The trip wasn't entirely without risk. Three weeks ago, Hans Meier-Ewert, head of the German-African Business Association, traveled to war-torn Libya together with representatives from 20 German companies. Just getting there presented the first challenge, with all regularly scheduled flights to Tripoli having been canceled long ago. The German government made a Transall military transport plane available for the journey, and the mission was headed up by Hans-Joachim Otto, a state secretary in the German Economics Ministry.

In Benghazi, where the rebel movement is headquartered, the group handed over aid goods and medical supplies to the city's hospitals. But the trip was far from just a humanitarian one. The Germans also met with representatives of the Libyan transitional council and of the country's central bank in an effort to pursue economic interests in the country.

The war in Libya, of course, has not yet come to an end, and autocrat Moammar Gadhafi remains at large, likely hiding in a bunker somewhere in Tripoli. But companies from around the world, including several based in Germany, have already begun preparing for peacetime. Once reconstruction begins, business opportunities, they hope, will be plentiful - and lucrative.

"Once oil and natural gas begin flowing again, Libya will be a rich country," says Meier-Ewert. The country is one of the world's largest producers of crude oil and has the largest proven reserves in all of Africa. The country's future government could conceivably finance reconstruction entirely from the billions of profits expected from oil sales.

"Iran believes that whoever is for humanity should also be for eradicating the Zionist regime (Israel) as symbol of suppression and discrimination," Ahmadinejad said in an interview with a Lebanese television network, carried by ISNA. "Iran follows this issue (the eradication of Israel) with determination and decisiveness and will never ever withdraw from this standpoint and policy," the Iranian president added in the interview with the Al-Manar network.

The remarks by Ahmadinejad came one day before the annual anti-Israeli rallies named Qods (Jerusalem) Day, which are held nationwide in Iran on the last Friday of the fasting month of Ramadan. Ahmadinejad on Monday said that Iranians and Muslim nations worldwide should hold Qods rallies and show their willingness to dispose of this "infectious tumor and this regime full of rascality."

The Iranian president provoked international condemnation in 2005 when he said that Israel should be eliminated from the map of the Middle East and transferred to Europe or North America.

The decision was widely expected because in June, Kan had promised to quit once lawmakers passed three key pieces of legislation. The final two bills cleared the parliament earlier Friday. The Democrats will vote Monday for a new leader, who will almost certainly become Japan's next prime minister - the sixth since 2006.

Former Foreign Minister Seiji Maehara is viewed as the front-runner to replace him. Finance Minister Yoshihiko Noda and Trade Minister Banri Kaieda are also viewed as contenders. Looking back on his year and three months in office, Kan said he did all he could given difficulties he faced, including the disasters and a major election defeat in upper house elections last summer that left the parliament in gridlock.

"Under the severe circumstances, I feel I've done everything that I had to do," he said. "Now I would like to see you choose someone respectable as a new prime minister." The 64-year-old Kan has seen his approval ratings tumble amid a perceived lack of leadership after the March 11 earthquake and tsunami and subsequent nuclear crisis. Survivors complain about slow recovery efforts, and radiation from the crippled Fukushima Dai-ichi plant has spread into the air, water and food supply.

While the Hiroshima bomb claimed most of its victims in the intense heatwave of a mid-air nuclear explosion and the highly radioactive fallout from its mushroom cloud, no such nuclear explosions hit Fukushima. There, the radiation has seeped from molten fuel inside reactors damaged by hydrogen explosions.

"An atomic bomb is designed to enable mass-killing and mass-destruction by causing blast waves and heat rays and releasing neutron radiation," the Tokyo Shimbun daily quoted a government official as saying. "It is not rational to make a simple comparison only based on the amount of isotopes released." Government officials were not immediately available to confirm the report.

At Fukushima, Japan declared a 20-kilometre (12 mile) evacuation and no-go zone around the plant after the March 11 quake and tsunami triggered the world's worst nuclear accident since Chernobyl 25 years ago. A recent government survey showed that some areas within the 20-kilometre zone are contaminated with radiation equivalent to more than 500 millisieverts per year - 25 times more than the government's annual limit.

