The Social Democrat said that in addition to representing European Parliament in public, he would strengthen parliament by actively communicating the concerns of MEPs to the European Commission, the Council of Ministers - comprised of government officials from member states - as well as national leaders themselves.

As president of the European Parliament, Schulz will preside over plenary sessions and set the daily agenda in consultation with the leaders of the parliamentary factions. He will also sign regulations and directives together with the chairman of the Council of the European Union while overseeing the parliament's administration and budget.

Schulz has vowed to defend the powers of the parliament and reduce the union's "democratic deficit". "The European Parliament is the only directly elected institution in the European Union," he said in a recent newspaper interview. "From this I derive a broad responsibility for policy in the EU - even in those areas that national leaders claim for themselves." He added that he was planning on joining the 27 heads of state and government at the next EU Summit - whether he was invited or not.

Schulz shot to prominence in 2003, when he started asking questions about alleged conflicts of interest surrounding then-Italian president Silvio Berlusconi and his multi-billion euro media empire. Berlusconi told parliamentarians the bearded, bespectacled German politician would be perfect in the film role of a "kapo" - a prisoner who worked for the Nazis in concentration camps. "Mr Schulz has Lenin's face and speaks like Hitler," French far-right leader Jean-Marie Le Pen said after Schulz successfully blocked him from presiding over the parliament's inaugural session in July 2009 as the assembly's oldest member.

At first glance, it would appear that Germany emerged unscathed from Standard & Poor's blanket downgrades of nine euro-zone member states on Friday. Germany's triple-A rating was left intact and the country was even taken off the watch list, with its outlook upgraded from "negative" to "stable."

But a closer look reveals that one of the biggest losers is Chancellor Angela Merkel herself. S&P, after all, cited Europe's debt-crisis management as a significant factor in the downgrades. It is, the ratings agency wrote, "our view that the effectiveness, stability, and predictability of European policymaking and political institutions have not been as strong as we believe are called for by the severity of a broadening and deepening financial crisis in the euro zone."

Economy Minister Philipp Rosler, who is head of Merkel's junior coalition partner, the Free Democratic Party, complained that "the euro is under attack." Senior CDU parliamentarian Michael Fuchs said that the ratings agencies use different criteria in Europe than they do in the US and Britain. Elmar Brok, a leading CDU politician in European Parliament, said the downgrades "are almost the equivalent of a currency war."

The implosion in 2008 of the financial system in the US and Europe and last year's European sovereign debt crisis have accelerated the shift of economic momentum to Asia. In 2012, the US and Europe are likely to be flirting with recession for much of the time. Barring a hard landing in China, Asia-ex Japan should continue to clip along nicely at around 7 per cent, according to most economists.

The dramatic change in fortunes has spawned a degree of triumphalism among some Asians. "There's no crisis of capitalism," says Meghnad Desai, emeritus professor at the London School of Economics. "There's a crisis of western capitalism, which has gone geriatric. The dynamic capitalism, with its energy, innovation and sheer greed for growth has moved east."

In the absence of anything better, Asian governments that want to raise their people's income will have to fall back on some flavour of capitalism. "If you look at China, this really shows the power of capitalism, the power of market mechanisms and incentives," says Mr Rhee. "Some elements of capitalism are clearly necessary."

Certainly, within the broad definition of capitalism, the state can be bigger or smaller, it can intervene more or plan less. These policy alternatives are up for discussion in many Asian countries. But when push comes to shove, most are convinced by capitalism. For them it remains the worst possible economic system - except for all the others.

"Our wish and hope is we can stabilise this oil price and keep it at a level around $100 [a barrel]," Mr Naimi told CNN. "If we were able as producers and consumers to average $100 I think the world economy would be in better shape." Brent crude oil prices rose 56 cents on Monday to $111 a barrel amid rising tension between western nations and Iran over Tehran's nuclear programme.

The new favoured price - a de facto target - is a third higher than the $75-a-barrel level that King Abdullah said was a "fair price" in November 2008. Riyadh is traditionally seen as a price moderate within the Opec oil cartel. But Mr Naimi's comments put the kingdom in line with price hawks such as Venezuela. The revised target is in part a reflection of rising public spending in the wake of the Arab spring. "The Saudis need to spend more money to keep their citizens quiet and prevent protests," said Carsten Fritsch, oil analyst at Commerzbank.

