AIG has already received $150bn in financial support - the biggest bail-out by far of any US company. Stock markets slid sharply as AIG's plight underscored fears about the health of the global financial system. The Federal Reserve and the Treasury said that AIG posed a "system risk" to the global financial system. "The potential cost to the economy and the taxpayer of government inaction would be extremely high," they said.

"The additional resources will help stabilise the company, and in doing so help to stabilise the financial system." As well as insuring households, AIG plays a key role in insuring risk for financial institutions around the world. The news of AIG's historic loss comes as HSBC, Europe's biggest bank, seeks to raise £12.5bn ($17.7bn) to strengthen its finances following a 62% fall in annual profit.

US officials fear that a failure of AIG would be disastrous for both the US and the global economy. Credit rating agencies, such as Moody's, Fitch and Standard & Poor's, had been poised to cut AIG's credit ratings as a result of the record loss. That could have forced AIG to default on its debt, which would have had a knock-on effect on all of AIG's businesses.

Twenty years after the fall of the Berlin Wall, Western leaders were told yesterday THAT FIVE MILLION JOBS COULD BE LOST IN THE "NEW" EUROPEAN UNION COUNTRIES OF THE EAST unless radical action were taken to bail them out. The spectacular collapse of some of the post-communist tiger economies led to demands at an EU summit in Brussels for a rescue fund of €190 billion (£170 billion) to stop social collapse in the Eastern nations spilling over into the rest of Europe.

The plea, led by Hungary, was rejected in a bad-tempered meeting of the 27 European leaders, dominated by fears that Western EU countries would rather prop up their own large industries and jobs at the expense of the East. Ferenc Gyurcsany, the Hungarian leader, openly raised THE SPECTRE OF COLLAPSE IN EASTERN EUROPE and the creation of a new Iron Curtain.

"A significant crisis in Eastern Europe would trigger political tensions and immigration pressures. With a Central and Eastern European population of 350 million, of which 100 million are in the EU, a 10 per cent increase in unemployment would lead to at least five million unemployed people within the EU."

"The scale and the speed of the global banking crisis has at times been almost overwhelming, and I know that in countries everywhere people who rely on their banks for savings have been feeling powerless and afraid. But it is when times become harder and challenges greater that across the world countries must show vision, leadership and courage – and, while we can do a great deal nationally, we can do even more working together internationally."

"So now is the time for leaders of every country in the world to work together to agree the action that will see us through the current crisis and ensure we come out stronger. And there is no international partnership in recent history that has served the world better than the special relationship between Britain and the United States. It is a relationship that has endured and flourished because it is based not simply on our shared history but on the enduring values that bind us together – our countries founded upon liberty, our histories forged through democracy and an unshakeable belief in the power of enterprise and opportunity."

"I believe there is no challenge so great or so difficult that it cannot be overcome by America, Britain and the world working together. That is why President Obama and I will discuss this week a global new deal, whose impact can stretch from the villages of Africa to reforming the financial institutions of London and New York – and giving security to the hard-working families in every country." - Gordon Brown, British Prime Minister.

It was only discovered on Friday, 27 February, by Robert McNaught as a faint 19th magnitude speck on a photograph of the sky he took at Australia's Siding Spring Observatory in New South Wales. It was then one and a half million miles away but closing in rapidly. The asteroid was labelled 2009 DD45 by astronomers. Closest approach occurs during daylight over Britain at 1.44pm UK time when it will be crossing the sky at a rate of half a degree - the Moon's apparent diameter - a minute.

Though there is no danger of a collision, the close approach is a reminder of the need to keep monitoring space for potential impactors. An asteroid the size of DD45 could cause devastation and loss of life if it struck or exploded over a town or city. Close encounters with Earth-crossing asteroids, or Near Earth Objects, turn our region of space into a cosmic shooting gallery.

More than a thousand potentially hazardous asteroids are known to cross our orbit and nearly 900 are known that are around 500 ft wide. Last October one labelled 2008 TC3 struck a remote part of Sudan only hours after it was first spotted.

Aside from fears about HSBC investors were also anxious about this week's Bank of England interest rate decision, when borrowing costs are expected to be cut by a further half percentage point to a new low of 0.5 per cent. It is also widely expected that the Bank will go ahead with plans to begin quantitative easing which is a method to increase money supply into the British economy.

Darren Winder, equity strategist at Cazenove, said: "The capital raising from HSBC is obviously a major market issue. But more generally it is the weakness of the U.S. market from Friday that is weighing heavily on the markets. The big picture is still one of a profit picture which is under strong downward pressure and people are finding it very difficult to get comfortable with valuations against that sort of backdrop."

On Friday, new figures revealed that the US economy contracted at its fastest pace for more than a quarter of a century.

In a statement afterward, the leaders tried to reassure their publics, promising to hold to the single market, promote growth and reject protectionism. A call from Hungary for a large bailout for newer, eastern members of the union was rejected by Germany, the richest EU nation, and received little support from other countries. Prime Minister Ferenc Gyurcsany of Hungary warned of "a new Iron Curtain" dividing Europe, even if the metal today was gold. He called for a special EU fund of up to €190 billion, or $241 billion, to protect the bloc's weakest members.

