This goal was handsomely achieved and the consequences may yet be epoch-making. But the cold vice of global recession now holds even China in its grip. The latest figures show that China's juggernaut is slowing down and perhaps even grinding to a halt. Its economy expanded by 6.8 per cent last year, compared with 13 per cent in 2007. For those of us enduring outright recession, possessing an economy that grew at all, let alone by nearly 7 per cent, hardly seems a cause for alarm.

But China's vast population of 1.2 billion ensures that tens of millions of people enter the workforce every year, while colossal numbers migrate from the impoverished countryside to the cities of the eastern seaboard. Providing these rootless masses with jobs and homes means that China must run simply to stand still. In effect, a growth rate of 6.8 per cent leaves China perilously close to outright recession.

Our own plight would be immeasurably worsened by a recession in China. With unconscious irony, David Miliband, the Foreign Secretary, chose yesterday to launch a new document on Britain's relations with China, based on the assumption that Asia's giant will continue to be a "motor" for the global economy. If that engine falters, all of us will suffer. Much has been written about the alleged dangers of China's rise. THEY ARE AS NOTHING COMPARED WITH THE CONSEQUENCES OF CHINA'S POSSIBLE DECLINE.

From March 1 until the end of August, the EU will become the owner of 30,000 tonnes of butter and 109,000 tonnes of skimmed powder milk, paid for at above market cost to support the dairy industry. The EU is has also agreed to begin new export subsidies for European butter, milk powder and butteroil.

Export subsidies and EU food stocks were last used in 2007 and the Commission last year tried to scrap such payments, a reform that was blocked by France and Germany. Commission officials have played down the measure as a temporary move after a steep slide in milk prices triggered a 33 per cent decline in butter exports last year. "We are not anticipating a return to the old days of butter mountains and milk lakes. This is a temporary crisis situation on the market," said a Commission spokesman.

The EU intervention has created another obstacle to progress in world trade talks and has dashed hopes that President Barack Obama could be persuaded to reduce American farm subsidies. "We regret that the EU has taken this action which we believe will destabilise the market," said a US government official.

Mr Obama proclaimed that the US would "actively and aggressively seek a lasting peace between Israel and the Palestinians" in the wake of this month's Gaza war. "The outline for a durable ceasefire is clear: Hamas must end its rocket fire: Israel will complete the withdrawal of its forces from Gaza: the US and our partners will support a credible anti-smuggling and interdiction regime, so that Hamas cannot re-arm," the US president said.

"As part of a lasting ceasefire, Gaza's border crossings should be open to allow the flow of aid and commerce, with an appropriate monitoring regime, with the international and Palestinian Authority participating." Mr Obama and Hillary Clinton, secretary of state, also announced the appointment of George Mitchell, as the US special envoy for the Arab-Israeli conflict and Richard Holbrooke, former US ambassador to the United Nations, as representative for Afghanistan-Pakistan.

The moves signalled another shift from the foreign policy of the Bush administration, which had resisted appointing a high-profile envoy for Middle East peace. Before Mr Obama gave his speech, an Israeli official said there would be tough conditions for any lifting of the blockade, which he linked with the release of Gilad Shalit, a soldier held captive by Hamas since 2006.

Accounting for nationalised and part-nationalised banks must be at least as good as for those in the private sector, it added. The MPs also urged the Treasury to stop shedding staff during the downturn. The government nationalised Northern Rock and Bradford and Bingley last year, and put £37bn of capital into Royal Bank of Scotland (RBS), Lloyds TSB and HBOS.

This week, it was announced that banks would be able to take up state insurance against their expected bad debts, while the government said it was increasing its stake in RBS from 58% to nearly 70%. In its report, the committee said: "In order for public scrutiny to be effectively performed, the magnitude and nature of these liabilities must be comprehensively disclosed."

The accounts for fully and part-nationalised banks should be "at least as comprehensive as those made by major banks", and go beyond minimum accounting standards, it suggested. Key performance indicators for Northern Rock and Bradford and Bingley should also be included in Treasury accounts, the committee said. The committee's chairman, Conservative MP Michael Fallon, said: "Public companies are required to publish quarterly data on their accounts and, given the scale of public investment, the taxpayer deserves no less information from the Treasury."

Gross domestic product is predicted to have fallen by 1.2% in 2008's final quarter, following on from a 0.6% contraction in the previous quarter. This would represent the biggest decline since 1990's third-quarter. If the consensus is right, the figure will also represent a 1.4% decline on the same quarter a year ago - the biggest year-on-year fall since 1991.

Neil Mackinnon, chief economist at ECU Group, said: "THERE ARE NO GREEN SHOOTS OF RECOVERY, NO LIGHT AT THE END OF THE TUNNEL and the GDP figures will be grim and underscore the depth of the recession." The average recession in the UK since 1955 has lasted three quarters, but the past two recessions have lasted for five. In fact, many forecasters believe a recession could stretch into 2010 and be as severe as that of the early 1990s.

