Speaking at the launch of France's fourth nuclear-armed submarine, the "Terrible" (Fearsome), Sarkozy said his nation had to face new security threats, including Iran, and needed to be able to strike back forcefully if attacked. "Everyone must be aware today that even far-flung powers' nuclear missiles can reach Europe in less than half an hour," Sarkozy said in a speech at the northern port of Cherbourg.

While only major powers had such means today, countries in Asia and the Middle East were conducting a "forced march" to acquire such ballistic missile capabilities, he added. "I am thinking in particular of Iran. Iran is increasing the range of its missiles while grave suspicions hang over its nuclear program. Europe's security is at stake," he said.

The voluntary crucifixions in the northern Philippines were the most extreme displays of religious devotion in this mainly Catholic country, where millions are praying and fasting ahead of the Easter weekend. In the small village of Cutud, about 80 km (50 miles) north of Manila, men cried out as nails the size of pencils were driven into their hands and feet before they were hoisted up in the scorching heat. Eight went through the process. Eleven backed out, organizers said.

In the neighboring province of Bulacan, five people were nailed to wooden crosses, including a 15-year-old boy and an 18-year-old girl. Thousands watched the spectacle in Cutud, which has grown from a village production started in 1962 to a media and tourist attraction copied in other parts of the country. For hours before the crucifixions lines of men, hooded and half naked, flayed their backs with bamboo whips and paddles tipped with broken glass. Blood splattered over the road.

The atmosphere was festive, with hawkers selling beer, ice-cream and souvenir whips. VIPs watched from a specially elevated "viewing platform".

The plan is part of a wider programme launched by the Saudi monarch a few years ago to encourage moderation and tolerance in Saudi society. The ministry of religious affairs and new centre for national dialogue will carry out the training, the paper said. The centre was created five years ago to disseminate a moderate interpretation of Islamic tradition. There is growing awareness in Saudi society that security measures alone are not enough to counter the threat of Islamic militancy.

Saudi clerics have long been accused of encouraging Saudi youth to join global jihad and of inciting hatred of non-Muslims. Nearly 1,000 imams have already been sacked over the past few years. The Saudi royal family has come under increasing pressure - mainly from Washington - to change religious textbooks and to rein in militant clerics. But critics are sceptical about whether such initiatives would work as long as the powerful, and ultraconservative, religious establishment in Saudi Arabia continues to exert enormous influence over society.

Only last week, a prominent cleric called for the beheading of two liberal writers who had questioned the orthodox view that Muslims can not change their religion.

Cardinal Keith O'Brien will use his Easter Sunday sermon to launch a scathing attack on the prime minister over the controversial proposals. He will also criticise Mr Brown for not allowing Labour MPs a free vote on the issue at Westminster. Mr Brown has said the bill would improve research into many illnesses. Supporters of the Human Fertilisation and Embryology Bill believe hybrid embryos could lead to cures for diseases including multiple sclerosis and Alzheimer's disease. Speaking at Prime Minister's Questions on Wednesday, Mr Brown said: "This is an important Bill that improves the facilities for research and is vital for dealing with life-threatening diseases."

But in his sermon, which was released on Friday, Cardinal O'Brien claims that the Bill would lead to the endorsement of experiments of 'Frankenstein proportion'. He will say: "This Bill represents a monstrous attack on human rights, human dignity and human life. In some European countries one could be jailed for doing what we intend to make legal. I can say that the government has no mandate for these changes: they were not in any election manifesto, nor do they enjoy widespread public support." The Cardinal will describe the practice as "grotesque" and "hideous".

HOW BAD CAN THINGS GET? The answer is: very bad indeed, but not necessarily in the way many people think. THIS IS A BRUTAL FINANCIAL CRISIS, which is very likely to lead to a long and nasty recession in the US. But the outcome of this crisis is more likely to be HYPERINFLATION, than deflation.

This time, the Fed not only accepts the risk of higher inflation. It actually appears to seek higher inflation, as this would ease some of the problems (obviously not for all of the people). Inflation reduces the pain of borrowers. IT WILL MARK THE END OF THE US AS THE WORLD SOLE ECONOMIC SUPERPOWER; THE END OF THE DOLLAR AS THE GLOBAL RESERVE CURRENCY, AND ITS REPLACEMENT BY THE EURO; and the de facto end of Anglo-Saxon transaction-based financial capitalism. All three are, of course, related, but it is worth pondering those consequences in turn.

