If US lawmakers don’t reach a budget consensus and raise the debt ceiling by Thursday October 17, the US will become the first Western power to default since Nazi Germany in 1933, and will send markets into uncharted territory.

The rest of the world is bracing itself for what would happen if the bill is rejected, and the US inches closer to defaulting on its debts, which are largely foreign-held in the form of US Treasury Bonds. Central banks have begun preparing for the worst-case scenario if US does fault, which would result in a serious devaluation of Treasury bonds, delayed payments, and a more large-scale version of the current government shutdown.

“Because in the past it’s always been sorted out is absolutely not a reason to fail to do the contingency planning,” Jon Cunliffe, who will become the Bank of England’s deputy governor for financial stability in November, told UK lawmakers. “I would expect the Bank of England to be planning for it [US default]. I’d expect private-sector actors to be doing that, and in other countries as well,” said Cunliffe, who acknowledged a default as “the main risk to the [global] financial system”.

The European Central Bank and the People’s Bank of China (PBC) have struck a deal that moves both banks farther from the dollar orbit. The two banks agreed to ‘swap’ $56 billion worth of yuan for $60.8 billion worth of euros.

You would hope — and expect — that the process would be strictly analytical and scientific, uncontaminated by outside commercial interests. In at least one recent case, you would be wrong. As reported by the Washington Post, a panel that shaped the government’s policy for testing the safety and effectiveness of painkillers was subsidized by pharmaceutical companies that paid hundreds of thousands of dollars for, essentially, access. They wanted to influence the thinking of the FDA, according to emails secured through a public records request.

The emails show that the companies paid as much as $25,000 to attend a meeting of academics intended to provide advice to the FDA on how to analyze evidence from clinical trials. The communications suggest that the regulators had become too cozy with the companies who profit in the $9 billion US painkiller market. FDA officials who regulate these meds also served on the steering committee of the panel, which met in private, and co-wrote papers with employees of pharmaceutical companies.

“Instead of protecting the public health, the FDA has been allowing the drug companies to pay for a seat at a small table where all the rules were written.” Craig Mayton, the attorney who made the public records request, told The Post.

Mark Williams and Qinwei Wang from Capital Economic called the rise "astonishing". They estimate that China's central bank must have bought $70 billion of foreign bonds last month in a frantic bid to hold down the currency. We won't know for a while where the money went, but a big chunk must have gone into US Treasuries. So bear that in mind when you read the Xinhua claims that the US debt ceiling fight "has again left many nations' tremendous dollar assets in jeopardy and the international community highly agonised."

Or when it says: A new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing. To that end, several corner stones should be laid to underpin a de-Americanised world.

Talk, talk, talk. China's soaring reserves expose the truth. (And no, excess reserves are not a sign of strength, they are a sign of a deformed economy). Beijing is not in fact opening up its capital accounts and preparing to let the market decide the exchange rate.

Talks resume in Geneva for the first time in six months today with expectations high for a compromise deal that could see Britain, America and other Western countries abandon crushing sanctions in return for Tehran accepting strict controls on its atomic facilities. Iran’s chief negotiator even suggested yesterday that a “road map” for a peaceful solution to the impasse could be agreed by tomorrow.

But Mr Netanyahu warned that it was only the crippling economic pressure of sanctions that had forced Iran back to the negotiating table in the first place and that it would be foolish to relax them now. “It would be a historic mistake to ease the pressure on Iran a moment before the sanctions achieve their objective,” he said. “Particularly at this moment we must not give up on them, we must keep up the pressure.”

Any move to let up would strengthen Iran’s “uncompromising elements” around the supreme leader, Ayatollah Ali Khamenei, who would be “perceived as the winner”, Mr Netanyahu said. Mohammad Zarif, Iran’s foreign minister and chief negotiator, is expected to present the five permanent members of the UN Security Council plus Germany, the so-called P5+1, with new terms at today’s talks.

Radek Sikorski, the Polish foreign minister, is widely tipped as the centre-Right political figure best placed to take over Baroness Ashton’s role as the EU foreign affairs representative when her term ends next year. Speaking to The Telegraph, Mr Sikorsky said the scope of the job needed to take on a military dimension to reflect European security challenges.