"The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny," said Stefan Kornelius, the foreign news editor of Süddeutsche Zeitung in Germany. "The whole project of a joint currency is being tested for the first time. We always said YOU CAN'T REALLY HAVE A CURRENCY UNION WITHOUT A POLITICAL UNION, and we don't have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud."

The Prime Minister said the two countries' historic "partnership of purpose" should be directed at fighting the downturn as well as terrorism, poverty and disease. Mr Brown, who will be the first European leader to meet with Mr Obama since he came to office, said: "I believe there is no challenge so great or so difficult that it cannot be overcome by America, Britain and the world working together."

"That is why President Obama and I will discuss this week a global new deal, whose impact can stretch from the villages of Africa to reforming the financial institutions of London and New York - and giving security to the hard-working families in every country. IT WOULD REQUIRE ALL CONTINENTS TO MAKE CASH INJECTIONS TO BOOST ECONOMIES, ALL COUNTRIES TO ADOPT GREEN POLICIES, UNIVERSAL BANKING REFORMS AND CHANGES TO INTERNATIONAL BODIES," he suggested.

Amid fears that the new US president may downgrade the importance of the "special relationship" between the two nations, Mr Brown stressed his fondness for America in an article in the Sunday Times. "I have always been an Atlanticist and a great admirer of the American spirit of enterprise and national purpose. I have visited America many times and have many friends there, and as Prime Minister I want to do more to strengthen even further our relationship with America."

The aim for Software Defined Radio (SDR) is to be able to translate and understand any kind of radio wave signal, such as 3G or wi-fi. Researchers say SDR gadgets could become commonplace in five to 10 years.

Dr David Ndzi from the University of Portsmouth, where the International Conference on Telecommunications and Computers is being held, said: "SDR is what one could call a Tower of Babel-type technology, in that wireless devices that previously understood only one or a few languages, or standards, will suddenly be able to talk to each other freely regardless of frequency or conflicting protocols."

Conditions in the region are pushing Riyadh and Cairo toward cooperation. U.S. President Barack Obama is expected to announce his plan for removing U.S. combat troops from Iraq by August 2010, while keeping a residual force of 30,000-50,000 support troops there. This force will serve a tactical purpose — advising Iraq's military and security apparatus and performing other security operations — but it also will serve a larger, more strategic purpose. Its presence will signal to Tehran that the United States will not simply abandon Iraq and allow Iran to fill the power vacuum.

Nevertheless, the Arab states are getting worried. With a diluted U.S. military presence in Iraq, and with the Shia now in control in Baghdad, THE ARABS FEAR THAT IRAN WILL EXPLOIT REGIONAL AND SECTARIAN DYNAMICS TO CONSOLIDATE IRANIAN AND SHIITE INFLUENCE IN THE MIDDLE EAST, at the expense of the wider Sunni community.

But of all the Arab states, SAUDI ARABIA HAS THE MOST TO FEAR FROM IRAN. The kingdom's Eastern Province is where MOST OF ITS OIL RESERVES ARE FOUND — and as luck would have it, it is also where Saudi Arabia's minority Shiite population is concentrated. On Wednesday, extremely rare Shiite protests spread to Eastern Province after violent clashes erupted Monday between Shiite pilgrims and the Saudi religious police in Medina, one of Islam's holy cities.

The unrest itself is unusual — and given the wider events in the region, so is the timing. Though there is no clear sign that Iran is instigating the protests, the situation does give Tehran a perfect opportunity to unnerve the Saudi royals.

The leading Arab states are now taking a shot at banding together, but history and geography have demonstrated that the Arabs of the Middle East simply do not work well together, even when faced with a common threat. But even if the Arabs cannot work together, they might accomplish much by working separately toward the common goal of containing their Persian rivals.

Figures released Friday show that 79,300 jobs were lost in the state last month, bringing the total number of unemployed to 1,863,000, or 10.1% of the workforce. That's the highest since the rate touched 10.4% in 1983. Conditions are even worse in Los Angeles County, which saw its unemployment rate jump to 10.5% in January from 9.2% the month before.

The deep job losses follow a sharp drop in the gross domestic product - the value of all goods and services produced - in the waning months of 2008. Nationwide, GDP shrank at an annual rate of 6.2% in the fourth quarter, the Commerce Department said Friday. That was far worse than the 3.8% drop the agency had estimated, and the biggest decrease since 1982.

Los Angeles County lost a net 41,900 jobs last year and nearly all of them - about 41,000 - were in retail, manufacturing and construction, in that order. In January, retail shed 15,100 jobs, manufacturing lost 6,800, and construction, 4,800. The three sectors were caught in the collapse of the housing boom and recession. To make matters worse, another key California industry - the film business - lost 22,300 jobs in January, leading Los Angeles County layoffs for the month.

The French move raised fears that national protectionism could scupper hopes of recovery within the EU. Leaders of badly-hit European nations will also meet prior to the summit. Many of the newer EU members of Central and Eastern Europe have seen their financial institutions and economies battered by the developing recession.

