But John Chambers, managing director and chairman of S&P's sovereign ratings committee, explained to Fox News on Saturday that the downgrade was "motivated by a number of factors. One was the political gridlock in Washington, which make us think that it's going to be difficult for elected officials to put the fiscal profile of the US government on a long-term sustainable path," he said.

"And part of it was because of the fiscal path itself," he said, explaining that US debt accounts for 75 percent of gross domestic product and will "trend up over the next decade unless we get additional fiscal measures than what we have on the table right now." The agency was also worried that the eleventh-hour budget deal reached last weekend fell short of S&P's expectations, he said. S&P was seeking $4 trillion in budget cuts over the next decade. But Congress passed a plan on Tuesday that slashes up to $2.4 trillion in cuts over that time.

"If you get to the $4 trillion figure - which had been mentioned by the Bowles-Simpson commission, which had been mentioned by the president in his April 13 speech, which had been mentioned by Paul Ryan in his alternative budget - that, if you have decent growth behind it,would have done the trick," Chambers said.

Some Democratic lawmakers reacted to the downgrade by attacking S&P's credibility. "I find it interesting to see S&P so vigilant now in downgrading the US credit rating," said Senator Bernie Sander, a Vermont independent who votes with Democrats.

"Where were they four years ago when they, and other credit rating agencies, helped cause this horrendous recession by providing AAA ratings to worthless subprime mortgage securities on behalf of Wall Street investment firms?" he said. "Where were they last December when Congress and the White House drove up the national debt by $700 billion by extending Bush's tax breaks for the rich?"

Massachusetts Representative Barney Frank, the top Democrat on the House Financial Services Committee, said that the rating agencies have a horrible record and people should pay no attention to them.

Slim, 71, has taken a hit as Mexico's benchmark IPC index dropped 6.4 percent and the peso slid 2.3 percent against the dollar on concerns that the flagging US economy will hurt demand for assets in its southern neighbor. The removal of three of Slim's companies from the IPC index has made matters worse for the billionaire.

"He's been particularly hurt by those companies leaving the IPC," said Leon Cabrera, a trader at Mexico City-based Vanguardia Casa de Bolsa. "It reflects the nervousness out there. It's part of being in the market." America Movil SAB, the biggest wireless carrier in the Americas and Slim's largest asset, has declined a relatively benign 6 percent this week. Its Telefonos de Mexico SAB unit has been Slim's only gainer in Mexico, rising 11 percent on the parent company's offer to buy out minority shareholders.

Slim was named the world's richest man for a second year in a row by Forbes magazine in March. Bill Gates and Warren Buffett, second and third on the magazine's list, have had better weeks, at least for their biggest holdings.

But other countries, such as Australia, France and Japan, said they retained their faith in US bonds. The downgrade ended a week of growing uncertainty for the world economy. Fears that the US might be headed for a double-dip recession and the eurozone's debt problems were set to spread to Italy and Spain saw stock market sell-offs around the world.

The downgrade is a major embarrassment for the administration of President Barack Obama and could raise the cost of US government borrowing. This in turn could trickle down to higher interest rates for local governments and individuals. One initial estimate says that could add an extra $75 billion (46 billion pounds) to the US annual interest rate bill at a time when its debt levels are already high.

The other two major credit rating agencies, Moody's and Fitch, said they had no immediate plans to follow S&P in taking the US off their lists of risk-free borrowers. S&P said in a report issued late on Friday that the US budget deficit reduction plan passed by Congress on Tuesday did not go far enough.

It also said "the political brinkmanship" over the debt reduction plan showed that "the effectiveness, stability, and predictability of American policymaking and political institutions have weakened". S&P had threatened the downgrade if the US could not agree to cut its federal debt by at least $4 trillion over the next decade. Instead, the bill passed by Congress on Tuesday plans $2.1 trillion in savings over 10 years. S&P also said it might lower the US long-term rating another notch to AA within the next two years if its deficit reduction measures were deemed inadequate.

In one of the biggest waves of protests in decades in Israel, demonstrators are demanding government action to reduce the cost of housing and food. Some protesters have also set up camp in city centres. Police spokesman Micky Rosenfeld said that as well as Tel Aviv and Jerusalem, an estimated 20,000 people had taken part in protests in other towns and cities. "Our numbers are more than 250,000 people across the country," he told AFP news agency.

Israeli media put the number of protesters closer to 300,000. It was the third Saturday of protests in a row. The BBC's Wyre Davies in Jerusalem says most of those taking part were middle-class professionals who say their salaries cannot cover basic expenses including housing and childcare. The protesters have been inspired by social uprisings in the Middle East but instead of seeking political change are demanding that the government take action over the soaring cost of living, he adds.

