The alleged incident late Sunday in North Waziristan came as the Muslim country struggled to respond to a suicide bombing at a luxury hotel in the capital that killed at least 53. A spate of suspected US missile strikes into Pakistan's border region and a raid by US commandos that killed about 15 people have angered and embarrassed Pakistani leaders.

President Asif Ali Zardari is in New York to attend the UN General Assembly. The newly elected leader is also expected to meet US President George W. Bush. A MILITARY SPOKESMAN SAID LAST WEEK THAT PAKISTANI SOLDIERS HAD ORDERS TO OPEN FIRE IN CASE OF ANOTHER CROSS-BORDER RAID BY US TROOPS.

Experts believe the fakes are being produced by organised criminal gangs using specialist machinery. The Royal Mint said it was illegal to make or use counterfeited coins and said people must hand them in if they thought they had one. Although relatively easy to detect, their sheer number creates problems for shopkeepers, taxi drivers and other small traders who deal in cash for many of their transactions. According to figures obtained by the BBC from the Royal Mint, random sampling tests carried out earlier this year showed that approximately 2% of pound coins are fake.

Robert Matthews, was the Queen's Assay master until he retired to become a coin consultant four years ago. HE SAID CONFIDENCE IN COINS COLLAPSED IN OTHER COUNTRIES WHEN FORGERY RATES REACHED SIMILAR LEVELS. He said: "In 2004, people started refusing to take the South African 5 Rand coin, due to concerns about the number of counterfeits, and eventually the coin had to be redesigned and re-circulated. Independent surveys showed the number of counterfeits to be 2% - the same as we've got here - and I'm worried that if we're not careful the same thing will happen to the pound coin."

HOW TO SPOT A COUNTERFEIT COIN
- Look at the edge - on fake coins the lettering will often be indistinct, or the wrong typeface.
- Hold the coin so the Queen's head is upright and facing you. The pattern on the reverse side should also be upright
- The colour can be a give-away, although real coins can become discoloured in circulation
- Most fake coins often won't operate automated vending machines

THE CHANGES SHOULD ENABLE GOLDMAN SACHS AND MORGAN STANLEY TO RAISE MORE FUNDS BY OPENING COMMERCIAL BANKS. The move - part of a huge restructuring effort on Wall Street - will also give them access to Federal Reserve support. Congress is considering the plan, drawn up by Treasury Secretary Henry Paulson, which would set up a fund to buy back much of the bad debt held by financial institutions. Mr Paulson has urged other countries to follow the American example in dealing with the international financial crisis.

Investment banks have proved particularly vulnerable to the economic malaise - with Lehman Brothers going bankrupt this week and Merrill Lynch being sold to the Bank of America. Shares in Goldman Sachs and Morgan Stanley came under severe pressure amid the struggles of their fellow investment banks. Analysts speculated that both institutions would be acquired by commercial banks, whose ability to take deposits would give them a stable source of funding.

Instead, the banks filed requests with the Federal Reserve to change their status. And late on Sunday, the Fed said in a statement it had granted the requests.

It also gives Hank Paulson, the US Treasury secretary, immunity from legal challenge under the plan. The US Treasury will buy mortgage-related securities "from any financial institution having its headquarters in the United States", draft legislation said. Securities issued before September 17 will be eligible for inclusion.

Word of the proposals created a mood of euphoria in financial markets on Friday. But analysts warned of the risks. Tim Bond of Barclays Capital, while conceding that the rescue was necessary to avoid the risk of depression, said: "The volume of fresh government borrowing and the fast expansion of the Fed's balance sheet are both negatives for the dollar, CARRYING A POTENTIAL RISK OF INCREASED INFLATION."

Other economists also think that the dollar could be undermined. Kenneth Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard, said: "It is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen."

"THE FREE MARKET FOR ALL INTENTS AND PURPOSES IS DEAD IN AMERICA," said Republican Senator Jim Bunning of Kentucky. THE PROPOSAL WOULD "TAKE AWAY THE FREE MARKET AND INSTITUTE SOCIALISM IN AMERICA", HE SAID.

It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the ultimate financial question - until recently, unthinkable - is now being asked. COULD THE MIGHTY US GOVERNMENT DEFAULT? That's how much the world has changed.

During his trip, Mr Greenspan visited the Bank of England's monetary policy committee. He told them the US financial system had been resilient amid the bursting of the internet bubble. Share prices had halved and there had been massive bond defaults, but no big bank collapses. Mr Greenspan lauded the fact that risk had been spread, using complex derivative instruments. One of the MPC members asked: how could this be? Someone must have lost all that money; who was it? A look of quiet satisfaction came across Mr Greenspan's face as he answered: "European insurance companies."

Six years later, AIG, the largest US insurance company, has in effect been nationalised to stop it blowing up the financial world. The US has nationalised the core of its mortgage industry and the government has become the arbiter of which financial companies should survive or die.

