On Wednesday, eight German Federal Constitutional Court judges will announce their ruling on whether the German contributions to the first Greek bailout in 2010 and to the euro rescue fund were lawful, following a legal challenge brought last year. But they already made up their minds some time ago. Ever since the public hearing on the case in July, it is seen as certain that they will demand that the German parliament be substantially involved in all further rescue operations.

It was "partly accidental, partly intentional" that the date of the ruling, on September 7, comes just a few weeks before the parliamentary vote on the latest measures to stabilize the single currency, the president of the Constitutional Court, Andreas Vosskuhle, said with a smile during a book presentation in Berlin last week.

The ruling involves a legal challenge mounted by prominent Bavarian conservative politician Peter Gauweiler and a group of professors against Berlin's actions last year to help save the single currency. They accuse the German government of breaching both the German constitution and European law. They believe the aid paid for Greece and the contribution to the European Union's euro rescue fund was in breach of EU law, which stipulates that member states must not assume each other's debts.

It is already clear that there will be a compromise solution. Even the German government has conceded that it will have to give members of the Bundestag a say in euro bailouts - against the objections of Finance Minister Wolfgang Schauble. The need to involve parliament in EU financial matters was already enshrined in a 1993 Consitutional Court ruling on the Maastricht Treaty on European Union. That ruling means there "must be no automatism" in permitting sovereign bailouts, court judge Udo Di Fabio said in the hearing at the beginning of July.

There is an even more fundamental constitutional issue at stake, namely to what extent the German parliament is allowed to permit financial guarantees that currently amount to two-thirds of the German federal budget.

And senior Tory backbenchers yesterday set out the case for loosening ties with Brussels at a major conference on European reform at Westminster. The willingness in Tory ranks to speak out against the rule of the Eurocrats added to the growing pressure on Mr Cameron to take a tougher line with the EU.

And it was a further boost to the Daily Express's crusade for Britain to quit the EU. Mr Cameron is also facing a grilling today over his European policy by a committee of senior MPs. Lord Lawson, who slashed income tax as Chancellor in Margaret Thatcher's Tory government, savaged the architects of the euro zone in a blistering newspaper article yesterday.

"It should now be abundantly clear that the decision to embark on European Monetary Union was among the most irresponsible political initiatives of the post war world," Lord Lawson wrote. HE CLAIMED THE EURO WAS ALWAYS PART OF A PLOT TO BUILD A EUROPEAN POLITICAL UNION THAT WOULD BE DOMINATED BY GERMANY.

"A FUNDAMENTAL CONTEMPT FOR DEMOCRACY has always been one of the most striking and least attractive characteristics of the European movement," he wrote. He added: "The time has clearly come to say enough is enough. The present mess is bad enough."

That misery is bound to end and the last of the year's 100-plus temperatures may be recorded this week, but this drought will have a ripple effect that will spread beyond the region in the months ahead, having an impact on the one place Americans do not need to feel the hurt: their pocketbooks.

From beef prices to the cost of a pair of socks, the Texas drought of 2011 will leave its mark on family budgets. "This drought is just strangling our agricultural economy," says professor Travis Miller, of Texas A&M University's Department of Soil and Crop Sciences. Losses, so far, are estimated at $5 billion. Texas has lost a little over half of its cotton crop as parched fields brought back memories and statistics not seen since the great dust bowl of 1933. Texas produces 55% of the US crop and two-thirds of America's yield is exported to mills in China, Mexico, Vietnam and Thailand, where textile manufacturers drove prices down by reducing their stockpiles hoping to see a glut on the market and hence lower cotton prices, Miller says. However, their effort did not anticipate the drought and now with shrinking supplies, cotton prices are surging.

The effects go beyond this year's cotton harvest. Ranchers are selling off cattle in historic numbers, Miller says, many of them getting rid of breeding stock that ranchers can no longer feed and water. The state has also lost an entire hay crop, making winter feeding an expensive proposition. While that may mean lower beef prices in the short run as plenty of newly slaughtered cattle hit the marketplace, it likely will mean higher prices down the road since valuable breeding stock is being sold off.

