Profit from continuing operations declined to $655 million, from $1.04 billion a year earlier, the company said today in a statement. "BY ALMOST ANY MEASURE, THE U.S. ECONOMY AND BUSINESS ENVIRONMENT ARE MUCH WEAKER THAN THE ASSUMPTIONS" the company had in January, Chief Executive Officer Kenneth Chenault said today in a conference call. "Unemployment rates took the largest jump in over twenty years. Home prices declined at the fastest rate in decades and consumer confidence is at one of its all-time low points."

The U.S. economic slowdown worsened in June, affecting even American Express's wealthier cardholders with high credit scores, Chenault, 57, said in the call. Late and uncollectible loans were higher than expectations in the quarter and will rise as the year progresses, Chenault said. The U.S. lost 62,000 jobs in June, the sixth straight period of shrinking payrolls.

Wachovia Corp lost $8.86 billion in the second quarter, and said Tuesday it was slashing its dividend and cutting 6,350 jobs after losses tied to mortgages soared. Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

"These bottom-line results are disappointing and unacceptable," Chairman Lanty Smith said in a statement. "While to some degree they reflect industry headwinds and weaker macroeconomic conditions, they also reflect performance for which we at Wachovia accept responsibility." The nation's fourth-largest bank by assets says it lost the equivalent of $4.20 per share in the April-June period. In the same timeframe last year, the bank earned $2.34 billion, or $1.22 per share.

Wachovia has been suffering from its 2006 acquisition of Golden West Financial Corp. The bank paid roughly $25 billion for the California mortgage lender known for exotic loans. The so-called "Pick-a-Payment" loans, which Wachovia inherited from Golden West, have proved a headache for the bank and a lightning rod for shareholders, defaulting at higher rates than other mortgages.

The assessment from David Blanchflower, a member of the Bank's interest rate-setting committee, would mean about £55,000 being wiped from the value of the average home, currently £180,350. At this level, house prices would return to the levels of 2003, a disaster for many who have bought in the last few years.

House prices have already fallen 8.6 per cent since January, cutting the price of the average home by nearly £17,000. Professor Blanchflower's prediction in a newspaper interview is one of the most pessimistic about the fate of house prices. His position as one of the nine individuals who decide interest rates each month means it will be taken seriously.

That is - unless you own a £10m mansion - Earlier this year Indian steel magnate Lakshmi Mittal bought Kensington Palace Gardens in West London for £70million. In the super-prime sector, house prices are still going up, jumping 6.8 per cent since the start of the year. About 80 per cent of the buyers are foreigners, according to Knight Frank, with a quarter coming from Russia.

Fannie Mae and Freddie Mac, which are currently in possession of, or have insured, over 5 trillion dollars worth of mortgages, a good portion of which are nothing but toxic waste, have imploded and will now be nationalized in the most egregious example of moral hazard in the history of the world.

As this socialism for the rich transpires, IndyMac Bank has gone up in smoke. This is the second largest bank failure in US history and the largest such failure in over 23 years. Adding insult to injury, 10% to 20% of the FDIC's insurance reserves have just gone up in smoke along with IndyMac just as the hundreds, and what may eventually turn out to be thousands, of bank failures that are anticipated get started in earnest. What does that leave for future failures if only one bank failure wipes out a fifth of the FDIC's reserves?

Next up on the chopping block may be Downey, First Federal, Wachovia and Washington Mutual, which are not small fry by any means. Mattresses and freezers may soon be the savings vehicles of choice for those who can't afford a home safety vault as Depression Era mentality becomes the psychology du jour. WE ARE TOLD ALLOWING THE SYSTEM TO DEVOLVE INTO CHAOS IS NOT AN OPTION. WHAT THEY FAIL TO TELL YOU IS THEY HAVE NO GOOD OPTIONS. BUYING TIME IS NOT GOING TO SOLVE THE PROBLEM.

The current financial crisis in the United States has spread to other countries because of a massive debt that was not backed by enough real and liquid collateral. Banks and businesses gasping for financial breath are up for sale at basement prices, but no one is certain if the basement is the bottom.

