China's Wen Jiabao called the summit, the first of its kind, a "milestone". He said such co-operation would "have real significance" as the crisis impacted on economies around the world. The North Asian nations, former enemies, have held talks on the sidelines of international meetings, but this is their first independent trilateral summit.

"It is quite a milestone to hold a stand-alone China-Japan-South Korea summit," Mr Wen said as he opened talks with Japanese Prime Minister Taro Aso and South Korean President Lee Myung-bak in the southern city of Fukuoka. The countries said they planned to increase the amount of money swapped between them through the Chiang Mai Initiative - a move which should benefit South Korea especially, as their currency has lost a third of its value since the start of the year.

Our correspondent says the nations believe the swaps will prevent a repeat of the situation 11 years ago when sudden slides in currency values triggered a major financial crisis in Asia. Japan is also trying to put aside its past differences with China, partly because it was trade between them that helped pull Japan out of its last prolonged recession during the 1990s, our correspondent says.

After firing 4,600 tear-gas canisters in the past week, the Greek police have nearly exhausted their stock. As they seek emergency supplies from Israel and Germany, still the petrol bombs and stones of the protesters rain down, with clashes again outside parliament yesterday.

Bringing together youths in their early twenties struggling to survive amid mass youth unemployment and schoolchildren swotting for highly competitive university exams that may not ultimately help them in a treacherous jobs market, the events of the past week could be called the first credit-crunch riots. There have been smaller-scale sympathy attacks from Moscow to Copenhagen, and economists say countries with similarly high youth unemployment problems such as Spain and Italy should prepare for unrest.

"Because of unemployment, a quarter of those under 25 are below the poverty line," said Petros Rylmon, an economist at Linardos, the Labour Institute of the Greek trade unions. "That percentage has been increasing for the past 10 years. THERE IS A DIFFUSED, WIDESPREAD FEELING THAT THERE ARE NO PROSPECTS. This is a period when everyone is afraid of the future because of the economic crisis. There is a general feeling that things are going to get worse. And there is no real initiative from the government. Greece's riots are a sign of the economic times. OTHER COUNTRIES SHOULD BEWARE."

Father Lombardi went on to state that the Catholic Church does not accept discrimination against homosexuals. However, he clarified, "she opposes the perspectives that lead some to say that sexual orientations should be placed on the same level in all situations and in relation to all norms." An example of this, he added, is that of marriage: "marriage between one man and one woman is what the Church upholds, and she doesn't accept putting relations between persons of the same sex on the same level."

Father Lombardi also took the opportunity to criticize the media for often twisting and manipulating the Pope's words when he points out some issue of importance. "I don't think this is exact or fair behavior," he said.

Steffen Kampeter, a parliamentarian from Merkel's conservative Christian Democrats and a budget expert, told SPIEGEL ONLINE, "I completely agree with Steinbrück's analysis." In reference to EU demands that Germany do more to address the growing economic crisis, he said "THE BRITISH ARE EXPECTING THAT WE HELP THEM OUT OF THE MUCK. But we certainly weren't expecting that they share their profits from the financial market boom with us."

"What seemed in recent weeks like German failure and cowardice in the face of the economic crisis, now seems - given the catastrophic forecasts raining down from economic think tanks and politicians - like perseverance. Merkel at the moment is focused more on Germany THAN ON STABILIZING A EUROPE THAT LOOKS RUDDERLESS. The only thing certain when it comes to the European Union is the multi-billion euro price tag any stimulus program would carry. In such a situation, Merkel is happy to play the role of "Madame Non."

"But what is her steady hand doing at home? Here too she is keeping her wallet firmly in her pocket. The number of voices calling for an economic stimulus package, though, is multiplying. The Social Democrats are slowly coming around to the tax cut idea and calls from within the conservative camp are getting louder. It will take awhile before Germany makes a move. But the next crisis summit will come."

After a dramatic series of debates in Congress, the Senate rejected their bid for help. The decision is justifiable, because US auto companies are destitute. THEY NEED MONEY, BUT EVEN MORE IMPORTANTLY THEY NEED MANAGERS WITH A REAL LOVE FOR CARS. THE CURRENT CULTURE IN DETROIT IS TERMINALLY ILL. It has been destroying itself for 30 years. What Congress debated this week was not a rescue plan, as it was officially called, BUT A MULTI-BILLION-DOLLAR ASSISTED SUICIDE.