Bill Farren-Price of consultants Petroleum Policy Intelligence added that there was a "consensus" within Opec that $100 a barrel was the appropriate price level for its members' fiscal requirements and the need to invest to boost supply. "The context is an industry where a lot of new investment is predicated on that kind of price level."

"The state of Israel is required to strengthen its defence and attack capabilities immediately, which costs a lot of money," he said. "Libyan arms continue to flow into Gaza through Sinai," he said, indicating that there were "more than 10,000 missiles" in the coastal enclave, some of which had a range "surpassing 40 kilometres (24 miles)."

The ongoing reconciliation process between Fatah and Hamas would force Israel to demand that the Hamas-controlled Gaza Strip would be under similar terms as Fatah-controlled West Bank, Netanyahu said. "Fatah-Hamas unity would force us to demand that the Gaza Strip be demilitarised," he said. He accused Iran of using the Egyptian Sinai as a staging area for launching attacks on Israel.

"The peace with Egypt has been and is valuable to both countries, but under the surface, the civilian grudge against Israel on the street has become a political asset," Netanyahu continued. In September, the Muslim Brotherhood, whose rise followed president Hosni Mubarak's overthrow in February, demanded a "revision" of ties with Israel but did not call for scrapping the treaty, the first between Israel and an Arab country.

The disapproval rating for Congress inched up two percentage points since October and reflects a year of lows for Congress that ended in a battle over a temporary extension of the payroll tax cuts for 160 million Americans. Democrats and Republicans fought all last year over the best way to control the country's debt and annual budget deficit, as the two parties tried to position themselves for the 2012 elections.

A vitriolic debate leading up to an agreement last summer to allow President Barack Obama to raise the debt ceiling fueled public disgust with Congress and prompted Standard & Poor's credit rating agency to strip the United States of its stellar AAA rating. When the parties are considered individually, Democrats in Congress have a 33 percent approval rate, while Republicans have a 21 percent approval rate, the poll found. The 84 percent disapproval rate is the highest for Congress in nearly 40 years of polling.

Britain has already set aside 30 billion pounds for the IMF but it could be set to add a further 10 billion pounds to the eurozone coffers. A spokesman said: "He said if there were a strong case for additional resources, then he would be willing to take that case to Parliament. At the moment, there is a limit of 40 billion pounds, of which 30 billion pounds has already been subscribed. There is a headroom of 10 billion pounds."

Osborne claimed that the eurozone countries had not been doing enough to remedy the situation and the crisis in Greece would destabilise the entire situation if leaders were not careful. Speaking during a visit to China, he said: "If I felt it was a decent request by the IMF, then, of course, I would be willing to go to Parliament and make that request. But let me be very clear, I would not do that with Britain acting alone, like other big G20 countries, and we are very clear this is not a substitute for the eurozone providing money for dealing with its own currency."

"I think what the euro needs to do is show convincingly that it can stand behind its currency." The news came as President of the European Council, Herman Van Rompuy said an anti-recession strategy was urgently needed to be put in place. The crisis in Europe reached new levels after credit ratings agency Standard and Poor downgraded some of the key members of the eurozone, including France and Austria. Mr Osborne hit back at the eurozone leaders, including Merkel and Sarkozy that not enough had been done to act on the Greek debt crisis.

The poll by ISPO, published in an Italian newspaper said 65 percent thought the introduction of the euro had been more damaging than beneficial for the Italian economy. Confidence in the European Union dropped to 51 per cent, the lowest level for more than three years. The news will add to the discontent in the eurozone over whether the single currency will survive.

Earlier this month, Prime Minister Mario Monti hit back at pressure tactics placed on Italy by both Angela Merkel and Nicolas Sarkozy. The Italian PM warned that his country would need to see more concrete support from both France and Germany in return for agreeing to painful austerity measures by the two leaders.

As the standoff with Greece's creditors continued, Mario Monti, the Italian prime minister, pleaded for Germany and other creditor countries to help lower his country's borrowing costs. He warned there would be a "powerful backlash" among voters in smaller EU countries if they did not. S&P said the EFSF's rating would be cut again if member states' creditworthiness eroded further. Leaders appeared to abandon hopes for the EFSF and turned their focus on the European Stability Mechanism (ESM) instead. Herman van Rompuy, co-president of the European Union, said he would assess the size of the ESM "without delay" and ensure it is operational by July.