The comments put Mr Sikorski on a collision course with Downing Street, which has signalled it will fight attempts by Lady Ashton to establish a new European military headquarters and a new drone-based surveillance network to tackle external threats. “For diplomacy to be effective, you need instruments. You need a politically useable neighbourhood policy, development policy and security policy. It’s a function that could make Europe more influential in the future.”

“Where we still differ from national defence policies is that we have not made enough of our defence capabilities” Mr Sikorski added that recent developments showed that America would not always intervene with military force and that Brussels would have to take on its own burdens. “The EU has conducted military operations, including against Somali pirates where it has been very successful with attacks dropping 70 per cent.”

“There are clearly operations where we have vital European security considerations but where the Americans take a pass because their responsibilities lie elsewhere, that’s where we should act as Europe.”

All great empires – from the Greek, to the Roman, the Spanish and the British - have at their heart a dominant means of exchange which is very much part of their political and social hegemony. Once upon a time, it was Roman coinage which was the world's pre-eminent currency. In more recent times it was the British pound. Today, it's the US dollar to which international investors flock as a safe haven for their money. Highly liquid and apparently reliable – until recently at least – nothing else comes even remotely close to the greenback's dominant position in the international monetary system.

That this position – what Giscard d'Estaing referred to as America's "exorbitant privilege" – could so casually be put at risk by politicians on Capitol Hill is an extraordinary spectacle that may be indicative of a great power already seriously on the wane. With the pound, the fall from grace was swift. Britain emerged from the devastation of the First World War an irreparably damaged economic and military power, with crushing debts and a deeply impaired manufacturing sector.

The dollar was able quickly to usurp the pound's position. Final defeat for sterling came with Britain's decision to leave the gold standard in 1931 – an economically sensible decision but a psychological turning point for sterling from which it never recovered. Lack of any credible alternative means it won't happen so quickly with the dollar. For all the progress of the last 30 years, China for now remains a much smaller economy than the US and in any case is nowhere near ready financially to assume such a role. As for the euro, the dollar needn't trouble itself much about this one-time pretender to the throne.

Policies that may or may not be good for the US are in all probability bad for everyone else. Loose monetary policy in the US since the crisis began has induced unwanted demand and asset bubbles elsewhere in the world. Serious alternatives to the dollar, such as a global reserve currency, are still a long way off, but the latest shenanigans on Capitol Hill have given the search for them renewed and added momentum. The US is recklessly throwing away its future.

After a two-year run in which American equities dominated the investing landscape, the pendulum clearly has begun to swing globally in the second half of 2013 and more of that is expected in the year ahead.

Institutional investors responding to a Citigroup quarterly poll rated European stocks as the most-favored class, with Asia-Pacific coming in second and US pulling up third.

"One of the biggest surprises was the belief that European equities would generate the best gains in 2014, overtaking the US and emerging markets," Tobias Levkovich, Citi's chief market strategist, said in a note accompanying the survey. "This focus on Europe was fascinating in that this was the first time in the quarterly poll that such results were registered."

The surveys reflect recent money trends: Global exchange-traded funds took in $48.8 billion in the third quarter, while US funds attracted $31.5 billion, despite outperforming their counterparts around the world.

For years many have warned that since so many people are now dependent upon this program, ending it would result in widespread riots, looting and violence. Considering that the federal government is on an unsustainable fiscal path as the world’s largest debtor nation it is quite possible that it will soon become impossible for this program to continue. Interestingly enough we got a taste of what could happen when the system that processes EBT cards went down for a short period of time over the weekend.

During the course of the outage at least two Wal-Mart stores in Louisiana began processing EBT cards with no purchase limit. Immediately EBT card holders began filling up their carts with as much as they would hold to take advantage of the glitch. This resulted in chaos with police finally called in to restore order. Photos and videos have emerged showing bare shelves and an endless amount of abandoned grocery carts filled with huge quantities of food. One has to question the morality of these people that rushed at the chance to take advantage of the broken system.

It is unbelievable that we saw such widespread civil disturbances with the system only going down for half a day. The amount of rioting and looting we would see if the system were to go down for any extended length of time would be unimaginable.

According to a new report from the Mayor’s Office, there were no murders reported across the five boroughs between last Monday, October 7th, and Sunday, October 13th. That’s right – zero, zip, zilch, nada, no murders! This also marks the lowest number of shootings and the lowest number of murders “at any time since comparable records were kept.” The City has seen a 26.0 percent decrease in murders overall – 256 so far this year, down from 346 last year.

