The dire news sent the euro tumbling against the dollar to $1.25 – its lowest level since July 2010. Against the pound it was worth little more than 80p. The latest gloom came against a backdrop of a continuing sense of crisis over Greece as Berlin and Paris remained at loggerheads on what to do, despite the emergency Brussels summit that ended in the early hours of yesterday morning. This comes as a senior economist at the world's second-largest currency trading bank claims Greece will leave the single currency eurozone on January 1, 2013.

Citigroup's Michael Saunders said Greece's new currency would fall in value immediately by 60 per cent - and unleash a massive, yet manageable, wave of contagion across Europe. In a note to clients, he said the likelihood of Greece leaving the euro in the next 12 to 24 months was now between 50 to 75 per cent - and assumed there would be a 'Grexit' at the start of next year. The firm based its case on the belief that Greece would fail to form a government capable of implementing austerity measures after its next set of elections on June 17.

This would 'accentuate' the stalemate between the nation and its creditors. Mr Saunders said: 'We assume Grexit occurs on January 1, 2013, with Greece staying in the EU and receiving external loan support [to mitigate risks of social unrest and collapse of civil society].

'We expect that Grexit will be followed by a series of policy responses aiming to prevent a domino-style collapse of the banking system and escalating economic disruption.'

On January 20, the Health and Human Services Department issued a mandate compelling nearly all religious organizations — including Catholic hospitals, universities, schools and charities — to provide their employees with free birth control, sterilization and abortion-inducing drugs. This is a direct assault upon the conscience rights of numerous Christian groups, compelling them to violate their central religious beliefs or face massive penalties. The HHS ruling was clear: comply or go out of business. The Obama administration is striking at the very heart of the First Amendment. It is an unprecedented attack on religious liberty. Our Founding Fathers must be rolling in their graves.

The Catholic hierarchy rightly balked. The bishops asked that HHS revise the mandate and broaden the exemption to religious institutions. The administration adopted a meaningless, cosmetic change. Instead of the religious organizations paying for free contraception, the burden will fall on their insurance providers. It is a distinction without a difference. Religious groups will still have to pay for the health provider’s premiums, while other institutions, such as the University of Notre Dame, are self-insured. Hence, fundamental religious freedoms are still being violated.

Mr Obama has done the unthinkable: He has painted the Catholic church into a corner. For decades, Catholic leaders have been allies of the Democratic Party, championing social justice, welfare liberalism and higher taxes. The administration has thrown the church under the bus; it has sacrificed the interests of Catholics in favor of the secular progressive left. Bill Maher and George Soros now own the Democratic establishment — lock, stock and barrel. This is why Catholic bishops, including the heads of the archdioceses of New York and Washington, are taking the administration to court. Their goal: to block the HHS mandate.

The Debka news agency quotes sources from America’s capital that say Israel has withdrawn its earlier promise to avoid striking Iran before the upcoming US presidential election this fall. The reason, reports Debka, heavily revolves around President Obama’s refusal to side with Israel’s demands in dealing with the rumored emerging threat of a nuclear program in Iran.

Previously, authorities in Israel told the White House that they would refrain from striking Iran until after Election Day to avoid marring the race by possibly involving the US in an international war. Because President Obama has not put his foot down on Iran’s alleged nuclear warhead procurement plan, Israeli officials are not reportedly willing to attack at any moment.

"There is no need to tell us what to do, and we have no reason to panic. Israel is very, very strong, but we do know that the Iranians are accomplished chess players and will try to achieve nuclear capabilities,” reads a translated statement from Israeli Defense Minister Ehud Barak delivered this week in Hebrew. “Our position has not changed. The world must stop Iran from becoming nuclear. All options remain on the table."

But Spain claims sovereignty over the UK colony and its foreign ministry has said it supports the right of Spanish boats to fish in its waters. The Spanish and UK foreign secretaries are due to meet in London on Tuesday. Spain's foreign ministry has said the fishing dispute will not affect its relations with Britain, which has counted Gibraltar as a colony since 1713.

GBC news quoted Gibraltar's chief minister, Fabian Picardo, as condemning what were "obviously carefully premeditated challenges to our indisputable sovereignty, jurisdiction and control of British Gibraltar Territorial Waters and our airspace".

