The Federal Reserve's words may have been anodyne. "We will adjust the programme as needed to best foster maximum employment and price stability," said the US central bank's Open Market Committee. But by announcing another round of "quantitative easing", America is rightfully incurring the wrath not only of the emerging giants of the East, but the eurozone too.

The US had hoped China would use the forthcoming G20 summit in Seoul to accept America's proposal that net exporters should limit their current account surpluses to 4 percent of GDP. Any prospect of that is now gone. In the aftermath of the Fed's QE2 announcement, rather than agreeing to measures that would ease pressure on the US economy, China gave the States a public tongue-lashing. Measures to cap trade surpluses would "hark back to the days of planned economies", said Cui Tiankai, who will be one of China's lead negotiators in Seoul.

Germany also waded in, using industrial-strength language to describe the Fed's latest move. "With all due respect, US policy is clueless," remarked the finance minister, Wolfgang Schauble. "It's not that the Americans haven't pumped enough liquidity into the market... for them now to pump even more is not going to solve their problems." The Fed's plan to expand QE by $600 billion (373 billion pounds), on top of the $1,700 billion already implemented, caused the diplomatic fur to fly - from Thailand to Australia. An official statement from South Africa, a key member of the G20's powerful emerging market bloc, said America had "undermined the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain".

Up until now, the rest of the world has been willing to tolerate unprecedented money-printing by the US - and the UK for that matter. QE has been used to help various financial institutions avoid facing up to their losses, while covertly recapitalising Western banks that are, to all intents and purposes, insolvent. Money-printing has also pumped up equity prices. After the latest Fed-induced "sugar rush", the FTSE global all-share index hit a two-year high. But, in recent weeks, something has changed. Big players such as China, Brazil - and Germany too - think the US has gone far too far and are now saying so. This crazy money-printing is going to be seen as the primary cause of Western inflation, food riots and a commodity price spike.

Those dangerous, destabilising global imbalances would be addressed, they pledged. "Deficit" countries, such as the UK and US, would save and export more.

"Surplus" countries, such as China and Germany, would export less and get their consumers spending. Every country would do their bit, pull together, and all the bountiful progress would be chronicled the following year at the G20 summit in Seoul. Unfortunately, relationships formed under intense circumstances rarely last. This week, with most countries a year out of recession, G20 leaders reconvene in Seoul to discuss their efforts. Twelve months on, nationalism has replaced globalism. Peace and love have given way to currency wars. The imbalances are as entrenched as ever. And, most frightening, the battle drums are beating for protectionism and trade barriers.

At last month's International Monetary Fund (IMF) meeting, the mood was sombre. Dominique Strauss-Kahn, head of the IMF, spoke of "a new kind of economic co-operation at the global level which never had existed in the past [that] was very strong [at the G20] in London, very strong in Pittsburgh. I think it is fair to say that the momentum is decreasing." The European Central Bank president, Jean-Claude Trichet, also warned that while "we have a consensus on imbalances, the problem is implementation - as always".

Geithner last week sought to "reach a common understanding" with proposals that are likely be at the centre of discussions in Seoul. He raised the prospect of using current account targets as a way of reducing the imbalances, suggesting a 4 percent of gross domestic product (GDP) benchmark. Under his plan, countries with persistent deficits would have to boost savings and those with lasting surpluses would have to cut export reliance. Unsurprisingly, both China, with a 4.5 percent surplus, and Germany, with a 5.1 percent surplus, would have to take immediate action. In a damning riposte, Cui Tiankai, a Chinese deputy foreign minister, said the US plan harked back "to the days of planned economies".

Germany is not impressed. One day after the United States Federal Reserve announced that it would pump $600 billion (423 billion euros) into America's banking system over the next eight months, German Finance Minister Wolfgang Schauble sharply criticized the decision. "I don't think they are going to solve their problems that way," Schauble told German public broadcaster ZDF in a Thursday evening interview. "They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous."

In a separate interview on public broadcaster ARD, Schauble said that the move by Fed Chair Ben Bernanke would "create additional problems for the world." He promised to bring up the issue in talks with the US and said that, by following such a monetary path, the US was violating a pledge that all industrialized countries agreed to at the last G-20 summit in Toronto in June.

Bernanke acted just a day after the Democrats of President Barack Obama took a beating in Tuesday's mid-term elections - a vote which cost the party its majority in the House of Representatives. One of the Republicans' main complaints during the campaign focused on high deficits as a result of Obama's economic stimulus program. Despite recent hints from the White House that further stimulus measures might be in the offing, Tuesday's likely eliminates the possibility that Obama can push through further legislation to stimulate the economy.

The Fed, for its part, has very few levers left to stimulate investment and growth.

The research, published yesterday by the Council of Mortgage Lenders, warns around 50 per cent of Britain's 11.4 million people who have a mortgage could be affected. Of the total, around 20 per cent, equal to around 2.2 million people, will be 'shut out' from the mortgage market - this means the loan that they currently have would not have been handed out under new rules currently being proposed by the Financial Services Authority.