"The possibility remains that more Arab white knights will be sought to rescue ailing financial institutions," wrote Dr. Mohammed Ramady, a former banker and Visiting Associate Professor at the King Fahd University of Petroleum and Minerals in the Financial Adviser magazine. He said he fears that Arab investors will end up chasing their investments with more money to keep them from going under.

The growing Arab takeover of American businesses continues unhindered. The giant Dow Chemical company and a Kuwaiti company have agreed to set up world headquarters for their joint petrochemical venture in Dearborn, Michigan, which has a high concentration of American Arabs. The Abu Dubai Investment Council years ago entered the international media business, buying a nine percent stake in Reuters News Agency, which usually reports with an open anti-Israeli bias. However, Abu Dhabi's' director of international affairs, Yousef al Otaiba, has reassured American officials that its purchase of Citibank will not be used to exert political pressure on the U.S.

The five were released in return for the dead bodies of Hizbullah-kidnapped IDF soldiers Ehud Goldwasser and Eldad Regev. Nasrallah's "era of victories" speech came three years and one month after then-Vice Prime Minister Ehud Olmert told the Israel Policy Forum, "WE ARE TIRED OF FIGHTING; WE ARE TIRED OF BEING COURAGEOUS; WE ARE TIRED OF WINNING, WE ARE TIRED OF DEFEATING OUR ENEMIES."

As world media reported the cheering in Lebanon and the mourning in Israel after the terrorists were freed and the soldiers' bodies returned, Nasrallah told tens of thousands of cheering supporters that the deal achieved the goal that he stated at the end of the 2006 war - to force Israel to free Kuntar and the Hizbullah guerrillas. He said Hizbullah achieved another victory by forcing the Lebanese coalition government to give it and its pro-Syrian allies a larger Cabinet representation, giving it veto power over major decisions.

"THE AGE OF DEFEATS IS GONE, AND THE ERA OF VICTORIES HAS COME. This people, this nation gave a great and clear image today to its friends and enemies that it cannot be defeated," Nasrallah said in his brief appearance marked by a large number of bodyguards.

The video, which can be viewed on YouTube, is part of an international media campaign targeting the Arabic-speaking world. The video explains who "the real Samir Kuntar" and his supporters are: "Hizbullah is a terrorist organization that sees a cold-blooded child murderer as hero," reveals the narrator of the video, which aims to establish an Israeli moral victory over Hizbullah.

"For Hizbullah, Samir Kuntar is a first-rate hero, while for Israel and the rest of the civilized world he is the most despicable of murderers," the spokesman declares in Arabic. "He is no freedom fighter, but an abominable murderer." Samir Kuntar crushed the skull of a four-year-old girl and killer her father along with an off-duty policeman in 1979. He has been lionized in the Arab world as a hero for doing so, and respected as a martyr for the nearly three decades he spent in Israeli prisons. The video is an attempt by the Israeli government to combat global Arab propaganda on Israel's terms.

Rather than acquiesce to an Arab media that controls the prerogative of propaganda, the new Foreign Ministry initiative allows government spokesmen to speak directly to the Arab world on the internet. "The age of waiting for an interview with an Arab station is over," a Foreign Ministry spokesman told Ynet. "The aim is to create a dialogue through the YouTube channel's talkback mechanism. This video is the first, and in it we stressed the cynical way in which Hizbullah has exploited the families' grief and its and Samir Kuntar's boastful manner."

To twist their arm and try to make them go back on their decision is counter-productive because, in their overwhelming majority, those who voted no do not regret having rejected the treaty. The campaign was intense and the participation massive. Furthermore, this no vote came within the continuity of those expressed three years earlier by the French and the Dutch. PUBLIC OPINION, IN SEVERAL EUROPEAN COUNTRIES, IS HOSTILE TO CLOSER INTEGRATION."