"It's hard to live in this country," said 26-year-old student Ehud Rotem, who joined the Jerusalem protest. He told AP news agency that Israelis perform their mandatory military service, work and pay high taxes but "still don't earn enough to finish the month".

Power supplies were cut off in many areas on Tuesday, dozens of flights and ferries were cancelled, and schools and offices were closed. Forecasters say the storm should pass into the South China Sea on Thursday. The storm hit Camarines Norte province earlier in the week with gusts of 56mph (90km/h). A disaster-response official described it as the province's worst flooding in five years.

Regional civil defence chief Rafaelito Alejandro said at least 20 people had died in Bicol region - most of whom had been buried in landslides. Officials fear that the death toll could rise, and many of the dead are likely to be fishermen who were out at sea when the storm hit. The Philippines is regularly hit by powerful storms during the typhoon season. Nock-Ten, named after a bird from Laos, is the tenth storm of the season.

At least 140 flights have been cancelled and rail services disrupted. Muifa brushed past Shanghai on Sunday bringing high winds and heavy rain, but did not make its expected landfall. Meteorologists, who earlier predicted Muifa would reach land in Zhejiang province or Shanghai at the weekend, said Muifa would probably make landfall near Qingdao city, in Shandong province, early on Monday.

China's National Marine Environmental Forecasting Centre has upgraded its warning to a red alert - the highest possible - for shipping in the East China sea. Muifa has already battered the Philippines - where it caused flooding - Taiwan and Japan's southern island of Okinawa, which was hit by blackouts. The typhoon is being described as the most serious to threaten the region since 2005, when Typhoon Matsa killed 19 people, including seven in Shanghai.

That means the world's stock of top-quality security against which loans can be raised has been drastically shrunk. It means also that governments everywhere, including Britain, will find major investors such as the Chinese reluctant to buy sovereign debt, preferring to put their money into hard assets such as commodities, agricultural land and mines.

This weekend's US downgrade by Standard & Poor's sent shockwaves around the world, despite being not entirely unexpected. As a rule of thumb, countries stand to lose the coveted triple-A credit rating once their national debt comes close to or exceeds 100 per cent of annual national output. The 11th-hour deficit-reduction deal struck by Congress a week ago failed to avert this prospect, although there had been hopes that America's unique economic clout could make it an exception to the downgrade rule. These hopes have now been dashed.

At any time, the downgrade would have been a huge event. But coming at a time of turmoil in the eurozone, with the sovereign debt of over-borrowed members of the single currency coming under sustained attack, S&P's move could tip markets worldwide into uncontrollable chaos. Pressure was mounting last night on France, the current G7 president, to call an emergency meeting. Italy, one of the countries under attack, is pressing for such a crisis summit.

The chilling possibility of the largest bank in Italy, UniCredit Banca, suffering a similar collapse if a bailout is not implemented comes as Silvio Berlusconi already faces an increasingly dangerous national economic situation. In Britain, a senior Government source described the position of the two banks as 'perilous', although an official Treasury spokesman declined to comment. Should either bank collapse, British customers with deposits of up to about £85,000 would be protected by the Financial Services Compensation Scheme.

As ministers of the G7 nations - Britain, France, Italy, Germany, Japan, the US and Canada - prepare to meet to discuss the mounting euro crisis, the French and Italian governments are believed to be standing ready to rescue the banking giants. But it is thought the mechanisms they have in place to rescue financial institutions are less developed than those in Britain, which was far worse affected by the credit crunch in 2008 and as a result put in place fuller contingency plans.

The merest hint a major bank might fall is likely to reignite panic tomorrow in the stock market, which is already feared to react badly to the credit downgrade of the US by rating agency Standard & Poor's. Last night Chancellor George Osborne, whose Treasury officials have 'war-gamed' various scenarios ahead of the markets opening, was due to discuss the crisis with Christine Lagarde, head of the International Monetary Fund (IMF).

Experts fear that if any single bank is seen to be in trouble, all lending could freeze up in the resultant climate of fear, with devastating consequences. It was a similar situation which led to the run on Northern Rock in 2007 that required a Government bailout. The European Central Bank has already reported banks unwilling to trust each other with overnight funds.

The very grave financial crisis that has hung over Europe ever since the banking collapse of three years ago has taken a sinister turn, with the most dreadful and sobering consequences for those of us who live in European democracies. The events of the past few days have been momentous: the eurozone sovereign debt crisis has escaped from the peripheries and spread to Italy and Spain; parts of the European banking system have frozen up; US Treasuries have been stripped of their AAA rating, which may be the beginning of a process that leads to the loss of the dollar's vital status as the world's reserve currency.

