The fear is back, in the stock exchanges and in the capitals of the industrial nations. There are growing signs everywhere of a new financial crisis, and the political leaders of the West are looking helpless and out of their depth.

The United States is struggling with an enormous budget deficit. And the euro zone's central bankers and government leaders can't find a strategy to end the permanent malaise of their single currency. The White House has achieved little more than to buy some time with a new debt compromise reached after theatrical political squabbling between Democrats and Republicans. Last Friday night, rating agency Standard & Poor's lowered its rating for the US from AAA to AA+.

Muddling through, postponing, playing down - the motto of the crisis managers on both sides of the Atlantic has sent alarm bells ringing in stock markets. Britain's Economist magazine is warning of a double-dip recession in the US, a second downturn just three years after the last one. Many economists have been pointing out that last week's panic resembled the fear that swept financial markets after the collapse of US investment bank Lehman Brothers in September 2008.

Then as now, banks stopped lending each other money. Then as now, banks' cash deposits at the central bank doubled within days. The European Central Bank reacted by assuring banks of unlimited liquidity in the coming months. It was an emergency measure that led to short-term relief but sparked anxious questions among bankers and stock market players. How long can the central bank keep up its market-soothing liquidity operations before it finally loses its credibility, the most important asset of a central bank? Is the financial crisis about to escalate? And will the world then be bankrupt?

Germany has been enjoying what many have described as a new economic miracle, with 3.6 percent growth in 2010. In the first quarter of 2011, growth even reached 5 percent year-on-year. But with the world economy facing a slowdown, Germany's enormous dependence on exports, the driving force behind its impressive recovery in the last two years, could now spell doom. The US and Italy are among Germany's top five trading partners - and neither country is likely to provide much impetus for German industry in the foreseeable future.

There is a further danger: the Swiss and Japanese central banks are intervening in markets to stop the appreciation of their currencies which has been putting their exports at risk. If the Americans follow suit, a global race to depreciate national currencies could ensue - a disastrous form of protectionism.

Trouble first flared on Saturday after a peaceful protest in Tottenham over the fatal shooting of a man by police. The prime minister is returning early from holiday to chair a meeting of the government's emergency committee Cobra. David Cameron, who is on holiday in Italy, was due to board a flight on Monday night ahead of a meeting with Home Secretary Theresa May and Acting Metropolitan Police Commissioner Tim Godwin on Tuesday.

A government spokesman said the prime minister has been monitoring the situation on "an hourly basis". Monday's violence started in Hackney after a man was stopped and searched by police but nothing was found. There were also fears trouble may spread further afield as police in riot gear were deployed in Birmingham city centre after scores of youths rampaged through the shopping area, smashing windows and looting from shops.

Meanwhile:

Cars were set on fire in Lewisham

A bus and shop were set alight in Peckham

Several fires broke out in Croydon, including one at a large furniture shop which spread to neighbouring buildings and tram lines

In Hackney 200 riot officers with dogs and mounted police were located around Mare Street where police cars were damaged

Looters raided a Debenhams store and a row of shops in Lavender Hill in Clapham

In Birmingham, police said officers had made 35 arrests, including six juveniles, on Monday evening

Buses were diverted as the violence spread to Bromley High Street

There were reports of looting of phone shops in Woolwich High Street, in south London, and a torched police car

Shops and restaurants were damaged in Ealing, west London, and there was a fire in Haven Green park opposite Ealing Broadway Tube

At least 215 people have been arrested and 25 charged following the riots across London over the last two days.

"What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche" said Greenspan

Austan Goolsbee, the chairman of the White House's council of economic advisors, hit out at S&P on the same show, insisting the credit ratings agency had got its math wrong. "Well, the basic case is they made a $2 trillion math error and forgot to check their work," he said. "So rating agencies that didn't make a $2 trillion math error reaffirmed the AAA status. You saw Warren Buffet say that, if they had a AAAA, he would put US Treasurys in AAAA status."

Following the decision to downgrade America's credit rating, the head of sovereign ratings at S&P, David Beers, said the Obama administrations analysis of the move was a complete "misrepresentation." Greenspan said the current sense of crisis that has unnerved investors is about the euro zone, not the US.

'The United States was actually doing relatively well, sluggish but going forward until Italy ran into trouble," he said. "That destabilized the European system, and the crisis re-emerged. Europe is very critical to the United States in the sense not only do we have a fourth of our experts there, but more importantly, significant proportion of the foreign affiliate profits, in fact half of US corporations, are in Europe."

"When Italy showed signs of significant weakness in selling its bonds - the yield is now over 6 percent, which is an unsustainable level - it created a massive problem within Europe because Italy is a very large country, cannot be easily bailed out and, indeed, cannot be bailed out," Greenspan added.