The sell-off has profound implications for the US beef industry, Miller says, since ranchers have nurtured their breeding stock over several generations, developing cattle suited to specific environments. A rancher on the southeast Texas coastal plain has developed a herd that is different from a West Texas cattle herd. Rebuilding herds will be a long, expensive process. "When you sell everything, you lose the genetics," Miller says. "They have selected cattle that do well under that environment and cattlemen have spent their life doing that."

The bad news does not stop there. Winter-wheat-planting season runs from September through October and rain is vital to germination. Texas and Oklahoma produce almost a third of winter wheat in the US - the hard wheat used in bread products. This week, Bloomberg financial news quoted wheat economists predicting a 50% jump in winter-wheat prices. If the dearth of rain continues and there is no moisture in the soil to germinate the wheat, prices could climb higher still.

One leading analyst predicted that Threadneedle Street could reactivate its quantitative easing programme this week after the monthly report from purchasing managers flashed warning signs of a double-dip recession over the winter. News that activity in the services sector - which accounts for 75% of the economy - had dropped at its fastest rate since the foot-and-mouth crisis of 2001 sent shares sharply lower. With anxiety mounting over the eurozone's debt-ridden governments, the FTSE 100 Index closed almost 190 points lower at 5103.

Shares across Europe fell more heavily in response to weak economic figures and concerns that the political weakness of Angela Merkel's centre-right government will blunt attempts at solving the eurozone's debt crisis. Wall Street was closed for Labour Day. Banks were the biggest losers in London as a further 49 billion pounds was wiped off the value of leading shares following a loss of 33 billion pounds last Friday. The part-nationalised RBS fell more than 12% after it was singled out by a broker as the most vulnerable British target of claims made by the US Federal Housing Finance Agency over the subprime mortgage scandal. Barclays and HSBC, which joined RBS on the list of 17 banks, fell 7% and 4% respectively. Lloyds Banking Group fell 7%.

Michael Saunders, economist at Citi, said the services data would have an impact on the Bank's nine-strong monetary policy committee. "With these figures and other signs of increased downside risks to growth, we now believe that the MPC is likely to restart QE, either at this week's meeting or the October one," he said.

The directive, to be introduced under EU law, will give temporary agency workers the same rights as full-time workers to pay, holiday and maternity leave after 12 weeks of employment. The laws are expected to cost British businesses almost 2 billion pounds a year. But Downing Street has been told by lawyers that the Business Secretary's department has "gold-plated" the legislation with additional rules that need not have been included, despite a pledge by the Coalition not to introduce unnecessary regulation that undermines business.

Mr Cameron's advisers are weighing up whether to strip out some of these provisions. One option suggested is the "Armageddon" tactic of simply refusing to introduce the new laws, a move that could result in multi-million pound EU fines for the Government. Senior aides to the Prime Minister are growing increasingly alarmed about the potential economic impact of the Agency Workers Directive - to be introduced on October 1 - after warnings that it could derail the fragile economic recovery.

Business groups have warned that the measures will force some companies to lay off workers. Mr Hilton, one of the Prime Minister's most senior aides, is an increasingly controversial figure in Whitehall. He is thought to be keen to "take on" the EU on a major issue to put an end to unnecessary and costly regulation. Over the summer, it was disclosed that he had even floated the idea of scrapping maternity rights.

Herman Van Rompuy tends to be overlooked whenever European heads of state and government meet for their summits. The Belgian politician, president of the European Council, is an inconspicuous man with a receding hairline and metal-rimmed glasses, someone who doesn't seek the limelight, and who enjoys writing haikus about nature in his free time. He is one of the most powerful politicians in Europe, but he is almost unknown in most EU countries, including Germany.