GDP is the most commonly used indicator of national income. It attempts to measure the sum of incomes received by the various wealth-creating sectors of the economy, from manufacturing and retail to agriculture and service industries. The consensus forecast for 2009 as a whole is now for a 2.1% decline in GDP. As recently as December, the forecast was for a drop of 1.5%.

This highlights the rapidly deteriorating economic picture over recent weeks, during which a number of the UK's best known high street retailers, such as Woolworths and Zavvi, have gone into administration. The pound has slumped against the euro and many analysts believe that parity is now inevitable. Sterling also hit a seven-year low against the dollar this week.

Last week, the Congressional Budget Office projected that even without this package, the US budget deficit will hit $1,200bn this year – or 8.3pc of national income. Such a massive gap between spending and taxation already amounts to an unprecedented fiscal stimulus. Cranking up spending even more is the last thing the US should do.

Excessive government largesse is never a good idea. The demand boost takes time, the inefficiencies are enormous and the scope for cronyism bigger still. But turbo-charged state spending is especially bad in a country facing massive demographic pressures, with a fragile currency and already servicing debts equal to a mind-boggling 368pc of GDP. I wish Obama well, but his plan is utter folly.

This ghastly episode will only end once senior bank executives are forced, under threat of custodial sentence, TO FULLY DISCLOSE TO ONE ANOTHER AND THE AUTHORITIES, on the basis of all available evidence, the extent of their sub-prime liabilities. Then the losses must be written-off. Only after such purging will the banks begin to rebuild mutual trust – allowing the interbank market to reboot, so restoring the credit lines that are so vital to the broader economy. And all this needs to happen BEFORE more public money is spent recapitalising our banking sector.

I know what I'm saying is drastic. But this is a drastic situation. In the UK and US, in particular, the banks aren't playing ball. THEY THINK THEY'RE MORE POWERFUL THAN OUR ELECTED OFFICIALS, and for the last six months they have been getting away with hiding losses and burying mistakes while screwing many billions of pounds out of taxpayers.

As if all this renewed banking angst wasn't enough, yet another fear is now stalking international capital markets. Last week, any remaining hope the eurozone had escaped the worst of this crisis was blown out of the water. Credit default swaps (the cost of insuring against a government default) among the most feckless eurozone members have reached Latin American levels. WOULD FRENCH AND GERMAN TAXPAYERS BAIL OUT ANOTHER EUROZONE MEMBER? The longer this crisis goes on, the larger that incendiary question looms.

The Italian newspaper Corriere della Sera quoted Gazans claiming that less than 600 people had died in the 22-day attack, far fewer than the 1,300 reported by Palestinian health officials. "It's possible that the death toll in Gaza was 500 or 600 at the most, mainly youths aged 17 to 23 who were enlisted by Hamas – who sent them to their deaths," the newspaper quoted a doctor at the main Shifa hospital as stating.

Other residents told the newspaper Hamas gunmen had used medical facilities to organise and co-ordinate attacks. Israeli officials emailed the report around the world and a military officer condemned Hamas as "monstrous" in its use of civilians to cover its armed activities. "Entire families in Gaza lived on top of a barrel of explosives for months without knowing," said Brigadier Eyal Eisenberg.

He also ordered a review of military trials for terror suspects and a ban on harsh interrogation methods. Continuing a flurry of announcements, he named his envoys to the Middle East, and to Afghanistan and Pakistan. At Mr Obama's request, military judges have suspended several of the trials of suspects at Guantanamo so that the legal process can be reviewed.

"The United States intends to prosecute the ongoing struggle against violence and terrorism," he said. "We are going to do so vigilantly, we are going to do so effectively, and we are going to do so in a manner that is consistent with our values and our ideals." Mr Obama believed Americans will be safer with the prison closed, White House spokesman Robert Gibbs said in his first media briefing.

Mr Obama has repeatedly promised to close the Guantanamo Bay prison, where some 250 inmates accused of having links to terrorism remain and 21 cases are pending. The legal process for these prisoners has been widely criticised because the US military acts as jailer, judge and jury, the BBC's Jonathan Beale reports from Guantanamo. However, closing the prison will not be easy, he says. Questions remain over where those charged will be tried and where those freed can be safely sent.

One year ago, Iceland was named the most desirable country in the world. Today, its economy has been devastated by the catastrophic collapse of its three largest banks. Unemployment rose 45% between November and December, and a recent survey indicated that 40% of households and 70% of businesses were technically bankrupt. Since the fall of the banks in October, there have been no resignations from the government, the boards of the now nationalized banks have remained substantially the same, and weekly gatherings calling for new elections have been ignored.

Americans will certainly recognize strong parallels between Iceland's current situation and their own. After years of tight state regulation, the conservative government of David Oddsson privatized Iceland's banks, and in exchange the newly-rich owners of these banks ensured that Oddson's party remained in power. Even after he stepped down, he had himself appointed as head of Iceland's Central Bank and continued to ensure that regulatory oversight was kept to a minimum.

