In an internal report, the City watchdog has made no attempt to cover up its dereliction of duty in the run-up to the Northern Rock crisis, admitting with stark candour that it performed to a standard that was "not acceptable".
Incredibly, the report reveals heads of department had no contact at all with Northern Rock in the two-and-a-half years before the crisis erupted. Meanwhile junior managers, who should have met the bank's officials at least once a month, made contact only eight times in 31 months - including twice by telephone and five times in a single day.

Most unbelievably of all, for a long while the bank's supervision - or complete lack of it - was left to the department responsible for insurance groups. It's as if nobody at the FSA even realised Northern was a bank - let alone that its board was lending so recklessly it risked bringing Britain's entire financial sector crashing down.

The FSA's woeful shortcomings should not distract us from the recklessly greedy financiers who bear the true guilt for the economic crisis now gripping the world. But as long as there are so many unscrupulous people in the City, it is vital for all our livelihoods that our regulators should be up to their jobs.

The chiefs' concern is that U.S. forces are being worn thin, compromising the Pentagon's ability to handle crises elsewhere in the world. Wednesday's 90-minute Pentagon session, held in a secure conference room known as "the Tank," was arranged by Defense Secretary Robert Gates to provide Bush with an additional set of military views as he prepares to decide how to proceed in Iraq once his troop buildup, which began in 2007, runs its course by July.

"Armed with all that, the president must now decide the way ahead in Iraq," said Pentagon press secretary Geoff Morrell. The discussion covered not only Iraq but Afghanistan, where violence has spiked, and broader military matters, said Morrell, who briefed reporters without giving details of the discussion. Some specifics were provided by defense officials, commenting on condition of anonymity in order to speak more freely.

The Joint Chiefs are particularly concerned about Afghanistan and an increasingly active Taliban insurgency. The United States has about 31,000 troops in Afghanistan and 156,000 in Iraq.

The unusually long race for the White House - which began in earnest more than a year ago - has been a cash bonanza, especially for Democrats who are breaking all records. Between January 2007 and February, the candidates raised a record $814 million. By the end of this month, analysts expect the total taken in and spent by the candidates and interest groups will reach $1 billion.

To put the numbers into perspective, seven African countries or islands each have a gross domestic product of less than $1 billion, according to International Monetary Fund data. They include Sao Tome and Principe, Guinea-Bissau, Gambia, Comoros, the Seychelles, Liberia and Djibouti.

Massie Ritsch of the Center for Responsive Politics said even with the Internet contributions, only about 4 percent of Americans make a contribution to a federal politician. "The bulk of the money is coming from a tiny group of largely wealthy Americans who are having a great impact disproportionate to their numbers on something that should be important to everybody," he said. "That is what should frighten Americans - when these guys get elected are they looking primarily out for the good of the people or are there debts that they need to pay back."

Once the vehicle stops, about 20 potential buyers file out and become detectives, opening and closing cabinets and drawers, knocking on walls and asking about the price, the previous owners and what repairs may be needed. Welcome to the Foreclosure Bus Tour, a six-hour expedition to show Orlando-area homes and educate potential buyers on the vagaries of snatching foreclosures in a state where the housing market has struggled over the past two years. Real estate agents have also organized tours in California, where the idea seems to have originated, and cities such as Phoenix, Detroit, Kansas City and Jacksonville.

The Orlando prospects included working-class people looking for a family home, speculators seeking a bargain investment and even a Brit trying to take advantage of the weak dollar. To avoid embarrassing owners, the bus stops only at empty homes. The homes were in the market after lenders took them over from owners who failed to make mortgage payments. In February, Florida trailed only Nevada and California in the percentage of homes in foreclosure. RealtyTrac Inc. said 32,447 homes were in foreclosure statewide in February, up more than 69 percent from February of last year and up more than 7 percent from January.

But in a stunning revelation Wednesday, the latter expectation was apparently violated in a widely read lung cancer trial published in 2006 by researchers at Weill Cornell Medical College. The study, conducted by Dr. Claudia Henschke and published in the New England Journal of Medicine, found impressively that 80% of lung cancer deaths could be prevented through greater use of relatively simple CT scans, which can detect small tumors early and get patients into treatment before the disease takes hold. According to an investigation by the New York Times, funding for the trial came from the Foundation for Lung Cancer: Early Detection, Prevention & Treatment - an entity created by Dr. Henschke and her collaborators, and supported in part by the cigarette maker Liggett Group.

