SPIEGEL: What do you think of US Treasury Secretary Timothy Geithner's proposal that countries keep their current-account balance under 4 percent of gross domestic product, both for deficits and surpluses?

Michael Burda: I think that interventions of this sort are unreasonable and unworkable. One can not resolve global imbalances by imposing penalties. Such measures are unsuitable for achieving that goal.

SPIEGEL: What does the proposal mean for Germany, which runs a current-account surplus as a result of its strength as an exporter?

Burda: Germany would effectively be punished for its efforts in recent years to regain its competitiveness, which can help explain why German products are selling like hotcakes on the global market. I would also find it strange to see other countries being rewarded for not having put their own house in order.

SPIEGEL: The US treasury secretary is proposing that Germany reduces its reliance on exports, for example by boosting domestic demand with the help of tax breaks.

Burda: But you don't need penalties to do that. Domestic demand will pick up in the near future, entirely by itself. Germany's unions will see to that in the coming rounds of wage negotiations (ie by securing pay raises for their members).

SPIEGEL: How can the imbalance between exporting and importing countries be brought back into balance?

Burda: These things cannot be manipulated by governments in the long run, and will ultimately correct themselves over time without outside intervention. The Chinese will ultimately have to focus more on their domestic economy, and small- and medium-sized companies in the US will make an effort to produce goods that they can successfully export - of that I am optimistic.

A thirst for change in Washington and worries about the stumbling economy appear likely next Tuesday to break Obama's Democrats' grip on Congress in a potential rout that would topple House Speaker Nancy Pelosi from power. With more than 90 Democratic-held seats at risk on November 2 in the 435-member House, independent analysts project Republicans will pick up at least the 39 Democratic seats they need for control.

Republicans are also headed to big gains in the Senate but are expected to fall short of picking up the 10 Democratic seats needed for a majority. To control the 100-member Senate, Republicans will need to sweep nearly every competitive race - a difficult but not impossible task.

A Republican win in the House and gains in the Senate would likely put the brakes on Obama's agenda and spark a prolonged period of legislative gridlock, analysts said. Investors expect a split government and have largely factored in the result, so a dramatic move in stocks on November 3 is unlikely without an unexpected showing by either party.

His comments raise the prospect that big UK banks will be required to hold significantly more equity than new international rules require.

In order to do this, the banks might have to issue new shares, pay out less profits as dividends, or ration new lending more tightly.

In September, the Basel international committee of bank regulators raised the minimum ratio of equity that banks must hold to absorb losses on loans and other risky investments from 2% to 7% of assets. However, the committee said that even higher ratios were still to be agreed for the biggest banks whose failure would pose a risk to the financial system.

Mr King said that the new Basel minimum capital ratios were inadequate to address the problem of banks that are too big too fail, such as Barclays, HSBC and RBS. Such banks, he said, enjoy an implicit guarantee, which gives them an incentive to take on excessive risks. He also said that the coalition government's proposal for a bank levy - which is expected to raise 2.5 billion pounds a year - would be nowhere near enough to cover the losses of a future financial crisis.

"For all the clever innovation in the financial system, its Achilles heel was, and remains, simply the extraordinary - indeed absurd - levels of leverage represented by a heavy reliance on short-term debt," said Mr King. "The broad answer to the problem is likely to be remarkably simple. Banks should be financed much more heavily by equity rather than short-term debt. Much, much more equity. Much, much less short-term debt."

Experts say that after a long absence from Haiti, cholera could now "settle" and become endemic. The UN said 25 more people had died of the disease on Tuesday, bringing the total to 284. The number of reported cases now stands at 3,612. Health experts say they expect the outbreak will soon lessen but the disease will eventually join malaria and tuberculosis in becoming endemic in Haiti.

"It's normal that we should expect a settlement of cholera in Haiti nationwide over the coming months," Dr Michel Thieren of the Pan American Health Organization (PAHO) told Reuters news agency. The spread of the disease has alarmed locals in the region, who have reportedly vented their fears on the doctors who have arrived to help them.

The Associated Press reported that a treatment centre set up by the Spanish branch of MSF in Saint-Marc had been attacked by angry stone-throwing youths, who said they were afraid that the facility would bring more cases of the disease to their town. Some 1.3 million survivors of January's devastating earthquake are living in tent camps in and around the capital. Poor sanitary conditions make the camps and slums vulnerable to cholera, which is caused by bacteria transmitted through contaminated water or food.

Thousands of people have been evacuated amid fears pressure building up beneath Merapi's lava dome could lead to one of the most powerful blasts in years. But a further 13,000 people need to be evacuated from within a 10-mile (16km) radius of the volcano, officials say. It is thought that 5,000 people live on or near the volcano.