This year, with the US again slowing sharply, markets are speculating that further QE may be round the corner. Shares have rallied all week in anticipation that the Federal Reserve will act to reinvigorate the US recovery. Earlier this month, stock markets plummeted as economic data pointed to sluggish or virtually non-existent growth in the US and Europe. "Recent events have made it blatantly clear that the economy is in a funk," says Paul Dales, senior US economist at Capital Economics.

"The housing market remains at rock bottom and even the manufacturing sector, which had been the shining light of this recovery, has come off the boil." Gold also hit a new record high on Tuesday, before falling back as stocks rallied. Investors see gold as a haven in times of economic uncertainty, and QE is expected to depress the value of the dollar versus gold, which also makes the precious metal more attractive.

Mandatory evacuations have been ordered in parts of Delaware, Maryland, New Jersey and North Carolina. Irene, now leaving the Bahamas, has already caused havoc in the Caribbean. States of emergency have been declared in North Carolina, Maryland, Virginia, Delaware, New Jersey and New York. President Barack Obama also declared an emergency in North Carolina, where Irene is due to make landfall first, on Saturday afternoon. The move allows greater co-ordination between state and US federal disaster management authorities.

"In this emergency I am activating all levels of state government to prepare for any situation that may be caused by Hurricane Irene," said New York Governor Andrew Cuomo. In Washington DC, which is under a tropical storm watch, Sunday's scheduled dedication of the newly opened memorial for Martin Luther King Jr - which President Barack Obama had been expected to attend - has been postponed until at least September.

At 20:00 EDT on Thursday (00:00 GMT on Friday), Irene was gradually moving away from Abaco Island in the Bahamas, and remained 550 miles south south-west of Cape Hatteras, North Carolina, said the US National Hurricane Center. The huge storm boasts hurricane force winds extending 80 miles from its centre, and tropical storm winds reaching up to 295 miles from the eye. Forecasters said Irene could strengthen slightly throughout Thursday night and Friday ahead of its expected arrival in North Carolina on Saturday.

SPIEGEL: Mr. Woolley, you were fund manager for many years, but went on to found a research institute at the London School of Economics to study why financial markets repeatedly go haywire. Now speculators are once again betting against the euro, and share prices for big companies are falling by 20 percent in a day only to shoot back up again. What is going on?

Woolley: The developments in recent weeks have made it quite clear that the markets don't function properly. Things are spinning out of control and are potentially dangerous for society. Only a fraternity of academic high priests connected to the finance markets is still speaking of efficient markets. Still each market participant is pursuing their own selfish interests. The market isn't reaching equilibrium - it's falling into chaos.

SPIEGEL: You've compared the finance markets to a cancer. What do you mean by that?

Woolley: The finance sector can - and is - growing until it overwhelms the economy. In good years the US finance industry cashes in on more than 40 percent of all corporate profits. In bad years they are saved by the taxpayers. The agents are doing a devilishly good job of developing innovative, complicated new products that people can't understand. It gives them the opportunity to earn excess returns and attract the best talent. While they are acting rationally, the result is a catastrophe.

Beyond that point, latest indications put Irene on a path extremely close to or over the mid-Atlantic coast and New York City before plowing into western New England. Irene is expected to track near the mouth of the Chesapeake Bay and Delmarva coast Saturday night, then could pass within 30 miles of New York City Sunday evening as a weakening Category 2 hurricane.

Such a path would lead to severe impacts that could prompt officials to force evacuations. All residents and visitors in the path of Irene should heed these orders if issued and prepare homes and businesses for Irene's onslaught in the meantime. On its current forecast path, Irene would spread destructive hurricane-force winds (gusts between 80 to 100 mph) across the Delmarva coast, eastern New Jersey, New York City, western Long Island and southwestern New England.

A track directly over Atlantic City, N.J., and New York City would bring these intense winds westward to Philadelphia. The strongest and most sustained hurricane-force winds will be measured in the immediate vicinity of Irene's center. Widespread tree damage, major power outages and structural damage to buildings and homes would ensue. Glass windows could shatter along the sides of New York City skyscrapers.