Far from loosening, the US is on track to tighten by 2 per cent of GDP next year, and Europe by 1 per cent to 2 per cent, into the slowdown. China has already pushed credit to 200 per cent of GDP. It cannot repeat the trick. The Anglo-Saxons can print more money, but the gains in asset prices for the rich are offset by losses from fuel and food inflation for the poor. This is a destructive trade-off. The decision to throw everything we had at the crisis after Lehman-AIG was a legitimate gamble at the time, given the near certainty of depression if shock therapy had been tried - as in 1931.

It is too early to say the policy has failed, and failure is a false term when leaders confront cruel choices. Yet last week's drama has brought home the truth that suffocating debt has not gone away; it has merely hopped on to the shoulders of sovereign states, threatening just as much damage. Standard & Poor's downgrade of the United States to AA+ is a detail in this greater drama, albeit of poignant symbolism.

S&P should have acted six years ago when the rot was setting in. To do so now is fatuous. The US Treasury is right to disregard the verdict and keep risk weightings unchanged to avoid a cascade of forced debt sales. Note how quickly Japan, Korea, France, and even Russia, have closed ranks behind Washington.

As for China's bluster, it is chutzpah and self-delusion. We all agree that the US needs to "cure its addiction to debts", but so will China soon. China buys US debt in order to recycle $200 billion a quarter in foreign reserves, hold down the yuan, and continue its mercantilist export strategy. If China had not distorted world trade in this fashion, the US would not be in such a mess.

The search for a scapegoat has begun. German MEPs and officials have begun to blame Brussels for triggering this crisis, though all it did was admit that the 440 billion euros bail-out fund is too small to restore confidence, and that EMU is in systemic danger as contagion spreads to the core. Even Germany's most ardent pro-Europeans seem to have given up trying to find a solution. They are building an alibi for EMU break-up instead.

This is a dangerous moment for the world. It is still possible that the growth scare of recent months will prove a false alarm. Yet the Bank for International Settlements is surely right that we are pushing ever closer to the limits of a model that relies on artificial stimulus to keep stealing extra prosperity from the future. There is ever less to steal.

In comments emailed to CNBC, Guan Jianzhong, chairman of Dagong Global Credit Rating, said the currency is "gradually discarded by the world," and the "process will be irreversible." Dagong made headlines last week when it became the first rating agency to cut its US credit rating from "A+" to "A" after policymakers in Washington failed to act in a timely manner to lift its debt celing.

However, the announcement failed to register in the markets as investors have yet to decide whether to take the Beijing-based company seriously. "It has been around for quite a while, but I do not know of anyone assigning risk assessment to thir portfolio according to Dagong," said Steen Jakobsen, chief economist at Saxo Bank. "However, clearly the rating industry could do with some competition and deviance from firm beliefs."

But Guan's observation - made just before S&P slashed its ratings on the world's biggest economy - now seems strangely prescient. "I think the most pressing issue facing the US at the moment is to reflect on the crisis which happened in relation with the debt ceiling," Guan said. "They should get a clear understanding that the continuous decline of the debt service capability will inevitably result in the outbreak of a sovereign debt crisis."

His sentiment is also reflected in a strongly worded editorial published by China's official Xinhua news agency on Saturday that is widely seen as a thinly-veiled criticism of US fiscal and economic policies from Beijing. The editorial called for "international supervision over the issue of US dollars" and the introduction of "a new, stable and secured global reserve currency." It also noted that as its largest creditor, Beijing has every right "to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets."

It is by far the clearest and toughest regional position Syria has met, and it comes from one of the most influential Arab powers. Another major force in the region, Turkey, is stepping up the pressure too. Its foreign minister is due in Damascus on Tuesday with a tough message for President Assad. The US Secretary of State, Hillary Clinton, has asked the Turkish minister to press the regime to pull its troops back to barracks. But so far, there is no sign of that happening.

Damascus has said its critics are ignoring the killings and destruction by what it calls "armed terrorist gangs", and also ignoring the reform programme that the regime has launched in a bid to defuse the crisis. It says it needs more time. But time seems to be running out, as the country slips daily closer to the spectre of a sectarian civil war that has set the regional alarm bells ringing.

It came hours after the Arab League issued its first official statement, strongly condemning the violence. On Sunday, more than 80 people died as the army launched assaults in eastern and central Syria, activists said. They said at least 50 died when soldiers, backed by scores of tanks and armoured vehicles, stormed Deir al-Zour during the dawn call to prayer.

A man living in the city told the BBC the tanks had been withdrawn from the eastern city, but that residents feared they would come back. Twenty-six others were killed in Hula, near the city of Homs, including a 10-year-old boy. Deaths were also reported in Idlib in the north-west.

The Local Co-ordination Committees, an activist group that documents and organises protests, said that after sunset, thousands of protesters poured onto the streets in towns and cities, including Damascus and its suburbs, Homs, Aleppo, and Latakia on the Mediterranean coast. Activists say at least 1,700 civilians have been killed and tens of thousands arrested since the uprising began in mid-March.