Emergency teams have found at least 12 bodies in the area close to the mountain, local media report. "There are likely to be more victims as the terrain is difficult, roads are damaged and trees uprooted, it's dark and the condition of the volcano is still unstable," said Yogyakarta search and rescue official Taufiq.

On Monday, officials monitoring the volcano raised the alert for Mount Merapi to the highest possible level. Since then, more than 600 volcanic earthquakes have been recorded around the mountain. "We heard three explosions around 1800 (1100 GMT) spewing volcanic material as high as 1.5km (one mile) and sending heat clouds down the slopes," government vulcanologist Surono told AFP news agency.

He warned that pressure was building up behind a lava dome near the crater. "We hope it will release slowly," he said. "Otherwise, we're looking at a potentially huge eruption, bigger than anything we've seen in years."

Ten villages on the islands were swept away by the tsunami, a disaster official told the AFP news agency. Damage and rough weather are delaying efforts to reach the affected area. Hendri Dori Satoko, a lawmaker in the Mentawai islands, told Metro TV: "Our latest data from crisis centre showed that 108 people have been killed and 502 are still missing."

Heavy rain is preventing helicopters from accessing the area and boats cannot reach the islands either because the dock on the island of South Pagai has been destroyed. Poor communications have also made it hard for officials to gain accurate information, our correspondent adds. The disaster comes as thousands of people are being evacuated from the area around the Mount Merapi volcano in central Java, after it began erupting.

Ferrara said she wasn't alone in her voting experience. She said her husband and several others voting at the same time all had the same thing happen. "Something's not right," Ferrara said. "One person that's a fluke. Two, that's strange. But several within a five minute period of time - that's wrong."

Clark County Registrar of Voters Larry Lomax said there is no voter fraud, although the issues do come up because the screens are sensitive. For that reason, a person may not want to have their fingers linger too long on the screen after they choose their candidate.

"Especially in a community with elderly citizens (they have) difficulty in (casting their) ballot," Lomax said. "Team leaders said there were complaints (and the) race filled in."

Lomax said voters need to have faith in the system. "This election, I think, more than ever," he said. "The two sides are very fractured and each side is suspicious and we're caught in the middle."

"From everything we hear from inside the administration, they wanted this to be part of their efforts at diversity," said Denis Dison, spokesman for the Presidential Appointments Project of the Gay & Lesbian Leadership Institute. The pace of appointments has helped to ease broader disappointment among gay rights groups that Obama has not acted more quickly on other fronts, such as ending the "don't ask, don't tell" policy that bans gays from serving openly in the military.

In a sign of how times have changed, few of the appointees - about two dozen required Senate confirmation - have stirred much controversy. It's a far cry from the 1993 furor surrounding Clinton's nomination of then-San Francisco Supervisor Roberta Achtenberg as assistant secretary for Housing and Urban Development.

White House spokesman Shin Inouye confirmed the record number, saying Obama has hired more gay officials than the Clinton and George W Bush administrations combined. He said Obama "is proud that his appointments reflect the diversity of the American public."

"He is committed to appointing highly qualified individuals for each post," Inouye said. "We have made a record number of openly LGBT (lesbian, gay, bisexual or transgender) appointments and we are confident that this number will only continue to grow."

Mujiharto, who heads the Health Ministry's crisis center, said a 10-foot-high (three-meter) wave washed away hundreds of houses on Pagai and Silabu, part of the remote and sparsely populated Mentawai island chain. "We have 200 body bags on the way, just in case," he said. Indonesia, the world's largest archipelago, is prone to earthquakes and volcanic activity due to its location on the so-called Pacific Ring of Fire.

The fault that ruptured Monday, running the length of the west coast of Sumatra island, also caused the 9.1-magnitude quake that unleashed a monster tsunami around the Indian Ocean in 2004, killing 230,000 people in a dozen countries. Getting to the Mentawais, a popular surfing spot 175 miles (280 kilometers) from the Sumatra coast takes 12 hours and the islands are reachable only by boat.

Ade Edward, a disaster management agency official, said 23 bodies were found in coastal villages - mostly on the hardest hit island of Pagai - and another 167 people were missing. Water in some places reached roof tops, and in Muntei Baru, a village on Silabu, 80 percent of the houses were damaged. Some 3,000 people were seeking shelter Tuesday in emergency camps, Edward said, and the crews from several ships were still unaccounted for in the Indian Ocean.

"Fuel injection into the core of the reactor has begun," the state television announced. The US withdrew its opposition to the plant after Russia satisfied concerns over how it would be fueled and the fate of the spent fuel rods. Worries remain, however, over Iran's program to enrich uranium for nuclear fuel since the process can also be used to create weapons grade material.

Iran says the 1,000-megawatt nuclear plant, built with the help of Russia, will begin generating electricity in early 2011 after years of delays. Under a contract signed between Iran and Russia in 1995, the Bushehr nuclear power plant was originally scheduled to come on stream in July 1999 but the start-up has been delayed repeatedly by construction and supply glitches. Iranian officials have sporadically criticized Russia for the delays, some calling Moscow an "unreliable partner" and others accusing Russia of using the reactor as a lever in nuclear diplomacy with Iran.

