Port authorities in the Dutch city of Rotterdam deployed an icebreaking ship for the first time in 12 years, while in Britain forecasters issued a new severe weather warning. In the Balkans, thousands shivered in their homes after gas supplies to South Eastern Europe were cut as a result of a contract dispute between Russia and Ukraine, reminding many of the freezing winters they endured in the wars of the 1990s.

"It all reminds me of the war when we were freezing, except there is no shooting," said Hilmo Celjo, who stood in a queue near the Bosnian capital Sarajevo to buy wood and coal. Temperatures sank to record lows in parts of Germany overnight. A weather station in the eastern state of Saxony said the coldest spot was -27.7 degrees Celsius.

Thick snow has covered much of the country and icebreakers were at work on several waterways, including the River Elbe in eastern Germany. Marseille's main Saint Charles train station was paralyzed as signaling froze. School buses were canceled in the entire Bouches du Rhone area, where Marseille is located. France's Secretary of State for Transport, Dominique Bussereau, demanded an investigation into "unacceptable" chaos at Charles de Gaulle, where hundreds of flights were canceled and thousands of passengers stranded earlier in the week.

The eye-popping estimates reflect plummeting tax revenues because of the recession and about $400 billion to bail out the financial industry and take over Fannie Mae and Freddie Mac. Last year's deficit was $455 billion. The CBO estimate released Wednesday also sees the economy shrinking by 2.2 percent this year and recovering only slightly in 2010, and the unemployment rate eclipsing 9 percent early next year unless the Obama administration steps in.

"The recession - which began about a year ago - will last well into 2009," the CBO report says. The agency said "the ongoing turmoil in the housing and financial markets has taken a major toll on the federal budget." The dismal figures come a day after President-elect Barack Obama warned of "trillion-dollar deficits for years to come."

The Palestinian militant group Hamas said there were "positive signs but no agreement yet". The development came as Israel halted military operations in Gaza for three hours to aid humanitarian efforts. The lull, which began about 1100 GMT and ended shortly after 1400 GMT, was the first of what an Israeli spokesman said would be a daily ceasefire to allow Gazans to "get medical attention, get supplies... whatever they need".

News agencies reported that Gaza residents had rushed out into the streets during the lull to stock up on food and visit relatives in hospital. Israel and Hamas have been under pressure to accept a diplomatic solution to the conflict, which began on 27 December. Israel wants to stop rocket attacks on southern Israel and to stop Hamas smuggling weapons into Gaza via Egypt, while Hamas says any ceasefire deal must include an end to Israel's blockade of Gaza.

Israel said it was not sure how long the diplomatic process would take and that a working arms embargo on Hamas was needed. The World Bank warned on Wednesday of a looming public health crisis in Gaza because of damage to its sewage system and a shortage of clean drinking water.

Discontent could burst into the open and spread widely, according to an influential government magazine. It appeared that the article was issued as a warning to Communist Party officials to handle grievances with care.

China's Communist rulers have long been nervous that social instability might weaken their grip on power and undermine their claim to rule. They are anxious that celebrations to mark the 60th anniversary of Communist Party rule on October 1 should be picture-perfect and are determined to avoid a repeat of the student demonstrations in Tiananmen Square that were crushed 20 years ago on June 4 by troops and tanks.

This week's issue of The Outlook Magazine, published by the Government's Xinhua news agency, carried one of the starkest and most public warnings yet of trouble in 2009. Huang Huo, a senior Xinhua reporter, told the magazine: "Without doubt, now we are entering a peak period for mass incidents."

Before his world started to fall apart last autumn, Mr Merckle was employing 100,000 people and turning more than £30 billion a year. Forbes magazine had put his personal fortune at £7 billion. He had built the group from a small inherited pharmaceutical firm employing 80 workers. But almost every one of the offshoots of the Merckle empire was in serious trouble.

His Heidelberg Cement was having problems digesting Hanson, its recently purchased British competitor. Demand had slipped away for electric motors, machine tools and even the snowcats that he made for ski-trail maintenance. He was also thought to be the biggest individual loser from a dramatic swing in the share price of Volkswagen last year in which he is thought to have lost more than £200 million.

Although he had scratched together a £400 million loan for his companies, Mr Merckle was said to have become depressed by the decline in his fortunes. His creditors — about 30 banks including the Royal Bank of Scotland — had closed in on him, demanding his Swiss companies as security.

He disclosed that al-Qaeda's high command in Pakistan remained intent on using British citizens to carry out attacks on British soil, making necessary the constant surveillance of thousands of suspects. Terrorists were being forced "to keep their heads down" because of relentless surveillance and successful prosecutions.

The chat with the Director-General — arranged to mark MI5's centenary year — revealed more of the role of the intelligence agency and its myriad projects. More than 40 per cent of his staff are female, the average age is 40, and 8 per cent are of ethnic minority origin. Current concerns include the internet indoctrination of teenage Muslims into terrorism and the rise in dissident Irish republican attacks.

