BDO also called on the Bank of England to pump more money into the economy. The Bank has already spent about 200 billion pounds on trying to boost the supply of money to stimulate the economy. There are growing calls for it to expand this quantitative easing programme, not least from Adam Posen, an external member of the monetary policy committee.

Some economists believe that more stimulus measures are needed to counteract the upcoming government spending cuts, designed to reduce the country's budget deficit. "We are worried that it is already beginning to look as if the government's growth figures don't stack up," said Peter Hemmington, partner at BDO.

"The balance of risks has clearly changed since the election and the chancellor would be wise to consider whether he can go slower than planned with [the spending] cuts." The Bank should inject another 50 billion pounds into the economy before the end of the year, Mr Hemmington added.

It is remarkable that mainstream media has given this speech no coverage. I repeat, the central banker of the United States says in his own words:

"Let me return to the issue of longer-term fiscal sustainability. As I have discussed, projections by the CBO and others show future budget deficits and debts rising indefinitely, and at increasing rates. To be sure, projections are to some degree only hypothetical exercises. Almost by definition, unsustainable trajectories of deficits and debts will never actually transpire, because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit. Herbert Stein, a wise economist, once said, 'If something cannot go on forever, it will stop.'"

"One way or the other, fiscal adjustments sufficient to stabilize the federal budget will certainly occur at some point. The only real question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people plenty of time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis."

This is as close as you are ever going to see a central banker admit that his country's financial situation is so dire that it could breakup at any time.

"We live in an amazing world. Everybody has big budget deficits and big easy money but somehow the world as a whole cannot fully employ itself," said former Fed chair Paul Volcker in Chris Whalen's new book Inflated: How Money and Debt Built the American Dream. "It is a serious question. We are no longer talking about a single country having a big depression but the entire world."

The US and Britain are debasing coinage to alleviate the pain of debt-busts, and to revive their export industries: China is debasing to off-load its manufacturing overcapacity on to the rest of the world, though it has a trade surplus with the US of $20 billion (12.6 billion pounds ) a month. Premier Wen Jiabao confesses that China's ability to maintain social order depends on a suppressed currency. A 20 percent revaluation would be unbearable. "I can't imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs," he said.

Plead he might, but tempers in Washington are rising. Congress will vote next week on the Currency Reform for Fair Trade Act, intended to make it much harder for the Commerce Department to avoid imposing "remedial tariffs" on Chinese goods deemed to be receiving "benefit" from an unduly weak currency. Brazil dived into the markets on Friday to weaken the real. The Swiss have been doing it for months, accumulating reserves equal to 40 percent of GDP in a forlorn attempt to stem capital flight from Euroland. Like the Chinese and Japanese, they too are battling to stop the rest of the world taking away their structural surplus.

The exception is Germany, which protects its surplus ($179 billion, or 5.2 percent of GDP) by means of an undervalued exchange rate within EMU. The global game of pass the unemployment parcel has to end somewhere. It ends in Greece, Portugal, Spain, Ireland, parts of Eastern Europe, and will end in France and Italy too, at least until their democracies object. We have a new world order where China and India are buying gold on every dip, where the West faces an ageing crisis, and where the sovereign states of the US, Japan, and most of Western Europe have public debt trajectories near or beyond the point of no return.

The managers of all four reserve currencies are playing fast and loose: the Fed is clipping the dollar; the Bank of England is clipping sterling; the European Central Bank is buying the bonds of EMU debtors to stave off insolvency, something it vowed never to do just months ago; and the Bank of Japan has just carried out two trillion yen of "unsterilized" intervention. Of course, gold can go higher.

After the early united front to stem the global collapse in 2008, "the momentum [of economic co-operation] is decreasing", Dominique Strauss-Kahn said at the IMF's annual conference in Washington. "That is a real threat. Many do consider their currency a weapon. That is not good for the global economy... There is no domestic solution to a global crisis."

His concerns were echoed by Robert Zoellick, President of the World Bank, who warned that failure to co-operate would risk plunging the world economy into depression. He said: "If one let's this slide into protectionism, we run the risk of the mistakes of the 1930s." The issue broke into the open on Wednesday when US Treasury Secretary Tim Geithner called for "more progress by the major emerging economies to more flexible, more market-oriented exchange rate systems. This is particularly important for those countries whose currencies are significantly undervalued."

