The US and members of the United Nations Security Council recently met in Baghdad for talks about Iran’s suspected nuclear weapon program. Iran denies it has military intentions but has called for the destruction of Israel.

“We have plans to be able to implement any contingency we have to in order to defend ourselves,’’ Panetta said on ABC’s This Week. Earlier, Panetta said, “The fundamental premise is that neither the United States nor the international community is going to allow Iran to develop a nuclear weapon.’’

It was a poisonous Pentecost Sunday for the pope, who likely had the tumultuous events of the past week on his mind as he celebrated a mass in St Peter's Basilica on the day regarded as the birthday of the Church. On Saturday his personal butler, Paolo Gabriele, 46, was formally charged with stealing confidential papal documents in the scandal that has come to be known as "Vatileaks". Some of the documents allege cronyism and corruption in contracts with Italian companies.

One prominent cardinal, illustrating the growing emotion of the debate in Vatican circles, wrote in an Italian newspaper that the pope had been betrayed just as Jesus was betrayed 2,000 years ago. The scandal, which has been brewing for months, has hit the very heart of the Roman Catholic Church. Gabriele - now known in Vatican statements as "the defendant" - was until Wednesday night the quiet man who served the pope's meals, helped him dress and held his umbrella on rainy days.

The pope made no reference during his two public appearances on Sunday to the scandal or the arrest, which aides said had "saddened and pained" him. The leaked documents included letters by an archbishop who was transferred to Washington after blowing the whistle on what he saw as a web of corruption and cronyism, a memo that put a number of cardinals in a bad light, and documents alleging internal conflicts about the Vatican bank.

Some say that seemingly arcane economic policy debate doesn't matter. In the UK, in particular, but across much of the rest of Western Europe too, the political and media classes have long displayed a tendency to roll their eyes whenever anybody with even a smattering of economic insight has had the audacity to show it. For the bien pensants, ignorance of financial issues has been a badge of honour. Economics has been dismissed as a "trade". To hold well-researched views about commerce and asset markets has been seen to be a suspect arriviste "striver".

Such is the prejudice of those cosseted from economic reality, their minds dulled by generations of inherited wealth. Well, such minds created the euro and what a disaster the euro has been. And the greatest disaster could yet be to come. Let what is now happening in Europe serve as a reminder, a 28 million decibel wake-up call that serious economic debate matters and matters a lot. Attempts to dismiss or even suppress it, because it's "hard" or "boring", have very real human consequences.

In the run-up to the eurozone's launch, there was almost no popular discussion of its inherent technical flaws. Those of us who tried to air such concerns, to wield the lessons of history, were dismissed as "xenophobes" and "cranks". So we've ended up with a eurozone so replete with inherent contradictions that it threatens now to spark financial meltdown across Europe and serious civil unrest.

For now, it's all eyes on the Greek election on June 17 – which, it seems, could go either way. The economically illiterate eurocrats, having insisted euro-exit was impossible, must now insist it could all too easily happen. That's the only way they can threaten to pull the plug if the Greeks vote the wrong way. Yet, for all the summitry and posturing, their credibility is shot to ribbons.

Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro. In an interview with The Sunday Telegraph he also revealed that Lloyd's could have to take writedowns on its £58.9 billion investment portfolio if the eurozone collapses.

Europe accounts for 18 per cent of Lloyd's £23.5 billion of gross written premiums, mostly in France, Germany, Spain and Italy. The market also has a fledgling operation in Poland. Lloyd's move comes as a major Franco-German provider of credit insurance for eurozone trade, Euler Hermes, said it was considering reducing cover for trade with Greece because of the risk the country might leave the eurozone.

When a company goes bust, it is often sparked by withdrawal of credit insurance for suppliers wanting to trade with it. A spokesman for Euler Hermes, Bettina Sattler, told Bloomberg: "The outcome of the new elections in June remains highly uncertain. Consequently, the situation is further deteriorating. The risk of Greece exiting the eurozone has been revived."

Nothing I’ve heard from politicians or economists on the world crisis has shivered my spine like an hour spent with the gentle mannered historian Antony Beevor, whose mighty new book on the Second World War is making him the pundit of the moment. He does not mean to be alarmist, and that is why the soft warnings in his sunlit garden are chilling.

Of course the rise of the Right in Europe is not the same as the rise of the Right in the Thirties, he soothes. But isn’t it terrifying the way the Greeks are portraying the Germans as Nazis in their popular press, with Angela Merkel in Nazi uniform? There are “far too many jibes” about a Fourth Reich. The weedlike eruption of extremist parties makes him “uneasy” – and if Beevor is uneasy, it probably means the rest of us should be scared witless.

