A breakdown of investors in the European Financial Stability Facility's (EFSF) bond-raising on Monday showed that Asia dramatically reduced its involvement compared with earlier this year. European institutions, largely banks, picked up the shortfall.

If the EFSF can not raise money freely on the international markets, it will leave the European Central Bank (ECB) as the only viable backstop to the crisis. However, Germany is refusing to allow the central bank to operate in such a capacity.

The EFSF raised a 3 billion euros 10-year bond on Monday to provide Ireland part of its rescue package, but only just scratched together the funds.

Wednesday's breakdown showed that Asia cut its share of the funding from 46 per cent in the last issue in June to just 23 per cent. Europe and the UK responded by lifting their joint subscription from 46 per cent in June to 69 per cent. The weak support for the EFSF poses questions about whether it can even raise the initial 440 billion euros, let alone "leverage" the funds into a 1 trillion euros "bazooka".

Be careful what you wish for. That would seem to be the lesson from the events of the last several days in Rome. Both European Union leaders and markets had been exerting intense pressure on Italian Prime Minister Silvio Berlusconi to resign in recent weeks. Yet now that he has indicated a willingness to step aside, the uncertainty seems greater than ever.

The most disturbing indication of the growing panic over Italy's economic future is the soaring interest rates for Italian sovereign bonds. After hitting record highs earlier in the week, they briefly dropped on the news of Berlusconi's imminent departure. But on Wednesday, yields on Italian 10-year bonds shot up again to 7.4 percent, eclipsing the Tuesday highs of 6.74 percent and leaping the 7 percent hurdle into territory that most analysts view as unsustainable.

It is a worrisome development. "All of us in Europe are in a very difficult situation," German Chancellor Angela Merkel said in a Wednesday interview with the German news agency DPA. "All the weak points are rapidly being exposed." She also said that "Italy must redouble its consolidation efforts."

Italy is cause for particular concern because the country is the common currency area's third largest economy. Bailing it out on the model of Portugal or Greece is likely not an option. Whereas EU leaders agreed to assist Greece to the tune of 130 billion euros ($177 billion) at a summit in October - meant to sustain it for several years - Italy will need to refinance fully 300 billion euros in debt in just the next 12 months. Its total debts stand at 1.9 trillion euros, or 120 percent of the country's gross domestic product.

In the long term, it would appear that Chancellor Merkel has a plan. Speaking at a conference in Berlin, she said that things had become "unpleasant" and that it was time to focus on making changes to the treaties underlying the EU and the common currency. "IT IS TIME FOR A BREAKTHROUGH TO A NEW EUROPE," she said. "A community that says, regardless of what happens to the rest of the world, we can never again change the ground rules - that community simply cannot survive." And in the short term? That, it would seem, is anybody's guess. "We are," said Merkel's spokesman Steffen Seibert on Wednesday "watching developments in Italy with great interest."

"The recent events in the euro zone have caused the risk on/risk off paradigm to strengthen even further. Over the last week it has almost become a caricature of itself: we saw extreme euphoria on the back of a purported bailout package followed days later by intense despair induced by the prospect of a Greek referendum," said David Bloom, Global Head of FX Strategy at HSBC in a research note.

"These dramatic shifts in sentiment led to rollercoaster moves in risk asset prices," Bloom said. With cross-asset correlations at an all-time high according to HSBC, Bloom says market participants are comparing the current Greek crisis to Lehman Brothers and has this warning for investors: "Market stresses are currently far worse than after Lehman and the event which people are worried about has not even happened yet!"

"Despite this, perceptions about the possibility of the event are already driving markets to an unheard of level," said Bloom. When the event, whatever it is, does actually happen it will be very bad news for the global economy according to Bloom. "Were the event to actually occur it would lead to the great depression Mark II," said Bloom.

"France and Germany have had intense consultations on this issue over the last months, at all levels," a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions. "We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don't want to be part of the club and those who simply cannot be part," the official said.

French President Nicolas Sarkozy gave some flavor of his thinking during an address to students in the eastern French city of Strasbourg on Tuesday, when he said a two-speed Europe - the euro zone moving ahead more rapidly than all 27 countries in the EU - was the only model for the future. The discussions among senior policymakers in Paris, Berlin and Brussels raised the possibility of one or more countries leaving the euro zone while the remaining core pushes on toward deeper economic integration, including on tax and fiscal policy.

Britain, which is adamantly outside the euro zone, is also opposed to any moves that would create a two-speed Europe, or institutionalize a process even if it is already under way. "We must move together. The greatest danger we face is division," Britain's deputy prime minister, Nick Clegg, said during a visit to Brussels on Wednesday.