THE YEAR OF ACCELERATED ECONOMIC DOWNTURN IN AMERICA - Wall Street tarnished, Lehman Brothers dead - HAS YET TO SEE ITS FURIOUS FINALE. An overheated capitalism, which rated seriousness as unimportant and said quality was old-fashioned, has led us to this point. Detroit, unexpectedly, will pose the first serious test for President-elect Barack Obama and his promise of change and hope. Will he throw good money after bad, as powerful voices in his own party advocate? Or will he introduce new management styles and new ideas to Detroit, against the will of the local powers that be? The essential question is not "Will the cash flow change?" but "Will the cars?"

The Big Three auto executives were no longer in a position to keep their businesses running as usual. They were losing money day by day, and NO BANK IN THE WORLD WOULD LOAN THEM A CENT. Even the Saudis and the Chinese said no. In the end, the last brands of the Detroit family of carmakers - Chevrolet, Cadillac, Buick, Lincoln - lost their souls. Since then Detroit has built ghost-cars, often rickety and always cold to the touch. Anyone who wants to understand the depths of the current crisis will need to drive one of these lumbering GM cars.

ROME - Rome declared a state of emergency as the swollen Tiber river threatened to flood Friday and the death toll from the heavy rains battering much of Italy rose to four. The Civil Protection Department said the Tiber had risen about 16 feet (5 meters) in the past two days and warned it might burst its banks.

USA - An ice storm to compare with some of the Northeast's worst made a mess of the region Friday, leaving 1.25 million homes and businesses in seven states without power as it forced schools to close and toppled ice-laden trees and power lines onto slippery roads.

VENICE - Alarms sounded early in the morning as the high tide came in and parts of the city flooded. Still, the water was far less than the unusually high tide recorded in the lagoon city last week, when residents and tourists waded through knee-high water, shops were flooded and much of the city was brought to a halt.

ENGLAND - Extensive flash flooding has hit the south-west of England overnight, according to the emergency services. Somerset and Devon were especially badly hit, with up to 18 inches of rain in places, said Norman Evans of Devon and Somerset Fire Service.

USA - Snow has blanketed parts of the US states of Louisiana and Mississippi, causing disruption and leaving thousands without power. Up to eight inches of snow were reported in some areas, blocking roads and forcing offices to close.

SOUTH AMERICA - Intense rains hit Venezuela, Panama and parts of Brazil, leaving several people dead, destroying millions of dollars worth of crops and leaving several hundred thousand people homeless.

UK - The Environment Agency issued a total of 31 flood watch notices for the North West, Midlands and Thames area, with seven notices in force across Scotland. From the Met Office - "Britain is shivering through the coldest start to winter for more than 30 years."

PHILIPPINES - At least 13 people have been killed in flooding caused by heavy rains in the central Philippines this week, the civil defence office says. The provinces of Isabela and Carayan were declared a state of calamity.

AUSTRALIA - The SES in Victoria is dealing with more than 330 calls for help as wild weather sweeps across the state. West coast communities in South Australia have reported dust storms, flash flooding and damaging winds.

USA - Severe to extreme drought conditions are present in the Hawaiian Islands, southern Texas and the South eastern U.S. Western South Carolina, South western North Carolina, and North eastern Georgia had exceptional drought.

ETHIOPIA - Storms brought heavy rain that caused a river in the country's highlands to overflow. The floods were responsible for killing 11 people and 6,000 livestock, and destroying nearly 2,500 hectares of crops. More than 100 villages were inundated by the floods.

"If they told us what they held, we would know the potential losses that the government may take and THAT'S WHAT THEY DON'T WANT US TO KNOW," said Carlos Mendez, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.

The Fed stepped into a rescue role that was the original purpose of the Treasury's $700 billion Troubled Asset Relief Program. The central bank loans don't have the oversight safeguards that Congress imposed upon the TARP. Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren't rated AAA.