And that's the problem with conflicts of interest: even if the study results were scientifically sound, if the interpretations and projections made by the researchers defensible, and if there was no connection at all between Liggett and the researchers, the fact that a cigarette manufacturer was even remotely involved taints the findings and leaves the results open to question.

If anything, this incident exposes the extent to which the medical field still relies on the integrity of its members to maintain patient confidence. But as economic and other interests continue to seep into the doctor's office, that may have to change. It may no longer be enough for journals to ask researchers to disclose potential conflicts of interest, for example; now editors may have to begin asking for records detailing how a study was funded. In the end, that may be just as important as analyzing the study itself.

The North made the demand Monday in response to the South Korean unification minister's recent comment that Seoul will hold off on expanding the industrial zone until the dispute over the North's nuclear programs is resolved, Unification Ministry spokesman Kim Ho-nyeon said.

The sprawling Kaesong industrial complex, located just north of the heavily fortified border, is a prominent symbol of reconciliation between the two Koreas, combining the South's technology and management expertise with the North's cheap labor. South Korea is still committed to ongoing economic cooperation with its impoverished communist neighbor because it would create opportunities for both Koreas, Unification Minister Kim Ha-joong said.

The leaders of the two countries agreed to expand the complex during a summit last year. But new South Korean President Lee Myung-bak has pledged to review rapprochement projects pushed by his two liberal predecessors, saying progress in the nuclear standoff is a prerequisite for further large investment and aid projects in the North. Sixty-nine South Korean companies operate in the industrial zone, employing 23,220 North Korean laborers, according to the South's management committee.

North Korea might make concessions on humanitarian issues in order to receive handouts from South Korea, but Pyongyang's leaders would try to keep any crisis on its farms from spilling over into international nuclear disarmament talks, they added. North Korea, which even with a good harvest still falls about 1 million tonnes, or around 20 percent, short of the food needed to feed its own people, relies heavily on aid from China, South Korea and U.N. aid agencies to make up the gap.

"If the South and the global community fail to send food aid to the North, we might see a food crisis even worse than the one in the 90s," said Kwon Tae-jin, an expert on the North's agriculture sector at the South's Korea Rural Economic Institute. A famine in the mid-to-late 1990s killed more than 1 million North Koreans in a country of about 23 million.

North Korea for years has been able to receive massive food aid with few questions asked by left-of-centre South Korean governments who have seen the handouts as a small price to pay to keep the peninsula stable.
But a conservative government that took power in South Korea last month said there would no longer be a free ride for its capricious neighbour. North Korea's slow-moving government has not yet adjusted to the policy change, experts said.

New President Lee Myung-bak wants to tie aid to progress his communist neighbour makes in nuclear disarmament, reuniting families separated by the 1950-53 Korean War and returning more than 1,000 South Korean citizens believed to be still held in the North.

Sadr, whose truce last year was praised by U.S. forces for curbing violence, called for talks to end the crackdown on his followers, the biggest military operation that Iraqi forces have undertaken without U.S. or British combat units. Scores of people have been killed and hundreds wounded in the fighting, which began in the southern oil hub of Basra and spread to Shi'ite parts of Baghdad where Sadr's followers hold sway and the towns of Hilla, Kut and Diwaniya in the south.

Maliki, in Basra to oversee the campaign there, said fighters would be spared if they surrendered within 72 hours. The assault is a chance for his government to prove it can impose its will and allow American forces to withdraw. But it also runs a risk of unleashing more violence after a year that saw security in Iraq improve dramatically.

Battles which began on Tuesday in Basra resumed with heavy gunfire and explosions. A health official said 40 people had been killed and 200 wounded in the city by Wednesday morning. A Reuters correspondent in Kut, 170 km (105 miles) south of Baghdad, heard gunfire and mortar impacts and saw buildings and cars aflame. Police said at least 18 people died in clashes there, including a baby girl.

