US Special Envoy for Middle East Security James Jones has been assigned the task of preparing a plan on this issue within six moths. A number of options are being considered, including the involvement of NATO troops or Jordanian and Egyptian forces. Jones, a former Marine Corps general, was NATO's top military commander from 2003 to 2005.

US Secretary of State Condoleezza Rice, who appointed Jones immediately after November's Annapolis Conference, hinted at this role in a briefing she gave reporters on her way to the PA/PLO donors' conference in Paris in mid-December. Rice said at the time that the establishment of an Arab state "will raise questions about a security vacuum when Israelis leave the West Bank . And this is not an issue just for the Palestinians. It's an issue for the states in the area as well, like Jordan and Egypt."

As rebukes go in the close-knit world of central banking, few hurt as much as the scathing indictment of US Federal Reserve policy by Professor Anna Schwartz. The high priestess of US monetarism - a revered figure at the Fed - says THE CENTRAL BANK IS ITSELF THE CHIEF CAUSE OF THE CREDIT BUBBLE, and now seems stunned as the consequences of its own actions engulf the financial system. "THE NEW GROUP AT THE FED IS NOT EQUAL TO THE PROBLEM THAT FACES IT," she says, daring to utter a thought that fellow critics mostly utter sotto voce.

"They need to speak frankly to the market and acknowledge how bad the problems are, and acknowledge their own failures in letting this happen. This is what is needed to restore confidence," she told The Sunday Telegraph. "THERE NEVER WOULD HAVE BEEN A SUB-PRIME MORTGAGE CRISIS IF THE FED HAD BEEN ALERT. This is something Alan Greenspan must answer for," she says. Her fame comes from a joint opus with Nobel laureate Milton Friedman: A Monetary History of the United States. It revolutionised thinking on the causes of the Great Depression when published in 1965. THE BOOK BLAMED THE FED FOR CAUSING THE SLUMP. The bank failed to use its full bag of tricks to stop the implosion of the money stock, and turned a bust into calamity by raising rates.

"The book was a bombshell," says British monetarist Tim Congdon. "Until then almost everybody thought the free-market system itself had failed in the 1930s. WHAT FRIEDMAN-SCHWARTZ SAY WAS THAT INCOMPETENT GOVERNMENT BUREAUCRATS AT THE FED HAD CAUSED THE DEPRESSION."

The tale of the early 1930s is intricate, but worth rehearsing in the climate of today's credit crunch. The October 1929 crash did not cause the slump, it was merely a vivid detail. The US economy muddled through for another year, seemingly sound. Then it buckled as rising defaults in the farm belt set off a run on local banks. It was at this juncture that critics claim the Fed lost the plot. Washington prohibited the pros at the New York Fed from injecting sufficient stimulus through open market operations [buying bonds]. Contagion spread. The Jewish-owned Bank of the United States was allowed to collapse by fellow clearing banks, for reasons of snobbery and malice. The staggering blindness of Fed backwoodsmen from 1930-1933 is hard to exaggerate.

OVER 4,000 US BANKS - A FIFTH - COLLAPSED IN THE 1930S. There was no deposit insurance. REAL ECONOMIC OUTPUT FELL BY A THIRD, PRICES BY A QUARTER, AND UNEMPLOYMENT REACHED A THIRD. Real income fell by 11 per cent, 9 per cent, 18 per cent, and 3 per cent in the years to 1933.

According to Schwartz the original sin of the Bernanke-Greenspan Fed was to hold rates at 1 per cent from 2003 to June 2004, long after the dotcom bubble was over. "It is clear that monetary policy was too accommodative. RATES OF 1 PER CENT WERE BOUND TO ENCOURAGE ALL KINDS OF RISKY BEHAVIOUR," SAYS SCHWARTZ. That mistake is behind us now. The lesson of the 1930s is that swift action is needed once the credit system starts to implode: when banks hoard money, refusing to pass on funds. The Fed must tear up the rule-book.

Bernanke did indeed switch tack on Thursday. "We stand ready to take substantive additional action as needed," he says, warning of a "fragile situation". It follows a surge in December unemployment from 4.7 per cent to 5 per cent, the sharpest spike in a quarter century. Inflation fears are subsiding fast. Bernanke insists that the Fed has learnt the lesson from the catastrophic errors of the 1930s. At the late Milton Friedman's 90th birthday party, he apologised for the sins of his institutional forefathers. "YES, WE DID IT, WE'RE VERY SORRY, WE WON'T DO IT AGAIN."

