Monsignor Rino Fisichella, who heads the Vatican's Pontifical Academy for Life, urged Obama to listen to all voices in America without "THE ARROGANCE OF THOSE WHO, BEING IN POWER, BELIEVE THEY CAN DECIDE ON LIFE AND DEATH." Fisichella said in an interview published Saturday in Corriere della Sera that "if this is one of President Obama's first acts, I have to say, in all due respect, that we're heading quickly toward disappointment."

Obama signed an executive order that ended the ban on Friday, reversing the policy of the Bush administration. "This deals a harsh blow not only to us Catholics but to all the people across the world who fight against THE SLAUGHTER OF INNOCENTS THAT IS CARRIED OUT WITH THE ABORTION," another top official with the Academy for Life, Monsignor Elio Sgreccia, told the ANSA news agency.

A US counterterror official confirmed Friday that Said Ali al-Shihri, who was jailed at Guantanamo for six years after his capture in Pakistan, has resurfaced as a leader of a Yemeni branch of al-Qaeda. "By Allah, imprisonment only increased our persistence in our principles for which we went out, did jihad for, and were imprisoned for," al-Shihri said in a video posted on a militant-leaning Web site Friday.

It was the second time this week a reference to al-Shihri has shown up on the Web site. He was mentioned in an online magazine on January 19 with a reference to his prisoner number at Guantanamo, 372. Al-Shihri was released by the US in 2007 to the Saudi government for rehabilitation. But this week a publication posted on the site said he is now the top deputy in "al-Qaeda in the Arabian Peninsula," a Yemeni offshoot of the terror group headed by Osama bin Laden.

The group has been implicated in several attacks on the US Embassy in Yemen's capital Sana. According to the Pentagon, at least 18 former Guantanamo detainees have "returned to the fight" and 43 others are suspected of resuming terrorist activities. Pentagon spokesman Geoff Morrell declined to provide the identity of the former detainees or say what their terrorist activities were.

President Obama said the United States had found itself "in the midst of an unprecedented crisis that calls for unprecedented action. This recovery plan must and will include unprecedented measures that will allow the American people to hold my administration accountable for these results," he said.

Mr Obama announced:
- More than 3,000 miles of new electricity transmission lines would be laid down to improve the US power network
- 75% of public sector buildings would be made more energy-efficient, saving taxpayers $2bn a year
- More than 2.5m homes would be "weatherized" (made more energy efficient),
- Funds would be made available to improve or renovate 10,000 schools

President Obama said: "Instead of politicians doling out money behind a veil of secrecy, decisions about where we invest will be made public, and informed by independent experts whenever possible. We'll launch an unprecedented effort to root out waste, inefficiency, and unnecessary spending in our government, and every American will be able to see how and where we spend taxpayer dollars by going to a new website called recovery.gov." Mr Obama said the economic recovery plan "will save or create three to four million jobs over the next few years".

The global financial crisis hit Iceland - which has a population of 320,000 - in October, triggering a collapse in its currency and financial system under the weight of billions of dollars of foreign debts incurred by its banks. The economy is set to shrink 10 percent this year and unemployment is surging. Critics wanted Haarde, the central bank governor and other senior officials to resign.

Some senior figures in his party have also said they favour an early election, but Haarde had up to now vowed to defy plunging popularity and stay on. Protests had been held weekly since the crisis broke last year, but since Tuesday have been held every night. On Thursday, police used teargas on demonstrators for the first time since protests against the North Atlantic island's entry into the NATO alliance in 1949.

Latvia, Bulgaria and other European countries hit hard by the global economic meltdown have also seen unrest.

First Centennial, with $803.3 million in assets and $676.9 million in deposits, was shut by the California Department of Financial Institutions and the Federal Deposit Insurance Corp was named receiver. First California Bank, based in Westlake Village, will assume deposits. The failed bank's 6 offices will open January 26 as branches of First California, the FDIC said.

"Depositors of the failed bank will automatically become depositors of First California," the FDIC said in an e-mailed statement. "There is no need for customers to change their banking relationship to retain their deposit insurance coverage."

Regulators closed 25 banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of September 30. National Bank of Commerce in Berkeley, Illinois, and Bank of Clark County in Vancouver, Washington, were shuttered by regulators on January 16.

The company gained federal permission this week to inject eight to 10 patients with cells derived from embryonic cells, said Dr. Thomas Okarma, president and CEO of Geron Corp in California. The patients will be paraplegics, who can use their arms but can't walk. They will receive a single injection within two weeks of their injury.

The study is aimed at testing the safety of the procedure, but doctors will also look for signs of improvement like return of sensation or movement in the legs, Mr Okarma said. Whatever its outcome, the study will mark a new chapter in the contentious history of embryonic stem cell research in the United States - a field where debate spilled out of the laboratory long ago and into national politics.