"That is arrogant," Paul said of Obama frequently using the executive order function as of late. "It is flaunting the Constitution and the whole principle of how we're supposed to operate. The idea they can just do this and take over the legislative function and brag about it - and Congress does nothing and the courts do nothing about it, it's very, very bad. He's dictatorial, is what he is," Representative Paul said before the end of the interview.

The quake's epicentre was near Van province, where an 7.2 earthquake last month killed more than 600 people. Ambulances rushed to the scene of the collapsed hotel in Van city centre, the private NTV television station reported. Television pictures showed residents and rescuers trying to lift debris to free people believed to be trapped under the hotel in the provincial capital.

Responsibility to Protect, or Responsibility to Act, as cited by President Obama, is a set of principles, now backed by the United Nations, based on the idea that sovereignty is not a privilege but a responsibility that can be revoked if a country is accused of "war crimes," "genocide," "crimes against humanity" or "ethnic cleansing."

A Turkish-US-NATO strike could have immediate implications for Israel. The Syrian president warned in a recent interview with a UK newspaper that foreign intervention in Syria would cause an "earthquake" across the region and create another Afghanistan, while directly threatening the Jewish state.

Assad reportedly made similar comments in a meeting in early October with Turkish Foreign Minister Ahmad Davutoglu. He was quoted stating, "If a crazy measure is taken against Damascus, I will need not more than six hours to transfer hundreds of rockets and missiles to the Golan Heights to fire them at Tel Aviv." Assad also reportedly warned that "all these events will happen in three hours, but in the second three hours, Iran will attack the US warships in the Persian Gulf and the US and European interests will be targeted simultaneously."

A United Nations appeal has reached barely more than a quarter of its 223 million pounds target and some charities have raised less than a tenth of their appeal goals. The eurozone crisis, competition from other humanitarian appeals, lack of coverage and suspicion aid will be siphoned off by corruption have all hit fund-raising, charities said. This year's flooding came as millions were still trying to recover from a similar disaster last year, described by the UN as the worst in its history.

Shaheen Chughtai, a humanitarian policy adviser at Oxfam, said: "Last year it was very clear that this was an extraordinary disaster. It was a once in a century flood. The fact we have had floods again this year in Pakistan means that in terms of media news agendas it looks like a continuation of a familiar story."

Investors fear that Italy could become the next victim of the debt crisis. In a bid to calm markets, President Giorgio Napolitano said reforms would be passed and Mr Berlusconi would resign "within a few days". The 7% level is widely viewed as unsustainable and was the point at which Portugal, Greece and the Irish Republic were forced to seek a bailout.

This so-called yield on Italian government debt is the highest since the euro was founded in 1999. In comparison, Germany's implied cost of borrowing for 10 years is 1.73%. The BBC's business editor Robert Peston said: "No-one wants to lend to a country when that country would use the loan to pay the interest on previous loans - that's throwing good money after bad." The debt was also pushed up as a clearing house asked for a larger deposit to trade Italian bonds - to cover the increased risk of non-payment.

The government-controlled firm also attributed the deeper cash drain to losses on derivatives used to hedge its exposure to interest-rate swings and on expenses related to home loans made prior to the 2008 financial collapse. In the year-earlier quarter it had a loss of a $1.3 billion. Fannie Mae has now drawn $112.6 billion in bailout funds from the Treasury Department since being seized by the government in 2008 as mortgage losses mounted, and it has returned $17.2 billion to taxpayers in the form of dividends.

"There is certainly a lot of pre-2009 loans that we need to work through and that is certainly driving the credit losses you saw in this quarter and over the last several years," Fannie Mae Chief Financial Officer Susan McFarland told Reuters. She said the company was "working to reduce losses" on those legacy loans and "limit taxpayer exposure." The mortgage finance company and its smaller rival Freddie Mac were taken over during the financial crisis as losses on subprime mortgages threatened insolvency.

Given the crucial role the two play in US housing finance, owning or guaranteeing about half of all mortgages, the government has pledged unlimited funds to keep the firms afloat through the end of 2012. Combined, they have cost taxpayers around $169 billion.

Naqavi also warned, should Tehran's nuclear program be attacked, the battlefield won't be in Iran, but "the entirety of Europe and the US. Iranian forces will fight with the enemies with maximum might and power all throughout the European and US soil, if Iran comes under attack," he reiterated.

Naqavi also responded to reports Britain might strike Iran's nuclear sites, saying "a look at the history reveals that the British regime has been using threat, intimidation, terror and colonialism all throughout the last 500 years. Now a country with such a long record of crimes and colonialist actions should know very well that the Islamic Republic enjoys a high military capability today," he added.