In a major escalation in international pressure on President Bashar al-Assad, King Abdullah declared on Sunday evening that his country had taken an historic decision despite all the support it had given Syria in the past. "Any sane Arab, Muslim or anyone else knows that this has nothing to do with religion, or ethics or morals; spilling the blood of the innocent for any reasons or pretext leads to no path to... hope," he said in a statement broadcast by the Saudi-owned satellite channel, al-Arabiya. "What is happening in Syria is not acceptable for Saudi Arabia," he added. "There are only two options for Syria's future: either it chooses wisdom on its own, or it will be pulled down into the depths of chaos and loss."

Gang members used Blackberry smart-phones designed as a communications tool for high-flying executives to organise the mayhem. The Blackberry phone, one of the first devices to offer mobile email, was once the preserve of business leaders and political aides but has become increasingly popular with members of urban gangs and teenagers. This is largely due to the Blackberry Messenger service - known popularly as BBM - which allows owners of the devices to communicate with each other for free and almost instantaneously.

Crucially, in order to communicate users have to exchange their phones' PINs, meaning their messages are private - unlike Twitter or Facebook. Conversations can be held between multiple people simultaneously in 'group chat' sessions. On Saturday night, rioters and spectators filmed the mayhem using mobile phones and camcorders and quickly posted the footage on Youtube. Some looters photographed each other in front of wrecked and burning shops as "trophy" snaps.

A terrified woman who had become trapped in a shop on Tottenham High Road posted footage of dozens of riot officers charging from their line of vans towards flaming barricades. As the orgy of violence reached a crescendo, a BBC crew were attacked while delivering a live broadcast, forcing the channel and Sky News to withdraw their satellite trucks. In their absence, many turned to Twitter for a stream of eyewitness reports and photographs posted by local residents.

Riot police were called to the town centre, part of a usually quiet commuter suburb, at around 6:30pm after hooded youths, including dozens of teenage girls, attacked police cars. Bricks and slabs of concrete were thrown at buildings. Running battles between the youths and police continued through the evening, as bricks were hurled at police vans attempting to lock down the area.

Stella Creasy MP for nearby Walthamstow called for people to steer clear of the town centre, fearing the looting would spread, while sources confirmed a group of masked youths were throwing stones at vehicles and at Westfield Shopping Centre in White City, west London before moving on to the BBC television centre. In Edmonton there were reports of a stabbing outside a working men's club while in south London, police in Brixton came under a missile attack after they tried to stop an altercation between youths as tension remained high following Saturday's riots. Stones and bottles were also thrown at officers in separate attacks.

Nick de Bois, Conservative MP for Enfield North, said the disorder was encouraged on social media websites and had become a "self-fulfilling prophesy": "There seems to have been a very well organised campaign over social media to try to engineer trouble here in Enfield." he said. "There is no element of injustice that they are here for. They are here quite simply to cause trouble, to hurt local businesses and shops. This is nothing more than illegal criminal behaviour and I just hope that if the police conclude their investigation, that they do make arrests and those that are guilty receive a serious punishment from the courts."

Twenty-four people were arrested inside the fairgrounds after fights broke out, State Fair officials said. The violence continued after closing time outside the park. State Fair Park CEO Rick Frenette said seven park police officers were injured, including two who were taken to the hospital. Milwaukee Police said just after 11 pm they responded to complaints of an unruly mob attacking cars, people and leaving damage in its path.

Hundreds of young people left the fairgrounds and made their way down to the surrounding neighborhoods, smashing car windows, throwing rocks and beating people who were leaving the fair. Several people were punched in the face, a child was pushed to the ground, one woman required stitches and another will need surgery for her injuries. Police are continuing to search for suspects involved in the incident.

Witnesses described the mobs as young African American teens. Milwaukee Aldermen Bob Donovan and Joe Dudzik released a bold statement on Friday about what they called a "deteriorating African American culture in our city," Fox 6 News reported.

But John Chambers, managing director and chairman of S&P's sovereign ratings committee, explained to Fox News on Saturday that the downgrade was "motivated by a number of factors. One was the political gridlock in Washington, which make us think that it's going to be difficult for elected officials to put the fiscal profile of the US government on a long-term sustainable path," he said.

"And part of it was because of the fiscal path itself," he said, explaining that US debt accounts for 75 percent of gross domestic product and will "trend up over the next decade unless we get additional fiscal measures than what we have on the table right now." The agency was also worried that the eleventh-hour budget deal reached last weekend fell short of S&P's expectations, he said. S&P was seeking $4 trillion in budget cuts over the next decade. But Congress passed a plan on Tuesday that slashes up to $2.4 trillion in cuts over that time.