Thomas Jefferson wrote in the American Declaration of Independence that "Governments are instituted among Men, deriving their just powers from the consent of the governed [and] whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government." As the protesters fight to enforce that right, in this county that has known no war for generations, that has not seen violent conflict among its citizens for centuries, we must ponder what could be.

The American measures were taken as part of a trade dispute, now known as "cheese wars", in which the Bush administration took action against the European Union's ban on imports of US hormone-treated beef. The EU banned growth hormones on European farms more than two decades ago on health grounds, but their use was continued in the United States.

Last week, America imposed a 100 per cent import duty on a long list of EU products, but singled Roquefort out for a 300 per cent tariff. "Symbol versus symbol," said Philippe Folliot, a French member of parliament whose Tarn constituency contains many Roquefort producers. "Since the United States has decided to surtax one of the most ancient (cheese) appellations, I think that the French government, with the European Union, must think about a heavy specific tax on imports of Coca-Cola concentrates produced in the US."

In a letter to George W Bush's successor, Barack Obama, Mr Folliot called on the newly inaugurated US president to remove the "shocking" Roquefort duty, which, he said "uselessly stigmatises an already fragile sector." Producers of what the French hail as the "king of cheeses" from the Massif Central, southern France, say the rise is tantamount to an "embargo" on Roquefort exports to their third biggest market. Roquefort makers export about 420 tons a year, or 2.5 percent of their total production, to the US.

The latest action has been slammed as a parting shot by Mr Bush, who is still thought to be piqued by France's opposition to the 2003 Iraq war.

Commenting on whether the Euro was a mistake, economist Barry Eichengreen writes on the Vox website, "The euro area will hang together, in other words, because the decision to enter is essentially irreversible. Getting out is impossible without precipitating the most serious imaginable financial crisis - something that no government is prepared to risk."

EU Commissioner for Economic and Monetary Affairs Joaquin Almunia has rejected any suggestion of a split of the eurozone. Le Monde notes that the current economic crisis is however putting the monetary union under severe strain and that certain states are asking for lower rates of borrowing than those currently in place. THE PAPER HIGHLIGHTS THAT THIS GROWING AND PERSISTENT PRESSURE COULD BRING ABOUT THE EVENTUAL DEMISE OF THE MONETARY UNION.

Speaking in a Commons debate on financial management of the EU budget, Mr Pearson said: "It is simply not good enough that the majority of the EU budget suffers from a level of error that is material." He added, "I want to be clear from the outset that the Government considers the situation to be entirely unacceptable."

Conservative MP Phillip Davies said, "Surely the problem is that the UK Government, each year that the accounts aren't signed off, the following year gives even more money to the EU... the answer is for the UK Government to say 'we won't give you any more money until you get your accounts signed off properly'."

Mr Pearson responded, saying that although the management of the budget had improved, "I certainly agree EU taxpayers deserve better." Mr Pearson said it was "not realistic" for Britain to stop making payments to the EU as some had suggested, but he told MPs "We do need to be relentlessly dissatisfied with the progress that has been made on these issues."

Speaking at a joint press conference they held in Kuwait, the two said that THE ARAB WORLD FACES ANARCHY AND AN INNER SPLIT, which they attribute to two factors: The inter-Palestinian struggle, and the "Israeli aggression and occupation."

Several recent incidents portray the weakness of Arab unity, correspondent Haggai Huberman reports. Last Friday, a gathering of representatives of more than a dozen Arab and Muslim nations was held in Doha. Among the participants were Damascus-based Khaled Meshaal of Hamas and Iranian President Mahmoud Ahmedinajad – but the others were not informed of the participation of these two until after they had already arrived in Doha. Apparently, it was feared that the participation of Meshaal and Ahmedinajad might keep others away.

In addition, a high-ranking French diplomat has been quoted as saying that Syria was more interested in weakening Egypt over the past three weeks than in helping solve the crisis in Gaza. Syria and others accused Egypt of conspiring with Israel in order to attack Gazan Arabs. The diplomat further said that the Syrian branch of Hamas is more extremist than the Gazan, and that this is related to Syria's influence over Meshaal.

On Friday (16 January), demonstrators attacked the Lithuanian parliament building in Vilnius calling on the government to resign. Organised by the Lithuanian Trade Union Confederation, the protest denounced public sector wage cuts and increases in taxes aimed at aiding the country's battered economy. The violent protests come two days after similar events shook Sofia, the capital of BULGARIA, and follows on from riots protesting International Monetary Fund (IMF)-agreed austerity measures in LATVIA earlier in the week.

In HUNGARY, as in GREECE - where a police shooting sparked violent protests in December - the riots have unique domestic political reasons that combine with the wider economic background, Ms Bohle - a political scientist at the Central European University in Budapest - explained. "In Hungary's case, it was the prime minister's being caught lying that social supports could continue and then delivering an austerity package," she said. "There is a mistrust and lack of legitimacy in the government. On top of this is THE EXISTENCE OF THE FAR RIGHT, which may make it into parliament. HUNGARY IS DEEPLY POLITICALLY UNSTABLE."