Buoyed by the soaring yen, Japanese businesses have also been put off the United Kingdom as a hub of their operations by Britain's decision not to join the euro. A further black mark has been the sense of the UK's "geographical isolation" from the rest of the continent.

Top of the list of reasons for firms' departure for Germany is transport links in the south-east. Businesses in Japan assume that trains and planes will arrive on time, be clean and not prohibitively expensive, and first-time visitors are shocked to find that the same does not hold true in London.

Many companies are setting up in Düsseldorf, where 168 companies are members of the Japanese Business Association, or Frankfurt because of its good access to markets across Europe. Also the home of the European Central Bank, some 210 Japanese companies – including Honda, Mitsubishi, Suzuki and Canon – are now operating in the Frankfurt area, which is home to more than 4,000 Japanese nationals.

The warning marked a dramatic rise in tension between the nuclear-armed neighbours after last month's attack on Mumbai, in which 179 people were killed and which India has blamed on Islamist militants based in Pakistan.

It followed media reports in Pakistan and India that "several" Indian nationals had been arrested in the last two days after bombings in the Pakistani cities of Lahore and Multan

"Indian citizens are therefore advised that it would be unsafe for them to travel (to) or be in Pakistan," India's Foreign Ministry spokesman said in a statement. Another Foreign Ministry official contacted by Reuters said the warning referred to all travel to Pakistan.

The move represents a sharp escalation in the standoff between the nuclear-armed neighbors and will hurt Pakistan's US backed campaign against al-Qaida and Taliban taking place near Afghanistan's border.

Two intelligence officials said the army's 14th Division was being redeployed to Kasur and Sialkot, close to the Indian border. They said some 20,000 troops were on the move. Earlier Friday, a security official said that all troop leave had been cancelled.

The officials spoke on condition of anonymity because of the sensitivity of the situation.

During Midnight Mass at the Church of the Nativity in Bethlehem, Archbishop Fouad Twal affirmed that some 2,000 years ago God designated Bethlehem "his home and his meeting place with men." Archbishop Twal called Bethlehem a "city of peace, of divine love and of reconciliation," and affirmed that "peace is a right for all men."

"It is also the solution for all conflicts and differences," he continued. "War does not produce peace, prisons do not guarantee stability. The highest of walls do not assure security. Neither the aggressor nor the aggressed enjoy peace. Peace is a gift of God and only God can give that peace."

The Pope decried instability in the Democratic Republic of Congo (DRC), Sudan and Somalia, and lamented the plight of ordinary Zimbabweans. He also called for solidarity in the face of an ever more uncertain future. "If people look only to their own interests, our world will certainly fall apart," he told tens of thousands of worshippers gathered in St Peter's Square.

Pope Benedict plans to visit Cameroon and Angola in March, and then Israel, the Palestinian territories and Jordan next May in order to see for himself the Middle East situation and encourage peaceful solutions to conflict there, our correspondent says. "May the divine light of Bethlehem radiate throughout the Holy Land," the Pope said.

His remarks echoed those of his earlier Midnight Mass, in which he called for an end to "hatred and violence" in the Middle East.

The closing days of 2008 may be marked by floods, terrorism and global financial collapse - but Pope Benedict XVI has assured believers that the end of the world is not nigh.

Speaking at a ceremony at which he blessed figures of the infant Jesus for Rome Nativity cribs, the Pope said there had been "alarmism" about the end of the world since the days of St Paul, who in his Letter to the Philippians had told early Christians to rejoice because "The Lord is at hand" (Phil. 4:4-5). This had been wrongly taken to mean the imminent approach of the Last Judgement.

Last year the Pope dismissed recurring "Messianical" predictions of the imminent end the world, saying "history is ongoing, and involves human tragedies and natural calamities." He added, echoing Pope John Paul II, his predecessor, "Do not be afraid".

President-elect Barack Obama's selections of James L. Jones, a retired four-star Marine general, to be his national security adviser and, it appears, retired Navy Adm. Dennis C. Blair to be his director of national intelligence present the incoming administration with an important opportunity - and a major risk. These appointments could pave the way for these respected military officers to reverse the current trend of Pentagon encroachment upon civilian government functions, or they could complete THE SILENT MILITARY COUP D'ETAT THAT HAS BEEN STEADILY GAINING GROUND below the radar screen of most Americans and the media.

While serving the State Department in several senior capacities over the past four years, I witnessed firsthand the quiet, de facto military takeover of much of the U.S. government. Now the Pentagon has drawn up plans to deploy 20,000 U.S. soldiers inside our borders by 2011, ostensibly to help state and local officials respond to terrorist attacks or other catastrophes.