"Personally, I regret that as I voted yes. But the EU cannot disrespect the sovereign choice of the Irish people, not without arousing in them a lasting sense of resentment. AFTER THE FRENCH NO VOTE, NOBODY ASKED THEM TO GO BACK ON THEIR DECISION BY MAKING THEM VOTE AGAIN ON THE SAME TEXT. But we'll do it with the Irish just because there are less of them and because this time they are the only ones who have had their say on the treaty through universal suffrage?"

Figures will show that six per cent of all NHS admissions are in some way caused by drink, The Daily Telegraph can disclose. And the rate of visits to hospital over alcohol-related problems is rising by 10 per cent every year. The figures indicate the true impact alcohol has on the NHS from accidents, violence and disease. They include for the first time estimates of the number of cancers caused by alcohol consumption as well as heart disease and strokes.

Alcohol is thought to cause about 17,000 cases of cancer a year and £2billion of NHS money is spent every year treating patients with alcohol-related diseases. Alan Johnson, the Health Secretary, believes "lifestyle" illnesses will put an increasing strain on the NHS unless people behave more responsibly. Ministers fear that resources needed to tackle other diseases will have to be diverted if there is no change in behaviour.

Injuries caused by drink-fuelled violence or road accidents are also not fully recorded, they will say. Officials estimate that the true figure for alcohol-induced admissions last year was 811,000. The figures underline the seriousness of the problem and the strain it places on the NHS. They will show that admission rates are more than twice as high for men as for women.

A new Canadian study suggests that even these foods - most of which make nutritional claims on their packaging - aren't all they profess to be. University of Calgary researchers analyzed the nutritional benefit of more than 360 such products, often marketed as "fun foods," which are aimed at children.

Three-quarters of these foods, for example, came in packages bearing cartoon images. Researchers did not include junk food in their analysis, but they found that nearly 90% of kid products still did not meet established nutritional standards. What's more, 62% of the foods that researchers deemed to be of "poor nutritional quality" made positive nutritional claims on the package - such as being low-fat, containing essential nutrients or being a source of calcium. "If a parent sees a product that makes specific nutritional claims, they may assume that the whole product is nutritious," says author Charlene Elliott, a communications and culture professor at the University of Calgary. "Our study has shown that that is definitely not true in the vast majority of cases."

The food industry has long been under fire for advertising directly to children. They're an irresistibly lucrative target - children under 12 are estimated to spend more than $25 billion a year themselves, and may influence another $200 billion that is spent. But there's no doubt that some of that spending contributes directly to childhood obesity - 32% of American youngsters are overweight, and 50% of the calories kids under 18 eat come from fat or added sugars.

The Environmental Audit Committee also warned against the government allowing coal-fired power plants to be built that were "CCS ready" able to be fitted with carbon capture and storage technology once it is commercially proven and available. "Carbon capture and storage has undoubted potential, but there is a real question about when it will become technologically and, equally importantly, commercially viable," said committee chairman Tim Yeo.

"We cannot afford to develop new coal-fired power stations when we have no guarantee about when they will be fitted with CCS, if at all," he added. Carbon capture and storage is the holy grail in the battle against global warming because in grabbing emissions of climate warming carbon gases before they reach the atmosphere and burying them deep underground it allows business as usual.

BECAUSE OF A COMBINATION OF AGE AND EUROPEAN EMISSION LAWS, BRITAIN WILL BE FORCED TO CLOSE UP TO ONE-THIRD OF ITS POWER PLANTS WITHIN THE NEXT 15 YEARS.

No single country owning large amounts of dollar-based investments is inclined to dump them abruptly; nobody aims to start a panic. But fears have begun to grow that one day a country may get spooked that another is about to dump its dollars - and THAT COULD TRIGGER PRE-EMPTIVE PANIC SELLING.

"Foreigners could decide it's just not worth the risk and sell," says Andrew Tilton, an economist at Goldman Sachs. "The really dire scenarios have become a lot more likely than they were a year or two ago." Still, as Tilton and others are aware, one fundamental reality continues to offer assurances that foreigners will still buy American debt: IN THE GLOBAL ECONOMY OF THE MOMENT, THE UNITED STATES ITSELF IS TOO BIG TO FAIL.