His veiled attack on China came as Wen Jiabao, the Chinese Premier, defended his policy of slow appreciation in the yuan and told EU leaders to stop bullying China. He warned that a more rapid appreciation could lead to social turmoil. China is pushing for a bigger role within the IMF but Mr Strauss-Kahn suggested currency concessions would be needed. "If you want to be at the centre, it goes with having more responsibility on what you do and the consequences of what you do in the global economy," he said.

He criticised China for deliberately keeping the yuan - its currency - low in order to keep exports cheap, which is hurting US competitors. Mr Soros told BBC Radio 4's Today programme that China had a "huge advantage" over international competitors because it can control the value of its currency.

He said China could also influence the value of other world currencies because they have a "chronic trade surplus", which means the Chinese have a lot of foreign currencies. "They control not only their own currency but actually the entire global currency system," he said. Writing in the Financial Times, Mr Soros added: "Whether it realizes it or not, China has emerged as a leader of the world. If it fails to live up to the responsibilities of leadership, the global currency system is liable to break down and take the global economy with it."

Air Force bombers flew nuclear rehearsal runs over North Korea's capital during the war. The US military services later vied for the lead role in any "atomic delivery" over North Korea. In the late 1960s, nuclear-armed US warplanes stood by in South Korea on 15-minute alert to strike the north.

Just this past April, issuing a US Nuclear Posture Review, Defense Secretary Robert Gates said "all options are on the table" for dealing with Pyongyang - meaning US nuclear strikes were not ruled out. The stream of new revelations about US nuclear planning further fills in a picture of what North Korea calls "the increasing nuclear threat of the US," which it cites as the reason it developed its own atom-bomb program - as a deterrent. "This is the lesson we have drawn," North Korea's vice foreign minister, Pak Kil Yon, told the UN General Assembly in New York on September 29.

Yoshiki Mine of Japan's Canon Institute for Global Studies, who as a diplomat dealt with both disarmament and North Korea, said the northern regime feels its existence as a nation is threatened. The US nuclear option "does give the North Koreans an excuse to develop, acquire and own nuclear weapons," Mine told the AP. "They have indicated many times that as long as this basic security is not secured, they would not abandon nuclear weapons."

In response, China blamed rich nations for problems in the currency markets that have hit many developing nations. The tension between the US and China over currency policy surfaced once again at the International Monetary Fund (IMF) talks. Mr Geithner renewed the pressure on China to allow its currency to rise. He named no names, but he was talking mainly about China.

The US has a long-standing grievance over China's currency policy, which limits the movement of the yuan against the dollar. The American complaint is that it gives Chinese exporters an unfair competitive advantage. There was a vigorous response from Zhou Xiaochuan, governor of China's central bank (The People's Bank of China), who blamed the rich countries for problems in the currency markets. Mr Zhou said extremely low interest rates in rich countries had created "stark challenges for emerging market countries".

China has stopped its currency rising much by buying foreign currency. If it were to refrain from that and allow the yuan to rise, it would probably help other developing countries that compete with China, as well as the US which is protesting the most. But there is another force behind the rising developing world currencies. Their economies are growing robustly, while the rich countries are not. That uneven global economic recovery is a problem that cannot be quickly fixed.

The move, along with another decision on foreclosures by PNC Financial Services Inc, adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers, without verifying the information in them. Charlotte, North Carolina-based Bank of America Corp, the nation's largest bank, said Friday it would no longer complete foreclosures in all 50 states as it reviews documents used to process foreclosures. That applies to homes that the bank takes back itself and those that it transfers to investors such as mortgage giants Fannie Mae and Freddie Mac.

The bank did so in reaction to mounting pressure from public officials inquiring about the accuracy of foreclosure documents. A document obtained last week by the Associated Press showed a Bank of America official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically didn't read them. The official, Renee Hertzler, said in a February deposition that she signed up to 8,000 such documents a month.

"American families should not have to worry about losing their homes to sloppy bureaucratic mismanagement or fraud," Dodd said. "Regulators at the federal, state, and local levels have a responsibility to uphold the law and protect consumers from unfair foreclosure, and lenders have a duty to not cut corners around the law." Banking and housing analysts, meanwhile, fear the foreclosure document problems could prolong the housing bust, and hundreds of thousands of inevitable foreclosures will be pushed off into some legal limbo for years.

