Its $42 billion budget deficit would make an out-of-control Hollywood director blush — and bankrupt a small nation. Its schools are failing, air quality is worsening, and unemployment neared 10% as of December. The only thing larger than its litany of woes, however, IS THE ROSTER OF BIG-NAME POLITICAL CELEBRITIES WHO ARE TESTING THE WATERS FOR A RUN FOR GOVERNOR IN 2010, when term limits show Arnold Schwarzenegger to the door.

"This is an era of limits," Jerry Brown recently told TIME, reprising a theme he sounded more than 30 years ago when the state first put him in the governor's mansion in the aftermath of Watergate and the last throes of Vietnam War. "There is not a lot of room for political maneuvering. The age of dividing up the easy surpluses is over. We've been on a borrowing binge, both in the private and public sector, and we're going to have to enter a time of belt-tightening."

Japan has not suffered much directly from the bursting of bubbles in U.S. credit and housing markets, but its heavy dependence on exports and persistently soft domestic consumption has led to a sharper contraction than other major economies. As the rich world faces its worst downturn in decades, the Group of Seven (G7) policymakers pledged at the weekend to do all they could to combat recession.

Japan's economy shrank 3.3 percent, or an annualized 12.7 percent in the fourth quarter of 2008 - three times the fall in gross domestic product in the same quarter in the United States, at the epicenter of the current global crisis. With exporters cutting production and laying off staff and many retailers reporting sharp falls in sales, economists saw little hope of a bounce back for Japan.

"One plan includes a Chapter 11 filing that would assemble all of GM's viable assets, including some U.S. brands and international operations, into a new company," the newspaper said. "The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked." Citing "people familiar with the matter," the story said that GM could also ask for additional government funds to stave off a bankruptcy filing. GM declined to comment, the story said.

General Motors and Chrysler LLC face a Tuesday deadline to file restructuring plans to the government in exchange for receiving $17.4 billion in federal loans. Automakers have struggled as U.S. auto sales have tumbled amid a recessionary economy. U.S. auto sales in January tumbled to a 27-year low.

GM has been in talks with bondholders and the United Auto Workers union to get an agreement on a RESTRUCTURING THAT WOULD WIPE OUT ABOUT $28 BILLION IN DEBT FOR THE AUTO MAKER, sources have told Reuters. GM has already announced plans to cut 10,000 salaried workers worldwide, or 14 percent of its staff, impose pay cuts for most remaining white-collar U.S. workers and has offered buyouts to its 62,000 U.S. workers represented by the UAW.

The note, which Livni handed to outgoing Prime Minister Ehud Olmert of Kadima at the weekly cabinet meeting, set the battle lines in what could be weeks of political bargaining after Israel's inconclusive election last Tuesday. Shortly after polls closed, both Livni and Netanyahu laid claim to the premiership, deepening uncertainty over the course Israel will follow after last month's Gaza war and in peace negotiations with the Palestinians.

Kadima won 28 seats in the 120-member parliament to Likud's 27, but a strong rightist bloc that emerged in the vote appeared to give Netanyahu the edge in putting together a governing majority.

"I have no intention of being in a unity government headed by Bibi - and don't hint that," Livni, using Netanyahu's nickname, said in the note chiding Olmert, who was reported to have urged her to join a broad Likud-led coalition. Television cameras are allowed to film the start of Israeli cabinet meetings, and they caught Livni writing the note. Its text could be read clearly when the paper was shown on TV news programs.

Credit ratings agency Moody's recently followed rival Standard & Poor's in warning it might downgrade Irish debt, amid fears that one of Europe's former success stories is falling into a deepening recession. The cost to hedge against losses on Irish debt tripled last week to a record 355 basis points - meaning that for every £100 of debt, investors have to pay £3.55 to insure against default, according to data firm CMA Datavision. It was about 262 basis points at the end of January.

Moody's has warned there is a more than 50% chance Ireland will lose its triple A rating within 12 to 18 months. The spread between Irish and German debt rose last week to 203 points, MEANING IRELAND HAS TO PAY 2% MORE INTEREST THAN GERMANY TO BORROW IN THE FINANCIAL MARKETS because of its perceived higher risk.

Ireland last week announced an additional €7bn (£6.3bn) injection into its top banks, Bank of Ireland and Allied Irish Banks, which are suffering from an increase in bad loans. Thousands of Irish citizens are struggling to pay their mortgages which they arranged at the peak of the country's real estate bubble. Unemployment is at a 15-year high.