Damaging tropical storm-force winds (winds between 40 and 70 mph) will extend 150 miles westward and nearly 250 miles eastward from Irene's center. These winds will likely reach Richmond, Virginia, Baltimore, Maryland, Philadelphia, Pennsylvania, Albany, New York, and nearly all of New England, threatening to cause significant tree damage and power outages. The winds will have no trouble downing trees where recent flooding and record rainfall has saturated the ground in areas such as Philadelphia and New York City.

Irene will also cause extremely rough surf to pound the entire mid-Atlantic and New England coastline with severe beach erosion and significant coastal flooding an almost certain guarantee. A flooding storm surge will further inundate the coastline.

Local media reported it was felt 82 miles (133km) to the north-west in the capital Washington, as well as in northern Virginia and Maryland. Tuesday's earthquake, one of the most powerful to hit the east coast since 1897, had been felt as far away as Alabama and Boston. In Washington, it opened a small crack near the top of the Washington Monument, prompting officials to indefinitely close the structure.

The National Cathedral lost part of its towering neo-Gothic spires and suffered cracks in its flying buttresses, while many schools and older buildings across the region suffered minor damage. Two nuclear reactors were taken offline as a precaution near the epicentre of the original quake, but no damage was reported.

Fiscal union - the coordination of tax and spending - has not yet arrived but it has moved a giant step closer. Sure it was just a proposal but there was plenty of detail. This new government, according to President Nicolas Sarkozy, "will be made up of heads of state and government that will meet twice a year and more often if necessary. It will elect a stable president for two and a half years." The eurozone and the EU can still give the appearance that it is a Franco-German enterprise.

The Paris summit was intended to send a signal that these two leaders recognise that if the single currency is to work it will require closer economic integration. That is surely true but these changes will involve countries surrendering sovereignty and it will be interesting to see whether voters will be consulted.

The Austrians quickly indicated they were not prepared to relinquish completely their ability to set economic policy for the sake of closer integration. "The agreement is very, very far away - I don't see it yet," said Maria Fekter, the finance minister. Chancellor Angela Merkel and President Sarkozy want all eurozone nations to enact constitutional amendments requiring balanced budgets by the summer of 2012. The Germans have insisted on this. The French were far less keen. And there may well be protracted arguments in various national parliaments over this. Agreement by next year seems ambitious.

But fierce resistance will lie ahead, particularly from financial institutions which are lined up to take a hit on their lending to Greece. The City of London, which is Europe's main financial centre, will be particularly wary. Ireland will insist that any new financial transaction tax applies to all 27 members of the European Union. The UK will oppose this. What was on offer yesterday was a long-term political plan intended to show closer integration of the eurozone. What it did not do was to address the current debt crisis that so unnerves investors.

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure 10 million pounds of the state-backed lender's bonds against default is now 343,540 pounds. The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.

"The problem is a shortage of liquidity - that is what is causing the problems with the banks. It feels exactly as it felt in 2008," said one senior London-based bank executive. "I think we are heading for a market shock in September or October that will match anything we have ever seen before," said a senior credit banker at a major European bank.

"Militarily, China's sustained modernization program is paying visible dividends," the report says. "During 2010, China made strides toward fielding an operational anti-ship ballistic missile, continued work on its aircraft carrier program, and finalized the prototype of its first stealth aircraft." The report cautions that the Chinese military continues to lack key military capabilities, is equipped with large amounts of outdated hardware, and lacks operational experience. But the report concludes that the army "is steadily closing the technological gap with modern armed forces."

By the end of this decade, China will be able to project military power and sustain a modest-sized force of naval and ground forces for smaller conflicts "far from China." That assessment was not included in earlier annual reports to Congress. China recently began sea trials of a refurbished Soviet-era aircraft carrier and is developing a ballistic missile to target ships at sea, the report says. It also is continuing aggressive cyber-intelligence gathering and has targeted numerous computer systems around the world, the report says, noting the intrusions "appear to have originated within" China.

