Meanwhile, Ireland has announced fiscal retrenchement of 15 billion euros over the next four years, twice the original plan. It is already cutting public wages by 13 percent. John Fitzgerald from Ireland's Economic and Social Research Institute said there is a risk that austerity tips the economy into a downward spiral, comparing it to an overdose of "chemotherapy" that does more harm than good.

Finance minister Brian Lenihan said the country had no choice. "The cost of borrowing is high and rising, and if we do not act soon to live within our means, people may stop lending to us. We will not fool the markets for an instant if we seek to defer any longer what evidently needs to be done now. The Irish people will have to accept cuts in public expenditures and higher taxes," he said.

In Greece, yields on 10-year bonds surged 67 points to 10.26 percent, the biggest jump since the turmoil in June. The sell-off came after permier George Papandreou warned that the country was still in danger, and threatened to call early elections.

Gavan Nolan from Markit said fears of "political instability in sovereign credits" had moved onto the radar screen, with investors now paying closer attention to whether or not governments can actually deliver on austerity plans. The test will be whether these countries can generate enough exports to trade their way out of crisis over coming years, or remain trapped in slump with rising political tensions.

Tensions are mounting ahead of a crucial meeting of European leaders this week, with Germany and France at loggerheads with both the EU executive and many other member states over their calls for further changes to the European Treaty. On Wednesday the European Justice Commissioner Viviane Reding slammed a deal hashed out between French President Nicolas Sarkozy and German Chancellor Angela Merkel to push for CHANGES TO THE EU LAW TO ALLOW FOR THE SUSPENSION OF THE VOTING RIGHTS OF MEMBER STATES WHO VIOLATE STRICT BUDGET DEFICIT RULES.

"Coming up with illusions of new treaties looks completely irresponsible to me," Reding said in an interview with German daily Die Welt published on Wednesday. "Haven't they both understood that it took us 10 years to wrap up the Lisbon Treaty?"

Germany has threatened to block a package of reform proposals, to be presented by European Council President Herman van Rompuy at the summit this Thursday and Friday, if it doesn't get its way on alterations to the Lisbon Treaty. The irony is that Berlin supports the bulk of the reforms, which include plans to improve EU budget discipline and widen provisions for financial and political sanctions.

"Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.

Chinese officials have criticized US monetary policy as being too loose before, but rarely in such explicit language. At the G20 meeting in South Korea which ended on Saturday, Chinese Finance Minister Xie Xuren said that issuers of major reserve currencies - code for the United States - must follow responsible economic policies.

Along with posing an inflationary risk, a weak dollar also places appreciation pressure on China's yuan since its value is so closely tied to the US currency.

The disclosure by the Department for Work and Pensions raises fresh questions over how many of the 2.6 million people on the existing incapacity benefit are really incapable of being employed. The figures suggest that if they were tested to the same extent the number would fall as low as 650,000.

This would slash the 12.5 billion pounds bill for incapacity benefit to just over 4 billion pounds a year. The Government is pushing ahead with trials in Burnley and Aberdeen to re-test existing incapacity benefit claimants. If successful, the tests will be implemented nationwide. Nearly 10,000 people have applied for the ESA because they are too fat - a condition which is labelled 'endocrine, nutritional and metabolic diseases'. Of those applicants, just 600 were allowed to stay on sickness benefit. Of the 7,100 people that have applied to go on sickness benefits because they have said they have sexually transmitted diseases just 600 were allowed to stay on the ESA.

Hans-Rudolf Merz, Switzerland's finance minister, on Monday agreed "to begin ministerial negotiations with the aim that UK residents with Swiss bank accounts pay tax on the interest they earn", a Treasury source said. The commitment, signed after a meeting with George Osborne, is a way around Switzerland's famous banking secrecy laws.

Although the tax will not raise as much as if the full sums held on deposit were disclosed, the compromise promises some payment to the Exchequer where previously there was none. Germany is believed to be holding similar discussions.

Switzerland has been forced onto the back foot due to tougher international action against tax havens and the weakness of its biggest bank, UBS, which was hit hard by the financial crisis. The US threatened ruinous legal action against UBS this year unless the Swiss authorities handed over the names of thousands of alleged US tax avoiders. In a landmark deal, Switzerland provided the names and the case was settled.

It has agreed to adhere to international standards on helping countries chase tax avoiders but has fought off demands for automatic information exchanges with other countries in favour of a withholding tax that helps preserve the secrecy on which its $2 trillion wealth management industry is built.

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.