Van Rompuy has been traveling a lot lately. His current schedule includes meetings with Finnish Prime Minister Jyrki Katainen and French President Nicolas Sarkozy. On Monday, Van Rompuy meets with German Chancellor Angela Merkel in Berlin, where he can look forward to a particularly pleasant conversation. Merkel wants to propose giving the European Council president even more power.

The chancellor is planning her next political policy reversal . Until very recently, she has insisted that she was firmly opposed to creating divisions within Europe. But under the pressure of the euro crisis, Merkel has recently been thinking about abandoning the concept of a unified EU - and assigning a key role to Van Rompuy in the process.

The EU has always been careful to ensure that all members acted in unison, whether it involved moving forward or standing still. But in times in which the common currency threatens to break apart, the 17 nations of the euro zone need a common economic and financial policy. Otherwise, as the crisis has demonstrated, the euro cannot function.

TODAY, IT IS PRIMARILY GREAT BRITAIN THAT IS PREVENTING THE EU FROM GROWING CLOSER TOGETHER. Merkel, though, has had enough - and is now planning a two-speed Europe. It would mean tightly interlocking the countries of the euro zone, possibly by means of a separate treaty that would apply in parallel to the EU Treaty of Lisbon. This was the concept German Finance Minister Wolfgang Schauble proposed last week to the leadership of his party, the center-right Christian Democratic Union (CDU). Merkel sees Van Rompuy, who already chairs the council of the 27 EU leaders, as the head of the new power center.

European Commission President Jose Manuel Barroso is also alarmed. In a "speech on the state of the union" last year, he warned against a division of Europe. He intends to read the member states the riot act before the European Parliament in Strasbourg at the end of the month. Last Thursday, Barroso tested the mood at a lunch with a few members. He argued that because of the principle of unanimity, THE INTERGOVERNMENTAL METHOD WOULD ALLOW "A FEW IDIOTS" IN ONE COUNTRY (BRITAIN) TO "BLACKMAIL" THE EU.

SPIEGEL: Then where are they (the problems) coming from?

Schroder: Great Britain is causing the biggest problem. Great Britain is not part of the euro, and yet the British always want to have their say in the design of an economic zone. This is inconsistent. And besides, the British have been very skeptical about every integration step, and that's putting it very diplomatically.

SPIEGEL: In reality they've been obstructionists?

Schroder: Yes. I was originally of the opinion that Great Britain could be treated like France. But what was overlooked, also by myself, is that Great Britain still sees itself in a sort of middle position between the United States on one side and Europe on the other. In other words, it's in an "in-between" position. And that is unacceptable.

SPIEGEL: But if nothing works with Great Britain, what role can the British play in the future?

Schroder: The decision on the concrete configuration of the economic government can only be made by members in the euro zone, and not by the Council (the powerful EU institution comprised of European national leaders) as a whole.

Read full interview at - http://www.spiegel.de/international/europe/0,1518,784357,00.html

Scores of fires are burning across Texas, which has been hit by high winds generated by Tropical Storm Lee. He urged people to heed evacuation orders and not to stay in their homes if they had lost power. "I understand that losing your home or lifetime possessions is incredibly difficult, but do not put your life in jeopardy," Mr Perry said. A blaze in east Texas killed a 20-year-old woman and her baby daughter on Sunday before it was extinguished.

An estimated 5,000 people have been forced to leave their homes because of the Bastrop fire, which is about 30 miles (50km) south-east of Austin and moving away from the state capital. Earlier, Jan Amen of the Texas Forest Service described the central Texas blaze as "a monster" that had been "zero percent contained". The fire is the largest of dozens of wildfires burning throughout the state, including more than 60 that started on Sunday.

Powerful winds from Tropical Storm Lee, hundreds of miles to the east, have fanned the flames. Texas has been suffering its worst drought since the 1950s.