Schmitt contends that scientists "are being intimidated" if they disagree with the idea that burning fossil fuels has increased carbon dioxide levels, temperatures and sea levels. "THEY'VE SEEN TOO MANY OF THEIR COLLEAGUES LOSE GRANT FUNDING WHEN THEY HAVEN'T GONE ALONG WITH THE SO-CALLED POLITICAL CONSENSUS that we're in a human-caused global warming," Schmitt said. Dan Williams, publisher with the Chicago-based Heartland Institute, which is hosting the climate change conference, said he invited Schmitt after reading about his resignation from The Planetary Society, a nonprofit dedicated to space exploration.

Schmitt resigned after the group blamed global warming on human activity. In his resignation letter, the 74-year-old geologist argued that THE "GLOBAL WARMING SCARE IS BEING USED AS A POLITICAL TOOL TO INCREASE GOVERNMENT CONTROL OVER AMERICAN LIVES, INCOMES AND DECISION MAKING." Williams said Heartland is skeptical about the crisis that people are proclaiming in global warming.

Schmitt said he's heartened that the upcoming conference is made up of scientists who haven't been manipulated by politics. Of the global warming debate, he said: "It's one of the few times you've seen a sizable portion of scientists who ought to be objective take a political position and it's coloring their objectivity."

Pyongyang's official Korean Central News Agency made the suggestion on the 67th birthday of leader Kim Jong Il, and accused the United States and other countries of trying to block the country's "peaceful scientific research" by linking it to a long-range missile test. "One will come to know later what will be launched" from North Korea, KCNA said.

When the North test-fired a long-range missile in 1998, it claimed it put a satellite into orbit. The KCNA report comes amid growing international pressure on the communist country to back out of apparent plans to carry out a test launch of a missile believed capable of reaching US territory. US Secretary of State Hillary Rodham Clinton, who last week urged North Korea to avoid provocations, was on her way to the region. North Korea is expected to be a key topic for her visit to Japan, Indonesia, South Korea and China.

Pyongyang has reportedly moved a long-range Taepodong-2 missile, its most advanced, to a launch site on the country's northeastern coast. South Korean media have said a launch could come late this month. Analysts say North Korea's saber-rattling appears to be an attempt to draw Obama's attention, to start negotiations where it can extract concessions.

Between them they had around 250 sailors on board. A senior Navy source said: "The potential consequences are unthinkable. It's very unlikely there would have been a nuclear explosion. But a radioactive leak was a possibility. Worse, we could have lost the crew and warheads. That would have been a national disaster."

The collision is believed to have taken place on February 3 or 4, in mid-Atlantic. Both subs were submerged and on separate missions. As inquiries began, naval sources said it was a millions-to-one unlucky chance both subs were in the same patch of sea. Warships have sonar gear which locates submarines by sound waves. But modern anti-sonar technology is so good it is possible neither boat "saw" the other.

Vanguard is one of Britain's four V-Class subs forming our Trident nuclear deterrent. Each is armed with 16 ballistic missiles. She was last night towed into Faslane in Scotland, with dents and scrapes visible on her hull. Triomphant limped to Brest with extensive damage to her sonar dome. Triomphant has a crew of 101. Vanguard weighs 16,000 tons, is 150 metres long and has a crew of 140.

Mr Cameron told the BBC that it was "NOT POSSIBLE" TO RULE OUT A FULL NATIONALISATION OF THE INSTITUTION. The Lib Dems said the bonuses would reward "failure". Ministers said lower-paid workers should not miss out. But Lloyds said its staff deserved "financial recognition" for hitting targets.

A Lloyds spokesman stressed that no decision had been finalised on this year's bonuses, although the group's five executive directors have all voluntarily agreed to forego any bonus they may be awarded for 2008. HBOS - bought by Lloyds with government backing last year - is set to record a loss of nearly £11bn, raising concerns that it may need more help from the state.

Last week Chancellor Alistair Darling told RBS failure should not be rewarded with huge bonuses, but says he cannot rule out pay-outs for some bank staff. The comments came as reports put THE POTENTIAL TOTAL BONUS FIGURE AT UP TO £1BN FOR THE COMPANY'S 177,000 WORKERS.

The HBOS whistleblower whose revelations led to the resignation of one of the Government's top regulators is about to release a tranche of documents which he says point a direct and accusatory finger at Gordon Brown's responsibility for the banking crisis, and has called on the Prime Minister to resign.