Klaus Regling, chief executive of the EFSF, said the fund would have "sufficient means to fulfil its commitments under current and potential future adjustment programmes until the ESM becomes operational in July 2012". S&P was severely criticised across the eurozone, even before the EFSF decision was announced. Olli Rehn, an EU Commissioner, said ratings agencies are the tools of "American financial capitalism".

Wolfgang Schauble, Germany's finance minister, said rating agencies' influence should be curbed and insisted German guarantees for the EFSF were sufficient. The governor of the Bank of France, Christian Noyer, said S&P's mass downgrades "constitutes an additional challenge". A bigger hurdle was emerging as Greece's international creditors warned that crucial talks would not resume without "progress" from Athens and the troika, made up of the nternational Monetary Fund (IMF), European Central Bank (ECB) and EU.

The drill, originally set for April, was intended to create a high level of interoperability between the two countries' missile defense systems. Thousands of US troops would be deployed in Israel to be joined by an equal number of Israeli soldiers. It would also be the first time a top US commander (Admiral James Stavridis of the US European Command) has been assigned to participate in the simulations.

The maneuvers had been scheduled to take place at a time of spiraling tensions around Iran. Moreover, the probability loomed they would coincide with Iran's own large-scale naval war games. Israel denies any link between "Austere Challenge 12" and the political build-up in the Gulf, saying their joint drill with the US was "routine," "planned in advance" and "not in response to any real-world event," reports Agence France Presse. Despite the claims, the drill, unique in its size and scope, has sparked concerns in the region that Israel may be bolstering its defense with US troops for an imminent strike on Iran's nuclear facilities.

Now the drill has been postponed due to "technical and logistical" reasons, or, as Israeli public radio puts it, "budgetary constraints." Analysts suggest Washington does not want to put a burning match close to Iran's tinderbox. Moreover, there is also major disagreement between Israel and the US on the red lines for a strike on Iran. This, according to the Associated Press, is likely to head the agenda that General Martin Dempsey, a top US military chief, is taking to Israel for next weekend's discussions with Israel's defense minister, Ehud Barak, and the chief of staff, Benny Gantz. Israeli media speculate Dempsey's visit is a part of the US effort to avoid any "surprise" on Iran coming from Israel.

Experts say Iran could block the strait using mines, armed speed boats or anti-ship cruise missiles, but, according to Michael Connell at the Center for Naval Analysis, "the immediate issue [for the US military] is to get the mines."

Cue the dolphins.

"We've got dolphins," retired Admiral Tim Keating said in an interview last week with NPR. Keating, who commanded the US 5th Fleet in Bahrain during the run-up to the Iraq war, said in a situation like the standoff in Hormuz, Navy-trained dolphins would come in handy. "They are astounding in their ability to detect underwater objects," Keating told the station.

The invasion of Iraq was the last time the mine-sweeping capability of dolphins was widely-touted. "Dolphins - which possess sonar so keen they can discern a quarter from a dime when blindfolded and spot a 3-inch metal sphere from 370 feet away - are invaluable mine sweepers," reported The San Francisco Chronicle. In 2010, the Seattle Times reported that the Navy has 80 bottlenose dolphins in the San Diego Bay. They are taught to hunt for mines and drop acoustic transponders nearby. According to a report in 2003, the dolphins only detect the mines. Destroying them is left up to the Navy's human divers.

That is because, in the wake of Standard & Poor's Exocet, the EFSF also could be downgraded. So the fund, too, would pay more to borrow, just as credit becomes more expensive for the newly downgraded countries it might need to bail out. The likelihood the EFSF can do its job will fall, then, as the chances it will be needed, rise. The question of whether the fund can "lever-up" from its existing 440 billion euros (364 billion pounds) (public money pledged, not delivered) to the 1,000 billion-plus euros that may be needed if Europe's banks endure "another Lehman", is now under serious scrutiny.

Just five eurozone countries - Italy, Spain, Ireland, Portugal and Greece - have around 200 billion euros of debt maturing between now and April. Can they refinance, pulling back from the brink of insolvency? Their chances just got worse. Before we Brits gloat, let us remember that the main reason the UK remains triple-A status is that we're "printing money" and using it to roll over our debts, the Bank of England creating new credits ex nihilo, then buying gilts from existing investors.