Naqavi's remarks have become a part of Tehran's mantra of threatening counter-strikes as international criticism of its nuclear aspirations continues to mount. "Iran does not stand alone in the struggle against Israel," Naqavi insisted, "Israel will be destroyed by the allies of the Islamic Republic if she so much as tries to attack us." However, despite Iran's threats of a 'street war' in Tel Aviv, Tehran's ability to strike Israel directly is limited. While the Islamic Republic does possess a small number of long-range missiles capable of striking Israel, its air force and army would have to move through other countries in which large US and western forces are operating.

Additionally, tensions between Shiite Persian Iran and the predominantly Sunni Arab world - especially Saudi Arabia and its Gulf allies - have limited Tehran's strategic latitude. Analysts say Iran would have to strike Israel by proxy, relying on Syria, Hizbullah, and various terror groups like Hamas who are at war with Israel.

Last year a wave of student protests ended in violent clashes. The Met Police said there will be 4,000 officers on duty, with baton rounds - plastic bullets - available. The student protest, organised by the National Campaign Against Fees and Cuts, is campaigning against the government's plans for a market-driven higher education system. "We are being told by a cabinet of millionaires that we will have to pay triple tuition fees," said campaign leader Michael Chessum.

The route of the march is headed towards the financial district of the City of London, where there is already a protest camp outside St Paul's Cathedral. The Occupy London protesters at the cathedral are planning to stage their own events in support of the student marchers. After the violent scenes that accompanied a series of student protests last year, there is set to be a heavy police presence. As a warning against any outbreaks of violence a police spokesman said that one of the tactics available is "the authority to deploy baton rounds in extreme circumstances".

"We wish to protect the French against the grave problems facing other European countries. Bankruptcy is not an abstract word," said premier Francois Fillon. The belt-tightening plan - the second package since August, taking total cuts to 112 billion euros - include a 5 per cent super-tax on big firms, a rise in VAT on restaurants and construction, and cuts in pensions, schools, health, and welfare. It is the latest squeeze in a relentless campaign of fiscal tightening across the eurozone.

"It is like the 1930s: imposing austerity on countries already in recession is the way into a death spiral," said Danny Blanchflower, a former UK rate-setter. Left-wing critics have evoked grim parallels with the "deflation decrees" of Pierre Laval in 1935 when France had to take ever harsher measures to preserve the country's viability on the Gold Standard, a gamble that ultimately set off violent street protests. France's move came amid a further blizzard of grim data from Europe, confirming that most of the region is already on the cusp of recession. Growth has reached a "virtual standstill", said EU commissioner Olli Rehn.

Mr Fillon said the country must accept sacrifice to "avoid the day where policies are imposed upon us by others," insisting that France would meet its "untouchable" deficit target of 4.5 per cent of GDP next year - down from 5.7 per cent this year. The austerity plan seems aimed at insulating France from the unfolding disaster in Italy, where a deepening slump and the final agonies of Silvio Berlusconi's government sent debt markets into a tail-spin on Monday.

Goldman Sachs warned that Italy might start to take "unilateral decisions" such as seizing banks or clamping down on the bond market (effectively holding investors captive) if the political climate deteriorates further and authorities feel boxed in. It said the crisis has set off a "self-fulfilling dynamic" that may ultimately make it impossible for Italy to roll over debt.

Joachim Fels from Morgan Stanley said Europe's leaders may themselves have invited disaster by suggesting for the first time that a country - Greece - may be pushed out of EMU. This shatters the stated orthodoxy until now that the euro is inviolable and eternal. "They may have set in motion a sequence of events which could potentially lead to runs on sovereigns and banks in peripheral countries that make everything we have seen so far in this crisis look benign," he said.

Now, the Credit Union National Association (CUNA) reports that a whopping 650,000 Americans have joined credit unions since September 29 - the date that Bank of America announced it would start charging a $5 monthly debit fee, a move it backed down on this week. To put that in perspective, there were only 600,000 new members for credit unions in all of 2010. "These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings," said CUNA President Bill Cheney.

The big problem: Berlusconi doesn't seem like he's in an urgent mood to make reforms, the ECB isn't doing much, and China and Brazil have dropped out of the picture. Hence we could get a big bustup! For us there is no obvious near-term solution other than a stress event which prompts action. Maybe the EU authorities will use the experience learnt from the Greece situation last week that a hard-line response is the only way to force countries to act in the way they want. It is a big risk but at the moment the weaker countries seem to still want the Euro enough that the ECB and Germans could play hard ball and get what they want if they are prepared to take the risk. Indeed ECB Governing Council member Yves Mersch fired a warning over the weekend saying that the ECB often discusses the possibility of ending the purchase of Italian government bonds and could if it concludes Italy is not adopting promised reforms. Such talk will not encourage private capital into Italy meaning that the ECB may need to intervene more to have the required impact.