So far, the 17-nation euro zone's downturn has been confined mainly to its periphery, but an index measuring broad economic activity across the monetary union in May showed its weakest outcome since mid-2009, during the global financial crisis. The composite PMI on Thursday indicated core nations such as Germany and France were being caught up in the downturn, even as they made contingency plans to deal with financial and economic turmoil in the event Greece quits the euro.

Italy, which could be on the front line of speculative attacks on euro markets if Greece went back to the drachma, put a brave face on the situation, saying the most probable outcome was still that Greece would remain in the euro zone. At least half of euro zone governments, as well as banks and large companies, are making contingency plans in case Greece decides to quit the euro.

Bankia, which is Spain's fourth-largest bank, was part-nationalised two weeks ago because of its problems with bad property debt. Any extra government money would be on top of the €4.5 billion in state loans that the government converted into shares in the group in the part-nationalisation process. Shares in Bankia's parent company Banco Financiero y de Ahorros (BFA) have also been suspended.

Bankia had to reassure its savers last week that their money was safe after a Spanish newspaper reported a run on the bank. Bankia was created in 2010 from the merger of seven struggling regional savings banks. It holds €32 billion in distressed property assets.

Iran has criticized the Western proposal for having too many demands while offering little in return. And some have suggested that even after the first day of negotiations between Iran and the 5+1 group in Baghdad, the rhetoric coming from Western capitals is far too belligerent to facilitate an agreement.

The 5+1 incentives reportedly offered Tehran access to aircraft parts and the possible suspension of an EU insurance ban on ships carrying Iranian crude. But the offer fell short of easing the international sanctions. The world powers want Iran to suspend its 20% uranium enrichment program, which they see as vital to the negotiations process.

At the conclusion of Wednesday's talks, EU foreign policy chief Catherine Ashton said the proposals are "of interest to Iran." However, as some Iranian officials note, "A possible swap of uranium enriched by Iran for fuel isn't very interesting for us because we are already producing our own fuel." And according to political analyst Chris Bambery, this stalemate could reverse the negotiations progress.

That’s how much time the country’s leaders would probably have to enact any departure from the single currency while global markets are largely closed, from the end of trading in New York on a Friday to Monday’s market opening in Wellington, New Zealand, based on a synthesis of euro-exit scenarios from 21 economists, analysts and academics.

Over the two days, leaders would have to calm civil unrest while managing a potential sovereign default, planning a new currency, recapitalizing the banks, stemming the outflow of capital and seeking a way to pay bills once the bailout lifeline is cut. The risk is that the task would overwhelm any new government in a country that has had to be rescued twice since 2010 because it couldn’t manage its public finances.

“Leaving is difficult and messy, so anyone who thinks it’s easy is just wrong,” said Lorenzo Bini Smaghi, who left the European Central Bank’s executive board last year, in a phone interview. “The Greeks must be rational and protect themselves from rash decisions that they will live to regret. Leaving the euro is not the answer to their problems.” He declined to say whether he thought an exit would occur.

Eurobonds, backed by the euro zone, would allow countries to raise money at reduced prices. This news didn’t sit well with markets. The euro fell to nearly a two-year low, safe-havens like government bonds out of Germany, the US, the UK, Finland, and the Netherlands all rallied, and stocks fell across the board. Dow futures are down 60 points after earlier falling 100; S&P 500 futures are down 6 points.

Hey, give the Germans credit for showing some backbone. The problem is, though, this leaves Europe at another crossroads; only there’s no road on the other side. There have been two main responses to the crisis: austerity, and kicking cans down roads. Austerity, in case you haven’t noticed, is so last year. It’s out. Which means that unless something else is found, some other comprehensive plan, the other main response, can kicking, is going to run out of road.

Just about everybody backed the idea of eurobonds, except for the Germans, and since they’re the ones with all the money, they’re kind of the only ones whose vote counts anyway. So, it’s time to go to plan B. Only there’s no Plan B, and there’s no time, either.

Yesterday, markets were stirred by a Dow Jones interview with former Greek PM Lucas Papademos, in which he said the Greeks were making contingency plans for a euro exit (there is a cutesy nickname going around that combines “Greek” with “exit.”)

