For the quarter, the Dow and the S&P plunged more than 12 percent, while the Nasdaq tanked over 14 percent. "When you took away the Fed protection, people feel that the Fed's not supporting them so they're not going to take risks," said Joe Saluzzi, co-manager of trading at Themis Trading. "There's a lot of hesitation - we saw quick bounces after the economic numbers."

Iran's Supreme Leader Ayatollah Ali Khamenei has assailed a two state solution for Israel and the Palestinians, saying the Palestinian bid for statehood at the United Nations is doomed to fail. Khamenei spoke at the "5th International Conference in Support of the Palestinian Intifada" in Iran's capital Tehran on Saturday.

The Palestinians should not limit themselves to seeking a country based on the pre-1967 borders, Khameini said, because "all land belongs to Palestinians. We neither propose dumping the migrant Jews in the sea nor the UN arbitration, rather our proposal includes a referendum to be participated by all Palestinians," Iran's semi-official FARS news agency reported Khameini as saying.

"Today the West is standing on a crossroad and it should either leave its age-old bullying and recognize the rights of the Palestinians or wait for harder blows in the near future," Khameini added, according to the FARS news agency. Khamenei also called Israel a "cancerous tumor."

"The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished," he told the magazine Super-Illu. He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.

"Then it will be only a matter of 190 billion in total, for which we will be guarantors, including interest," he explained. Germany's lower house of parliament, the Bundestag, on Thursday approved the beefing up of the eurozone bailout fund, which cleared its final hurdle on Friday when it was rubber-stamped by the Bundesrat (upper house). A majority of Germans (58%) consider it was a mistake to boost the EFSF, according to a poll to be published Sunday in the weekly Bild am Sonntag.

Fareshare said low-income families were struggling with rising food prices, and one in three charities it surveyed was facing government funding cuts. The charity has 17 locations around the UK and passes on good quality supplies from the British food industry to a wide network of organisations such as homeless hostels, women's refuges, day centres and after-school clubs.

It said that in the year to April it provided 8.6 million meals to 600 groups, and this year it was facing unprecedented demand from some 700 organisations.

Today's drop means London's blue chip shares have fallen 13.7% in the third quarter of 2011 - its worst performance since 2002 when the dot-com boom ended. World markets have been hugely volatile in recent weeks as investors panicked that the US and eurozone would be unable to keep up with payments on their huge debts and would lead the world back into recession. Today's falls were caused after a monthly survey by banking giant HSBC showed that China's manufacturing remained stagnant in September due to sluggish demand both at home and abroad.

Poor data from America added to the gloom today after the Commerce Department said incomes fell for the first time in nearly two years in August. This added to fears about the eurozone debt crisis, as Greek Prime Minister George Papandreou pressed European leaders, including French President Nicolas Sarkozy, to release the next eight billion euro (7 billion pounds) bailout instalment for his country.

This assent was a foregone conclusion, given the backing of the opposition Social Democrats and Greens. In any case, the vote merely ratifies the EU deal reached more than two months ago - itself too little, too late, rendered largely worthless by very fast-moving events.

The significance is entirely the opposite. The furious debate over the erosion of German fiscal sovereignty and democracy - as well as the escalating costs of the EU rescue machinery - has made it absolutely clear that the Bundestag will not prop up the ruins of monetary union for much longer.

Horst Seehofer, the leader of Bavaria's Social Christians, said his party would go "this far, and no further". There can be no question of beefing up the EFSF to 2 trillion euros or any other sum, whether by leverage or other forms of structured trickery. "The financial markets are beginning to ask whether Germans can afford all this help. We must not risk the creditworthiness of the German state," he said.

He might be "very happy" that the German parliament approved the expansion of the euro rescue fund on Thursday, but European Commission President Jose Manuel Barroso appears far from happy with how the European Union is currently functioning. In a hard-hitting interview with Friday's edition of the German daily Suddeutsche Zeitung, Barroso warned that the EU was in its "deepest ever crisis" and said that the bloc needed a more closely coordinated economic policy in order to stabilize the euro zone and the entire EU.

He called for more power for the EU's institutions, arguing that it was an "illusion" to think that the euro zone's economic policy could be coordinated just by the European Council, the institution that comprises the leaders of the EU's 27 members, which meets twice a year. He said that setting rules for a stable euro zone could not only be left to the member states. "That will never work," he said, explaining that national governments "always try to negotiate." Barroso said there was a good reason why there were independent institutions such as the European Commission - the EU's executive body - and the EU's Court of Justice.