Embryonic stem cells can develop into any cell of the body, and scientists have long hoped to harness them for creating replacement tissues to treat a variety of diseases. But research has been controversial because embryos must be destroyed to obtain them.

JOSEPH STIGLITZ, Nobel Prize winning economist and professor at Columbia University, New York - What's happened is a milder version of what has happened in the US, only a little more transparent. My sense is that America may be in far worse shape.

DAVID SMITH, Chief executive, Jaguar Land Rover - Today's GDP figures will no doubt confirm what the automotive industry had been experiencing for a while; the UK is firmly in recession and is likely to remain so for some time.

RUTH LEA, Economic Adviser to the Arbuthnot Banking Group - The UK is not finished, but it is distressed. Very distressed. We'll probably see a contraction in the economy of 3 per cent this year, which means another million, at least, unemployed, and another 10 per cent or more off property prices, rising arrears and repossessions.

MARTIN WEALE, Director, National Institute for Economic and Social Research - Will the UK go bust? No. It's a silly question. We could end up borrowing from the IMF, but that is plainly not the same thing.

JON MOULTON, Founder of private equity group Alchemy Partners - Everything I see shows a worsening economy. Most of the companies I see are coming up with figures which are frightening. The currency slide is going to mean that inflation will be back with us earlier than expected.

THEO PAPHITIS, Owner of the stationer Ryman and star of Dragons' Den - It is by far the worst recession in living memory. It is not something that we will ever see again in our lifetime – but it will come to an end.

GEORGE OSBORNE, Shadow Chancellor - Of course Britain is not finished, but given the growing lack of international confidence in the policies of the Government, we should be very concerned about the direction in which our country is being led.

This goal was handsomely achieved and the consequences may yet be epoch-making. But the cold vice of global recession now holds even China in its grip. The latest figures show that China's juggernaut is slowing down and perhaps even grinding to a halt. Its economy expanded by 6.8 per cent last year, compared with 13 per cent in 2007. For those of us enduring outright recession, possessing an economy that grew at all, let alone by nearly 7 per cent, hardly seems a cause for alarm.

But China's vast population of 1.2 billion ensures that tens of millions of people enter the workforce every year, while colossal numbers migrate from the impoverished countryside to the cities of the eastern seaboard. Providing these rootless masses with jobs and homes means that China must run simply to stand still. In effect, a growth rate of 6.8 per cent leaves China perilously close to outright recession.

Our own plight would be immeasurably worsened by a recession in China. With unconscious irony, David Miliband, the Foreign Secretary, chose yesterday to launch a new document on Britain's relations with China, based on the assumption that Asia's giant will continue to be a "motor" for the global economy. If that engine falters, all of us will suffer. Much has been written about the alleged dangers of China's rise. THEY ARE AS NOTHING COMPARED WITH THE CONSEQUENCES OF CHINA'S POSSIBLE DECLINE.

From March 1 until the end of August, the EU will become the owner of 30,000 tonnes of butter and 109,000 tonnes of skimmed powder milk, paid for at above market cost to support the dairy industry. The EU is has also agreed to begin new export subsidies for European butter, milk powder and butteroil.

Export subsidies and EU food stocks were last used in 2007 and the Commission last year tried to scrap such payments, a reform that was blocked by France and Germany. Commission officials have played down the measure as a temporary move after a steep slide in milk prices triggered a 33 per cent decline in butter exports last year. "We are not anticipating a return to the old days of butter mountains and milk lakes. This is a temporary crisis situation on the market," said a Commission spokesman.

The EU intervention has created another obstacle to progress in world trade talks and has dashed hopes that President Barack Obama could be persuaded to reduce American farm subsidies. "We regret that the EU has taken this action which we believe will destabilise the market," said a US government official.

Mr Obama proclaimed that the US would "actively and aggressively seek a lasting peace between Israel and the Palestinians" in the wake of this month's Gaza war. "The outline for a durable ceasefire is clear: Hamas must end its rocket fire: Israel will complete the withdrawal of its forces from Gaza: the US and our partners will support a credible anti-smuggling and interdiction regime, so that Hamas cannot re-arm," the US president said.

"As part of a lasting ceasefire, Gaza's border crossings should be open to allow the flow of aid and commerce, with an appropriate monitoring regime, with the international and Palestinian Authority participating." Mr Obama and Hillary Clinton, secretary of state, also announced the appointment of George Mitchell, as the US special envoy for the Arab-Israeli conflict and Richard Holbrooke, former US ambassador to the United Nations, as representative for Afghanistan-Pakistan.

The moves signalled another shift from the foreign policy of the Bush administration, which had resisted appointing a high-profile envoy for Middle East peace. Before Mr Obama gave his speech, an Israeli official said there would be tough conditions for any lifting of the blockade, which he linked with the release of Gilad Shalit, a soldier held captive by Hamas since 2006.