"These intrusions were focused on exfiltrating information," the report says, adding that the same skills can be used for "computer network attacks" in warfare. China's cyberwarfare capabilities likely would serve future military operations by gathering intelligence, constraining enemy action or slowing their response, and bolstering conventional attacks during a crisis or conflict. Chinese military writings state that China plans to use its cyberwarfare weapons to achieve information superiority and to counter a stronger foe.

"The pace and scope of China's sustained military investment have allowed China to pursue capabilities that we believe are potentially destabilizing to regional military balances, increase the risk of misunderstanding and miscalculation, and may contribute to regional tensions and anxieties," said Michael Schiffer, deputy assistant defense secretary for East Asia, in releasing the report at the Pentagon.

The agreement is the latest part of HMRC's efforts to track down and tax money hidden in offshore bank accounts. It follows a similar deal agreed earlier this month between Germany and the Swiss authorities. UK officials said the agreement was a landmark one. "The world has changed for tax evaders," said Dave Hartnett of HMRC.

"A few years ago, nobody would have anticipated that we would conclude an agreement with Switzerland to tackle tax evasion. We will secure significant sums of tax that some had thought we would never see," he added. Meanwhile, David Gauke, Exchequer Secretary to the Treasury, said the "historic agreement will enable us to collect billions of pounds from those who have for too long evaded their responsibility to pay UK tax by abusing Swiss banking secrecy".

From 2013 the account holders will also face an annual levy of between 27% and 48% on the income from their accounts, depending on whether it has arisen as capital gains, dividends or interest. The UK authorities will also have the right to request the banking details of 500 UK individuals a year for further investigation. Chas Roy-Chowdhury of the Association of Chartered Certified Accountants (ACCA) said the deal was "very innovative". "This is a wake up call to tax dodgers, and will flush some of them out of the woodwork," he said.

"I regard the huge buy-up of bonds of individual states by the ECB as legally and politically questionable. Article 123 of the Treaty on the EU's workings prohibits the ECB from directly purchasing debt instruments, in order to safeguard the central bank's independence," he said.

"This prohibition only makes sense if those responsible do not get around it by making substantial purchases on the secondary market," he said, speaking at a forum of half the world's Nobel economists on Lake Constance to review the errors of the profession over recent years. Mr Wulff said the ECB had gone "way beyond the bounds of their mandate" by purchasing 110 billion euros (96.6 billion pounds) of bonds, echoing widespread concerns in Germany that ECB intervention in the Italian and Spanish bond markets this month mark a dangerous escalation.

He did not explain what else the ECB could have done once the bond spreads of these two big economies began to spiral out of control in early August, posing an imminent threat to monetary union and Europe's financial system. The blistering attack follows equally harsh words by the Bundesbank in its monthly report. The bank slammed the ECB's bond purchases and also warned that the EU's broader bail-out machinery violates EU treaties and lacks "democratic legitimacy".

The combined attacks come just two weeks before the German constitutional court rules on the legality of the various bailout policies. The verdict is expected on September 7.

The Outer Banks islands off North Carolina are being evacuated and people are stocking up on supplies in coastal areas of the US state. The huge storm has brought flooding and power cuts across the Caribbean. On Mayaguana Island, part of the Bahamas, Irene has damaged roofs and blown down trees and lampposts, leaving the island without electricity, Associated Press quoted Police Inspector Vernon Rahming as saying.

Captain Stephen Russell, the head of the National Emergency Management Agency in the Bahamas, told AP news agency that two southern islands have also been hard hit. Two settlements had been devastated on Acklins and Crooked islands, both of which have populations of several hundred, he said. Up to 12 inches (30cm) of rain was expected in parts of the Bahamas, making roads impassable in the capital, Nassau.

The Miami-based National Hurricane Center (NHC) warned that "an extremely dangerous storm surge will raise water levels by as much as seven to 11 feet (2.1 to 3.4 meters) above normal tide levels over the central and north-western Bahamas". The NHC said it expected Irene to grow into a category four storm on Thursday with winds of 135 mph.