The US financial superpower status was geared not primarily to the relative size of the US economy, close to 30%, but in terms of the role played by the US in the globalisation Ponzi game. The US current account deficit was an important part of this game, as was China's c/a surplus and its undervalued currencies.

But as the dollar collapses and inflation rises, the US will not be able to maintain that game indefinitely. Nor will it be able to maintain the status as a global reserve currency for any length of time, as rising inflation will not be acceptable for many economies pegged to the dollar. The euro is the currency of the least inflated global economic region, and as such offers the best store of value - a consideration likely to prove increasingly important as this crisis unfolds.

SO THIS RUN ON FINANCIAL AMERICA IS NOT ONLY A HUGE FINANCIAL EVENT. IT IS A GEOSTRATEGIC SHIFT OF GREAT IMPORTANCE.

Credit Suisse, which employs hundreds of people in Canary Wharf, discovered the problem last month but today is the first time it has revealed that traders had cooked the books. Traders are believed to have deliberately tried to cover up the scale of their losses in complex financial instruments, probably to boost their year-end bonuses. Originally the bank said that the traders had accidentally "mismarked" the prices of the financial instruments.

But today it said that it had "determined that the pricing errors were, in part, the result of intentional misconduct by a small number of traders". THE NEWS RAISES FEARS THAT OTHER BANKS ARE SITTING ON MASSIVE LOSSES WHICH HAVE YET TO COME TO LIGHT. Credit Suisse said all the traders involved had now either been fired or suspended.

The bank has always refused to name any of the traders involved but it was revealed by the London Evening Standard that the team was headed by Kareem Serageldin, a managing director at the bank who left last month. Credit Suisse admitted that an internal review "found that controls put in place to prevent this activity were not effective".

In the audio excerpts broadcast by the Doha, Qatar-based television, bin Laden said that "Palestine cannot be retaken by negotiations and dialogue, but with fire and iron." Bin Laden also called on Palestinians who are unable to fight in the "land of Al-Quds" - a Muslim reference to Jerusalem - to join the Al Qaeda fight and the holy war, or jihad, in Iraq. "The nearest field of jihad today to support our people in Palestine is the Iraqi field," bin Laden said.

"We tell our brothers in Palestine who could not join the jihad in the land of Al-Quds, to get rid of illusions of political parties and groups which are mired in the trickery of the blasphemous democracy and to take their positions among the ranks of the mujahideen in Iraq," he said.

Such a Palestinian fight in Iraq should be "concentrated on and supported by all Muslims, specially from neighboring countries," bin Laden added and also called on people of Syria, Lebanon, Jordan and Saudi Arabia to "help in support of their mujahedeen brothers in Iraq, which is the greatest opportunity and the biggest task."

The announcement came ahead of a meeting with the bosses of the big five UK high street banks. The banks are understood to want the Bank of England to pump even more cash into the system. Both the European Central Bank and the US Federal Reserve have made much more money available to their banks. This week's additional funding, released on Thursday, was three times oversubscribed.

No details of the talks between the bank bosses and Mervyn King have been disclosed, but the Bank of England issued a short statement. "The Bank of England and the banks agreed to continue their close dialogue with the objective of restoring more orderly market conditions," it said. The banks represented were HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS.

HBOS shares were among the top gainers on the London Stock Exchange on Thursday, up 6.2% recovering most of their falls from the previous day. On Wednesday, the Financial Services Authority (FSA) said it would "not tolerate" traders starting "false" rumours about firms to make cash from dealing in their shares.

The tax was customary during the times of the first and second Temples, and is described in the Torah portion "Ki Tisa" in the book of Shemot (Exodus). The coin is believed to date back to the Second Temple period.

The discovery was made shortly before the holiday of Purim, when Jews give a sum of money as a reminder of the ancient half-shekel tax. While the ancient tax was used to pay for the upkeep of the Temple, the modern sum is traditionally donated to the needy.