"If you are looking at the key in this country to economic stability, it's the housing industry," said banking analyst Nancy Bush of NAB Research. "This is a huge mess that helps nothing."

Washington's army of diplomats in Europe has been taking on one country at a time. Germany stood at the top of the list and, initially, surrendered without even a whimper to the American demands. In 2008, the federal government in Berlin signed an agreement pushed by Washington allowing American officials wide-ranging access to the databases of German security agencies. It was only after leaders in Hamburg raised their objections to the deal that it was, temporarily, stalled in the Bundesrat, Germany's upper legislative chamber, which represents the interests of the states. The city-state has since withdrawn its objections after securing minor concessions on data protection provisions in the document, and the treaty is now set to be approved.

Step by step, and largely unnoticed by the public, the US has been pushing through similar arrangements in a number of European capitals. Washington reported its latest success in Vienna last week: The Austrian government said it was ready to grant US security agencies with free access to its police computers, complete with DNA and finger print data and a criminal registry.

The proceedings were not entirely peaceful. One Austrian government official reported "massive pressure." American Ambassador William C Eacho, III was apparently "very charming and friendly," when he appeared in the Austrian Chancellery and offered his "help." President Barack Obama's emissary said the administration in Washington was considering discontinuing the visa-waiver program for Austrians traveling to the United States because Austria wasn't sufficiently cooperating in the fight against terrorism.

Last weekend, the US issued a travel warning for Europe on the basis of possible imminent terrorist attacks. Germany Interior Minister Thomas de Maiziere, however, has warned against scaremongering. There is apparently no concrete evidence of imminent attacks in Germany. But perhaps, speculates one European Union security expert, it was just a little "background music" for the real questions to be discussed in the trans-Atlantic talks: How deeply can American terrorism investigators peer into European computers, how extensively can they monitor European bank accounts, tap into Blackberrys or listen in on Skype calls?

At same time, a potential revival of US and UK asset-purchase plans may spark declines in their currencies. UBS AG says the "mega-trend" of interventions will roil the $4 trillion-a-day foreign-exchange market for the next decade. While lower exchange rates can lift an economy by helping exports, the danger is that the moves escalate into devaluations and protectionist retaliation, impeding global growth. Brazil's Finance Minister Guido Mantega, a delegate to the International Monetary Fund annual meetings in Washington this week, said September 27 that there's already a worldwide "currency war."

"There's a real danger of a more unilateral approach taking hold," said Mansoor Mohi-uddin, the Singapore-based head of global currency strategy at UBS, the world's second-biggest currency trader. "There will be more countries outright intervening and others inadvertently weakening their currencies." Having all but exhausted traditional monetary and fiscal policies, industrial nations are looking for new ways to spark growth amid subdued domestic demand, while emerging markets want to maintain the advantage in commerce that helped power them through the credit crisis.

Chinese Premier Wen Jiabao yesterday reiterated his view that a rapid increase of the yuan would hobble China's economy, dealing a fresh rebuke to US and European calls for a higher exchange rate. "If the yuan isn't stable, it will bring disaster to China and the world," Wen said. "If we increase the yuan by 20 percent to 40 percent as some people are calling for, many of our factories will shut down and society will be in turmoil."

Trade tensions are already brewing. The US House of Representatives last month passed a measure that would let domestic companies petition for duties on Chinese imports. Historians blame a trade war during the Great Depression, starting with the US passage of the Smoot-Hawley Tariff Act in 1930, for deepening the worldwide economic slump. "The esprit-de-corps is dissipating and each economy is pursuing policies that are in their own interest," said Adams, now managing director at the Fairfax, Virginia-based Lindsey Group, an economic advisory firm.

Fed Chairman Ben S Bernanke and his fellow policy makers are debating whether to increase Treasury purchases to spur the US economy by keeping borrowing costs low. The "fairly bad" outlook for slow growth and rising unemployment without a recession will probably be the one that occurs, the email said.