The logic for that assurance goes like this: The American consumer has for decades served as the engine of world commerce, using borrowed cash to snap up the accoutrements of modern living - clothes and computers and cars now manufactured, in whole or in part, in factories from Asia to Latin America. Eliminate the American wherewithal to shop, and the pain would ripple out to multiple shores. GLOBALIZATION, IN OTHER WORDS, ALLOWED CHINA AND JAPAN TO AMASS THE FORTUNES THEY HAVE BEEN LENDING TO THE UNITED STATES.

In other words, in the estimation of people in control of money, the United States cannot be allowed to collapse, just as Fannie and Freddie cannot be allowed to fail. Too much is riding on their survival. The central truth of that logic still seems to be apparent as the Treasury keeps finding takers for American debt.

So the government offers its rescue of the mortgage companies, and foreigners keep stocking the government's coffers. "They don't want the U.S. to go into the worst downturn since the Depression," Tilton says. BUT ALL THE WHILE, THE DEBT MOUNTS ALONG WITH THE COSTS OF AN ULTIMATE DAY OF RECKONING. Debate grows about the wisdom of leaning on foreign credit, and about how much longer Americans will retain the privilege of spending and investing money that isn't really theirs.

Bailouts amount to mortgaging the future to stave off the wolf howling at the door. The likelihood of a painful reckoning is diminished, while the costs of a reckoning - should one come - are increased.

THE COSTS ARE GETTING BIG.

Lord Justice Dyson, the judge overseeing the case, yesterday asked the Government to explain its actions. However Mr. Wheeler's application for leave to appeal has since been rejected this morning.

The front page of the Express notes that the ratification was only made public yesterday - 24 hours after the ceremony in Rome had taken place. Despite reports that Foreign Secretary David Miliband was due to make a statement to Parliament yesterday, in the end only a two-line written statement was submitted by Europe Minister Jim Murphy.

Open Europe's Lorraine Mullally is quoted in the paper as saying, "FIRST GORDON BROWN SIGNED IT IN BRUSSELS IN SECRET AND NOW THEY'VE RATIFIED IT ON THE SLY. THEY ARE ASHAMED OF IT BECAUSE THEY KNOW PEOPLE DON'T WANT IT. Gordon Brown has behaved in a cowardly way because he is scared of the voters." Meanwhile, Commons leader Harriet Harman insisted it was "in Britain's interest to be at the heart of Europe".

The Gaza-based group of Salafi Muslims, known as the Army of Islam (Jaish al-Islam), first made headlines a year ago when it kidnapped British Broadcasting Corporation (BBC) reporter Alan Johnston near his Gaza City bureau office. "It was nothing personal," commented their leader, Abu Mustafa, in an interview published over the weekend by the German Der Spiegel. "It was a message to the West that they should release imprisoned Muslims." He added that at the moment foreign journalists are not in danger in Gaza.

Abu Mustafa does not consider Hamas to meet the criteria for real followers of Islam, however. "They are traitors. Compared to us, they are Islamism-lite." Whether they will come to violence over their differences, and ultimately a struggle for control of the region, is a separate issue.

"We will give them the chance to turn away from the false path," he said, but added that if Hamas does not comply, "Then there will be confrontation." In the long run, however, Abu Mustafa said he believes Hamas's "American style of Islam" will do the job for him. "They will destroy themselves."

Next came the federal takeover of IndyMac, following Sen. Chuck Schumer's, D-N.Y., ill-advised public release of his June 26 letter to the Office of Thrift Supervision and the Federal Deposit Insurance Corporation expressing concern over the bank's solvency.

Wall Street Journal editorial writer Holman W. Jenkins, Jr. made a strong argument that Freddie and Fannie ought to be privatized and their assets sold, with the goal of putting both quasi-governmental entities out of business once and for all.

What is certain is that more bank failures are likely in the coming months, as the crisis resulting from the bursting of the mortgage bubble works its way through billions of dollars in near worthless or deeply depreciated collateralized mortgage securities held by U.S. financial institutions in their asset portfolios. As many as 150 out of the 7,500 banks in the U.S. could fail in the next 12 to 18 months.