In response to Bloomberg's request, the Fed said the U.S. is facing "an unprecedented crisis" in which "LOSS IN CONFIDENCE IN AND BETWEEN FINANCIAL INSTITUTIONS CAN OCCUR WITH LIGHTNING SPEED AND DEVASTATING EFFECTS. Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, MULTIPLE HARMS THAT MIGHT RESULT FROM DISCLOSURE," Jennifer J. Johnson, the secretary for the Fed's Board of Governors, said in a letter e-mailed to Bloomberg News. "In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information," she wrote.

"There has to be something they can tell the public because we have a right to know what they are doing," said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press. "It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit AND OUR FINANCIAL SYSTEM HAS COMPLETELY COLLAPSED," she said.

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Dana Perino, President George W. Bush's spokeswoman, said in a carefully nuanced statement released minutes before the financial markets opened in New York. "However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program - to prevent a collapse of troubled automakers."

TARP is the Troubled Assets Relief Program, the official name of the Treasury's financial rescue program, originally intended to assist banks. The Treasury Department promptly indicated that it would provide short-term relief to the automakers. "Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," said a Treasury spokeswoman, Brookly McLaughlin.

Referring to the carmakers, the White House statement said, "A precipitous collapse of this industry would have a severe impact on our economy. IT WOULD BE IRRESPONSIBLE TO FURTHER WEAKEN AND DESTABILIZE OUR ECONOMY AT THIS TIME." The statement indicated that Bush was prepared to capitulate on his objection to using the bank bailout funds to stave off imminent bankruptcy filings at General Motors and Chrysler and possibly Ford in the future.

Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees that his money management operations were "all just one big lie" and "basically, a giant Ponzi scheme." Prior to Madoff's arrest, investors had wondered how he was able to generate annual returns in the low double digits in a variety of market environments. Many questioned how U.S. regulators were able to ignore numerous red flags with regard to Madoff's operations. "MANY OF US QUESTIONED HOW THAT STRATEGY COULD GENERATE THOSE KINDS OF RETURNS SO CONSISTENTLY," said Jon Najarian, an options trader who knows Madoff and is a co-founder of optionmonster.com. Madoff's SONS TURNED HIM IN FOR RUNNING WHAT THEY SAID THEIR FATHER CALLED "A GIANT PONZI SCHEME."

A Ponzi scheme is an illegal investment vehicle that pays off old investors with money from new ones, and is dependent on a constant stream of new investment. Because the invested capital is not earning a sufficient return on its own, such schemes eventually collapse under their own weight. Madoff is the founder of Bernard L. Madoff Investment Securities LLC, a market-making firm he launched in 1960. His separate investment advisory business had $17.1 billion of assets under management.

The move is the latest in a long and complex series of bilateral agreements which the Swiss government has negotiated with Brussels, in order not to be isolated within Europe's powerful trade zone. But the Swiss people have regularly indicated that they do not want their country to join the EU, so getting their agreement on something as sensitive as opening national borders was not easy.

"There was a highly controversial public debate," admits Urs Bucher, head of Switzerland's office of European Integration. "Some people feared we would be opening our borders to criminals, and to thousands of illegal immigrants, but we are convinced this won't happen." In the end, the Swiss approved joining Schengen in a nationwide referendum.

One factor which swayed voters was the fact that, by joining the Schengen area, Switzerland would have access to the Schengen Information System (SIS), a Europe-wide electronic database containing thousands of details of wanted or missing people, and stolen goods and vehicles. "THIS IS A VERY VALUABLE CONTRIBUTION TO OUR SECURITY," says Luzius Mader, deputy head of the Swiss justice and police department. "It will allow us to carry out police work much more effectively."

The Hang Seng dropped 5.5 per cent to 14,758.39, while the index of mainland Chinese shares traded in Hong Kong lost 6.8 per cent to 7,911.76. The Nikkei ended the day down 5.6 per cent at 8,235.87, while the broader Topix lost 4.2 per cent to 813.37. The dollar fell to Y88.10 against the yen before settling around Y89 levels, recently trading around Y90. Naoyuki Shinohara, Japan's vice finance minister for international affairs, said currency moves had been excessive.