It has been a mere three years since the collapse of the investment bank Lehman Brothers plunged the world into a deep financial crisis. But now, with economic indicators offering little room for optimism, a new crisis may be on the horizon. That, at least, was the message offered by Deutsche Bank CEO Josef Ackermann on Monday in comments delivered at a conference in Frankfurt. "We should resign ourselves to the fact that the 'new normality' is characterized by volatility and uncertainty," Ackermann said. "All this reminds one of the autumn of 2008."

The volatility was on full display on Monday as the leading German market index, the DAX, plunged to a two-year low and stocks of European banks, including Ackermann's Deutsche Bank, lost value. The price of gold once again spiked upwards as investors sought security.

In addition, the European Central Bank reported that European banks on Friday parked 151 billion euros ($213.3 billion) overnight with the ECB, the highest total in more than a year. The increase reflects growing distrust on the financial markets, with banks shunning the higher interest rates they would earn by depositing money with each other.

"It looks like the Arab Spring, but it can also be a radical Islamic winter," he said in a speech at the Institute for National Security Studies in Tel Aviv. "This leads us to the conclusion that through a long-term process, the likelihood of an all-out war is increasingly growing," the IDF general said. "Iran has not abandoned its nuclear program. The opposite is true; it continues full steam ahead," he said. "In Egypt, the army is collapsing under the burden of regular security operations, and this is reflected in the loss of control in the Sinai and the turning of the border with Israel into a terror border, with the possibility that Sinai will fall under the control of an Islamic entity."

"In Lebanon, Hezbollah is growing stronger within government arms, but it has not lost its desire to harm Israel, and the ties with Turkey aren't at their best," Major General Eisenberg added. During his address, the senior IDF official revealed that new, more lethal arms surfaced in the hands of Gaza terror groups during the latest round of fighting in the area. As result of the disturbing development, Israeli civilians were instructed to adopt greater precautions, he said. "We discovered a new weapon, and as result of this we instructed the public to hide under two roofs, rather than only one," he said.

Scores of residents were left wondering whether they had homes to return to as many of the fires continued to burn Sunday night. The largest and most destructive fire was in Bastrop County, where a blaze burned 14,000 acres and grew to an estimated 16 miles long by the end of the day, said Mark Stanford, fire chief of the Texas Forest Service. "It's catastrophic," Stanford said of the Bastrop County fire. "It's a major natural disaster."

Forest Service spokeswoman Lexi Maxwell said that fire began about 2 pm in the Circle D subdivision off Texas 71. It merged with another fire north of there that pushed south and crossed over Texas 21 and Texas 71, Maxwell said. Aerial units estimated that at least 300 homes had been damaged or destroyed by the fire.

Frankfurt's Dax index ended the day 5.3% lower, while the Paris Cac 40 fell 4.7% and the FTSE 100 a comparatively modest 3.6% - its second-biggest fall this year. The German market dropped below the low point that it reached during the sharp sell-off in early August. Asian markets also fell earlier in the day, with the Nikkei in Tokyo ending 1.9% down, and Hong Kong's Hang Seng 3% lower. US markets remained closed on Monday for Labor Day.

The current slide in markets, which began in late Thursday trading in New York, was triggered by mounting evidence of a slowdown in the global economy and fears over the impact of US and European government austerity. In the latest such indication, August service sector survey data released by the research group Markit on Monday showed that activity in the UK almost stagnated and business confidence in the eurozone fell at its fastest rate in August since the 2008 collapse of Lehman Brothers.

Bank shares have taken the brunt of the latest stock market sell-off. Royal Bank of Scotland fell 12.3%, Deutsche Bank 8.9% and Societe Generale 8.6%. Most major banks in the US and Europe have lost about half of their value over the last six months. Fears began to mount again that the eurozone may not be able to contain its debt crisis, and a government default could in turn lead to a European banking crisis. Deutsche Bank's outgoing chief executive, Josef Ackermann, said on Monday that some European banks would go bust if they were forced to recognise in their accounts the existing losses on government debts they own, based on current market prices for government bonds.