But that mission could easily spill over from emergency counterterrorism work into border-patrol efforts, intelligence gathering and law enforcement operations - which would run smack into the Posse Comitatus Act, the long-standing law restricting the military's role in domestic law enforcement. So the generals are not only dominating our government activities abroad, at our borders and in Washington, but they also seem to intend to spread out across the heartland of America.

Reports have circulated for years that the Saudis have pursued a secret nuclear program with help from Pakistan, though the Saudis deny this," said a Wall Street Journal article titled 'A Middle East Arms Race'. For years now, media outlets have alleged that Saudi officials are interested in nuclear proliferation, citing comments by former Saudi diplomat Mohammed Khilewi - who defected to the US in 1994. Khilewi reportedly handed over documents to US officials, which revealed that the Saudi government was interested in nuclear proliferation.

According to the diplomat, who now lives undercover in the New York City area, Saudi officials have had a covert nuclear weapons research effort since 1975. Khilewi says Saudi Arabia wants bombs to counter the threat posed by Israel - which already has Arab territory under occupation. An article published by The Guardian in 2003, made similar claims, suggesting that Riyadh was considering nuclear proliferation. According to the article, Pakistan and Saudi Arabia were engaged in secret nuclear cooperation.

A 2006 report printed by a British global business magazine, also alleged that Saudi Arabia had financed the Pakistani nuclear drive. "Western intelligence services are now convinced that SAUDI ARABIA PLAYED A LARGE ROLE IN FINANCING PAKISTAN'S NUCLEAR BOMB PROJECT. Riyadh's aim was to guarantee it immediate access to a nuclear arsenal… British Intelligence (MI6) already regards Saudi Arabia as a surrogate nuclear power, able to join the club whenever it chooses," reported The Business.

In a report published November 4 - just in time for the holiday season - the War College's Strategic Studies Institute posited a number of shocks that the country should be prepared for, INCLUDING UNREST CAUSED BY THE ECONOMY'S FAILURE. The report has a snappy title, "Known Unknowns: Unconventional 'Strategic Shocks' in Defense Strategy Development," and was written by Nathan Freier, a visiting professor at the college.

The War College says "widespread civil violence inside the US would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security." Among things Freier wants us to worry about are "deliberate employment of weapons of mass destruction... unforeseen economic collapse, loss of functioning political and legal order, purposeful domestic resistance or insurgency and catastrophic natural and human disasters."

Oh, and by the way, have a Merry Christmas!

Both coins were discovered recently in the Temple Mount sifting operation in Jerusalem's Emek Tzurim National Park. The project, funded by the Ir David (City of David) Foundation is now in its fourth year and is being carried out under the direction of Professor Gabriel Barkay of Bar Ilan University and archaeologist Tzachi Zweig.

The coin minted by ANTIOCHUS bears a portrait of the Greek monarch, who ruled from 175-163 BCE, during which time he looted the Temple of its treasures and erected a statue – an idol – in the sanctuary. The Hasmonean rebellion was directed against those actions, and the liberation of the Temple and its rededication are the events commemorated in the holiday of Chanukah which Jews have celebrated ever since. "This is the first coin of its kind that has been discovered, in near perfect condition, in rubble that comes from the Temple Mount," said Professor Barkay.

The silver half-shekel coin, discovered by 14-year-old Neve Daniel resident Omer Ya'ari, is one of those that were used to pay the annual Temple tax, appears to have been minted in 66/67 CE, the first year of the Great Revolt against the Romans. The tax, which every Jew was required to pay annually to the Temple, is described in Exodus (30:11-15). On one side of the coin, a branch with three pomegranates is visible, with the inscription, "Holy Jerusalem." The other side of the coin bears a picture of a chalice from the First Temple and the words, "Half Shekel."

Back in September, V.V. Chari, an economist at the University of Minnesota and an adviser to the Federal Reserve Bank of Minneapolis, got a call from a Congressman. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were arguing that they needed $700 billion to save the nation's financial system, and the Congressman wanted to know what to make of it all. Chari said he didn't know — he hadn't looked at the data. Policymakers kept talking about how banks weren't lending to businesses or to individuals or even to each other, so Chari pulled numbers to see just how badly the credit markets were frozen. HE WAS SURPRISED: HE DIDN'T SEE MUCH OF ANYTHING WRONG.

In October, Chari teamed up with two other economists, Lawrence Christiano and Patrick Kehoe, and wrote a paper called "Facts and Myths and the Financial Crisis of 2008." In it the economists wrote that the United States was "indisputably undergoing a financial crisis and is perhaps headed for a deep recession," but THE NATURE OF THE PROBLEM, THEY SAID, HAD BEEN COMPLETELY MISREPRESENTED.