The equity market volatility was exacerbated by thin markets but the news damaged the frail sentiment that had been built over the week with calmer markets and hopes of a US economic stimulus plan from president-elect Barack Obama. "MARKETS WERE CALMING DOWN, so this is a terrible way to end the week and erase that sentiment, IT COULDN'T COME AT A WORSE TIME," said Joseph Kraft head of capital markets for Japan at Dresdner Kleinwort in Tokyo.

Japanese exporters were predictably in the limelight, with automakers in particular taking a pummeling. Toyota lost 10.1 per cent to Y,2760, Honda dropped 12.5 per cent to Y1,921 and Nissan fell 11.5 per cent to Y308.

Speaking by teleconference at the Reuters Investment Outlook 2009 Summit, the co-founder with George Soros of the Quantum Fund, said the government's $700 billion rescue package for the sector DOESN'T ADDRESS HOW BANKS MANAGE THEIR BALANCE SHEETS, AND INSTEAD REWARDS WEAKER LENDERS WITH NEW CAPITAL. "Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt," said Rogers, who is now a private investor.

"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that THE GOVERNMENT IS TAKING THE ASSETS FROM THE COMPETENT PEOPLE AND GIVING THEM TO THE INCOMPETENT PEOPLE and saying, now you can compete with the competent people. It is horrible economics."

Now a specialist in commodities, Rogers said he has used the recent rally in the U.S. dollar as an opportunity to exit dollar-denominated assets. Governments are making mistakes," he said. "They're saying to all the banks, you don't have to tell us your situation. You can continue to use your balance sheet that is phoney.... ALL THESE GUYS ARE BANKRUPT, THEY'RE STILL WORRYING ABOUT THEIR BONUSES, THEY'RE STILL TRYING TO PAY THEIR DIVIDENDS, AND THE WHOLE SYSTEM IS WEAKENED."

Mr Brown is with the German chancellor in Brussels where EU leaders are trying to agree proposals to inject 200bn euros (£177bn) into European economies to help deal with the downturn.

Mr Kampeter said: "Peer Steinbruck's comments have nothing whatsoever to do with internal German politics, as Prime Minister Brown has suggested. After years of lecturing us on how we need to share in the gains of uncontrolled financial markets, the Labour politicians can't now expect us to share in its losses. The tremendous amount of debt being offered by Britain shows a complete failure of Labour policy."

He said: "I do not really want to get involved in what is clearly internal German politics here, because they have a coalition in Germany with different political parties." The prime minister's official spokesman added: "Clearly there is a debate taking place in Germany about the nature of any additional fiscal stimulus measures.

Officials said the risk of an imminent attack had increased after one of the arrested men had received the 'green light' from his paymasters to carry out a suicide mission. They added that the man was believed to be mounting an operation 'from which he was not expected to come back'. There were claims he had left a so-called matyrdom video.

The police action - which follows the recent al Qaeda-linked terror attack in Mumbai - came as the 27 European leaders, including Mr Brown, French president Nicolas Sarkozy and German chancellor Angela Merkel, met for a two-day summit. Announcing the detentions, Belgian federal prosecutor Johan Delmulle said one of the alleged plotters had already 'said goodbye to his loved ones because he wanted to enter paradise with a clear conscience'.

The operation to swoop on the alleged terror cell involved more than 240 police officers who carried out 16 raids in Brussels and a further one in Liege. The men are believed to have received terror training in jihadi camps in Afghanistan and Pakistan.

The Labor Department reported Thursday that initial applications for jobless benefits in the week ending Dec. 6 rose to a seasonally adjusted 573,000 from an upwardly revised figure of 515,000 in the previous week. That was far more than the 525,000 claims Wall Street economists expected.

Elsewhere, the U.S. trade deficit rose unexpectedly in October as a spreading global recession dampened the once-strong sales of American exports and the volume of oil imports surged by a record amount, the Commerce Department said.

Companies have eliminated a net total of 1.9 million jobs this year, and some economists project the total cuts could reach 3 million by the spring of 2010. A number of large U.S. employers announced layoffs this week, including Dow Chemical Co., 3M Co., Anheuser-Busch InBev, National Public Radio and the National Football League.