Accounting for nationalised and part-nationalised banks must be at least as good as for those in the private sector, it added. The MPs also urged the Treasury to stop shedding staff during the downturn. The government nationalised Northern Rock and Bradford and Bingley last year, and put £37bn of capital into Royal Bank of Scotland (RBS), Lloyds TSB and HBOS.

This week, it was announced that banks would be able to take up state insurance against their expected bad debts, while the government said it was increasing its stake in RBS from 58% to nearly 70%. In its report, the committee said: "In order for public scrutiny to be effectively performed, the magnitude and nature of these liabilities must be comprehensively disclosed."

The accounts for fully and part-nationalised banks should be "at least as comprehensive as those made by major banks", and go beyond minimum accounting standards, it suggested. Key performance indicators for Northern Rock and Bradford and Bingley should also be included in Treasury accounts, the committee said. The committee's chairman, Conservative MP Michael Fallon, said: "Public companies are required to publish quarterly data on their accounts and, given the scale of public investment, the taxpayer deserves no less information from the Treasury."

Gross domestic product is predicted to have fallen by 1.2% in 2008's final quarter, following on from a 0.6% contraction in the previous quarter. This would represent the biggest decline since 1990's third-quarter. If the consensus is right, the figure will also represent a 1.4% decline on the same quarter a year ago - the biggest year-on-year fall since 1991.

Neil Mackinnon, chief economist at ECU Group, said: "THERE ARE NO GREEN SHOOTS OF RECOVERY, NO LIGHT AT THE END OF THE TUNNEL and the GDP figures will be grim and underscore the depth of the recession." The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five. In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s.

GDP is the most commonly used indicator of national income. It attempts to measure the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries. The consensus forecast for 2009 as a whole is now for a 2.1% decline in GDP. As recently as December, the forecast was for a drop of 1.5%.

This highlights the rapidly deteriorating economic picture over recent weeks, during which a number of the UK's best known high street retailers, such as Woolworths and Zavvi, have gone into administration. The pound has slumped against the euro and many analysts believe that parity is now inevitable. Sterling also hit a seven-year low against the dollar this week.

Last week, the Congressional Budget Office projected that even without this package, the US budget deficit will hit $1,200bn this year – or 8.3pc of national income. Such a massive gap between spending and taxation already amounts to an unprecedented fiscal stimulus. Cranking up spending even more is the last thing the US should do.

Excessive government largesse is never a good idea. The demand boost takes time, the inefficiencies are enormous and the scope for cronyism bigger still. But turbo-charged state spending is especially bad in a country facing massive demographic pressures, with a fragile currency and already servicing debts equal to a mind-boggling 368pc of GDP. I wish Obama well, but his plan is utter folly.

This ghastly episode will only end once senior bank executives are forced, under threat of custodial sentence, TO FULLY DISCLOSE TO ONE ANOTHER AND THE AUTHORITIES, on the basis of all available evidence, the extent of their sub-prime liabilities. Then the losses must be written-off. Only after such purging will the banks begin to rebuild mutual trust – allowing the interbank market to reboot, so restoring the credit lines that are so vital to the broader economy. And all this needs to happen BEFORE more public money is spent recapitalising our banking sector.

I know what I'm saying is drastic. But this is a drastic situation. In the UK and US, in particular, the banks aren't playing ball. THEY THINK THEY'RE MORE POWERFUL THAN OUR ELECTED OFFICIALS, and for the last six months they have been getting away with hiding losses and burying mistakes while screwing many billions of pounds out of taxpayers.

As if all this renewed banking angst wasn't enough, yet another fear is now stalking international capital markets. Last week, any remaining hope the eurozone had escaped the worst of this crisis was blown out of the water. Credit default swaps (the cost of insuring against a government default) among the most feckless eurozone members have reached Latin American levels. WOULD FRENCH AND GERMAN TAXPAYERS BAIL OUT ANOTHER EUROZONE MEMBER? The longer this crisis goes on, the larger that incendiary question looms.

The Italian newspaper Corriere della Sera quoted Gazans claiming that less than 600 people had died in the 22-day attack, far fewer than the 1,300 reported by Palestinian health officials. "It's possible that the death toll in Gaza was 500 or 600 at the most, mainly youths aged 17 to 23 who were enlisted by Hamas – who sent them to their deaths," the newspaper quoted a doctor at the main Shifa hospital as stating.

Other residents told the newspaper Hamas gunmen had used medical facilities to organise and co-ordinate attacks. Israeli officials emailed the report around the world and a military officer condemned Hamas as "monstrous" in its use of civilians to cover its armed activities. "Entire families in Gaza lived on top of a barrel of explosives for months without knowing," said Brigadier Eyal Eisenberg.