He laid out a set of proposals including more regulation and control of banking activities and capping of the pay of the leaders of financial organisations. He said "self regulation is finished."

German Finance Minister Peer Steinbruck said the crisis marks the beginning of a multi-polar world, where the US is no longer a superpower. HE BLAMED THE "IRRESPONSIBLE" POLICIES OF THE US FOR THE CRISIS, CLAIMING THEY WERE "SIMPLISTIC" AND "DANGEROUS". Steinbruck yesterday outlined a series of "draconian" financial regulations, according to Eurointelligence.

The article reports that he wants to make short-selling illegal, and to impose legislation forcing banks to take on 20% of the credit risk when selling on credit for securitisation. The FT notes that other proposals included a crackdown on variable pay for bankers. FRANCE AND GERMANY WILL SET UP A WORKING GROUP TO CONSIDER TOUGHER REGULATION.

The Economist argues that "Mr Sarkozy's call to make high finance 'moral' has deep roots. WHEN CRISIS MANAGEMENT TURNS TO A DEBATE ON NEW REGULATION, AMERICANS AND EUROPEANS WILL START FROM DIFFERENT PLACES."

His terse statement came as details emerged of the White House meeting which was supposed to seal the bail-out deal but ended in disarray with the two sides further apart than when they started. Democrats spoke of a verbal brawl in which some Republicans ACCUSED THE PRESIDENT OF TRYING TO SELL THEM SOCIALISM. Mr Bush replied: 'IF MONEY ISN'T LOOSENED UP, THIS SUCKER COULD GO DOWN.'

After the meeting, Treasury Secretary Hank Paulson is said to have literally begged Democrats to help keep the threatened deal afloat. Bending down on one knee in the Roosevelt Room of the White House, the 6ft 5in former American Football star nicknamed the 'Hammer' begged Democrat leaders: "Please don't blow this up." House Speaker Nancy Pelosi jokingly shot back: "I didn't know you were Catholic." The extraordinary sight of the Republican Party's financial lion genuflecting to his Democrat congressional foes underlined just how desperate the Bush administration was to push through its controversial economic rescue package.

But the humiliation was not over for Secretary Paulson. As he got back to his feet after Thursday's ill-fated White House summit, Nancy Pelosi reminded him: "WE'RE NOT THE ONES TRYING TO BLOW THIS UP – IT'S THE HOUSE REPUBLICANS." The glum treasury chief reportedly replied "I know, I know." With elections less than six weeks away and widespread public outrage over the bail-out, some REPUBLICANS IN CONGRESS HAVE MUTINIED OVER WHAT THEY SEE AS THE HEAVY HAND OF GOVERNMENT INTERFERING IN A PRIVATE-SECTOR PROBLEM.

The White House has now set a deadline for the package to be agreed before the financial markets open on Monday. But if a deal is not signed experts predict the London Stock Exchange could fall by up to 1,000 points when it opens next week if the deal is not signed. It would be a 'Black Monday' meltdown similar to the financial crash of 1987. OTHER WORLD MARKETS WOULD ALSO BE SURE TO FALL DRAMATICALLY. But President Bush's press secretary, Dana Perino, was more hopeful. "We feel like we're close, but we're not quite there yet," she said.

The Belgian central bank and the country's regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion. In Britain, the fate of Bradford & Bingley will be decided today. Frenetic talks between the Bank of England, the Financial Services Authority and the government have been taking place this weekend to save the troubled mortgage bank.

Santander, the Spanish bank, is in negotiations to buy B&B, but it is insisting on a stringent set of conditions. The talks are being led by Anto-nio Horta-Osorio, chief executive of Santander's UK bank, Abbey. Dutch banking giant ING and France's BNP Paribas are both involved in talks with Fortis about buying all or part of its business.

Neither bank is thought to be willing to take on Fortis unless they can receive guarantees over the bank's exposures to sub-prime mortgages and other problem assets. THE BELGIAN REGULATOR IS THOUGHT TO BE CONSIDERING THE CREATION OF A "TOXIC DUMP" FOR ASSETS SIMILAR TO THE CONTROVERSIAL SCHEME PROPOSED IN AMERICA AS A MEANS OF ENSURING A DEAL.

ANY UNCERTAINTY AROUND THE FUTURE OF FORTIS IS LIKELY TO WEIGH HEAVILY ON ROYAL BANK OF SCOTLAND. Fortis was one of RBS's partners in the consortium that bought ABN Amro last year. The Dutch banking assets that Fortis bought as part of the deal have yet to be transferred out of the holding company used to execute the deal, which is legally a subsidiary of RBS.

Mr Stephenson is believed to have taken his own life after succumbing to mounting personal pressures as the world's financial markets went into meltdown.

