Believing that the rescue package sends the wrong signal, experts from the country's leading economics think tanks argue it's the right call. IT'S NOT A CALL FOR ASSISTANCE; IT'S A SCREAM FOR HELP. US Treasury Secretary Henry Paulson is asking other countries to help buy up bad US debt. The US government is putting up $700 billion in taxpayer money in the hopes that the measure might restore stability in the financial system. Some countries are planning to help. BUT THE GERMAN GOVERNMENT HAS ANSWERED THIS CALL QUICKLY AND CLEARLY: NO.

ECONOMICS EXPERTS THINK THAT'S THE RIGHT RESPONSE. As they see it, in the long run, those responsible for the crisis - who have been cashed out with high salaries and bonuses for years - will not be penalized for billions "but will be let off the hook like everyone else," says Carsten Meier of the Kiel Institute for the World Economy (IfW). According to Meier, by injecting capital into the market, the US government is putting everyone who speculated and lost back on their feet and thereby standing in the way of a market cleanup.

Beijing is battling public alarm and international dismay after thousands of Chinese children were hospitalised, sick from infant milk formula tainted with melamine, a cheap industrial chemical that can be used to cheat quality checks.

A European Commission spokeswoman said EU authorities would test 100 percent of products from China containing more than 15 percent of milk powder, and would ban all products for children and young people containing any proportion of milk.

This came as the World Health Organisation and UNICEF issued a joint statement saying the deliberate contamination of food for infants and young children was "particularly deplorable". Nitrogen-rich melamine can be added to substandard or watered-down milk to fool quality checks, which often use nitrogen levels to measure the amount of protein in milk. The chemical is used in pesticides and in making plastics.

The Wall Street investment bank astounded its rivals by raising $10 billion in fresh capital — $5 billion from Berkshire Hathaway, Mr Buffett's main listed company, and $5 billion through a public share offering. Shares in Goldman rose 6 per cent to $133.00, giving Berkshire an instant theoretical profit on a side deal, under which it has warrants to buy up to $5 billion of new Goldman shares at $115 a share at any time in the next five years.

Analysts said that the decision by Mr Buffett, widely regarded as one of the world's most astute long-term investors, to take the plunge in financial stocks — having passed on previous capital-raisings by banks — might come to be seen as the turning point in the financial crisis.

"THE US WILL LOSE ITS STATUS AS THE SUPERPOWER OF THE WORLD FINANCIAL SYSTEM. This world will become multi­polar" WITH THE EMERGENCE OF STRONGER, BETTER CAPITALISED CENTRES IN ASIA AND EUROPE, Mr Steinbrück told the German parliament. "THE WORLD WILL NEVER BE THE SAME AGAIN."

His were the most out­spoken comments by a senior European government figure since Wall Street fell into chaos two weeks ago. He later told journalists: "WHEN WE LOOK BACK 10 YEARS FROM NOW, WE WILL SEE 2008 AS A FUNDAMENTAL RUPTURE. I am not saying the dollar will lose its reserve currency status, but it will become relative." The minister, who has spearheaded German efforts to rein in financial markets in the past two years, attacked the US government for opposing stricter regulations even after the subprime crisis had broken out last summer.

Mr Steinbrück's proposals include a ban on "purely speculative short selling"; a crackdown on variable pay for bank managers, which had encouraged reckless risk-taking; a ban on banks securitising more than 80 per cent of the debt they hold; international standards making bank managers personally responsible for the consequences of their trades; and increased co-operation between European super­visors.

The automotive loans are separate from the proposed $700bn bail-out for the banking sector. The House approved the measure 370-58, setting the stage for Senate approval within days. The industry's case has been helped by the fact that Michigan and Ohio, the two states most dependent on the car industry, are key swing states in the November 4 presidential election.

Executives of General Motors, Ford Motor and Chrysler and their suppliers have lobbied heavily for the loans. Both presidential ­candidates, John McCain and Barack Obama, have expressed support.

Shelly Lombard, analyst at Gimme Credit, a corporate bond research company, told clients this week that "blue collar workers are more sympathetic victims than 'rich' investment bankers. So it's easier to defend loans designed to save close to 100,000 jobs in the shrinking US manufacturing industry." The loans were originally authorised in an energy bill passed last December to finance the retooling of plants for more fuel-efficient vehicles, especially hybrid and electric cars. But they have become a crucial prop for Detroit carmakers.

A small notice taped to the window on this Friday afternoon in mid-July tells her why she's been locked out. IndyMac has failed, the single-spaced, letter-sized paper says; the bank is now in the hands of the Federal Deposit Insurance Corp. "The Receiver is now taking possession of the Bank," the sign says. "I'm physically shaking," says Horn, an academic tutor, as she peers into the bank. Inside, an FDIC examiner is talking to six stone-faced IndyMac employees. "I don't know when I'm going to be able to get my money," Horn says. "I'm a single mom. This is the money I live on." Don't worry about Horn. She'll be all right, as will most of Pasadena, California-based IndyMac's 200,000-plus customers.