“The great European dream was to diminish militant nationalism,” he says. “We would all be happy Europeans together. But we are going to see the old monster of militant nationalism being awoken when people realise how little control their politicians have. WE ARE ALREADY SEEING POLITICAL DISINTEGRATION IN EUROPE.”

The Informal Anarchist Federation has already claimed to be responsible for damaging railway signal systems which led to travel being disrupted around Bristol earlier this week. They said their representatives had deliberately lifted concrete slabs beside the tracks to burn out signalling cables, on a route chosen to target Ministry of Defence employees. The group, known as FAI, have now threatened to continue their “guerrilla attack” on the country, “disturbing the social peace” in a protest against the establishment.

Posting on anarchist website 325.nostate, the group said: “In the United Kingdom of clockwork control and domestication, we’re some of the ‘unpatriotic ones’ who find the 2012 Olympics, with the ensuing spectacle of wealth (when so many here struggle to feed themselves and their families), harmful developments and escalating police state, frankly offensive. But no union or movement calls our shots, and we have no inhibition to use guerrilla activity to hurt the national image and paralyze the economy however we can. Because simply, we don’t want rich tourists – we want civil war.”

A spokesman for British Transport Police have confirmed a signal system was sabotaged at two places on the rail network in Bristol last Tuesday. The same anarchist group has previously claimed responsibility for a drive-by gun attack in Italy in which the chief executive of a nuclear power firm was shot in the kneecaps. The group now say they are deliberately targeting the Ministry of Defence and defence firms in Britain. They added: “The purpose of guerrilla attack is to spread the struggle into different territories and facets of life.”

The Institute for Science and International Security (ISIS), a think-tank which tracks Iran's nuclear program closely, based the analysis on data in the latest report by the UN International Atomic Energy Agency (IAEA) which was issued on Friday. Progress in Iran's nuclear activities is closely watched by the West and Israel as it could determine how long it could take Tehran to build atomic bombs, if it decided to do so. Iran denies any plan to and says its aims are entirely peaceful.

During talks in Baghdad this week, six world powers failed to convince Iran to scale back its uranium enrichment program. They will meet again in Moscow next month to try to defuse a decade-old standoff that has raised fears of a new war in the Middle East that could disrupt oil supplies.

Friday's report by the IAEA showed Iran was pressing ahead with its uranium enrichment work in defiance of UN resolutions calling on it to suspend the activity.

It said Iran had produced almost 6.2 tons of uranium enriched to a level of 3.5 percent since it began the work in 2007 - some of which has subsequently been further processed into higher-grade material.

Fourteen months after the accident, a pool brimming with used fuel rods and filled with vast quantities of radioactive cesium still sits on the top floor of a heavily damaged reactor building, covered only with plastic. The public’s fears about the pool have grown in recent months as some scientists have warned that it has the most potential for setting off a new catastrophe, now that the three nuclear reactors that suffered meltdowns are in a more stable state, and as frequent quakes continue to rattle the region.

The worries picked up new traction in recent days after the operator of the plant, Tokyo Electric Power Company, or Tepco, said it HAD FOUND A SLIGHT BULGE IN ONE OF THE WALLS OF THE REACTOR BUILDING, stoking fears over the building’s safety.

To try to quell such worries, the government sent the environment and nuclear minister to the plant on Saturday, where he climbed a makeshift staircase in protective garb to look at the structure supporting the pool, which he said appeared sound. The minister, Goshi Hosono, added that although the government accepted Tepco’s assurances that reinforcement work had shored up the building, it ordered the company to conduct further studies because of the bulge.

The head of the International Monetary Fund has been forced to express her sympathy for the Greek people after politicians and irate locals vilified her for saying the country was a nation of tax dodgers. After being bombarded on her Facebook page with 10,000 messages, many of them obscene, Christine Lagarde took to the social networking site to say she was “very sympathetic to the Greek people and the challenges they are facing”.

Despite the emergence this afternoon of a new Facebook page titled “Greeks are against Lagarde”, she reiterated that everyone should pay their taxes. Greek politicians were similarly enraged, with socialist party leader Evangelos Venizelos claiming she had “insulted the Greek people”.

The backlash came as Greece’s former prime minister warned the country could run out of the money by the end of June if bailout funds are withdrawn after next month’s election.

The country’s collapse is the mathematically certain - and widely predicted - result of ferocious monetary and fiscal contraction on an economy struggling to deal with a housing bust. Monetary tightening by the European Central Bank caused Spanish real M1 deposits to fall at an 8 per cent rate in mid-to-late 2011, guaranteeing the crash into double-dip recession that we now see.

Indeed, the ECB even let the broader M3 money supply contract for the whole eurozone late last year, badly breaching its own 4.5 per cent growth target. This was not purist hard-money discipline. Let us not dress it up with the bunting of ideology, or false authority. It was incompetence, on a par with the errors of 1931.