The death of the respected 47-year-old City figure evokes memories of the 1929 Wall Street crash in America and comes as:
• Bradford & Bingley teeters on the brink of nationalisation after a dramatic share price slump.
• David Cameron faced embarrassment on the eve of the Tory conference after members of a secretive club of Conservative donors were linked to the 'short-selling' of Bradford & Bingley.
• Gordon Brown was wrongfooted by Shadow Chancellor George Osborne, who announced plans to set up an independent watchdog to police the Treasury and strip it of key powers if the Conservatives win the next Election.

New Zealand-born Mr Stephenson, who owned a £3.6million, five-storey house in Chelsea and a retreat in the West Country, was chief operating officer of Olivant Advisers. Last year, the private equity firm tried to buy a 15 per cent stake worth almost £1billion in Northern Rock before the bank was nationalised, bidding against Virgin boss Sir Richard Branson.

The financial system could face a meltdown of 1929 proportions unless US politicians succeed in their efforts for a $700bn rescue scheme, experts added. The warning came as Republicans and Democrats met in Washington for a rare weekend debating session to attempt to seal agreement on the contentious plan, aimed at preventing a long-lasting recession in the US.

One Republican said that the message from government officials is that "the economy is dropping into the john." He added: "WE COULD SEE FALLS OF 3,000 OR 4,000 POINTS ON THE DOW [the New York market that currently trades at around 11,000]. That could happen in just a couple of days. "What's being put around behind the scenes is that we're looking at 1930s stuff. WE'RE LOOKING AT CATASTROPHE, HUGE, AMAZING CATASTROPHE. EVERYBODY IS EXTRAORDINARILY SCARED. IT'S GOING TO BE REALLY, REALLY NASTY."

Investors fretted about contagion into Europe, where Fortis, which was part of the consortium that bought ABN Amro last year, fired its chief executive after liquidity concerns pushed shares down more than 20pc to a 14-year low. Holland's ING and BNP Paribas are looking at buying the bank this weekend. London investors have warned that THE FTSE COULD SUFFER FALLS OF AS MUCH AS 1,000 POINTS - A FIFTH OF ITS VALUE, if the deal falls through.

Peter Spencer, economic adviser to the Ernst & Young Item Club, said: "This is the time you have to bail people out and ask questions later. It is very difficult to see how the US banking system would survive without that. THIS HAS THE POTENTIAL TO MAKE 1929 LOOK LIKE A WALK IN THE PARK."

By Monday, after an intense weekend of negotiations, the draft of the bailout legislation before Congress HAD SWELLED TO 42 PAGES. By Friday, after almost a week of marathon talks between Treasury Secretary Henry Paulson and key lawmakers in both parties, THE WORKING VERSION WAS UP TO 102 PAGES.

IT LIKELY WILL GROW EVEN LONGER as negotiators continue to tweak the proposal this weekend, adding and subtracting key elements. Rep. Barney Frank, D-Mass., the House Financial Services Committee's chairman, was optimistic Friday that a final agreement could be reached by Sunday

Outside, the late summer has brought one last bout of sweltering temperatures to the Austrian city of Klagenfurt. But inside the convention center, the state of Carinthia has thrown a party for itself. A trade show devoted to wood products has just opened. Industry officials are giving remarks. The economics minister has traveled to Klagenfurt from Vienna, and even the bishop is there.

Finally, the state's governor steps up to the microphone, sporting a dark tan, smiling with his bright white teeth and wearing a traditional jacket he normally wears at such events. JÖRG HAIDER REPORTS THAT HIS STATE IS HOME TO "FANTASTIC MANUFACTURING COMPANIES" AND THAT MORE THAN 12,000 NEW JOBS HAVE BEEN CREATED. Carinthia is pulling itself up from the bottom of the heap. IT'S A MODEL FOR AUSTRIA'S FUTURE. THAT, AT LEAST, IS HAIDER'S MESSAGE.

The choir of the Carinthia Hunters' Association sings "Alpine Greeting," dressed in traditional green loden jackets. Later, Haider grabs a baton and, with a satisfied smile, leads the band in a march. Why not? Carinthia, for the most part, dances to Haider's beat. HE RECEIVED A 42.5 PERCENT SHARE OF VOTES IN THE STATE'S 2004 LEGISLATIVE ELECTIONS. Not much is likely to change the next time around, when Carinthians return to the polls for state elections - unless, of course, "Jörgi," as many people call AUSTRIA'S MOST FAMOUS LIVING FAR-RIGHT POLITICIAN - has returned to Vienna.