What Britain also has going for it, of course, is that the Coalition has forged a "credible" deficit-reduction plan. What "credible" means in today's wacky world of Western government finance is that the UK's plan is more realistic than total fantasy. The question is, how much more? And the cost, so far, of Britain's bank bail-outs, or "financial interventions" in the Whitehall vernacular? A cool 2,270 billion pounds, more than twice our on-the-books national debt. How much of that will the Government recoup when, if at all, these bankrupt institutions are sold off?

Consider that, before getting too smug about what's happening in the eurozone.

The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and "orderly" 50 per cent haircut to their holdings. Greece's finance minister Evangelos Venizelos said talks would resume on Wednesday to "bridge differences" but insiders remained sceptical that a deal could be stitched at such a late stage.

The clock is ticking for Greece, as a deal must be reached before March 20, when the country is due to receive a further 130 billion euros (107 billion pounds) bail-out tranche from the International Monetary Fund and must make a key 14.5 billion euros bond payment. The problem centres on the difference between lenders agreeing to a "voluntary" and orderly default - which would mean swapping into bonds with a lower value - and lenders refusing terms, which would cause a default.

This type of "credit event" would trigger billions of insurance claims through credit default swaps (CDS), insurance policies taken out to protect investors in the event of a default.

The problem is that, of the 315 billion euros of Greek debt outstanding, only 7.8 billion euros is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure. Most Greek CDS are held by hedge fund managers - accused by Germany and France of financially benefiting from sovereign woes. Some claim that hedge fund managers would benefit from a default, with Europe's banks being the losers.

Use of the European Central Bank's three-year funding programme is expected to exceed 500 billion euros in February when lenders are offered their second chance to access its new long-term refinancing operation (LTRO), according to Credit Suisse. Last month, banks borrowed a total of 489 billion euros using the LTRO, which has effectively seen the ECB take on the role of providing a large part of the funding required by several eurozone banks. Analysts at Credit Suisse point out the ECB's willingness to provide an increasing proportion of the short and longer-term funding required by eurozone banks has led to a widening gap in the size of its balance sheet versus those of the Bank of England and the US Federal Reserve.

The willingness of the ECB to provide more funding to eurozone banks is in stark contrast to the Bank of England's much tougher approach to major UK lenders. For instance, while eurozone banks can easily put up covered bonds as collateral against ECB loans, the Bank specifies what collateral is acceptable for each of its funding programmes and applies tighter criteria against their use. While eurozone banks are allowed to issue covered bonds specifically for use as collateral to access ECB funding the Bank prohibits such behaviour. The disparity has led to what Credit Suisse describes as an "uneven playing field" between UK and eurozone banks.

Bank officials have been clear they do not think UK lenders require any new assistance and should not have access to cheaper funds.

And yet both events are important because they show us the mechanism behind this year's likely unfolding of events. The eurozone has fallen into a spiral of downgrades, falling economic output, rising debt and further downgrades. A recession has just started. Greece is now likely to default on most of its debts and may even have to leave the eurozone. When that happens, the spotlight will fall immediately on Portugal, and the next contagious round of downgrades will begin.

Europe's insufficient rescue fund, the European Financial Stability Facility, now also faces a downgrade because it had borrowed its ratings from its members. The way the EFSF is constructed means that its effective lending capacity will thus be reduced. Even though the French downgrade did not come as a surprise, the eurozone member states have no plan B for this, just a few stopgap emergency scenarios. They may decide to run the EFSF and its permanent successor concurrently. They may also provide the latter with a full immediate allotment of its capital. But this will create gaps in national budgets in a bad year.

By downgrading France and Austria but not Germany and the Netherlands, Standard & Poor's also managed to shape expectations of the economic geography of an eventual break-up. A downgrading of all triple A rated members would have been much easier to deal with politically. Germany is now the only large country left with a triple A rating. The decision will make it harder for Germany to accept eurozone bonds. The ratings wedge between France and Germany will make the relationship even more unbalanced.

Even economic reforms, necessary as they may be for other reasons, cannot solve this problem. This is another European illusion. We are now at a point where effective crisis resolution would require a strong central fiscal authority, with the power to tax and allocate resources across the eurozone. Of course, it will not happen.

This is the ultimate implication of last week's ratings downgrades. We have moved beyond the point where a technical fix would work. The toolkit is exhausted.