Mr Greenspan was in charge of supervising and regulating much of the banking industry for two decades. The Fed says it is responsible for ensuring "safe and sound banking practices". It is right that other regulators should have stepped in, too – the US regulatory structure has not kept pace with market changes. But given the Fed's institutional importance and Mr Greenspan's personal stature, does anyone doubt that the Fed could have used its limited powers to ensure a closer examination of what was going on?

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States. Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.

"That's a distinction without a difference to the American people. The key here is protecting the system... We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. The American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."

It's a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street. The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.

"GREENSPAN WAS CONSIDERED A MASTER," TREMONTI DECLARED. "NOW WE MUST ASK OURSELVES WHETHER HE IS NOT, AFTER OSAMA BIN LADEN, THE MAN WHO HURT AMERICA THE MOST... It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

On the other end of the political spectrum, among leftists who have long predicted calamity for what they call the "savage neoliberal capitalism" of Wall Street, there were gleeful allusions to the stock market crash of 1929. Expressing nostalgia for "the good old days when bankers jumped out of windows," Aeschimann condemned as "extortion" the rescue of U.S. corporate giants by the very state that free-marketeers resent.

But fear accompanied gloating. The crisis threatens to worsen woes - inflation, unemployment, weak growth - of regional powerhouses including Britain, Spain and Italy. Joaquin Almunia, an ideologically moderate Spanish Socialist who is the European Union's economic commissioner, offered a simple analysis. "It has been a problem of greed," he told El Pais newspaper. "In Europe it can't be said that we did nothing, European banks bought toxic products... Nobody knows when this will end."

The spectacle across the ocean has left a lasting impression on many Europeans. Hanna Evers of Berlin, a cellphone retailer interviewed in the shopping district of Wilmersdorfer Street, said she was angry about the amount of money that had been "burned" in recent days. "I WAS TAUGHT THAT THE U.S.A. IS THE MOTHERLAND OF MONEYMAKING," SHE ADDED. "AND NOW ALL I CAN SEE IS A HERD OF HEADLESS CHICKENS RUNNING AROUND ON WALL STREET."

In the second statement in two weeks responding to comments made by Catholic politicians on the Sunday morning program, ARCHBISHOP CHARLES CHAPUT AND AUXILIARY BISHOP JAMES CONLEY OF DENVER ARE TELLING POLITICIANS "WHO DESCRIBE THEMSELVES AS CATHOLIC," TO BEGIN TO "ACT ACCORDINGLY."

House Speaker Nancy Pelosi appeared first on the program in late August. When asked to comment on when life begins, she said that as a Catholic she had studied the issue for "a long time" and that "the doctors of the Church have not been able to make that definition." Senator Joseph Biden, Senator Barack Obama's running mate on the Democratic presidential ticket, appeared on the same program last Sunday. The senator "compounded the problem" with his explanation of when life begins, according to the bishops. The senator said that although he knows "when [life] begins for me," he claimed it to be fundamentally a "personal and private issue."

Responding to the comments of Biden, the bishops of Denver refuted the claim that the moment when life begins is "a personal and private issue. MODERN BIOLOGY KNOWS EXACTLY WHEN HUMAN LIFE BEGINS," they explained, "AT THE MOMENT OF CONCEPTION. RELIGION HAS NOTHING TO DO WITH IT," the prelates continued. "People might argue when human 'personhood' begins - though that leads public policy in very dangerous directions - but no one can any longer claim that the beginning of life is a matter of religious opinion."

The bishop's comments exhibited straight talking - no sidestepping to appease the feelings of Catholic politicians. It provided a message for all mankind to live by - NAMELY THAT LIFE BEGINS IN THE WOMB AND HAS A RIGHT TO LIFE BEFORE AND AFTER BIRTH.

EUROPEAN BANKS ARE HOLDING UP PRETTY WELL AMID THE TURMOIL SWEEPING THE INDUSTRY. None of the Old World's biggest banks appears likely to fail or put itself on the block, analysts say. INDEED, THE EUROPEANS ARE MORE LIKELY TO BE BUYING: London-based Barclays on Sept. 17 inked a $1.75 billion cash deal to buy the investment banking and trading businesses of bankrupt Lehman Brothers.

Another London-based bank, HSBC Holdings, has been mentioned as a potential buyer for crisis-racked Morgan Stanley, though HSBC won't comment. And even as Spain sinks into recession, its two biggest banks are expanding internationally, with Madrid-based Banco Santander getting the green light from European Union regulators on Sept. 16 to acquire British bank Alliance & Leicester.

BANKS ON THE CONTINENT HAVE STEERED CLEAR OF RISKY SUBPRIME-STYLE MORTGAGE LENDING, TOO. What's more, real estate markets across most of the Continent are holding up well. "We have an advantage that used to be a disadvantage: Real estate prices are quite stable," says Jörg Krämer, chief economist at Germany's Commerzbank.