The Pope used the Sistine Chapel's ancient altar set right against the wall under Michelangelo's dramatic depiction of the Last Judgment, instead of the altar placed on a mobile platform that allowed his predecessor John Paul II to face the faithful. A statement by the Vatican's office for liturgical celebrations said it had been decided to use the old altar, where ballots are placed during papal elections, to respect "the beauty and the harmony of this architectonic jewel."

That meant that for the first time in this kind of celebration since the Second Vatican Council (1962-65), the pope occasionally turned his back on the faithful and faced the Cross. He also read his homily from an old wooden throne on the left of the altar used by Pius IX in the 19th century. The conservative German-born pontiff is slowly reintroducing some of the old rituals phased out after Vatican II, which substituted Latin for local languages, modernized the Church and encouraged inter-religious dialogue.

In July, the Pope issued a decree allowing wider use of the old Latin mass, in what was regarded as a nod to Church traditionalists. He has also said he would like the centuries-old Gregorian chant to make a comeback.

Then, no bank had its own building and bankers were but goldsmiths who lent money and rented space to do business. But after the moneylenders cut their bargain (and it was a bargain) with King William of England, things were never to be the same, either for England or the moneylenders - or the world. In 1694, by bailing King William out of his debts incurred by England's war with France, THE MONEYLENDERS ACHIEVED ENORMOUS POWER AND A NEW FOUND RESPECTABILITY. THEY NOW CALLED THEMSELVES BANKERS and would profit by the vast sums of credit that were to underwrite the greatest empire since imperial Rome - an era that is now about to end.

England ultimately leveraged its ability to wage war with credit into a world empire; and, the moneylenders, now called bankers, used England's power to spread their system of credit-based money across the world, multiplying and increasing their profits thereby. And although England's position as a world power has waned, the power of the moneylenders has grown. TODAY, BANKERS ARE EVEN MORE POWERFUL THAN GOVERNMENTS. But the triumph of the bankers will be temporary. It will be short-lived because THE UNITED STATES HAS NOW IRREPARABLY DAMAGED THE CREDIT-BASED SYSTEM THAT ENGLAND'S BANKERS SO CAREFULLY CONSTRUCTED.

Paper debt-based money issued by the Bank of England replaced the gold and silver coins previously circulating as money. The people deposited their savings of gold and silver in government approved banks which WERE GRANTED THE RIGHT TO MAKE LOANS IN THE AMOUNT OF TEN TIMES THEIR ACTUAL DEPOSITS and profit thereby by charging interest on those loans. To pay the interest due on the increasing amounts of debt created by credit based economies, economies have to continually expand. This was as true in Victorian England as it is today. When credit-based economies contract, the ability to service previously incurred debt is damaged. IF THE CONTRACTION IS SEVERE ENOUGH, THE ECONOMY WILL COLLAPSE. THIS IS WHAT IS ABOUT TO HAPPEN TO US ON A VERY GRAND SCALE.

In 1933, the US government enacted three measures: The Emergency Banking Relief Act, and the Glass-Steagall Acts, I and II. THE EMERGENCY BANKING RELIEF ACT OF 1933 WAS A MEASURE WORTHY OF ANY POLICE STATE. For the first time in history, citizens were prohibited from owning gold by their own government. Such a demand on a citizenry had never before been ordered. When Americans were told to turn over their gold to the US government, it was described as confiscation. IT WAS REALLY AN ACT OF TYRANNY. IT WAS ALSO AN INDICATION OF WHO REALLY CONTROLS THE US GOVERNMENT. This system, concocted by England's moneylenders, allows banks to issue loans in the amount of ten times the money they have on deposit, sic BANKS MAKE MONEY BY LOANING MONEY THEY DON'T ACTUALLY HAVE.

THE REMOVAL OF GOLD FROM THE MONETARY SYSTEM BY THE US IN 1971 REMOVED THE VERY FOUNDATION STONE OF THE MONEYLENDER'S SYSTEM OF CREDIT. The basis of the moneylender's credit was gold, albeit highly leveraged but still convertible on demand. When the US declared the US dollar no longer convertible to gold in 1971, all money, all currencies became fiat currencies, sic government issued coupons. This had never happened before in the history of the world; and we are now about to experience the consequences of that act. WHILE MANY MAY FEAR AN ECONOMIC SLOWDOWN IS IN THEIR FUTURE, FEW YET ARE AWARE OF THE SEVERITY OF THE COMING CONTRACTION AND COLLAPSE; AND FEWER STILL ARE AWARE OF THEIR GOVERNMENT'S COMPLICITY. The triumph of the moneylenders over government is almost complete and because of it, in the coming crisis governments will protect the interests of bankers, not the people.