The MI5 chief also divulged that there had been indirect connections between the terrorists in Mumbai in November and individuals in Britain but that there was no evidence of any national security issue for Britain. In the past 18 months there had been fewer cases where terrorists had moved from facilitating and supporting terrorism to planning attacks. He said: "There have been 86 successful convictions since January 2007 of whom approaching half pleaded guilty, which has had a chilling effect on the enthusiasm of the networks. They're keeping their heads down."

A copy of the plan was leaked to the leftist Israeli daily, Ha'aretz, which published details from it at the top of its English-language website Sunday morning. Because of Ha'aretz's constant effort to undermine Israel's security by promoting every new "peace plan" to emerge, it is probable someone in the EU arranged to float the document and gauge Israel's reaction before Europe's foreign ministers convene to discuss it.

The union is thought to have timed the document's release in order to have it in play before Barack Hussein Obama ascends to the presidency of the United States on January 20. "Inter alia, it calls for increased pressure on Israel to reopen Palestinian institutions in Jerusalem, including Orient House, which formerly served as the Palestinian Authority's headquarters in the city," the paper said, and which gave the Arabs a strategic foot in what Israel calls its "eternal and undivided capital."

A central demand of the Arab world is that the central and most important parts of Jerusalem - with the Temple Mount, Israel's holiest site, at the top of the list - be included in a Palestinian state. States the EU plan: "A KEY PART OF BUILDING THE PALESTINIAN STATE INVOLVES RESOLVING THE STATUS OF JERUSALEM, AS THE FUTURE CAPITAL OF TWO STATES. [Therefore] the EU will work actively towards the re-opening of the Palestinian institutions, including the Orient House."

The PA's commitment to "fight terror" - a commitment it has manifestly not kept despite signing numerous agreements to do so; that should be monitored too. To this end the EU - which is historically strongly biased against the Jewish state - will offer to send "policemen, soldiers or civilians to help train Palestinian security forces or," ominously, "TO SUPERVISE IMPLEMENTATION OF A FINAL-STATUS AGREEMENT."

Israelis are already anticipating that a Netanyahu government will find itself at loggerheads with the new Obama administration, which is expected to greatly increase pressure on Israel in any case, with or without advice/interference from the EU. By drawing attention to the fact that all of Europe, too, will be lined up with Washington against Israel, Ha'aretz is suspected of seeking to influence Israelis away from voting for the almost universally-despised Netanyahu.

This month, both have their eye on the same thing: the plot-turns inside the Russian Orthodox Church, which is currently weighing a successor to longtime Patriarch Alexy II, who died last month at the age of 79.

The arrival of a new Patriarch is also creating plenty of anticipation among religious leaders outside of Russia. Attending Alexy's funeral last month was an impressive array of clerics from dozens of countries and religions, including the main branches of Christianity. Notably, several prominent Catholic Cardinals showed up. Rome has no sway in the Orthodox Church's choice, but it is deeply interested in the new Patriarch. THE ONE BILLION STRONG CATHOLIC CHURCH IS EAGER TO FORGE CLOSER TIES TO THE LARGEST BRANCH OF ORTHODOX CHRISTIANITY, after a millennium of prickly (at best) relations following the Great Schism of 1054. Most recently, Alexy had accused Catholics of aggressive proselytizing throughout the former Soviet Union after the fall of Communism.

American Jesuit scholar Robert Taft, a Rome-based expert in Eastern Christian liturgy, cautions that Catholic-Orthodox relations should not be judged solely by "photo op" encounters between the Pope and Patriarch. "We are sister Churches," said Taft. "There's never going to be a day when Orthodox become Catholics (or vice-versa). But we can move toward being in communion, with the Holy Trinity and with each other. That's what we're heading toward. It's a sharing of life."

Assailants rammed a burning car into the gates of a synagogue in Toulouse, in southwest France, on Monday night. A Jewish congregation in Helsingborg, in southern Sweden, also was attacked Monday night by someone who "broke a window and threw in something that was burning," said police spokesman Leif Nilsson. Neighbors alerted rescue services before the fire took hold.

In Denmark, a 27-year-old Dane born in Lebanon of Palestinian parents is alleged to have injured two young Israelis last week, opening fire with a handgun in a shooting that police suspect could be linked to the Gaza crisis.

In Britain, the Community Security Trust, a Jewish defense group, said it had seen a rise in anti-Semitic incidents since the start of Israel's offensive against Gaza. The group said it had recorded 20-25 incidents across the country in the past week that it believed were connected with Gaza, including an arson attempt on a synagogue in north London on Sunday. London police are investigating the attack, in which suspects splashed flammable liquid on the door and set it on fire.

Community Security Trust spokesman Mark Gardner said that in another incident last week a gang of 15-20 youths walked along the main street in Golders Green, a largely Jewish neighborhood in north London, shouting "Jew" and "Free Palestine" at passers-by.

