USA - The federal government borrowed 46 cents of every dollar it has spent so far in fiscal year 2013, which began October 1, according to the latest data the Congressional Budget Office released Friday. The government notched a $172 billion deficit in November, and is already nearly $300 billion in the hole through the first two months of fiscal year 2013, underscoring just how deep the government’s budget problems are as lawmakers try to negotiate a year-end deal to avoid a budgetary “fiscal cliff.”

USA - The federal government ran a deficit of $292 billion for the first two months of fiscal year 2013 – October and November 2012 – amounting to $4.8 billion of borrowed money each day. “The federal budget deficit was $292 billion for the first two months of fiscal year 2013, $57 billion more than the shortfall recorded in October and November of last year,” CBO said in its Monthly Budget Review Friday.

UK - A cabinet minister today said Britain would be better off out of Europe, declaring: 'We want our country back'. Referring to the raft of directives that come from Europe, Secretary of State for Environment, Food and Rural Affairs Owen Paterson said Britain 'would do a lot better if we made more laws locally in our own Parliament'. He also warned current fishing policies are a 'disaster', pledged to see through the badger cull and, in a departure from Government policy, said shale gas is a preferable alternative to wind farms.

GAZA - Hamas chief Khaled Mashaal, on his first visit to Gaza on Friday, told crowds he hoped his next visit would be to “Jerusalem, Ramallah and a liberated Palestine,” the Bethlehem-based Ma’an news agency reports. After passing through the Egyptian border crossing, [Mr] Mashaal knelt on the ground to offer a prayer of thanks and was then greeted by dozens of officials from an array of competing factions, the report said. In an interview he gave to CNN several weeks ago, [Mr] Mashaal claimed that Hamas would accept a Palestinian state along the indefensible pre-1967 borders but would refuse to recognize Israel’s right to exist.

EGYPT - Egyptian President Mohammed Morsi has annulled a decree he issued last month that hugely expanded his powers and sparked angry protests, officials say. However, a news conference in Cairo was told that a controversial referendum on a draft constitution would still go ahead as planned on 15 December. Mr Morsi's critics have accused him of acting like a dictator, but he says he is safeguarding the revolution. Several people have been killed in the recent spate of anti-government protests, and the presidential palace has come under attack. The Cairo headquarters of the Muslim Brotherhood, the movement to which Mr Morsi belongs, were set on fire.

EGYPT - Egyptian opposition protesters have demonstrated outside the presidential palace in Cairo overnight, after breaking through a security cordon. Tens of thousands gathered near the palace after rejecting a call for dialogue by President Mohammed Morsi. Meanwhile supporters of Mr Morsi held their own march in the capital, vowing vengeance at a funeral for men killed in clashes earlier in the week. "Egypt is Islamic, it will not be secular, it will not be liberal!" the crowd chanted.

EGYPT - Egyptian President Mohammed Morsi addressed his nation on Thursday night. But instead of striking a conciliatory tone aimed at calming the tense situation in his country, he continued to toe the Muslim Brotherhood line. More violence is almost sure to be the result, and [President] Morsi himself shoulders the blame. Given such a hard-line approach, [President] Morsi's empty calls for national dialogue are farcical. He invited opposition leaders to meet him at the presidential palace on Saturday at 12:30 pm, but was rebuffed. The opposition does not believe [President] Morsi is prepared to make any concessions, and called for more demonstrations instead.

ITALY - Italian Prime Minister Mario Monti says he plans to resign after Silvio Berlusconi's PDL party withdrew its support for the government. Mr Monti, who heads a non-elected cabinet of technocrats, said he will try to pass a budget and financial stability law before standing down. Hours earlier, former Prime Minister Mr Berlusconi said he will run for office again next year. He said Mr Monti's austerity policies had harmed Italy. Mr Monti - an economist - replaced Mr Berlusconi as prime minister just over a year ago, and launched a programme of reforms aimed at pulling Italy out of economic crisis.

USA - Something appears to have snapped in the American psyche as the last 30 days have seen the largest physical gold sales on record. Between the search volume for 'bulk ammo' and this, we fear something is afoot and while Congress fiddles as our economy burns, Bernanke going 'back to work' is perhaps what the physical 'horders' are thinking... or maybe they understand, as we noted here, that just as Kyle Bass has confirmed previously, Paper Gold is just like allocated, unambiguously owned physical bullion... until it’s not.

MIDDLE EAST - Sources close to the French Defense Ministry reported Friday, December 7, that a Western-Arab military intervention against the Assad regime will begin shortly with the participation of the US, France, Britain, Turkey, Jordan and other anti-Assad Arab nations, Saudi Arabia, UAE and Qatar.

French and British warships have joined the USS Eisenhower carrier off Syria. The mission would combine an air blitz and special operations forces on the ground for wiping out Assad’s chemical arms stocks, air force and air defense batteries.

BERLIN, GERMANY - German Chancellor Angela Merkel said Thursday afternoon following a meeting with Prime Minister Binyamin Netanyahu, that the two were not in agreement over a housing project being planned in an area on the outskirts of Jerusalem. "On the question of settlements, we are agreed that we are not agreed,” [Mrs] Merkel told a joint news conference with [Mr] Netanyahu in Berlin, according to AFP. [Mr] Netanyahu told reporters at the joint news conference that he has no doubt about Germany's commitment to Israeli security.

UK - Experts have warned the cost of bread and cake is set to rise after the wet spring reduced crop yields. The price of a loaf from bakers and supermarkets will increase by up to 10p, with the cost of cakes, pastries and savoury snacks also rising. Bakers are facing a £50-a-ton hike in the price of flour; the equivalent to 13 per cent of the cost of the raw material. That increase will have to be passed on to customers, the chairman of the National Association of Master Bakers (NAMB) has warned. It has been reported that we are having to take an extra two million tons from Germany...

JAPAN - A 7.3 magnitude quake has struck off Japan's eastern coast, triggering a tsunami warning and a one-metre wave that has hit Miyagi Prefecture. The wave hit the city of Ishinomaki, while the quake was also felt strongly in the capital, Tokyo. The epicentre of the quake was about 245km (150 miles) south-east of Kamiashi at a depth of about 36km, the US Geological Survey said. Buildings were reported to have swayed violently in Tokyo.

VATICAN - German President Joachim Gauck has met with Pope Benedict XVI at the Vatican. The two leaders discussed religion, Europe's current economic crisis and the future of the continent.

BRUSSELS, EUROPE - Eurozone countries would lose the right to set their own budgets and end up surrendering economic sovereignty to Brussels under a blueprint to “complete” the European Union’s single currency.