David Hackett Fisher noted in THE GREAT WAVE - Price Revolutions and the Rhythm of History that price waves last from 80 to 120 years; that such waves end in economic collapse and the breakdown and transformation of societies. THE CURRENT PRICE WAVE BEGAN IN 1896. DO THE MATH. We are at the end of a price wave that marks the end of an epoch, the era of Victorian England. As Fisher states, such waves always end in economic collapse. Faith will be needed to get through the difficult times ahead.

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http://www.financialsense.com/fsu/editorials/schoon/2008/0107.htm

Les Echos - An article in Les Echos on the upcoming French EU Presidency notes that "Nicolas Sarkozy would like to create in Europe A PERMANENT COMMAND STRUCTURE, WHICH WOULD COMPETE WITH NATO."

FT Deutschland - reports that Gordon Brown is to meet Nicolas Sarkozy, Angela Merkel and Jose Barroso in London on 29 January to talk about financial markets.

Le Figaro - Further coverage of the split in the French Socialist Party over whether to boycott the Versailles Congress or turn up and vote against the amendment to the French Constitution, which will allow for ratification of the revised EU Constitution.

The FT - looks at Nicolas Sarkozy's vision for a "policy of civilisation" which is meant to stress human rather than economic values. It is noted that despite Sarkozy's change in tone, he will stick to his reformist economic agenda.

Le Figaro - reports that France has decided to "save" the EU force that is trying to get off the ground in Chad by providing helicopters and logistics.

Le Figaro - reports on a scandal smearing the Greek government, involving the Culture Ministry and which has been dubbed "the juiciest scandal in the country's history." An investigation has been launched into the Culture Ministry's management of EU funds.

The Times - A referendum on the revised Constitution was ruled out by Portugal yesterday after pressure from Gordon Brown and Nicholas Sarkozy. Portuguese PM Jose Socrates said that "a referendum in Portugal would jeopardise, without any reason to do so, the full legitimacy of the ratification by national parliaments that is taking place in all the other European countries."

The United States rarely uses the politically charged word "occupation" to describe Israel's hold on lands captured in a 1967 war. It is a term Palestinians seeking a state in the West Bank and Gaza Strip employ frequently to describe their plight. "The establishment of the state of Palestine is long overdue. The Palestinian people deserve it," Bush said in a statement he read to reporters in a Jerusalem hotel.

Bush's language, after he travelled to the West Bank city of Ramallah past Israeli checkpoints and settlements, could cause political pain to Israeli Prime Minister Ehud Olmert, whose right-wing coalition partners usually bridle at such remarks. "There should be an end to the occupation that began in 1967," Bush said. He had earlier met Palestinian President Mahmoud Abbas and visited Bethlehem, also in the West Bank.

Bush pressed the Palestinians to rein in militants. He said any negotiations must also ensure Israel has "secure, recognised and defensible borders" alongside a "viable, contiguous, sovereign and independent" Palestine.

Challenging sceptics of his new push for peace on the first U.S. presidential visit to Ramallah, he told a news conference with Abbas: "I believe it's going to happen, that there will be a signed peace treaty by the time I leave office." An Israeli official said Bush's remarks were the basis for moving forward with negotiations. But many doubt differences can be overcome now, as Bush seeks to burnish his legacy in the Middle East after five years of war in Iraq. Olmert is politically weak and Abbas cannot control the Gaza Strip, which Hamas Islamists seized in June.

Bush also reaffirmed a U.S. commitment to a 2003 peace "road map" under which Israel was to halt settlement activity and Palestinians were to crack down on militants. "On the Israeli side, that includes ending settlement expansion and removing unauthorised outposts. On the Palestinian side that includes confronting terrorists and dismantling terrorist infrastructure," the president said. "Security is fundamental. No agreement and no Palestinian state will be born of terror. I reaffirm America's steadfast commitment to Israel's security."

Last night shareholders and customers condemned the decision to 'reward' the people involved in the biggest banking crisis in modern British history with annual payouts of up to £100,000 each. They accused the recipients, who range from senior managers to management board directors, of siphoning money out of the bank as it hovers on the brink of collapse. The confidential payouts, which total £2.3million for this month alone and were known about by the Treasury, are detailed in company documents seen by The Mail on Sunday.

The disclosure will put further pressure on the bank's management as it prepares for an emergency shareholder meeting on Tuesday. It will also add to the Government's political difficulties over the issue. As Chancellor Alistair Darling battles to avoid the "nuclear option" of nationalising Northern Rock, City experts are warning that Britain's international reputation for economic management is being seriously damaged.

In a letter to senior staff on December 20, chief executive Andy Kuipers said the bank's board of directors had agreed "an enhanced remuneration package" for employees deemed "essential to our continuing excellent operational performance". He said they will receive a bonus amounting to a quarter of their gross annual salary every three months - effectively doubling their pay if they are paid the bonus for a year. The arrangement can be withdrawn only with three months' written notice, so the employees are guaranteed at least six months' extra pay.