"These accusations are totally unfounded," the chief Vatican spokesman Rev. Federico Lombardi told Reuters, in response to an audio recording by bin Laden which was posted on the Internet to coincide with the birthday of the founder of Islam.

Lombardi said bin Laden's accusations were not surprising. "It is natural to think that he would lump the Vatican and the Pope together with all his perceived enemies. But this is not correct," he said. He recalled that the Pope himself had been quick to condemn the Danish cartoons and had launched a wider criticism of depictions of religious figures that offend members of different faiths.

He also pointed out that Pope Benedict, who himself deeply offended many Muslims with a 2006 speech depicting Islam as a violent faith, recently set up a permanent official dialogue with Muslim leaders.

Wouter Bos, Dutch finance minister, is set to be heavily outvoted at a meeting of his peers on Tuesday to pass the 2006 budget of €107bn (£80bn, $155bn), in spite of huge errors found by auditors last year in the four-fifths of money that is spent nationally. Mr Bos, backed by the European Commission and members of the European parliament, aims to press states to provide proof that the money was well spent. The Commission has threatened to suspend billions of euros worth of payments or take legal action if they do not provide such proof.

Mr Bos, who last year became the first finance minister to sign an annual statement that EU agricultural spending had been audited, has said he will vote against discharge of the budget. "An improvement needs to be made in accounting for EU money, and much more work needs to be done by member states," a Dutch government spokesman told the Financial Times. "This is an issue for member states more than the Commission."

Stocks in Halifax Bank of Scotland slumped by more than 17 per cent yesterday morning as SPECULATORS SPREAD MALICIOUS AND FALSE RUMOURS ABOUT THE BANK'S IMMINENT COLLAPSE. The drama started to unfold at 8.31 when shares in HBOS began to wobble. What followed was one of the most remarkable morning's trading in recent stock market history.

THERE WERE UNCONFIRMED REPORTS LAST NIGHT THAT ONE TRADER HAD MADE £100MILLION FROM THE COLLAPSE IN HBOS SHARES. Britain's financial watchdog immediately launched a criminal investigation into the "modern day bank robbers" who collectively helped to wipe more than £3billion off the bank's value. The Financial Services Authority warned them to stop exploiting jittery market conditions. The rumour-mongering is now known to have fuelled the extreme market turbulence of the last few days.

The collapse of HBOS, which has more than two million small shareholders, would be an almost unimaginably enormous financial disaster, hence the share price crash when the City was swamped with wild rumours that it was on the brink of disaster yesterday. The Bank of England was forced to issue a statement insisting that there was no reason to panic and that it had not given emergency help to the bank. HBOS added to the condemnation heaped on the traders who caused the disastrous plunge in its share price.
A senior HBOS executive said: "THIS IS THE MODERN DAY VERSION OF BANK ROBBERY."

In an audio recording posted on the Internet coinciding with the birthday of Islam's founder, bin Laden said the drawings, considered offensive by Muslims, were part of a "new crusade" in which Pope Benedict was involved. "Your publications of these drawings - part of a new crusade in which the Pope of the Vatican had a significant role - is a confirmation from you that the war continues," said the Saudi-born militant leader, addressing "those who are wise at the European Union."

You are "testing Muslims - the answer will be what you shall see and not what you hear." The message, produced by al Qaeda media arm As-Sahab in the lunar month which ended on March 8, carried an animation of a spear piercing through a red map of Europe with blood splashing as its tip penetrated the surface.

It also carried what appeared to be an old picture of bin Laden firing an assault rifle. The message also coincides with the fifth anniversary of the U.S.-led invasion of Iraq. Michael Scheuer, a former CIA bin Laden tracker, said: "It's not a coincidence that it was released on the day that is observed in the Muslim world as the Prophet's birthday." He added: "It's only ominous when he says 'don't listen to our words, watch for our actions' ... that means they clearly are intending to attack in Europe."

The Financial Services Authority said it had started an investigation into whether some traders spread rumors about British financial institutions over the last few days and might have profited from the decline in the stocks' share prices. Separately, the Bank of England, which almost never makes public statements about specific lenders, denied rumors that it met or scheduled to meet with executives at a British bank to discuss potential liquidity problems.