That's because the FDIC, created in 1934, insures all accounts up to $100,000 at its member banks, and it has never failed to honor a claim. The people to worry about are U.S. taxpayers. The IndyMac debacle is taking a large bite out of FDIC reserves, and if scores of other banks fail in the year ahead, the fund will be depleted. Taxpayers will have to step in.

BY THE END OF 2009, ABOUT 100 U.S. BANKS WITH COLLECTIVE ASSETS OF MORE THAN $800 BILLION WILL FAIL, predicts Christopher Whalen, managing director of Institutional Risk Analytics, a Torrance, California-based firm that sells its analysis of FDIC data to investors.

The economy had shrunk by 0.3% in the first quarter of the year. Technically, a recession is defined as two or more successive quarters of negative growth. It is the first time Ireland has experienced a recession since 1983. The economy is now facing its most difficult period since high unemployment and emigration hit in the early 1980s.

Economists pointed to the collapse of a decade-long bonanza in Ireland's property market, coupled with a slump in construction activity. The global credit crunch has also been a factor behind the rapid economic slowdown. IT MEANS IRELAND IS THE FIRST EUROZONE ECONOMY TO SLIP INTO RECESSION THIS YEAR. The country has enjoyed a boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in Europe.

Bloxham Stockbrokers chief economist Alan McQuaid said: "Although the domestic side of the economy is contracting at a significant rate, the external side - the multinationals - is holding up quite well, but one would have to question how long that's going to last."

The Shenzhou VII capsule soared into orbit atop a Long-March II-F rocket from the Jiuquan spaceport in Gansu province in the northwest of China. The 70-hour flight will include a spacewalk undertaken by 42-year-old fighter pilot Zhai Zhigang. Mr Zhai is joined on the mission by two other "yuhangyuan" (astronauts) - Liu Boming and Jing Haipeng.

China's president Hu Jintao met the three astronauts before the lift-off, wishing them success on the nation's riskiest space mission yet. "You will definitely accomplish this glorious and sacred mission. The motherland and the people are looking forward to your triumphant return," President Hu told the yuhangyuan, who were dressed in flight suits and behind glass to avoid being exposed to germs.

The rocket will put the Shenzhou capsule in a near-circular orbit more than 300km above the Earth. Mr Zhai will conduct his extra-vehicular activity (EVA) on either Friday or Saturday. Dr Roger Launius, senior curator at the National Air and Space Museum in Washington DC, told BBC News: "It is a demonstration of technological virtuosity. IT'S A METHOD OF SHOWING THE WORLD THEY ARE SECOND TO NONE - WHICH IS A VERY IMPORTANT OBJECTIVE FOR CHINA."

Earlier this week, Pakistani troops fired warning shots at US helicopters near the border, local officials said. And on Wednesday, a drone believed to be operated by the CIA crashed inside Pakistan. Local tribesmen in the area told the BBC that two helicopters were trying to cross into Pakistani territory near Ghulam Khan, in North Waziristan, when Pakistani troops at posts near the border fired at them.

Major Murad Khan, of the Pakistani military, told the BBC that they were still checking the incident. Correspondents say there is growing anger in Pakistan at US forces in Afghanistan allegedly violating Pakistani sovereignty.

The BBC's Syed Shoaib Hasan says that the border between Afghanistan and Pakistan is very unclear. There is an imaginary border called the Durand line which each side marks differently. Our correspondent says that, in reality, the border is marked by a 3-4km (1-2 miles) stretch of no man's land. Pakistan says this is its territory and Afghanistan makes similar claims.

THE ENTIRE ECONOMY WAS IN DANGER, he said in a live TV speech, and failure to act now would cost more later. He has invited presidential rivals John McCain and Barack Obama to the White House on Thursday to discuss the $700bn (£378bn) rescue package. The rivals have disagreed on delaying a TV debate over the economic turmoil.

Mr McCain says he is suspending his campaign to help with the crisis, but Mr Obama says voters now need to hear from the candidates more than ever. The two men will attend a meeting with administration officials and congressional representatives on Thursday morning in the US capital in a bid to broker a mutually acceptable bail-out deal.

Mr Bush made his comments in an evening address to the nation. Major sectors of America's financial system were at risk of shutting down, he said, and without action a "distressing scenario" would unfold. His administration is calling on Congress to approve a costly bail-out - under which the Treasury would use public money to buy bad debt from troubled financial institutions - as soon as possible.

But lawmakers from both the Democratic and Republican parties have voiced doubts about the plan and the speed at which they are being asked to approve it. They want assurances that it will benefit ordinary American home-owners as well as Wall Street, and be subject to adequate oversight. Mr Bush said he understood the frustration of "responsible Americans" who "are reluctant to pay the costs of excesses on Wall Street".