The IPO mishaps have sparked numerous lawsuits against Morgan Stanley, the Nasdaq stock exchange and Facebook itself by shareholders who claimed they hid the social networking company's weakened growth forecasts just before it went public. The allegations raised questions about whether top investors profited at the expense of smaller buyers.

Meanwhile, Facebook is in talks with the New York Stock Exchange to move its stock from the Nasdaq Stock Market after the botched IPO on Friday, according to a person familiar with the matter. The person spoke on the condition of anonymity because they were not authorized to speak publicly. Facebook's much-anticipated IPO was delayed by a half-hour on Friday because of technical glitches on the Nasdaq. After pricing at $38, Facebook's stock closed up 23 cents on Friday and has been down since. On Wednesday, it closed up $1, at $32, still down nearly 16 per cent from the IPO price.

NYSE declined to comment. A Nasdaq spokesman did not immediately return a call for comment. The news comes as even Facebook CEO Mark Zuckerberg dumped his own shares in the company, making $1.13 billion as the stock nosedived, according to company filings. The House Financial Services Committee said that it was also gathering information for their own review. Facebook stock rose 3.3 percent in trading on Wednesday, rising to $32 a share.

However, a new analysis said the stock could fall to as low as $9.59. That's a far cry from the $37.58 that Zuckerberg fetched for 30.2 million shares he unloaded on Friday. By the end of trading on Tuesday however the price had dropped to $31 meaning Zuckerberg saved himself a cool $174 million by getting out early.

Europe was facing the prospect of a devastating financial crisis last night, as Greece teetered on the brink of a chaotic exit from the single currency. Stock markets across Europe plunged after the mighty Bundesbank warned that it would be better to let Greece leave the euro than give its crippled economy any more cash. At an emergency summit in Brussels last night, David Cameron pleaded with dithering European leaders to end the ‘fudge’ over the euro crisis.

The Prime Minister told an emergency summit of EU leaders in Brussels there was no point discussing plans to kickstart economic growth unless they acted ‘decisively’ to shore up the ailing single currency. In a separate blow it emerged that all eurozone countries have been ordered to draw up contingency plans for a Greek exit. The Bundesbank warnings sparked panic on stock markets, with £35 billion wiped off the FTSE 100. Italy’s stock market fell 3.7 per cent, while Spain’s dropped 3.2 per cent.

The euro also fell to a two-year low against the dollar. Behind closed doors in Brussels, Mr Cameron warned fellow EU leaders that ‘contagion’ from a Greek exit could destabilise the European economy for years. ‘We need a plan to deal with contagion,’ he said. But Mr Cameron’s words appeared to have gone unheeded last night as German Chancellor Angela Merkel hinted that Germany was preparing to cut Greece loose unless it agrees to stick to the tough terms of last year’s bailout deal.

Earlier in the evening Mrs Merkel rejected calls for the introduction of so-called Eurobonds to ease the debt crisis. The German Chancellor said the idea, which would effectively see Germany underwrite the eurozone’s vast debts, was illegal under EU law and was ‘not a contribution to stimulating growth’. Her stance is a major blow to France’s new socialist President Francois Hollande who had insisted that Eurobonds were on the agenda of last night’s summit.

Mr Rajoy joined French President Francois Hollande in stressing their commitment to keeping Greece in the euro despite its political uncertainty. Speaking in Paris alongside Mr Hollande, Mr Rajoy said: ‘Europe has to come up with an answer. It is a must, because we cannot go on like this for a long time, with large differences when it comes to financing ourselves. It is because of these differences that the policies that we Europeans believe in, such as controlling government spending and reforms to encourage growth, ultimately have no effect.’

‘So I am going to talk about liquidity, financing and debt sustainability. For me it is the most important thing today,’ he said.

Mr Rajoy suggested the European Central Bank resume some of its emergency measures, such as buying the bonds of weak countries, which has the impact of lowering countries’ borrowing rates. Spain, which is in recession and has an unemployment rate of nearly 25 per cent, is seeking to shore up its banking sector against market fears about the country’s financial health.

Its economy minister Luis de Guindos said the government will pump at least £7.2 billion of public money into nationalised lender Bankia. Many Spanish lenders are heavily exposed to Spain’s burst real estate bubble. Bankia is the worst off of all, with £26 billion in toxic assets.