To make matters worse, a further 30 per cent of people with a mortgage, equal to around 3.4 million, will be able to borrow less than they need. The changes pose a worry for millions of homeowners whose loan is coming up for renewal, such as a three-year fixed deal which is about to end. The CML fears that homeowners will not be able to remortgage to a rival bank or building society due to the new rules proposed by the FSA.

The proposals could signal the death of interest-only and self-certification mortgages, according to the study. Michael Coogan of the CML said the new rules are 'an over-reaction to past problems', warning: 'As a consequence, they will not lend to as broad a range of potential customers.'

All coconuts around the city's Gandhi museum, one of Mr Obama's stops in the city, are being taken down. Mani Bhavan, where Mahatma Gandhi stayed during his freedom struggle against the British, is among five places the US president is visiting in Mumbai. "We told the authorities to remove the dry coconuts from trees near the building. Why take a chance?" Mani Bhavan's executive secretary, Meghshyam Ajgaonkar, told the BBC.

Every year in India people are injured or even killed by falling coconuts. Mr Obama, still smarting from heavy losses in the midterm elections, will visit India, Indonesia, South Korea, Japan and China on the 10-day tour.

China, Brazil and Germany on Thursday criticised the Fed's action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows. Guido Mantega, the Brazilian finance minister who was the first to warn of a "currency war", said: "Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter."

Mr Mantega added: "You have to combine that with fiscal policy. You have to stimulate consumption." Germany also expressed concern. An adviser to the Chinese central bank called unbridled printing of dollars the biggest risk to the global economy and said China should use currency policy and capital controls to cushion itself from external shocks.

"As long as the world exercises no restraint in issuing global currencies such as the dollar - and this is not easy - then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament," Xia Bin wrote in a newspaper under the Chinese central bank

The price of oil also jumped, while the dollar fell against major currencies. Although the Fed's move was widely expected, most analysts had predicted a lower figure of $500 billion to be injected. The FTSE 100 closed up 114 points at 5863, while the Dow gained 220 points to close at 11435. In Paris, the Cac 40 climbed 74 points to 3,917, while Germany's Dax was up 117 points at 6,735.

Rob Carnell, chief international economist at the banking group ING, said the action was unusual because the economy is in a completely different shape to how it was before. "[During the first round of QE], you had massive financial market disruptions - really serious problems, mortgage yields and rates were shooting through the roof, no one could borrow. That's clearly not the case right now," he told BBC World Service. "The justification for it seems to have utterly changed... It's really policy on the hoof, trying to justify it as they go along."

The Church said some members of the sect were carrying out "activities that disturb the ecclesiastical community". The BBC's David Willey in Rome says Opus Angelorum first attracted the attention of the Vatican 30 years ago, after the death of its founder, a woman from the Austrian Tyrol called Gabriele Bitterlich.

Bitterlich claimed to have been in contact with an archangel and to have written down the names of hundreds of angels and demons, our correspondent says. "The Congregation has learned that very discreet propaganda in favour of this wayward movement... is taking place." The sect - which operates mainly in German-speaking Europe, Brazil and India - claims that women who have had abortions are possessed by the devil. The activities of Bitterlich's followers, including dozens of Catholic priests and nuns, eventually attracted the attention of the Vatican which ordered an investigation, our correspondent adds.

Our correspondent says Opus Angelorum has no known connection with the best-selling novel, Angels and Demons, written by Dan Browne, who has been criticised by the Vatican for his fictional works involving superstition in the Catholic Church.

Almost 100 people are now said to have been killed. An estimated 75,000 residents have been evacuated from the area. Mount Merapi, one of the world's most active volcanoes, is located in a densely populated area in central Java. The latest eruption began late on Thursday, sending residents streaming down the mountain with ash-covered faces. Rescue workers said villages in the area were in flames.

Rescuer Utha told AFP news agency: "I found three bodies - a child, mother and father, still on their bed. They must have been sleeping when the hot ash struck their house... We also found a dead man with a phone still on his hand." Volcanologists Surono told AFP: "This is the biggest eruption so far. The heatclouds went down the slopes as far as 13km (eight miles) and the explosion was heard as far as 20 kilometres away." The authorities have decided to widen the "danger zone" around the crater from 15 km (9 miles) to 20km (12 miles). Scientists are warning of further eruptions in the coming weeks.

"We hope the US economy gets back up stronger on its feet," he said. Bruederle also said there was some truth to the criticism that the United States was influencing the dollar's exchange rate with monetary policy and voiced concern about increased protectionism in different forms around the world. The US Federal Reserve committed on Wednesday to buy $600 billion of bonds with new money over the next eight months, after what it called "disappointingly slow" progress towards its economic targets.

He said a currency war would be a "disaster" which must be prevented and also said US midterm election results made him more concerned about protectionism. "I fear that there could be a trend in that direction," said the minister. Bruederle dismissed criticism from some countries that Germany had not done enough to fight economic imbalances. He said Germany has already done its homework to fight imbalances.

He said trade imbalances could not be evened out with planned economy methods and many of Germany's neighbours were benefiting from Germany's strong economic growth. "A large number of our European neighbours are living off Germany at the moment," he said. He was also concerned about increased protectionism in different forms around the world.