Paul Moore, the former head of risk at HBOS, told the IoS that he has more than 30 potentially incendiary documents which he will send to MPs on the Treasury Select Committee. He says they disprove Mr Brown's claim about the reasons for HBOS's catastrophic losses – now estimated to be nearly £11bn – and show that it was the reckless lending culture, easy credit and failed regulation of the Brown years that led directly to the implosion of British banks.

Former Tory Chancellor Lord Lamont said: "What has happened with Lloyds TSB/HBOS is truly scandalous. The Government encouraged the merger, the Prime Minister personally claimed the credit for it and the Government – despite many warnings – suspended the competition rules so that the merger could happen. The result has been nothing short of a disaster."

There were not believed to be any fatalities or injuries in the blast, which happened at about 7:10 pm ET (12:10 am Sunday GMT), said Carlos Lineras of the Colombia Institute for Geology and Mines. The institute issued an evacuation order for about 7,000 people living near the Galeras volcano.

The volcano is not in a heavily populated region. Galeras has erupted several times since it became active again in 1989. The only fatalities were in 1993, when nine people - all scientists or tourists in or near the volcano's crater - were killed.

The plan to rescue the banks, or the people, as enunciated by Treasury Secretary Geithner, is no plan, only an apparent set of contradictory principles: an ideological one not to nationalize and a political one not to subsidize too obviously.

THE PLAN WILL FAIL UNLESS THE ADMINISTRATION COMES OUT IN FAVOR OF EITHER SUBSIDY OR SEIZURE OF FAILING BANKS. Either the United States will be forced to nationalize when that becomes apparent or perhaps it is waiting until that failure makes nationalization more politically palatable. In either event, it is a terrible mistake and the cost will only grow, both in direct terms for taxpayers and more broadly for the growing number of people with too little income to pay tax.

One factor which may come into play is international pressure not to nationalise. What is just about possible in the United States would be far harder in economies such as Britain's with larger banking systems relative to their size and borrowing power.

The Irish Times notes that Judge Herbert Landau said new EU powers in criminal justice affected "core issues" of German legislative authority. "These are issues affecting the shared values of a people," he said. According to Euobserver, Judge Udo Di Fabio, who will deliver the judgement on the Treaty, asked whether the transferral of powers to the EU really means more freedom for EU citizens, asking "Is the idea of going ever more in this direction not a threat to freedom?" Judge Rudolf Mellinghoff asked whether the Treaty was already "in an extensive way" being applied when it comes to the area of criminal sanctions in environment issues.

The Frankfurter Allgemeine Zeitung noted that the judges were united on one issue: that the treaty is not a work of high literature. Less-than-clear passages from the treaty were read out aloud, guaranteeing a laugh, noted the paper.

Suedeutsche Zeitung notes that the Court may ask for a referendum if it finds that the Treaty detrimentally affects the German Constitution. The paper notes that "if the judges intervene... it will be because important transfer of powers to the EU is not followed by a corresponding increase in democracy. Europe suffers from lack of democracy".

The warning was a particular shock after Lloyds chairman Sir Victor Blank recently told Sky News he believed all the bad news about HBOS had already come out. In fact, the new estimate is several billion pounds worse than the markets had expected. The fall came despite the fact the group, which is 43%-owned by the taxpayer, expects pre-tax profits of around £2.4bn for Lloyds TSB.

Market confidence in HBOS collapsed last autumn and the Government waived competition rules to allow the bank to be taken over by Lloyds TSB, creating a UK "super-bank". The taxpayer has pumped a total of £17bn into the two banks to shore up their balance sheets. The massive write-downs at HBOS throw a fresh spotlight on the handling of risk at the bank.

The baby, who weighed in at seven pounds and three ounces when she was born Monday, was conceived after just one night of unprotected sex, the paper said. Alfie was 12 years old at the time. In theory, police could have brought a prosecution for under-age sex, but they said they would not be pressing charges.

"Sussex Police Child Protection Team were aware of a 14-year-old girl that had become pregnant as the result of a relationship with a 12-year-old boy," said a spokeswoman for Sussex Police. "A joint agency investigation with East Sussex County Council Children's Services has taken place which has considered the needs of both individuals and there will be continued support for these two young people in the future."

Update - The Daily Mail reports - "The teenage sister of the boy who became a father at 13 had a baby when she was the same age!"