The heads of nine of those nations - among them Hungary and Latvia, both facing serious liquidity problems - will gather before the full summit begins. They are then expected to highlight their concerns about protectionism and call for more help from richer EU nations, reports the BBC's Oana Lungescu, in Brussels. However, officials have played down chances of EU leaders taking any decision on Hungary's call for a 180bn-euro (£160bn) aid package for Central and Eastern Europe.

Ahead of the latest meeting, France's President Sarkozy denied accusations of protectionism levied at his three billion euro bail-out plan, which aims to keep French carmakers manufacturing in France. However, he said that if the US defended its own industries, perhaps Europe should do the same. The French move has been criticised by the Central Europeans, who argue that the French bail-out plan should not be implemented at their expense.

THAT SUMMIT IS PART OF THE BUILD-UP TO A G20 MEETING of world leaders which UK Prime Minister Gordon Brown will host IN LONDON ON 2 APRIL.

Peter Cummings, who masterminded many of the stricken bank's high-profile deals, has left with a pension pot estimated at £10million-plus. The one-time tea boy was sacked last month following the merger with profitable Lloyds TSB but details of his extraordinary golden goodbye emerged only last night. Cummings, 53, was in charge of the ill-fated HBOS corporate lending division which is now being blamed for piling up a mountain of toxic debts.

HIS RECKLESS PRACTICES HAVE RETURNED TO HAUNT HBOS'S NEW OWNER LLOYDS. Losses on its corporate loans rose tenfold to £6.7billion after a raft of its deals with property and construction companies blew up. The latest 'fat cat failure' row echoes the furore generated by former RBS chief executive Sir Fred Goodwin - who is insisting that he will take a £693,000-a-year pension deal after his exit in October.

Last night, government officials asked Lloyds Banking Group - created as a result of a rushed merger between Lloyds TSB and HBOS last autumn and 43 per cent state owned - to review pay-offs to Cummings and other executives.

"This is a product that we use for less than three seconds and the ecological consequences of manufacturing it from trees is enormous," said Allen Hershkowitz, a senior scientist at the Natural Resources Defence Council. "Future generations are going to look at the way we make toilet paper as one of the greatest excesses of our age. Making toilet paper from virgin wood is a lot worse than driving Hummers in terms of global warming pollution." Making toilet paper has a significant impact because of chemicals used in pulp manufacture and cutting down forests.

Longer fibres in virgin wood are easier to lay out and fluff up for a softer tissue. Dixon said the company used products from sustainbly farmed forests in Canada. Americans already consume vastly more paper than any other country — about three times more per person than the average European, and 100 times more than the average person in China.

Barely a third of the paper products sold in America are from recycled sources — most of it comes from virgin forests. "I really do think it is overwhelmingly an American phenomenom," said Hershkowitz. "People just don't understand that softness equals ecological destruction."

In a letter to the White House, ABA CEO Edward Yingling says bankers across the country were "disappointed and concerned" with rhetoric like that. "Mr. President, of the over 8,000 banks in this country, VERY FEW EVER MADE A SINGLE SUBPRIME LOAN, AND THEY DID NOT ENGAGE IN THE HIGHLY LEVERAGED ACTIVITIES THAT BROUGHT DOWN WALL STREET FIRMS," Yingling said.

Yingling referred the president to statements made by Representative Barney Frank (Democrat), the powerful chairman of the House Financial Services Committee, in which he said that the toxic mortgage lending that sparked the current crisis was done by mortgage brokers and others not subject to the strict rules that govern commercial banks.

"Mr. President, the failure to distinguish between Wall Street and the thousands of FDIC-insured banks across the country undermines the confidence in our banking industry, the industry which is the foundation on which our economic recovery must be built," Yingling said. "We stand ready to work with your administration to promote policies that will clear the way to do what banks do best: finance business and families that are ready to move the economy forward. But these efforts will only be inhibited by misperceptions about our industry."

President Obama has announced that the war in Iraq will end in 18 months. Formally announcing a withdrawal date for most U.S. troops he said: "Let me say this as plainly as I can, by August 31, 2010, our combat mission in Iraq will end." He added: "WE CANNOT SUSTAIN INDEFINITELY A COMBAT THAT IS PUTTING A STRAIN ON THE AMERICAN MILITARY AND HAS COST NEARLY A TRILLION DOLLARS."

The confirmation of his election campaign pledge to draw the conflict to a close came as Britain's Foreign Secretary claimed the Iraqis were "impatient" to take control over their own affairs. While visiting British troops in Basra yesterday, David Miliband said conditions in Iraq are improving every week and the country is "yearning" to make its way after almost six years of occupation.

But while just a few hundred UK troops will remain after Britain pulls out of Iraq for good in July, Mr Obama was criticised by leaders in his Democrat party last night for planning to leave a U.S. force of between 30,000 and 50,000 in the country until the end of 2011. The President said the troops were needed to train and equip the Iraqi army, protect civilian reconstruction projects and conduct limited counterterrorism operations.