It bankrolled French farmers through the Common Agricultural Policy, that disguised tithe for war reparations. It then bankrolled Spanish farmers as well. It funded each new wave of EU expansion, though reeling itself from the 60 billion euros annual cost of its own reunification. It gave up the cherished D-Mark, the anchor of German economic stability. We are so used to German self-abnegation for the sake of Europe that we can hardly imagine any other state of affairs. But the escalating protest against EMU bail-outs by Germany's key insistutions go beyond the banalities of money. The fight is over German democracy itself.

You can feel the storm brewing in Germany. Within days of each other, President Christian Wulff accused the European Central Bank of going "far beyond" its mandate and subverting Article 123 of the Lisbon Treaty by shoring up insolvent states, and Bundesbank chief Jens Weidmann said bail-out policies had "completely gutted" the EU law.

Both believe the EU Project has taken a dangerous turn. Fiscal powers are slipping away to a supra-national body beyond sovereign control. "This strikes at the very core of our democracies. Decisions have to be made in parliament in a liberal democracy. That is where legitimacy lies," said Mr Wulff Otmar Issing, the ECB's founding guru, fears that the current course must ultimately provoke the "resistance of the people". Instead of evolving into an authentic union with a "European government controlled by a European Parliament" on democratic principles, it has become deformed halfway house.

In its rush to save EMU, he said, Europe has forgotten that legislative primacy over tax and spending is the crucible of our democracies. It was monarchical assault on the power of the purse that led to England's Civil War, and America's Revolution. We will find out to what extent Germany's constitutional court shares these fears when it rules this Wednesday on the legality of the EU rescue machinery, and delivers its verdict of life or death for monetary union.

The motley rebel forces who overthrew Gaddafi two weeks ago have set up no guard to prevent anyone taking it away or looting it for parts. Western powers and Libya's neighbors fear that the power vacuum could allow huge quantities of unsecured weapons left over from the civil war to end up in the hands of Islamist militants, in particular the North African branch of al Qaeda.

Officials with Libya's interim government, the National Transitional Council, say they are trying to secure these weapons. But there was little evidence of that at the Scud site, in farmland about 25 km (15 miles) southeast of Tripoli. Abdelhamid Omar Derbek, a colonel at the local anti-Gaddafi military headquarters, said he and his men visit the site several times a day.

A Scud-launching complex, consisting of an 11-meter (33-foot) rocket with a range of up to 300 km (200 miles) depending on the variant, could be a valuable resource for any insurgent. Even without launching it, the warhead alone contains up to a tonne of high explosive, which could be stripped from the missile and used to make improvised bombs for urban guerrillas. "The possibility is certainly there," said Shashank Joshi, a military expert at Britain's Royal United Services Institute. In an interview with Reuters on Friday, the senior European Union representative in Tripoli said the bloc was concerned that Islamist militants could obtain weapons in Libya and take them out across the country's largely unpoliced borders. "This is an evident risk," said EU envoy Agostino Miozzo.

"Our situation is extremely serious," the postmaster general, Patrick R Donahoe, said in an interview. "If Congress doesn't act, we will default." In recent weeks, Mr Donahoe has been pushing a series of painful cost-cutting measures to erase the agency's deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers - nearly one-fifth of the agency's work force - despite a no-layoffs clause in the unions' contracts.

The post office's problems stem from one hard reality: it is being squeezed on both revenue and costs. As any computer user knows, the Internet revolution has led to people and businesses sending far less conventional mail. At the same time, decades of contractual promises made to unionized workers, including no-layoff clauses, are increasing the post office's costs. Labor represents 80 percent of the agency's expenses, compared with 53 percent at United Parcel Service and 32 percent at FedEx, its two biggest private competitors. Postal workers also receive more generous health benefits than most other federal employees.

Missing the $5.5 billion payment due on September 30, intended to finance retirees' future health care, won't cause immediate disaster. But sometime early next year, the agency will run out of money to pay its employees and gas up its trucks, officials warn, forcing it to stop delivering the roughly three billion pieces of mail it handles weekly.