"It reveals how nervous the authorities are that rumors can actually bring serious problems to a financial institution," said Alistair Milne, senior lecturer at Cass Business School in London. Trading rooms were buzzing with rumors Wednesday morning that HBOS, the largest mortgage lender in Britain, was in trouble. The speculation had wiped about £3 billion, or $6 billion, off its market value before the Edinburgh-based lender could deny them, saying it had "ready access" to funding.

"They are trying to stamp on malicious rumors and foul play, but it's difficult because the markets have always worked on rumors," said Keith Bowman, equity analyst at Hargreaves Lansdown, a stockbrokerage firm in London. "Especially in a down market, the fact that investors can equally make money by taking short positions has accelerated the rumor mills."

We were told that this was THE NEW WORLD, the prime source of British wealth generation in the 21st century, CONDUCTED BY YOUNG CENTURIONS WHO WERE MASTERS OF THEIR UNIVERSE. According to the pundits, the rest of us should not carp at their riches because their skills were indispensable to our future. The rest of us would, in effect, be dependent upon crumbs from their banquet table to pay our wages in the decades ahead.

We watched hedge-fund kings down their £1,000 bottles of claret, chief executives play in the contest to rival each other's multi-million salaries. WE ASSUMED THAT THEY KNEW WHAT THEY WERE DOING. TODAY, OF COURSE, WE SEE THAT THEY MOST CERTAINLY DID NOT. The men and women responsible for the conduct of the West's financial SYSTEM HAVE LANDED THEMSELVES, AND ALL OF US, IN AN EPIC MESS OF WHICH NOBODY DARES TO FORETELL THE OUTCOME.

It is scarcely surprising that we feel bitter. There seems every likelihood that, AFTER THEY COLLECTED HUGE REWARDS ON THE WAY UP, IT WILL BE UP TO US TO PAY THE BILLS FOR THEIR FOLLIES ON THE WAY DOWN. Most of us with variable pensions or savings pay an annual 2 per cent fee to the wizards who manage them - who, in turn, are also entitled to a healthy cut of any increases they achieve. But nowhere in the small print is there provision for THE SAME CLEVER PEOPLE TO ACCEPT A SHARE OF OUR LOSSES WHEN PENSIONS AND SAVINGS HEAD SOUTH, AS THEY SURELY WILL.

For years, banking kings on both sides of the Atlantic have argued that the free market is the great wealth-creator; that government regulators should keep their meddling hands off Wall Street and the City because capitalism works best when the experts are left to get on with it. Yet the moment the Western financial system falters, indeed staggers on the edge of a precipice, BANKERS FLEE IN TERROR - HOPING THAT THE STATE WILL BAIL THEM OUT. That means us. British taxpayers have a £25 billion-plus exposure to Northern Rock.

In America, the U.S. Federal Reserve is now being obliged to offer guarantees, the costs of which might prove huge, even though JP Morgan has accepted the risk of buying the collapsing investment bank Bear Stearns. Unfortunately, those of us who live and work outside the City magic circle cannot allow ourselves the dance of glee we would normally enjoy when money moguls are discredited. For today, everybody's affairs are now so inextricably entwined with those of the financial world that if they suffer, so assuredly shall we all.

Now is the moment, surely, for local authorities to shed their armies of gender counsellors and lifestyle advisers, health and safety storm troopers, community service experts. A nation soon to be short of cash should be urgently addressing the social security budget, slashing discretionary spending, management consultants, ill-judged computer projects. What a moment for London to be lumbered with hosting the Olympics!

However, RATHER THAN REAL SPENDING CUTS, WE ARE LIKELY TO SEE A HUGE RISE IN TREASURY BORROWING SUCH AS WILL BURDEN THE COUNTRY AND HOBBLE FUTURE GOVERNMENTS FOR YEARS. Whichever party wins the next General Election will soon wish that it had not. Some time - probably after two or three nasty years - we can expect things to get better again. It would be nice to suppose that this experience would chasten the hedge-fund kings and banking geniuses who have created this shambles. FAT CHANCE! MASTERS OF THE UNIVERSE DO NOT DO HUMILITY.