The FSA said there had been "a lack of adequate oversight and review" by the agency of the troubled bank. It said too few regulators were assigned to monitor Northern Rock, which ran into trouble in August. The FSA said it would be overhauling its procedures as a result of the weaknesses identified. Newcastle-based Northern Rock was nationalised in February after the credit crisis forced it to seek a Bank of England lifeline to fund its mortgage loan book.

The failings include:

- A lack of sufficient supervisory engagement with the firm, in particular the failure of the supervisory team to follow up rigorously with the management of the firm on the business model vulnerability arising from changing market conditions.

- A lack of adequate oversight and review by FSA line management of the quality, intensity and rigour of the firm's supervision.

- Inadequate specific resource directly supervising the firm.

- A lack of intensity by the FSA in ensuring that all available risk information was properly utilised to inform its supervisory actions.

And it suggested that ultimately the blame for the collapse of Northern Rock should sit at the feet of the bank's senior management.

Faced with increasing attacks from Catholic bishops, threats of resignation from several ministers and taunts from David Cameron, he announced that ministers and backbenchers could vote against the three most controversial measures. The free votes will apply to the creation of human admixed embryos containing both human and animal material, for studying serious diseases. They will also cover "saviour siblings", which are screened as embryos to ensure their suitability to donate umbilical cord cells to sick children.

The Catholic Archbishop of Westminster, Cardinal Cormac Murphy-O'Connor, said in a joint statement with the bishops' conference: "The free vote will be welcomed by people of all faiths or none who are concerned about the implications of this Bill that go to the heart of what it means to be human."

Medical research leaders and patient groups also applauded the decision, saying they hoped it would allow debate to focus on the medical potential of research, not parliamentary procedure. Professor Robin Lovell-Badge, of the National Institute for Medical Research, said: "I am not against a free vote, as long as the MPs understand what is being proposed in the Bill and why."

Commons Speaker Michael Martin will spend another £100,000 or more on a High Court attempt to block publication of their second homes allowance. To the astonishment of many at Westminster, he announced he would challenge an order by a Freedom of Information tribunal that 14 prominent current or former MPs should provide a detailed breakdown of their expenses. Mr Martin said he would appeal against the decision that their addresses should be published.

The 14 MPs include Prime Minister Gordon Brown and Tory leader David Cameron, who have already said they are happy for the publication, receipt by receipt, of how they spent their £22,000 a year Additional Costs Allowance. The BBC reported last night that MPs were mounting a legal challenge to keep their expenses secret, because they would be "unable to justify their behaviour before the electorate" if the details were made public. Nick Robinson on the Ten O'Clock News said that had been told 'by senior sources on all sides of the Commons' that "some MPs might well have to retire from politics so embarrassed would they be if what they spent, and what they'd spent it on, was publicly revealed."

Former anti-sleaze MP Martin Bell said: "This is extraordinary. I can only assume that, seeing exactly what was in the expenses accounts, the Speaker decided that discretion was the better part of valour. The House of Commons does not understand the depth of feeling in the country about this issue." The £22,100-a-year Additional Costs Allowance is used to furnish second homes so MPs can have a base in London as well in their constituency. It costs taxpayers £11.7million a year.

Rockets fired from the capital's Shiite district of Sadr City slammed into the Green Zone Tuesday, the second time in three days, and firefights erupted around Baghdad pitting government and US forces against the militia allied to the influential Shiite cleric Moqtada al-Sadr. At the same time, the oil-export city of Basra became a battleground Tuesday as Iraqi forces, backed by US air power, launched a major crackdown on the Mahdi Army elements. British and US forces were guarding the border with Iran to intercept incoming weapons or fighters, according to a senior security official in Basra.

The US blames the latest attacks on rogue Mahdi Army elements tied to Iran, but analysts say the spike in fighting with Shiite militants potentially opens a second front in the war when the American military is still doing battle with the Sunni extremists of Al Qaeda in Iraq. "The cease-fire is over; we have been told to fight the Americans," said one Mahdi Army militiaman, who was reached by telephone in Sadr City. This same man, when interviewed in January, had stated that he was abiding by the cease-fire and that he was keeping busy running his cellular phone store.