The Work and Pensions Secretary accused Labour of undermining marriage and family life and said the country had paid a 'heavy price' in deeper poverty, high crime and poor life chances for the children of families that failed to stay together. Mr Duncan Smith's speech to representatives of the Relate counselling charity was the strongest defence of marriage made by a major government figure in years.

It contrasts powerfully with the Whitehall line in Labour's years which said that marriage did not matter and that it was not for government to interfere with people's choice of how they arranged their lives. And it signalled that Mr Duncan Smith will fight for the restoration of the privileges of marriage that were whittled away by Tony Blair and Gordon Brown. The Coalition pledged to support married couples in the tax system - but any practical help for couples is on the backburner while ministers try to cut debt.

Mr Duncan Smith said: 'It is important that we recognise the role of marriage in building a strong society, especially if we want to give children the best chance in life. Sadly, the last government seemed determined to undermine marriage - for example, by removing references to it from official forms.' He declared: 'Evidence shows that family influences educational outcomes, job prospects, and even life expectancy. When government abandons policies that support families, society can pay a heavy price.'

The research found more than one in three sellers have cut the asking price 'at least once' since it was put up for sale this year. On average, they have knocked off 6.1 per cent from the asking price, equal to a price cut of around 16,000 pounds. But many have been far worse hit, cutting the asking price several times and by up to 30 per cent, according to the research from the property website Zoopla.co.uk.

The report said homeowners are 'slashing' the asking price because they are becoming 'more realistic and desperate to sell'. Nicholas Leeming, commercial director of Zoopla.co.uk, said: 'For the past few months, asking prices have been somewhat out of kilter with what buyers are prepared or can afford to pay.

'But sellers are becoming increasingly realistic.'

In total, Zoopla said around 500 million pounds has been knocked off asking prices over the past three months, with homeowners deciding that a sale at a lower price is better than no sale. For many of the victims, their finances are under severe stress and they urgently need to sell because they are struggling to afford their monthly mortgage payments. It comes amid warnings about 'zombie households' who are on a financial precipice, and may not be able to pay their mortgage if interest rates rise.

Next said: "The longevity of what appears to be a speculative bubble in cotton prices will be critical in determining prices for the second quarter." Cotton prices are running at a 15-year high after crops in China and Pakistan were hit by floods in recent months. On top of this, unseasonal weather in the US - the world's third largest producer - and an Indian export ban have hit world cotton crops. At the same time speculators have bought up large quantities of cotton in the hope of profiting from the increase, causing what analysts believe is a 'perfect storm' in the market.

Benchmark cotton futures for December delivery rose by 3.6 percent to reach $1.39 (86 pence) a pound on Wednesday. This is a record and an increase of over 80 percent since the summer. Any increase in prices could dampen the consumer economy. They would come on top of January's VAT rise from 17.5 percent to 20 percent and concerns over public sector job cuts.

Non-food items rose by 1.1 per cent because of the increase in VAT during the year and the overall inflation rate for goods in shops increased by 2.2 per cent, the BRC said. If families usually spend 100 pounds a week on groceries, the rise is the equivalent to adding 230 pounds to their annual bill. Experts warned of even higher increases in the New Year as VAT rises in January from 17.5 per cent to 20 per cent and retailers shield consumers from price rises. But this could mean high street price wars as retailers compete "even more fiercely".

The figures from the BRC, which speaks for the major supermarkets, are a further sign of the pain being felt by millions of families and pensioners hit by pay freezes who are struggling to make ends meet. It comes as all of the major supermarkets, Tesco, Asda, Sainsbury's and Morrisons continue to see a boom in profits. "Weak consumer confidence and a sluggish housing market mean retailers are competing even more fiercely for the limited discretionary spending available," said Stephen Robertson, the BRC director general.

"That situation is unlikely to change in the run up to Christmas, with retailers clamouring to win the attention of cash-strapped consumers through discounting and promotions."

After days of continual explosions, and warnings that pressure inside Mount Merapi may still be building, the province warned it was running out of money to help more than 70,000 people forced from their homes. Soldiers loaded women and crying children into trucks while rocks and debris rained from the sky late Wednesday afternoon. Several abandoned mountainside homes were set ablaze and the carcasses of incinerated cattle littered the scorched flanks.

"This is an extraordinary eruption," said Surono, a state volcanologist who had earlier said energy building up behind a magma dome in the crater appeared to be easing. He said Wednesday's powerful blast, which dusted cars, trees and roads in towns up to 130 miles away in gray ash, had triple the force of the first eruption on October 26. The follow-up before dawn Thursday was strong as well, sending rocks cascading down the western slopes.

"We have no idea what's happening," Surono said, as he shook his head, watching the bobbing needle of a seismograph machine. "It looks like we may be entering an even worse stage now." Forty people have died since it burst back to life just over a week ago, said Heru Nugroho, a spokesman at the main hospital dealing with the dead and injured. In 1994, 60 people were killed, while in 1930, more than a dozen villages were torched, leaving up to 1,300 dead.

Still, as with other volcanoes in this seismically charged country, tens of thousands call its fertile slopes home. Most now are packed in crowded government camps well away from the base.