Meanwhile, former German Finance Minister Peer Steinbruck - who is widely regarded as the likely chancellor candidate of the center-left Social Democrats in the 2013 German election - has said it is time to openly admit that Greece is "virtually bankrupt." "One can put it more drastically and say that (Greece) will not be able to return to the capital markets in the next few years," Steinbruck said in remarks to the German public broadcaster ARD. He said he was convinced that a decision would soon be made on a so-called haircut on Greek debt, which would involve creditors taking losses on part of their bond holdings. Steinbruck said that "many" private-sector creditors would also be affected.

It was one of the most anticipated parliamentary votes of the year. If it had gone wrong, it could have cost Angela Merkel her chancellorship. In the end, Merkel managed to pull it off - as she has so often in the past. The Bundestag passed the expansion of the euro backstop fund, the EFSF, with 523 votes in favor, 85 against and three abstentions. The result meant that Merkel could breathe a sigh of relief. There had been concern that renegades within her center-right coalition could force the chancellor to rely on opposition votes to pass the legislation. Had that happened, her power would have been severely curtailed.

In the end, however, 315 parliamentarians from Merkel's conservatives and from her junior coalition partners, the Free Democrats, voted in favor of the EFSF expansion. If the total had been below the so-called "chancellor's majority" of 311, it would have meant that Merkel was reliant on opposition votes, indicating she could no longer rely on the support of her own coalition. On Friday, the Bundesrat, Germany's upper legislative chamber, also approved the EFSF expansion.

The conservative daily Die Welt writes: "Europe is, without a doubt, in danger. Not because the citizens of Europe don't like the EU, but because they don't understand it. Because they can't even recognize it. Because no one explains what it's good for, what form it should take in the future and how to get there, step by step. The powers-that-be only say that the European Union must exist - there is no alternative. They also warn that talking about the dangers only causes them to grow - and so it's better to keep quiet."

"It doesn't seem to bother anyone that the EU is using its own private language... Nobody has a problem with the fact that the urgently needed rescue fund was given the clunky name of the 'European Financial Stability Facility.' Doesn't anyone realize that no one understands what's going on, that no one can even picture (the EFSF) in their minds? And doesn't anyone realize that these words don't sound like something worth saving, but something dangerous that would be better avoided?"

"Democracy can have many faces - even an absolutist one. Europe's democracies are taking on such features right now. Because so many leaders regard the European project as so titanic, they have abandoned all hope of being able to explain it to the general public. Leaders are ignoring their citizens because, hey, they're not going to understand it anyway... This attitude might buy time, but it gambles away Europe's reputation, its future and its legitimacy."

Fox News has learned that two Predator drones hovering above al-Awlaki's convoy fired the Hellfire missiles which killed the terror leader. According to a senior US official, the operation was carried out by Joint Special Operations Command, under the direction of the CIA. A total of four people were killed in the attack. President Obama called the strike a major "milestone" in the fight against Al Qaeda and its affiliates.

"The death of Awlaki is a major blow to Al Qaeda's most active operational affiliate," Obama said Friday. "He took the lead in planning and directing efforts to murder innocent Americans... and he repeatedly called on individuals in the United States and around the globe to kill innocent men, women and children to advance a murderous agenda." He said the strike is "further proof that Al Qaeda and its affiliates will find no safe haven anywhere in the world."

Al-Awlaki was a US-born Islamic militant cleric who became a prominent figure with Al Qaeda in the Arabian Peninsula, the network's most active branch. He was involved in several terror plots in the United States in recent years, using his fluent English and Internet savvy to draw recruits to carry out attacks. President Obama signed an order in early 2010 making him the first American to be placed on the "kill or capture" list.

But with the Government's favoured yardstick, the Consumer Prices Index (CPI) rising at an annual rate of 4.5 per cent - and the Retail Prices Index (RPI) showing 5.2 per cent - many may underestimate the cumulative threat. Simon Broadley of Yorkshire Building Society said: "With the average savings account standing at 11,648 pounds this can have a significant effect on a person's savings - especially over the long-term, given the current market."

"Over 10 years someone with the typical savings pot in a basic easy access savings account would have earned 1,624 pounds in interest, leaving its nominal value at 13,272 pounds. However, for them to have the same spending power as when they invested - their savings would need to have grown to 15,700 pounds - a difference of 2,428 pounds." Michelle Slade of the independent website Moneyfacts, added: "People can see the impact of rising prices on their everyday spending, but neglect to see the impact on their savings as the actual size of their savings pot is still seemingly growing."

The cumulative effect has been similar to a slow motion bank robbery, with savers suffering for the benefit of borrowers because inflation transfers wealth from the former to the latter by reducing the real value of debts as well as savings. This unstated policy is unlikely to change soon because the government is Britain's biggest debtor and also the biggest beneficiary from negative real interest rates. No politician will say that savers must be punished for their prudence in order to protect borrowers from the consequences of excessive debt but that is what government policy amounts to.