The fighting burnished Sadr's standing among fellow Shiites wary of the US occupation. Over the years, the US has repeatedly accused elements within the Sadrist movement of having ties with Iran and even Lebanon's Hizbullah. After rockets hit the Green Zone Sunday, US commander in Iraq Gen. David Petraeus said the weapons had been provided by Iran.

Some 18 years later, the parallel between Tibet's unfolding and increasingly bleak prospects and the Jewish historical experience seems all the more relevant. Just as after the failed first century Jewish uprising against Rome, Tibetans are becoming a minority in their homeland thanks to Beijing's strategy of drastically and irreversibly altering Tibet's population by flooding the territory with Han Chinese, China's dominant ethnic group.

Already, two out of every three residents of Lhasa, Tibet's capital, is Han Chinese. In 2006, Beijing hastened the process considerably by opening a high-speed rail link between Lhasa and Beijing. Saffron-robe clad Tibetan Buddhist monks have been replaced by Chinese-run brothels, karaoke bars and a sprawling amusement park that now surround the Portola Palace, the Dalai Lama's former residence and Tibet's equivalent of Jerusalem's ancient Temple.

It took Jews almost two millennia to re-establish an independent state in their homeland. During that time, later-arriving Arabs settled in the land and claimed it as their own. Despite Judaism's numerous ritual reminders of Zion's centrality, Jewish historical ties to the land were conveniently forgotten by most of the world, which came to view modern Jews as having no connection to the ancient Israelites who once populated the same land. As a result, returning Jews were regarded as colonialist interlopers and Arabs were seen as indigenous innocents suffering at the hands of Jewish pretenders. Tibetans now face a similar inversion of history.

Jewish cultural identity survived the destruction of the Second Temple by shifting from a temple-based religion to its rabbinic form. Moreover, it took Jewish secularists willing to take up the gun for Zionism to gain a state in the modern era. Tibetan religion and culture are in the initial stages of a similarly radical transformation. What shape that will take and whether it will successfully preserve a distinct Tibetan identity is, of course, unanswerable. What is clear is that Jews and Tibetans have more in common than is superficially apparent - as the Dalai Lama recognized back in 1990

However, Mr Sarkozy's hint of a boycott, delivered on the eve of his state visit to Britain today, threatened to open a rift with Gordon Brown. It contradicts the position of British ministers, who have repeatedly rejected calls for a boycott of the opening ceremony.

Mr Sarkozy's comments will increase pressure on the Prime Minister to be more explicit about his demands with Beijing over Tibet. They also threatened to overshadow what London and Paris had hoped would be a turning point in Anglo-French relations after the ill-feeling of the Blair-Chirac years. However, Mr Sarkozy's threat of a boycott of the Olympic opening ceremony will place the new entente under immediate pressure. "The opening ceremony is part of the Games and our position against a boycott of the Games has not changed. We do not believe in a boycott as a way of effecting change," a Department for Culture, Media and Sport spokesman said.

British arms exports to China have tripled in value in one year, according to a Foreign and Commonwealth Office report (Michael Evans writes). Arms exports were worth £215 million from October 2006 to September 2007. Licences for Beijing included equipment for military helicopters and for communications systems.

Profits will continue to wane, other analysts said. "There is light at the end of the tunnel, but it is still rather dim," Goldman analysts including New York-based Andrew Tilton said in a note to investors today. They estimated that residential mortgage losses will account for half the total, and commercial mortgages as much as 20 percent.

Goldman said the $460 billion in credit losses it foresees may "result in a substantial tightening in credit conditions as these institutions pull back on lending to preserve their reduced capital and to maintain statutory capital adequacy ratios." Credit-card loans, auto loans, commercial and industrial lending and non-financial corporate bonds make up the rest of the $460 billion in credit losses.

Goldman, which has lost 16 percent this year on the New York Stock Exchange, rose 75 cents to $179.63 in composite trading at 4:07 p.m. Merrill fell 53 cents to $47.85, Lehman declined $1.43 to $45.21 and Bank of America dropped $1.48 to $40.97.