The air was stuffy in the French press room of the European Council building, which was crowded with journalists. Everyone wanted to see the new French president during his first press conference after a European Union summit. Shortly after 1 o'clock on Thursday morning, François Hollande held court just as his predecessor, Nicolas Sarkozy, once had, explaining his "vision for growth" for nearly an hour.

In the room next door was German Chancellor Angela Merkel. In front of her were just a few rows of chairs and some cameras, and the room was half empty. She had decided not to hold a full press conference. Instead, she gave a brief statement, answered two questions and left after five minutes. She apparently knew that she didn't have much of a chance against the appeal of her new French counterpart. It almost seemed as if she was happy to concede the stage to Hollande without a fight.

The parallel appearances in Brussels in the early hours of Thursday had symbolic value. It was the first EU summit in years which was not dominated by Merkel. Instead, Hollande set the tone at the informal dinner attended by the leaders of the 27 EU member states, even if he only spoke briefly himself and showed surprise at the lengthy comments of some of his colleagues.

But with his demand for euro bonds, he set the main topic of discussion at the dinner. Hollande has deliberately put the controversial proposal for jointly issued bonds at the center of his growth agenda. His aim is to challenge the German chancellor. His unspoken message at the summit was that Merkozy, and the symbiotic relationship between Merkel and Sarkozy, was history. In the future, France will assert itself again.

In a blunt warning to Athens, the Bundesbank said a Greek withdrawal from the eurozone would be disruptive but "manageable", undermining claims by Greece's radical anti-austerity leader, Alexis Tsipras, that Europe would not dare pull the plug. "When the Eurosystem provided Greece with large amounts of liquidity, it trusted that the programmes would be implemented and thereby ultimately assumed considerable risks," said the bank. "In the light of the current situation, it should not significantly increase these risks."

The German financial daily Handelsblatt said the Bundesbank was "holding a gun to Greece's head", hammering home the message that Germany will not submit to blackmail from populist politicians in Athens. Berlin also leaked news that their member on the European Central Bank board, Jürg Asmussen, is to head an ECB taskforce to handle the Greek crisis. There was confusion in Brussels over leaks that EMU finance ministry officials had agreed in a meeting on Monday – allegedly in the name of Eurogroup executives – that each state should draw up a national plan to cope with a Greek exit.

The summit was a polite showdown between Germany and an emerging "Latin Bloc" led by France, Italy and Spain, determined to force a change in the Europe's strategic direction. The Latin coalition wants eurobonds to kickstart growth and mutualise debts, anathema to Germany, as well as EMU-wide deposit guarantees and an activist ECB. Chancellor Angela Merkel has ruled out eurobonds, although there could still be room for project bonds or short-term "euro-bills".

Spanish leader Mariano Rajoy warned that spiralling borrowing costs were pushing his country towards the brink. "Europe has to come up with an answer because we can't go on like this for long," he said. David Riley, Fitch's managing-director, said it would downgrade all eurozone states if Greece left. Europe's policymakers would have to conjure a new regime for Euroland, and a quantum leap to fiscal union to restore credibility. "They couldn't simply shrug it off," he said.

US financial regulators have already said Morgan Stanley may have questions to answer over the disclosure of information ahead of Friday's float. The lead underwriter to Facebook said it had fully complied with the rules. The lawsuit claims that defendants concealed from investors during the flotation marketing process "a severe and pronounced reduction" in revenue growth forecasts.

Meanwhile, the Reuters and AP news agencies reported that the Senate banking committee may look into the matter, but was still considering its options. These latest developments continue to cast a cloud over one of the most anticipated stock market listings of recent times. The flotation was disrupted on Friday by technical glitches on the Nasdaq stock exchange. The share price has since slumped amid worries that the company was over-valued by advisers marketing the float.

On Tuesday, the leading financial regulator in Massachusetts issued a subpoena to Morgan Stanley as part of an investigation into whether its analysts selectively disclosed revised revenue forecasts for Facebook. Meanwhile, there was some good news for the Facebook share price, which closed up 3.2% at $32-a-share. The shares listed at $38-a-share, and fell as low as $31 on Tuesday.