"But given the situation we're facing, not passing a bill now will cost these Americans much more later," he said, calling for a bipartisan commission to oversee the plan.

It follows a speech to bankers by the Archbishop of York, Dr John Sentamu. In it, he called share traders who cashed in on falling prices "bank robbers and asset strippers". In the piece which is due to be published in the magazine on Friday, Dr Williams attacks "unbridled capitalism" and defends the socialist theorist Karl Marx's critiques of the system.

He said it had become - much as Marx suggested - "a kind of mythology" in which people invested their faith, wrongly assuming it would work for the common good. He urges that "short-selling" and some other financial practices be banned and wrote: "It is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to."

He accepts the need and desire for entrepreneurship but claims it is not the only way to create wealth. He denounces the notion that it is a type of "fundamentalism". On Wednesday Dr John Sentamu told bankers the market system seems to have taken rules "from Alice in Wonderland". The Archbishop also noted the contrast between the US government bank bail-out and the lack of funding for efforts to reduce poverty.

Although Damascus insists that its forces are conducting an anti-smuggling operation, the Lebanese Government is eyeing the moves with unease, believing that the unusual scale of the deployment has more to do with tensions between the two countries over recent sectarian clashes in northern Lebanon.

Their surprise deployment comes after several months of clashes in Tripoli, northern Lebanon, pitting the majority Sunnis against the minority Alawites, an offshoot of Shia Islam. The small Alawite community in Lebanon is a close ally of the Syrian regime. President Assad of Syria is an Alawite and most top positions in the Syrian security and military apparatus are filled by them

Alawites are a small offshoot of Shia Islam, which broke away from Sunni Islam after the death of Muhammad. Their doctrine deifies Ali, the son-in-law of Muhammad. They interpret the pillars of Islam as symbols; some celebrate many Christian festivals. The Baathist Government in Syria is dominated by Alawites. They comprise about 12 per cent of Syria's population. Their numbers are small in Lebanon but they became influential during Syria's military presence

Whether or not tomorrow's accounts of today's turmoil prove David Owen of Dresdner Kleinwort right; whether or not this is the beginning of the end of the dollar's pre-eminence in the world's central banks and foreign exchanges, THE ECONOMIC LANDSCAPE HAS UNDOUBTEDLY CHANGED FOREVER.

The US taxpayer bail-out of America's banking sector is an event whose significance will reverberate for many years. What it means for free markets, for the way Western economies are run, for the prosperity of the world economy, must remain to be seen. But as investors scrambled to make sense of last week's events, already one conclusion was all but irrefutable – THE US DOLLAR WILL HAVE TO TAKE ANOTHER MAJOR FALL.

The dollar rally that began in July and pushed the pound's value against the greenback significantly lower has come to an abrupt end as markets face up to the fact that the currency will have to absorb the effects of a sudden shocking increase in America's budget deficit. Might the dollar now be vulnerable to a run? In the longer term, MIGHT THIS SIGNAL THE BEGINNING OF THE END FOR THE DOLLAR'S STATUS AS THE WORLD'S RESERVE CURRENCY?

Additionally, Japan's No 3 bank plans to invest in Goldman Sachs, Japanese media said, in what would be the third big Japanese investment this week on Wall Street. Shares of Goldman Sachs jumped more than 7 percent to $134 before the bell.

"When one of the highly respected value investors puts up that amount of money it suggests, on the surface, that when Buffett jumps in the pool others may follow," said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey. "That says to investors that all is not lost."

But even as the Goldman Sachs news suggested confidence, investors worried congressional wrangling could delay or weaken the proposed $700 billion plan to rescue the financial sector, increasing unease about the struggling US economy. In another worrying sign for investors, the interbank cost of borrowing three-month money in London jumped on Wednesday, indicating that lending between banks remains strained because of a lack of confidence.

General Motors Corp, Dillard's Inc and Regions Financial Corp TUMBLED MORE THAN 7 PERCENT after members of the Senate Banking Committee expressed skepticism about Treasury Secretary Henry Paulson's plan. General Electric Co, the world's third-biggest company, retreated 4.6 percent as Merrill Lynch & Co downgraded the stock on "growing fundamental pressures." ConocoPhillips and Newmont Mining Co lost more than 3 percent as oil, gold and copper prices decreased.

"THE CREDIT CRUNCH IS GOING TO BECOME FAR MORE SEVERE THAN ANYBODY THOUGHT TWO WEEKS AGO," said Tom Wirth, senior investment officer at Chemung Canal Trust Co in Elmira, New York, which manages $1.7 billion. "In my opinion this is not understood by the politicians in Washington." About 1.2 billion shares changed hands on the floor of the NYSE today, about half of the average last week.