Plenty of risks lie ahead. Standard & Poor's warned on Sept. 17 that banks worldwide are likely to face a new wave of writedowns stemming from the U.S. mortgage crisis, as delinquency and default rates rise and the effects of the Lehman collapse ripple through the industry. S&P says total writedowns could exceed $500 billion, up from a total of about $300 billion taken so far.

Another worry relates to the U.S. government rescue of AIG. While the $85 billion bailout prevented the collapse of the world's biggest insurer, IT'S NOT CLEAR WHETHER BILLIONS OF CREDIT DEFAULT SWAPS, WHICH BANKS PURCHASED FROM AIG TO PROTECT AGAINST POTENTIAL LOSSES, ARE STILL IN FORCE, says Sandy Chen, a London-based banking analyst at Panmure Gordon.

Before his 9am broadcast, HBOS shares had dipped to a low of 88p. But his scoop sent the price rocketing to 215p in the space of an hour, giving the mystery buyers huge instant profits. In just two deals between 8.57pm and 8.58pm, buyers snapped up more than 20million HBOS shares at 96p each, netting millions of pounds in profit.

Examination of the frenetic trading has led to suspicions of a leak, causing widespread anger at the close of one of the most turbulent weeks the City has endured. Last night Mr Peston insisted his information on the talks was 'tightly held' and described the share-dealing frenzy as 'scary'.

It was a report by Mr Peston that also led to the run on the Northern Rock bank which caused its collapse. There has also been criticism of the delay between the news breaking on the BBC News channel and official confirmation from HBOS four hours later. Keith Skeoch, chief executive of Standard Life Investments, said: 'SOMEONE WAS IN POSSESSION OF INFORMATION AND THAT INFORMATION WAS LEAKED WHICH CAUSED A MOVEMENT IN HBOS'S SHARE PRICE. The market has a mechanism for release of information. It must be adhered to if we want to stop market abuse - and we must stop market abuse.'

Add that to $200 billion pledged to Fannie Mae and Freddie Mac, that $85 billion loan to AIG, and $29 billion in Bear Stearns junk still stuck on the Federal Reserve's books, and you get a price tag of $1.014 trillion. Throw in up to $300 billion in mortgage guarantees contained in the housing bill passed over the summer, and you're up to $1.314 trillion.

IT'S A STAGGERING NUMBER - ALMOST HALF WHAT THE US GOVERNMENT SPENT IN TOTAL LAST YEAR. And it certainly makes all those who've been predicting a trillion-dollar bailout for a while, like Nouriel Roubini and Charles Morris, look pretty smart.

But does it mean we taxpayers are really out $1.3 trillion? No. First of all, they're not necessarily going to spend all that money - the $300 billion in mortgage guarantees in particular vastly exaggerates the likely outlay. And a lot of the money they spend will eventually be recouped - what they're buying has some value, after all. What this does mean is that taxpayers are taking on a huge amount of risk, mainly because nobody else is willing to take on any right now. What I still can't figure out is how the Treasury hopes to structure the bailout so there's at least a chance of getting a fair return on that risk-taking.

INTERNAL SECURITY IN NUCLEAR-ARMED PAKISTAN, a country vital to the war against al Qaeda and other Islamist militant groups, HAS DETERIORATED AT AN ALARMING RATE OVER THE PAST TWO YEARS. The bombing bore the signs of an attack by al Qaeda or an affiliate, a U.S. intelligence official said.

It came hours after new President Asif Ali Zardari, widower of assassinated former prime minister Benazir Bhutto, made his first address to parliament a few hundred metres (yards) away, calling for terrorism to be rooted out. The tightly guarded hotel, part of a U.S.-based chain and popular with foreigners, diplomats and rich Pakistanis, was engulfed in flames for hours after the blast.

Residents of the Atlantic-Caribbean danger zone should not let down their guard, despite a brief lull in the action following Tropical Storm Josephine's demise two weeks ago and Hurricane Ike's strike on the Texas coast, experts said.

"CONDITIONS ARE STILL FAVORABLE FOR HURRICANES. People really need to stay on their toes," said Gerry Bell, the lead hurricane season forecaster for the U.S. National Oceanic and Atmospheric Administration. Forecasters had predicted the season, which runs through November 30, could produce up to 18 cyclones, and the warm sea temperatures, low wind shear and other factors that contribute to the formation of hurricanes are still in place.

In the Wall Street Journal Erika Mann and Nao Matsukata look at how the US' recent reneging on WTO commitments may affect EU businesses. Citing the US' withdrawal from obligations to open its multibillion-dollar online gaming market as an example, they argue that Europe's biggest concern should be that US PROTECTIONISM of this kind "opens the door for similar brinkmanship by other countries".

China has already gained leverage from Washington's selective rejection of global trade rules, by borrowing arguments from Washington in its defence against WTO litigation over its inadequate protection of intellectual property, an issue the EU cares greatly about.