We will never stop until we avenge the death of all who are killed, injured, widowed and orphaned in Palestine and throughout the Islamic world," said Ayman al-Zawahiri in a new 10 minute audio recording released today on extreme Islamist web forums. The message is entitled "The Massacre in Gaza and the Siege of the Traitors".

He also vows to carry out al Qaeda's repeated threat that the United States will not live in peace until Palestine does. "We are at work to carry out the promise of our fighting sheikh Osama Bin Laden (may Allah protect him) who promised that America will not live in peace in their dreams before we live in peace in Palestine, and until all the forces of the infidels leave the lands of Muhammed," Zawahiri says.

The Army - Only a few troops, perhaps 1 percent, will actually direct aimed fire at the enemy with the intent to kill. These troops are treasured, and set apart, and called snipers. Armed robots will all be snipers. Stone-cold killers, every one of them. They will aim with inhuman precision and fire without human hesitation. They will not need bonuses to enlist or housing for their families or expensive training ranges or retirement payments.

Commanders will order them onto battlefields that would mean certain death for humans, knowing that the worst to come is a trip to the shop for repairs. The writing of condolence letters would become a lost art. No human army could withstand such an onslaught. Such an adversary would present the enemy with the simple choice of martyrdom or flight. So equipped, America's military would be irresistible in battle.

The U.S. Navy - A generation ago the Reagan administration brought World War II-era battleships out of mothballs to provide gunfire support to onshore operations. With a crew of more than 1,500, these ships were designed to be manned by the low-paid draftees of the 1940s, not the more amply rewarded volunteers of the 1980s. The Navy couldn't afford them, and the ships were soon returned to mothballs. In their place, the Navy came up with the new DDG-1000 Zumwalt destroyer, an automated warship with a crew of only 150.

The Air Force is also moving down this path. Long skeptical of UAVs, it has begun to embrace them as the future of air power. Piloted aircraft face fundamental limits of crew fatigue. Heavy bombers flying from the island base of Diego Garcia to Afghanistan would spend more than a dozen hours flying to and from the target area, leaving little time for loitering over it. In contrast, large bomber-size UAVs can spend days over the target. At some point in the next decade, the Air Force will begin replacing cockpits with robotic pilots.

The Institute for Supply Management's factory index fell to 32.4, below economists' forecasts and the lowest level since 1980, from 36.2 the prior month. Readings less than 50 signal contraction. The group's new-orders measure reached the lowest level on record and prices slid the most since 1949.

"Every component suggests that the weakness is going to carry over into 2009," Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina, said in a Bloomberg Television interview. "There's just not a whole lot of new business coming in," and companies will have a "painful adjustment" as consumers shun spending.

Separate figures today showed business at European factories contracted in December by the most on record. Manufacturing declined in China for a fifth month in December, for an eighth month in the U.K., for a seventh month in Australia and at the fastest pace in at least 14 years in Sweden. The figures "confirm a sharp contraction in global investment, output and trade activity, consistent with the deepest global recession since at least the early 1980s," said Lena Komileva, head of market economics in London at Tullet Prebon Plc.

Earlier, he met politicians in Washington to discuss ways to boost the economy and create new jobs. US media reports say he is planning a stimulus package worth more than $800bn (£551bn), including $300bn of tax cuts.

Mr Obama has said he wants a plan that will create 3m jobs by 2011. The president-elect hopes to be able to enact the package shortly after his inauguration on 20 January. "The economy is very sick," he said. "We have to act and act now to break the momentum of this recession."

The US Labor department will release its December employment report on Friday and many economists are expecting the jobless figure to rise by 500,000, bringing the total US job losses for 2008 to about 2.5 million.

Mr Singh also accused Pakistan of "whipping up war hysteria" in what correspondents say may be the toughest comments yet by a senior Indian figure. On Monday, India said it had handed to Islamabad evidence that linked the attacks to "elements" in Pakistan.

Speaking to a meeting of the chief ministers of Indian states in Delhi, Mr Singh said that because of the "sophistication and military precision of the attack it must have had the support of some official agencies in Pakistan". He added: "Today, even as Pakistan engages in whipping up war hysteria, our nation remains steadfastly united and, if anything, the process of national consolidation is becoming stronger."

Mr Singh again criticised Pakistan's policies on tackling terrorism, saying it had "given sanctuary to terrorists and other forces who are antagonistic to India". He added: "The more fragile a government, the more it tends to act in an irresponsible fashion."

Gazprom said it was reducing supplies to compensate for the amount it says Ukraine has been siphoning off. Russia stopped supplying gas to Ukraine last week in a row over unpaid bills. A statement on Naftogaz's website lists nine countries, including Germany, Poland, and Hungary which, it says, will receive reduced supplies.

"Naftogaz of Ukraine considers that in such a case if European users receive less volumes of natural gas, all claims of the noted countries must be directed to Gazprom," says the statement. Moments later, Bulgaria's energy minister said Russian gas supplies to Bulgaria, Greece, Turkey and Macedonia had already been cut.

Pipes across Ukraine carry about one-fifth of the European Union's gas needs.