"POLICYMAKERS HAD MADE THREE VERY SPECIFIC CLAIMS," says Chari. "That banks were not lending to non-financial businesses and households, that banks were not lending to each other, and that the ability of non-financial businesses to access the commercial paper market had declined very sharply." When he and his colleagues plotted Federal Reserve data through mid-October, THEY FOUND NO DRAMATIC DECLINE IN ANY OF THOSE CATEGORIES. Most measures of lending were holding steady; some were even increasing.

In November, Duygan-Bump, Cohen-Cole and two other colleagues — Jose Fillat and Judit Montoriol-Garriga — put out a paper called "Looking Behind the Aggregates: A Reply to Facts and Myths About the Financial Crisis of 2008.'" In it, they argued that even though overall lending seemed to be robust, that could very well be the result of companies drawing down existing credit lines — agreements banks had made in better times and now couldn't renegotiate. In fact, there was plenty of anecdotal evidence in the business press to suggest that was exactly what was happening, that companies were locking in funding not to invest, but to hoard cash for worse times ahead.

Chari is more cautious. "Our position throughout has been that policymakers likely have access to information that is better than the information we have — and that it would be good for them to share that information," he says. "They've been remarkably unforthcoming about the rationale for their interventions." That seems to be a common sentiment. "The argument is if you're a new customer walking into a bank, it's impossible for you to get a loan," says Chari. "That story may be true, but there's no convincing evidence that's what's going on."

But that hope has now been crushed under an increasing tide of grimmer and grimmer statistics that seem to portray an economy in free fall. China will have its hard landing in 2009, and even the most optimistic economists now concede that GDP growth will be far below the 8% annual pace that Chinese economists and officials generally regard as THE MINIMUM NECESSARY FOR THE PRESERVATION OF SOCIAL ORDER, possibly hitting 5% or under.

As the depth of the slowdown becomes clearer, voices from all quarters have warned of the dangers of unrest. In mid-November, President Hu Jintao said the crisis would be a grave test of the Communist Party's ability to rule China, a warning echoed by other lower ranking leaders. At a December speech, Premier Wen Jiabao confessed to being particularly worried about unemployed workers and university graduates. Even the head of the country's Supreme Court warned judges TO TAKE SOCIAL STABILITY INTO MIND WHEN PASSING RULINGS.

"You can tell that the senior leaders know political change will come to China eventually and that the Party can't hang on indefinitely," says the diplomat. "That's why 90% of their children are in business, not working their way up the Communist Youth League or whatever. But that change is 15, 20 years down the road. That's not going to happen now, even if it is a very bad downturn. Change will come to China. But not yet. Not now."

If that sounds like the triumph of culture over religion, it is. By the middle of the 20th century, Americans had embraced a civil religion that among other things elevated the ideal of family to a sacrosanct level. The Norman Rockwell image of family gathered around the tree became a Christmas icon that rivaled the baby Jesus. And Christmas Eve services — with their pageantry and familiar traditions — became just one part of the celebration, after the family dinner and before the opening of presents.

The crisis that started in the US subprime mortgage market spread this year to become a global economic and financial disaster. Governments around the world were forced to bailout some of the most recognisable names in the financial world as the credit markets seized-up and several high-profile companies including Bear Stearns and Lehman Brothers disappeared into history.

The S&P is down more than 40 per cent so far this year, its worst fall since the Great Depression. Most analysts expect that the more than year-long recession will get worse before it gets better and investors are bracing themselves for more pain in 2009.

Bright spots have been few and far between. Even the consumer staples sector is down by almost a fifth this year. The financial sector in particular has been decimated with the S&P Financials index down almost 60 per cent so far this year. Citigroup shares have lost 77 per cent, Morgan Stanley 72 per cent and Goldman Sachs 65 per cent over the course of a year that has redefined the fundamentals of the global financial markets.

Hours after the Pope spoke, Egyptian President Hosni Mubarak and Israeli foreign minister Tzipi Livni met to discuss growing violence between Israel and militants in Gaza. Top of the agenda was the end of the six-month ceasefire in Gaza, which the Egyptians have brokered.

Appealing for new efforts to end the cycle of violence in the Middle East, Pope Benedict urged people to pray that "hearts will be opened, so borders will be opened". The 81-year-old pontiff plans to visit Jordan, Israel and the Palestinian territories next May, although final details of his trip have yet to be worked out.

In his traditional Christmas Day "Urbi et Orbi" speech - Latin for "to the city and to the world" - from the balcony of St Peter's, Pope Benedict is expected to touch on current events and issues of concern to the Vatican.