Hatzius' note reiterated comments he made yesterday at a forum in Washington, when he placed the odds of a renewed recession at 25 percent to 30 percent. He told reporters that was up from 15 percent to 20 percent at the start of the year. Another $1 trillion of asset purchases by the Fed would probably lower long-term interest rates by about 0.25 percentage point, adding a "few tenths of additional GDP growth," he said yesterday. The Fed bought $1.7 trillion worth of Treasury and mortgage debt in a program that ended in March. The purchases helped push mortgage rates to historic lows.

Participation has set records for 20 straight months. Unemployment in September may have reached 9.7 percent, according to a Bloomberg News survey of analysts in advance of the release of last month's rate on October 8. Unemployment was 9.6 percent in July, near levels last seen in 1983. An average of 43.3 million people, more than an eighth of the population, will get food stamps each month in the year that began October 1, according to White House estimates.

Earlier EU finance ministers joined the United States in calling for China to let the value of its currency rise. They argue that a cheap yuan is unfairly helping Chinese exporters. Mr Wen said China was still planning to proceed with reforms aimed at "increasing flexibility" in the exchange rate, but suggested it would not be rushed.

A sharp rise in the yuan could have disastrous consequences, he said. "Many of our exporting companies would have to close down, migrant workers would have to return to their villages," Mr Wen warned. "If China saw social and economic turbulence, then it would be a disaster for the world."

On Tuesday Jean-Claude Juncker, the head of the Euro Group committee of eurozone finance ministers, called for a "significant and broad-based appreciation" of the yuan. Earlier, the head of the International Monetary Fund, Dominique Strauss-Kahn, warned against the use of currency exchange rates as "policy weapons". "There is clearly the idea beginning to circulate that currencies can be used as a policy weapon," he said in an interview with the Financial Times.

"Translated into action, such an idea would represent a very serious risk to the global recovery. Any such approach would have a negative and very damaging longer-run impact."

As G20 finance chiefs prepare to meet on October 22, they are no closer to resolution of the decade-old bugbear of global imbalances between export-driven economies - mostly developing nations such as China, but also Japan and Germany - and the big global consumers, the United States, Britain and elsewhere. While there have been loose agreements on rebalancing over time - where emerging powers allow currencies to rise gradually - the lack of an agreed blueprint to manage the transition is already prompting unilateral actions and tit-for-tat reactions in a febrile economic and political environment.

Faced with fiscal exhaustion, hostile electorates and booming China's refusal to allow a rapid rise of the yuan, the US, Japan and possibly Britain seem set on another bout of money printing to reboot their ailing economies and weaken their currencies. "What is called for here is a realignment of emerging countries' exchange rates vis-a-vis the developed countries - maybe 20-25 percent appreciation over the next year or two."

What emerging economies lose on export competitiveness, he reckons, they can recapture at least partially in cheaper imports for their growing middle class of consumers. The tricky bit is how to get everyone to move together and prevent market prices snowballing or governments overreacting. Left to their own devices markets are unlikely to deliver the gradualism desired by most governments and faith in efficient pricing is at a low ebb after the credit crisis.

And, reading the runes well, money managers already see the opportunity and are stacking bets to exploit rising pressures. "No one is sleeping on the job," Brazil's finance minister, Guido Mantega, said on Monday. "We risk having a trade war and that's the worry. (But) it is preferable that we take coordinated measures instead of isolated measures."

Afghan and Arab sources cited by the Post said they believe for the first time that Taliban representatives are fully authorized to speak for the Quetta Shura, the Afghan Taliban organization based in Pakistan, and its leader, Mullah Mohammad Omar, according to the newspaper. The sources requested anonymity to discuss the development.

Omar's representatives have shunned negotiations in the past, insisting that all foreign troops withdraw first. However, the Post reported that its sources said the Quetta Shura has begun to talk about a comprehensive agreement that would include participation of some Taliban figures in the government and the withdrawal of US and NATO troops.

"They are very, very serious about finding a way out," one source close to the talks said of the Taliban, according to the Post. Karzai long has said he will talk to insurgents if they renounce violence, sever ties to terrorists and embrace the Afghan constitution. Waheed Omar, a spokesman for Karzai, denied that President Barack Obama's stated goal of beginning to withdraw US forces from Afghanistan in July 2011, if conditions allow, spurred the Afghan government to set up the council or reach out to the Taliban.