B&B, the eighth largest mortgage lender, is the latest banking institution to become a victim of the financial crisis and the deteriorating state of the housing market. Its shares fell six per cent to an all-time low of 20p as it became clear that no rival bank was prepared to mount a rescue bid. SINCE THE START OF THE YEAR, B&B SHARES HAVE FALLEN 90 PER CENT.

However, the British Banking Association reassured the 2.5 million customers who have £22 billion deposited with B&B. "Customers have no need to worry about any deposits in any British bank. The Financial Services Compensation Scheme covers all savings up to £35,000, which... covers 96 per cent of all banking customers."

If B&B were to fail, it would join a growing list of major financial institutions around the world that have been swept up in the economic turmoil. Financial specialists warn that if Congress fails to agree on a proposed $700 billion bail-out package for the US economy the list will grow. Tim Sykes, a banking analyst at Execution, said: "BRADFORD & BINGLEY POSES A RISK TO THE SYSTEM. IT SHOULD BE NATIONALISED. THAT WOULD SOW THE SEEDS OF THE END OF THE CRISIS."

Mr Grieve, speaking on the eve of the Conservative Party conference, argued this had led to support for extremism. He also warned against downplaying Britain's Christian heritage.

Mr Grieve told the Guardian: "WE'VE ACTUALLY DONE SOMETHING TERRIBLE TO OURSELVES IN BRITAIN. In the name of trying to prepare people for some new multicultural society we've encouraged people, particularly the sort of long-term inhabitants, to say 'well your cultural background isn't really very important'."

Mr Grieve also said the part played by Christianity in Britain should not be ignored. "THE ROLE OF CHRISTIANITY IS REALLY RATHER IMPORTANT. It can't just be magicked out of the script. It colours many of the fundamental viewpoints of British people, including many who've never been in a church."

A liberal Christian group said that CHURCH TREASURERS THEMSELVES HAVE USED THE CONTROVERSIAL SHORT-SELLING METHODS CONDEMNED BY THE ARCHBISHOPS OF CANTERBURY AND YORK. They said that the Church's financial arm, the Church Commissioners, turned to currency hedging last year to protect some of its £5billion investments.

The Ekklesia think-tank said: 'The archbishops should be extremely careful when attacking City "bank robbers" for short-selling and speculation.' Director Jonathan Bartley added: 'By its own admission it has hedged against a fall in the value of sterling and set up a currency hedging programme in 2006, effectively short-selling sterling in the currency markets.'

The Church's £5billion of holdings, built up over centuries from historic assets, are used to pay clergy stipends and pensions and church running costs.

The storm was located about 645 miles south-southwest of Bermuda, the Miami-based hurricane center said. The storm system drenched Puerto Rico, the Virgin Islands and Hispaniola for days before moving north into the Atlantic. Authorities in Puerto Rico said at least four people were killed and scores of homes were flooded.

Kyle had sustained winds of 45 mph and was moving to the north at about 8 mph, the hurricane center said. Forecasters warned people in Bermuda to closely monitor the progress of the storm. Computer models indicated it could reach hurricane strength within a couple of days.

UPDATE - Freshly upgraded from a tropical storm, Hurricane Kyle is POISED TO STRIKE THE ATLANTIC COAST AT THE US-CANADA BORDER LATE SUNDAY, the National Hurricane Center said. Canada posted a hurricane watch and tropical storm warnings in Nova Scotia and New Brunswick provinces, and a hurricane watch was ALSO IN EFFECT ALONG THE COAST OF THE NORTH EASTERN US STATE OF MAINE.

Lawmakers bickered over competing counterproposals and hours of meetings between key lawmakers broke down without any progress late into the evening. A meeting at the White House between President Bush, congressional leaders and the presidential candidates was meant to speed approval of an agreement. Instead, THE SESSION REVEALED DEEP DIVISIONS BETWEEN DEMOCRATS AND HOUSE REPUBLICANS.

As a result, House and Senate leaders and Treasury Secretary Henry Paulson rushed to Capitol Hill at 8 p.m. to try to hash out a deal. But shortly after 10 p.m., Rep. Barney Frank, D-Mass., the lead House Democrat on the issue who had been in close talks with Paulson for days, accused Republicans of refusing to negotiate. "At this point, we have absolutely no participation or cooperation from House Republicans," Frank said.

The next step was not clear late Thursday night. One thing seems certain: Lawmakers won't recess for the year on Friday, as originally planned. Instead, if they can't reach a deal in the next 24 hours, they're likely to work through the weekend.

On Wednesday night, Bush took the nation's airwaves in a prime-time address in which he laid out a looming economic disaster. "The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," Bush said. "More banks could fail, including some in your community. The stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet. Foreclosures would rise dramatically."

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.