Russia began shipping fuel for the plant in 2007. At the plant's inauguration on August 21, Iran's Vice President Ali Akbar Salehi had said loading the fuel into the reactor core would take place over two weeks and the plant would then produce electricity two months later in November.

Although food stocks are generally good despite much of this year's harvests being wiped out in Pakistan and Russia, sugar and rice remain at a record price. Global wheat and maize prices recently jumped nearly 30% in a few weeks while meat prices are at 20-year highs, according to the key Reuters-Jefferies commodity price indicator. Last week, the US predicted that global wheat harvests would be 30 million tonnes lower than last year, a 5.5% fall. Meanwhile, the price of tomatoes in Egypt, garlic in China and bread in Pakistan are at near-record levels.

"The situation has deteriorated since September," said Abdolreza Abbassian of the UN food and agriculture organisation. "In the last few weeks there have been signs we are heading the same way as in 2008. We may not get to the prices of 2008 but this time they could stay high much longer."

Mounting anger has greeted food price inflation of 21% in Egypt in the last year, along with 17% rises in India and similar amounts in many other countries. Prices in the UK have risen 22% in three years. The governments of Kenya, Uganda, Nigeria, Indonesia, Brazil and the Philippines have all warned of possible food shortages next year, citing floods and droughts in 2010, expected extreme weather next year, and speculation by traders who are buying up food stocks for release when prices rise.

A default is likely "as long as you can contain the contagion to other countries and it is done through orderly restructuring and repricing to retain competitiveness," El- Erian said at a conference sponsored by the Economist magazine in New York today. "The alternative doesn't promise growth and employment generation."

Europe's sovereign debt crisis erupted at the end of 2009 after Greece's newly elected socialist government said the budget deficit was twice as big as the previous administration had disclosed. The European Union and International Monetary Fund approved the aid package on May 2 in exchange for the Greek government agreeing to cut public-sector wages and pensions and raise taxes on fuel, alcohol and cigarettes.

"I have never seen 11 percent of GDP being delivered" under the current program assumptions, El Erian said. The debt burden at the end of the process is likely to be higher than it was at the beginning, he said.

US officials said the money flowing from Tehran was further proof that Iran is playing a double game in Afghanistan - wooing the government while helping Taliban insurgents who are fighting US and NATO forces. The United States has itself used cash as a weapon in the wars in both Afghanistan and Iraq - from local development projects to win public support, to salaries for Iraqi insurgents who switched sides, to cash payoffs to influential community leaders willing to back the US and its allies.

Karzai said that once or twice a year, Iran gives his office $700,000 to $975,000 for official presidential expenses. "This is transparent. This is something that I've even discussed while I was at Camp David with President Bush," Karzai told a news conference, referring to meetings with then-President George W Bush at the US presidential retreat outside Washington.

"It is not hidden," he said. "We are grateful for the Iranians' help in this regard. The United States is doing the same thing. They are providing cash to some of our offices." Asked whether the US actually gives bags full of cash to the presidential office, Karzai responded: "Yes, it does give bags of money."

US officials in Washington said both countries have given Afghanistan assistance in cash payments - a widespread practice in a country where few people have bank accounts or credit cards. "Going back a number of years, because of the nature of the Afghan financial system, there have been times where assistance has come into Afghanistan in the form of cash," said State Department spokesman PJ Crowley said.

The toll of 600, according to an AFP tally based on a count kept by the icasualties.org website, compares to 521 killed in all of 2009 in what was previously the deadliest year on record for the forces in Afghanistan. On average, two soldiers die each day. A total of 2,170 foreign soldiers have been killed since the 2001 US-led invasion of Afghanistan which overthrew the hardline Islamist Taliban regime.

A Taliban-led insurgency has since strengthened each year, but it is most intense in the southern provinces of Kandahar and Helmand. At least 1,348 American troops are among the dead, and the US military provides two-thirds of the 150,000-strong international force in Afghanistan.

The objective is for Afghanistan to take over responsibility for security by late 2014, but experts doubt that local security forces will be big enough or sufficiently well trained to shoulder the burden on schedule.

The dollar resumed its recent downtrend Monday in the wake of a meeting of finance ministers from the Group of 20 nations at the weekend. The meeting failed to yield a definitive agreement on currencies, putting selling pressure on the greenback.

"The dollar is being trashed, we've actually had effectively devaluation of about 14 percent in the last two months," Griffiths said. His view is contrary to that of HSBC foreign exchange strategist David Bloom, who told CNBC that a continuation of the currencies war after the G20 might put pressure on risky assets, causing a flight to safety into the dollar.