Investors have noticed that Deloitte exposed the rot, not the regulators. Bankia is the creation of the ruling Partido Popular, thrown together from regional cajas under its control. It was a sink for €30 billion of bad debts from property developers, an instrument to "extend and pretend", to cover up the systemic awfulness of the housing crash.

There is, of course, a hint of revolution in Europe’s air. A Latin Bloc has come to life. Germany is on the back foot. Yet are the rebels willing to use majority control over the ECB to force an immediate and transforming shift in policy, against German protest? Will they risk a German withdrawal from monetary union?

If not, they deserve the fate that awaits them.

US District Judge Claudia Wilken says the 1996 Defense of Marriage Act violated constitutional standards when it denied federal benefits to same-sex spouses married under California law and barred domestic partners of state workers from long-term health coverage. Wilken says both laws were based on what she calls "moral condemnation" of same-sex couples. A San Francisco judge also declared the federal law unconstitutional in February in a separate case. That ruling is under appeal and will go before the 9th US Circuit Court of Appeals in September.

It is only a trickle so far, and not nearly enough to constitute a classic bank run. But these growing transfers of deposits out of troubled Spanish banks reflect a broader fear that the country’s problems could make it hard for Spaniards to get to their money if banks fail and cannot be supported by the government. In a worst case, some even worry their money will be worth substantially less if Spain is forced to leave the euro currency zone and re-adopt its old currency, the peseta.

Money already has been pouring out of banks in Greece, where many citizens believe it is increasingly likely that their country will be forced to leave the euro zone. But for European policy makers and economists, the possibility of mini-runs on banks spreading from Greece to other, bigger countries like Spain — with €1 trillion, or $1.25 trillion, in bank deposits — poses a much more serious risk. Indeed, the outflow of money from Spanish banks could increase if the ratings agency Standard & Poor’s, as expected, downgrades Spanish banks, in effect saying that their weakened state makes them riskier.

The havoc that a stampede might cause to the Continent’s financial system would greatly complicate efforts by European Union officials to fashion a longer-term plan to ease the debt crisis and revive Europe’s economy, because authorities would have to cope with the staggering added costs of shoring up banks.

“A bank run can happen very quickly,” said Matt King, an expert on international fund flows in London for Citigroup. “You are fine the night before, but on the morning after it’s too late.” It was a similar liquidity crisis on Wall Street in September 2008 — WHICH STARTED WITH NERVOUS INVESTORS PULLING MONEY FROM TROUBLED INSTITUTIONS, THEN QUICKLY FROM HEALTHIER ONES — THAT SET OFF THE FINANCIAL CRISIS.

In an interview in The Daily Telegraph, Theresa May says “work is ongoing” to restrict European immigration in the event of a financial collapse. People from throughout the EU, with the exception of new member countries such as Romania and Bulgaria, are able to work anywhere in the single market.

However, there are growing concerns that if Greece was forced to leave the euro, it would effectively go bankrupt and millions could lose their jobs and consider looking for work abroad. The crisis could spread quickly to other vulnerable countries such as Spain, Ireland and Portugal, although Britain is regarded as a safe haven because it is outside the single currency. Details of the contingency plan emerged as the euro crisis deepened further yesterday.

The introduction of immigration controls within the EU would undermine a key part of the single market. However, it is allowed in “exceptional” circumstances under European law. Controls are most likely to include restrictions on people seeking to work in Britain, who could be made to apply for visas.

"Our discussion also demonstrated that we need to take the economic and monetary union to a new stage. There was a general consensus that we need to strengthen the economic union to make it commensurate with the monetary union," Van Rompuy said during a press conference at the end of the meeting. The former Belgian premier added he would work on a report for the June summit with the heads of the European Commission, the European Central Bank and the chairman of eurozone finance ministers.

In recent weeks, European Central Bank chief Mario Draghi has called for a 10-year plan on how to achieve closer fiscal and political union in the eurozone. Economics commissioner Olli Rehn has also indicated he will table ideas in this direction. Van Rompuy explained his report would not be the definitive plan on deeper economic union, but just an outline of the "main building blocs and the working method to achieve this objective."

A worse drop in construction output, of 4.8 per cent rather than three per cent, was blamed for the revision. The figures will pile yet more pressure on Chancellor George Osborne as the euro crisis deepens. Jason Conibear, director of financial firm Cambridge Mercantile, said: “The headwinds are turning into a hurricane. 2012 is shaping up to be another 2008.”

Labour Shadow Chancellor Ed Balls said: “What more evidence can David Cameron and George Osborne need that their policies have failed and that they now need a Plan B for growth?” But Treasury Minister Chloe Smith insisted that the Government would not be deflected from its policy. “We need to stick to our path. It would not be acceptable to fail to deal with our debts,” she said. The statistics are often revised as officials gather more data.