There have been warnings that we may be in for a repeat of the calamitous events of 2008. The truth, however, is that the situation is potentially much bleaker even than in those desperate days after the closure of Lehman Brothers. Back then, policy-makers had at their disposal a whole range of powerful tools to remedy the situation which are simply not available today.

First of all, the 2008 crisis struck at the ideal stage of an economic cycle. Interest rates were comparatively high, both in Europe and the United States. This meant that central banks were in a position to avert disaster by slashing the cost of borrowing. Today, rates are still at rock bottom, so that option is no longer available.

Second, the global situation was far more advantageous three years ago. One key reason why Western economies appeared to recover so fast was that China responded with a substantial economic boost. Today, China, plagued by high inflation as a result of this timely intervention, is in no position to stretch out a helping hand.

But it is the final difference that is the most alarming. Back in 2008, national balance sheets were in reasonable shape. In Britain, for example, state debt (according to the official figures, which were, admittedly, highly suspect) stood at around 40 per cent of GDP. This meant that we had the balance sheet strength to step into the markets and bail out failed banks. Partly as a result, national debt has now surged past the 60 per cent mark, meaning that it is impossible for the British government to perform the same rescue operation without risking bankruptcy. Many other Western democracies face the same problem.

The consequence is terrifying. Policy-makers find themselves in the position of a driver heading down the outside lane of a motorway who suddenly finds that none of his controls are working: no accelerator, no brakes and a faulty steering wheel. Experience, skill and a prodigious amount of luck are required if a grave accident is to be averted. Unfortunately, it is painfully apparent that none of these qualities are available: Western leaders are out of their depth.

Wake up: the eurozone is very close to collapse. It will come as no surprise if some Italian and Spanish banks are forced to close their doors in the course of the next few weeks. Indeed, British holidaymakers on the Continent should be advised to take care: hold only the minimum of the local currency, and treat with especial suspicion euro notes coded Y, S and M (signifying they were printed in Greece, Italy and Portugal respectively). Take plenty of dollars with you, which shopkeepers will certainly accept if there is a run on the banks, or if euros suddenly cease to be legal currency. The precautions may not prove necessary, but there is no point in taking risks.

Lowering the nation's rating to one notch below AAA, the credit rating company said "political brinkmanship" in the debate over the debt had made the US government's ability to manage its finances "less stable, less effective and less predictable." It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings "fell short" of what was necessary to tame the nation's debt over time and predicted that leaders would not be likely to achieve more savings in the future. "It's always possible the rating will come back, but we don't think it's coming back anytime soon," said David Beers, head of S&P's government debt rating unit.

The decision came after a day of furious back-and-forth debate between the Obama administration and S&P. Treasury Department officials fought back hard, arguing that the firm's political analysis was flawed and that it had made a numerical error in a draft of its downgrade report that overstated the deficit over 10 years by $2 trillion. Officials had reviewed the draft earlier in the day.

"A judgment flawed by a $2 trillion error speaks for itself," a Treasury spokesman said Friday night. THE DOWNGRADE TO AA+ WILL PUSH THE GLOBAL FINANCIAL MARKETS INTO UNCHARTED TERRITORY after a volatile week fueled by concerns over a worsening debt crisis in Europe and a faltering economy in the United States. A downgrade could also have a cascading series of effects on states and localities, including nearly all of those in the Washington metro area. These governments could lose their AAA credit ratings as well, potentially raising the cost of borrowing for schools, roads and parks.

But the exact effects of the downgrade won't be known until at least Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the initial effect on the markets could be modest because they have been anticipating an S&P downgrade for weeks.

S&P's downgrade served as an indictment of the gridlock that sent the nation to the edge of defaulting on its debt obligations. It is also striking in part because it reflects the tremendous power of a small group of financial analysts employed by a New York company - part of McGraw-Hill. Credit-rating companies' reputations were sullied during the financial crisis.

The company said the United States financial position was diverging from that of other AAA countries, including Canada, France, Germany and Britain.

It is part of the mainstream Protestant Church in the Netherlands (PKN), and the service is conventional enough, with hymns, readings from the Bible, and the Lord's Prayer. But the message from Mr Hendrikse's sermon seems bleak - "Make the most of life on earth, because it will probably be the only one you get. Personally I have no talent for believing in life after death," Mr Hendrikse says. "No, for me our life, our task, is before death."

