is going on. And it’s hit the self-esteem of the United States, the psyche. It’s having a much profounder effect than I conceived could happen”.

Greenspan, however, said that US Treasury bonds were still a solid investment.

“This is not an issue of credit rating. The United States can pay any debt it has because we can always print money to do that. There is zero probability of default,” Greenspan said.

Obama’s former top economic adviser Larry Summers, appearing on CNN’s State of the Union, attacked the S&P downgrade as an unwarranted piling atop an already weak economy.

Summers said the country could pay its bills, and repeated the administration’s allegations that S&P’s decision to downgrade was linked to a $US2 trillion accounting error and its use of a faulty baseline.

In an early vote of confidence from Tokyo, Finance Minister Yoshihiko Noda on Monday said that Japan – the second largest holder of US Treasury bonds after China – will continue investing in US Treasuries despite the downgrade.

In Beijing, however, China’s official Xinhua news agency said in a commentary that US politicians needed to stop blaming each other over the downgrade and find solutions.

“The alarm has rung. It is time for the naughty boys in Washington to stop chicken games before they cause more damages,” it said.

The Chinese government has yet to comment publicly on the downgrade.

As of late June, China sat on the world’s biggest foreign exchange reserves of about $US3.20 trillion.

S&P’s managing director, meanwhile, said there was a one in three chance of a further downgrade in the next two years, clarifying the “negative” outlook it first gave to the United States in April and again pointing to Washington gridlock.

“If the fiscal position of the United States deteriorates further, or if the political gridlock becomes more entrenched, then that could lead to (another) downgrade,” S&P ratings head John Chambers told America’s ABC television network.

“The outlook indicates at least a one in three chance of a downgrade” over the next six to 24 months, he said.

Democratic and Republican politicians continued the finger-pointing over the downgrade debacle on Sunday.

Democratic Senator John Kerry described it as a “Tea Party downgrade,” referring to the ultra-conservative anti-tax movement, and said a debt deal reached after weeks of heated negotiations fell short because some Republicans “were willing to shoot the hostage”.

“What we need is a Washington that stops this bickering,” Kerry told NBC’s Meet the Press.

Republican Senator John McCain, also appearing on NBC, blamed Obama, saying he had failed to put forth a specific debt plan.

“I agree that there is dysfunction in our system, but a lot of it has to do with the failure of the president to lead,” he said.