"If you get to the $4 trillion figure - which had been mentioned by the Bowles-Simpson commission, which had been mentioned by the president in his April 13 speech, which had been mentioned by Paul Ryan in his alternative budget - that, if you have decent growth behind it,would have done the trick," Chambers said.

Some Democratic lawmakers reacted to the downgrade by attacking S&P's credibility. "I find it interesting to see S&P so vigilant now in downgrading the US credit rating," said Senator Bernie Sander, a Vermont independent who votes with Democrats.

"Where were they four years ago when they, and other credit rating agencies, helped cause this horrendous recession by providing AAA ratings to worthless subprime mortgage securities on behalf of Wall Street investment firms?" he said. "Where were they last December when Congress and the White House drove up the national debt by $700 billion by extending Bush's tax breaks for the rich?"

Massachusetts Representative Barney Frank, the top Democrat on the House Financial Services Committee, said that the rating agencies have a horrible record and people should pay no attention to them.

Slim, 71, has taken a hit as Mexico's benchmark IPC index dropped 6.4 percent and the peso slid 2.3 percent against the dollar on concerns that the flagging US economy will hurt demand for assets in its southern neighbor. The removal of three of Slim's companies from the IPC index has made matters worse for the billionaire.

"He's been particularly hurt by those companies leaving the IPC," said Leon Cabrera, a trader at Mexico City-based Vanguardia Casa de Bolsa. "It reflects the nervousness out there. It's part of being in the market." America Movil SAB, the biggest wireless carrier in the Americas and Slim's largest asset, has declined a relatively benign 6 percent this week. Its Telefonos de Mexico SAB unit has been Slim's only gainer in Mexico, rising 11 percent on the parent company's offer to buy out minority shareholders.

Slim was named the world's richest man for a second year in a row by Forbes magazine in March. Bill Gates and Warren Buffett, second and third on the magazine's list, have had better weeks, at least for their biggest holdings.

But other countries, such as Australia, France and Japan, said they retained their faith in US bonds. The downgrade ended a week of growing uncertainty for the world economy. Fears that the US might be headed for a double-dip recession and the eurozone's debt problems were set to spread to Italy and Spain saw stock market sell-offs around the world.

The downgrade is a major embarrassment for the administration of President Barack Obama and could raise the cost of US government borrowing. This in turn could trickle down to higher interest rates for local governments and individuals. One initial estimate says that could add an extra $75 billion (46 billion pounds) to the US annual interest rate bill at a time when its debt levels are already high.

The other two major credit rating agencies, Moody's and Fitch, said they had no immediate plans to follow S&P in taking the US off their lists of risk-free borrowers. S&P said in a report issued late on Friday that the US budget deficit reduction plan passed by Congress on Tuesday did not go far enough.

It also said "the political brinkmanship" over the debt reduction plan showed that "the effectiveness, stability, and predictability of American policymaking and political institutions have weakened". S&P had threatened the downgrade if the US could not agree to cut its federal debt by at least $4 trillion over the next decade. Instead, the bill passed by Congress on Tuesday plans $2.1 trillion in savings over 10 years. S&P also said it might lower the US long-term rating another notch to AA within the next two years if its deficit reduction measures were deemed inadequate.

In one of the biggest waves of protests in decades in Israel, demonstrators are demanding government action to reduce the cost of housing and food. Some protesters have also set up camp in city centres. Police spokesman Micky Rosenfeld said that as well as Tel Aviv and Jerusalem, an estimated 20,000 people had taken part in protests in other towns and cities. "Our numbers are more than 250,000 people across the country," he told AFP news agency.

Israeli media put the number of protesters closer to 300,000. It was the third Saturday of protests in a row. The BBC's Wyre Davies in Jerusalem says most of those taking part were middle-class professionals who say their salaries cannot cover basic expenses including housing and childcare. The protesters have been inspired by social uprisings in the Middle East but instead of seeking political change are demanding that the government take action over the soaring cost of living, he adds.

"It's hard to live in this country," said 26-year-old student Ehud Rotem, who joined the Jerusalem protest. He told AP news agency that Israelis perform their mandatory military service, work and pay high taxes but "still don't earn enough to finish the month".

Power supplies were cut off in many areas on Tuesday, dozens of flights and ferries were cancelled, and schools and offices were closed. Forecasters say the storm should pass into the South China Sea on Thursday. The storm hit Camarines Norte province earlier in the week with gusts of 56mph (90km/h). A disaster-response official described it as the province's worst flooding in five years.

Regional civil defence chief Rafaelito Alejandro said at least 20 people had died in Bicol region - most of whom had been buried in landslides. Officials fear that the death toll could rise, and many of the dead are likely to be fishermen who were out at sea when the storm hit. The Philippines is regularly hit by powerful storms during the typhoon season. Nock-Ten, named after a bird from Laos, is the tenth storm of the season.