German Finance Minister Wolfgang Schauble can be an extremely polite man when he wants to be. At the same time, the many difficult years he has spent in politics have equipped him with an incomparable sarcasm. Schauble often walks a fine line between derision and civility. Schauble has recently been using a phrase that allows himself to conceal his frustration. He uses it in interviews, in internal meetings and in personal conversations, and it marks the beginning of some of his sentences. It can be loosely translated as: "Without presuming to impinge on the chancellor's authority."

Schauble had the opportunity to use the phrase once again recently. The steering committee of Angela Merkel's conservative Christian Democratic Union (CDU), to which Schauble belongs, was meeting with the assembled leaders of German trade unions. The union bosses were listening to the chancellor talk about the European Union, and yet what she was saying didn't make much sense to them. Schauble spoke up: "Without presuming to impinge on the chancellor's authority, I would also like to say something about Europe." "Should I step out of the room for a moment?" Merkel asked. At least it was a spontaneous attempt to make a joke.

Perhaps Merkel will be able to scrape together her own majority this Thursday, or cobble together a majority with votes from the opposition. But if it's merely a slim majority or if notable members of parliament from the coalition parties are among the no-votes and abstentions, Merkel will no longer be able to take the easy way out and nonchalantly declare the dissidents to be a problem - or have other people declare them to be a problem.

If that happens, it will become apparent that she is in fact the problem, and that she is incapable of explaining, convincing or leading. Then she will have forfeited her chancellorship, no matter how much longer it lasts.

"Pakistan is willing to do its best with the international partners and, most notably, the governments of Afghanistan and the United States, to acquit itself of this high responsibility (in Afghanistan)," she told the 193-nation assembly.

But her remarks came after Pakistan warned the United States to stop accusing it of playing a double game with Islamist militants and as it showered praise on China.

Now the US must deal with the threat of a jihad that security analysts warn would create serious problems for the US as it tries to end violence originating in Pakistan - and the Pakistani government can't be trusted, even if there's no alternative. The religious leaders threatening jihad are associated with the Sunni Ittehad Council (SIC), a coalition of local groups. According to Pakistani news reports, the council issued a press release declaring that it is illegitimate to call the US a superpower because only Allah deserves the title.

The scholars urged the Pakistani government to end the country's role in the war on terrorism and to try to establish a new international bloc made up of China, Turkey, Iran, Afghanistan and Pakistan. An analyst told FoxNews.com that the threat should be taken seriously.

The program, called Disaster SNAP (supplemental nutrition assistance program), was created by the federal government and is administered by the State Department of Public Welfare. Because of unexpectedly large turnouts, the application process was moved from Disaster Recovery Centers in Philadelphia to the 12 state offices in neighborhoods citywide.

Residents, based on income, household size and proof of flood-damage can receive up to a month's worth of food stamps. Those already receiving food stamps are eligible for partial relief, to the extent that their prior month's food supply was damaged. Throughout the day Monday, and beginning early Tuesday morning, many state offices had lines stretching for blocks with confused residents, many alerted by other neighbors that relief was available.

During my recent stint in the Obama administration as director of the Office of Management and Budget, it was clear to me that the country's political polarization was growing worse - harming Washington's ability to do the basic, necessary work of governing. If you need confirmation of this, look no further than the recent debt-limit debacle, which clearly showed that we are becoming two nations governed by a single Congress - and that paralyzing gridlock is the result.

So what to do? To solve the serious problems facing our country, we need to minimize the harm from legislative inertia by relying more on automatic policies and depoliticized commissions for certain policy decisions. In other words, radical as it sounds, we need to counter the gridlock of our political institutions by making them a bit less democratic.

German finance minister Wolfgang Schauble said it would be a folly to boost the EU's bail-out machinery (EFSF) beyond its 440 billion euros lending limit by deploying leverage to up to 2 trillion euros, perhaps by raising funds from the European Central Bank. "I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said.

Mr Schauble told Washington to mind its own businesss after President Barack Obama rebuked EU leaders for failing to recapitalise banks and allowing the debt crisis to escalate to the point where it is "scaring the world". "It's always much easier to give advice to others than to decide for yourself. I am well prepared to give advice to the US government," he said.

The comments risk irritating the White House. US Treasury Secretary Tim Geithner has been a key driver of plans to give the EFSF enough firepower to shore up Italy and Spain, fearing a drift into "cascading default, bank runs and catastrophic risk" without dramatic action. The danger for Germany is that America will lose patience, with unpredictable consequences. The US Federal Reserve is currently propping up the European banking system in a variety of ways, including dollar swaps.

Markets across the world ignored the mixed signals about the true scope of EU rescue measures, convinced that EU leaders have a "grand plan" up their sleeves and will unveil the details after the Bundestag has voted on Thursday on the earlier July deal to revamp the fund.