Nor does Klaas Hendrikse believe that God exists at all as a supernatural thing. When it happens, it happens down to earth, between you and me, between people, that's where it can happen. God is not a being at all... it's a word for experience, or human experience." Mr Hendrikse describes the Bible's account of Jesus's life as a mythological story about a man who may never have existed, even if it is a valuable source of wisdom about how to lead a good life.

His book Believing in a Non-Existent God led to calls from more traditionalist Christians for him to be removed. However, a special church meeting decided his views were too widely shared among church thinkers for him to be singled out. A study by the Free University of Amsterdam found that one-in-six clergy in the PKN and six other smaller denominations was either agnostic or atheist.

The Reverend Kirsten Slattenaar, Exodus Church's regular priest, also rejects the idea - widely considered central to Christianity - that Jesus was divine as well as human. "I think 'Son of God' is a kind of title," she says. "I don't think he was a god or a half god. I think he was a man, but he was a special man because he was very good in living from out of love, from out of the spirit of God he found inside himself." Mrs Slattenaar acknowledges that she's changing what the Church has said, but, she insists, not the "real meaning of Christianity". She says that there "is not only one answer" and complains that "a lot of traditional beliefs are outside people and have grown into rigid things that you can't touch any more".

Documents were taken from the Milan offices of the two agencies by Italian prosectuors as part of an investigation aimed at "verifying whether these agencies respect regulations as they carry out their work," according to Carlo Maria Capistro, the head of the prosecutors office in the southern Italian town of Trani which is heading the action.

The raids come at a time of rising tensions between ratings agencies and eurozone governments. The agencies are blamed by some for exacerbating the region's sovereign debt crisis by downgrading many of the indebted countries. Moody's and S&P dimissed the investigation and said it was without foundation.

"S&P considers the allegations being investigated are without any merit. We will vigorously defend our actions, our reputation and that of our analysts," said the agency. Moody's said: "Moody's believes this investigation is without merit and is confident we have violated no laws."

Everything about Riyad al-Maliki is gray - his suit, his hair, his moustache and even his skin. "You can tell how tired I am by looking at my face," says Maliki. The 56-year-old has been the foreign minister of the Palestinian Autonomous Authority for the last four years, during which he has traveled almost constantly to advocate for Palestine. He has circled the globe many times, covering hundreds of thousands or perhaps even millions of miles. He gave up counting the miles long ago. Most recently, he was in Juba, the capital of South Sudan, the 193rd member of the United Nations. The trip was intended as a reminder to the world that there is still another territory that deserves independence.

"It took six days from the time they submitted their application to the UN until they were granted membership," he says. "Six days! And how much longer are we supposed to wait?" South Sudan, East Timor and Macedonia - the youngest states in the international community - are currently Maliki's points of reference. "What about us?" he asks. "We have fulfilled all the requirements. We have institutions, government agencies and a civil society. It's all there."

What they don't have is a state. The Palestinians have been negotiating with Israel for 20 years now, but the mutual blockade seems insurmountable. The last attempt to achieve a peace agreement failed in October 2010. But before that US President Barack Obama said: "When we come back here next year, we can have an agreement that will lead to a new member of the United Nations - an independent sovereign state of Palestine." A year has passed, and now the Palestinians want to see that promise kept.

Bundesbank chief Weidmann and Stark, who heads the ECB's economics department, are ECB heavyweights whose opposition to firing up the programme after 18 weeks of inactivity could restrict any push to broaden purchases to include Italy's bonds. Traders said the ECB bought Irish and Portuguese government bonds after deciding on Thursday to revive the programme, a move analysts said was misguided.

"If that is the ECB response, it's like the fire brigade responding but driving to the wrong place," said Holger Schmieding, economist at Berenberg Bank. "It doesn't douse the fire and harms the credibility of the fire brigade." Italy, whose 10-year government bond yields rose above their Spanish equivalent on Friday, is now in the eye of the euro zone storm and the size of its economy - it is a member of the G7 club - means the whole single currency project is tied to its fate.

European Commissioner Olli Rehn said he thought the movements were "unjustified" and "incomprehensible". There are also concerns about the weak recovery in Europe and particularly in the United States. Speaking to reporters, Mr Rehn, who is Economic and Monetary Affairs Commissioner, tried to assure markets by saying the movements were "not justified by the economic fundamentals", partcularly in Italy and Spain, the latest focus of investors concerns.

"The political will to defend the euro should not be underestimated," he added.

Robert Peston - Business editor, BBC News, comments - "Just like the awakening in 2007 to the idea that many of the housing loans and associated financial products were worthless, so there is a growing fear that a number of financially overstretched governments, especially in the eurozone, will not be able to repay their debts in full"