Although over half of all murders this year were committed with firearms (57.8 percent or 148 of those 256 murders), that number is down by 28.8 percent from last year. And we’ve seen a decrease in total number of shootings as well – a whole 23.2 percent fewer than 2012! Way to go, guys. We did it. Put that gun away.

Typhoon Wipha is moving across the Pacific straight towards the capital, Tokyo, and is expected to make landfall during the morning rush hour on Wednesday, bringing hurricane-force winds to the metropolitan area of 30 million people.

The center of the storm was 860 km (535 miles) southwest of Tokyo at 0800 GMT, the Japan Meteorological Agency said on its website. It was moving north-northeast at 35 kph (22 mph). The storm had weakened as it headed north over the sea but was still packing sustained winds of about 140 kph (87 mph) with gusts as high as 194 kph (120 mph), the agency said.

The agency issued warnings for Tokyo of heavy rain, flooding and gales, and advised people to be prepared to leave their homes quickly and to avoid unnecessary travel. A spokesman for the meteorological agency said the storm was a "once in a decade event".

The US Geological Survey said the quake struck below the island of Bohol, known for its sandy beaches, where officials reported most of the casualties. People were also killed as structures collapsed in nearby Cebu province.

The quake struck at 08:12 (00:12 GMT) on a national holiday in the country. Several buildings and historic churches were damaged by the quake. At least 69 of those confirmed dead were from Bohol, reports citing disaster management officials say. Fifteen people were killed in Cebu, considered the Philippines' second major city, and another was reported dead from the neighbouring island of Siquijor.

President Barack Obama and congressional Republican leaders inched toward resolving the standoff on Friday, but struggled to agree on a short-term deal to increase US borrowing authority beyond an October 17 limit and to reopen the government.

"If it really comes to a collapse, no one knows exactly what will happen. One expects that there are chances to postpone the effects but by the end of the year at the latest it will be rather dramatic," Nowotny told Austrian broadcaster ORF in an interview aired on Saturday.

"It is apparent that it is extremely dangerous when the politics of a country whose currency is the world currency - it is still the most important currency - are driven primarily by very narrow domestic considerations," he added. "This discrepancy is very dangerous and in my view will have a negative impact on the long-term role of the dollar."

He urged US policymakers to reach a deal to raise the government's debt ceiling before Thursday's deadline. The US Treasury will start to run short of funds if no agreement is reached for it to borrow on financial markets.

Mr Kim warned this could be a "disastrous event" for the world. "The closer we get to the deadline the greater the impact will be for the developing world. "Inaction could result in interest rates rising, confidence falling and growth slowing," said Mr Kim, speaking at the World Bank's annual meeting in Washington.

"If this comes to pass it could be a disastrous event for the developing world and that will in turn greatly hurt the developed economies as well," he added. If the US does run short of cash, this could cause it to default on its debts, a development which would be likely to have a severe effect on financial markets around the world.

Excerpts from Xinhua – the official Chinese news agency: “...the US government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.”

“Moreover, instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas, instigating regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies.”

“As a result, the world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites, while bombings and killings have become virtually daily routines in Iraq years after Washington claimed it has liberated its people from tyrannical rule.”

“Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place ...the world's financial system also has to embrace some substantial reforms. The developing and emerging market economies need to have more say in major international financial institutions...”

“What may also be included as a key part of an effective reform is the introduction of a new international reserve currency that is to be created to replace the dominant US dollar, so that the international community could permanently stay away from the spillover of the intensifying domestic political turmoil in the United States.”

The directors of ICANN, the Internet Engineering Task Force, the Internet Architecture Board, the World Wide Web Consortium, the Internet Society and all five of the regional Internet address registries have vowed to break their associations with the US government.

In a statement, the group called for "accelerating the globalization of ICANN and IANA functions, towards an environment in which all stakeholders, including all governments, participate on an equal footing". That's a distinct change from the current situation, where the US department of commerce has oversight of ICANN. In another part of the statement, the group "expressed strong concern over the undermining of the trust and confidence of Internet users globally due to recent revelations of pervasive monitoring and surveillance".

Meanwhile, it was announced that the next Internet Governance Summit would be held in Brazil, whose president has been extremely critical of the US over web surveillance. In a statement announcing the location of the summit, Brazilian president Dilma Rousseff said: "The United States and its allies must urgently end their spying activities once and for all."