Last night Matthew Elliott, of the Taxpayers' Alliance, said: "With taxpayers having lost so much money in the Northern Rock crisis and being liable for many billions more, the top officials at the bank shouldn't be receiving a penny in bonuses. This is a typical case of a few fat cats living large at taxpayers' expense while ordinary families are expected to foot the bill." Robin Ashby, of the Northern Rock Small Shareholders Association, said: "While there is some argument for a few key talents to be paid retention bonuses, these sums would appear to be disproportionate, to put it mildly. That - and the secrecy involved - highlights the directors' poor stewardship of the company."

The Treasury is lining up the former boss of Lloyd's of London, Ron Sandler, to lead Northern Rock if it is nationalised.

Ministers are planning to implant "machine-readable" microchips under the skin of thousands of offenders as part of an expansion of the electronic tagging scheme that would create more space in British jails. Amid concerns about the security of existing tagging systems and prison overcrowding, the Ministry of Justice is investigating the use of satellite and radio-wave technology to monitor criminals.

But, instead of being contained in bracelets worn around the ankle, the tiny chips would be surgically inserted under the skin of offenders in the community, to help enforce home curfews. The radio frequency identification (RFID) tags, as long as two grains of rice, are able to carry scanable personal information about individuals, including their identities, address and offending record. The tags, labelled "spychips" by privacy campaigners, are already used around the world to keep track of dogs, cats, cattle and airport luggage, but there is no record of the technology being used to monitor offenders in the community. The chips are also being considered as a method of helping to keep order within prisons.

But details of the dramatic option for tightening controls over Britain's criminals provoked an angry response from probation officers and civil-rights groups. Shami Chakrabarti, director of Liberty, said: "If the Home Office doesn't understand why implanting a chip in someone is worse than an ankle bracelet, they don't need a human-rights lawyer; they need a common-sense bypass. Degrading offenders in this way will do nothing for their rehabilitation and nothing for our safety, as some will inevitably find a way round this new technology."

Writing in The Sunday Telegraph, the Prime Minister says that such a facility would save thousands of lives and that he hopes such a system can start this year. The proposals would mean consent for organ donation after death would be automatically presumed, unless individuals had opted out of the national register or family members objected. But patients' groups said that they were "totally opposed" to Mr Brown's plan, saying that it would take away patients' rights over their own bodies. There are more than 8,000 patients waiting for an organ donation and more than 1,000 a year die without receiving the organ that could save their lives.

A report on "presumed consent" to be published this summer, hopes its 14 recommendations will lead to 50 per cent more donations in five years. It admits to a possible "conflict of interest" between medical staff, trying to save lives and those keen to ensure every possible organ is harvested. Dr Kevin Gunning, an intensive care consultant at Addenbrooke's Hospital, Cambridge, and a member of the UK Transplant's advisory group, said the measures could put doctors and relatives under pressure. "If, as a doctor you have turned your thoughts to your patient being a donor when they are still living, that is a real conflict."

Dr Bruce Taylor, of the Intensive Care Society warned that early indicators of death were not reliable. "The only way to be sure is to do all the tests which show brain stem death; anything in advance of that is only a prediction." But Chris Rudge, of UK Transplant, the authority in charge of organ donation and transplant, insisted patients would not be considered as donors at any point where survival was possible.

The KMT, which wants closer ties with China, secured 72% of the seats in the 113-seat chamber, beating President Chen Shui-bian's party, the DPP. The independence-leaning president said he was "shamed", resigning as chairman of the Democratic Progressive Party. The elections are seen as a barometer for the presidential poll on 22 March. China regards Taiwan as a renegade province that should be reunified.

BBC China analyst Shirong Chen says the two main parties concentrated on local issues and shied away from discussing China in the run-up to the vote, a tactic the Chinese government has also adopted. China has been focusing on getting countries like the US and France to oppose Taiwan's referendum on joining the UN, which will be held alongside the presidential election in March.

Mr Singh will meet President Hu Jintao as well as Prime Minister Wen Jiabao and the Communist Party's second highest leader, Wu Bangguo. Their talks are expected to focus on territorial disputes and increasing bilateral trade, worth $37bn (£18.9bn).

In December, the powerful states held a landmark joint military exercise. The war games in the south-western Chinese province of Yunnan, the first of their kind between the two largest armies in the world, involved just over 100 soldiers from each side. Military ties between the countries have been tense since a brief but bloody border war in 1962.

The visit comes at a time when trade between India and China is booming and officials said the bilateral talks are expected to focus on surpassing the $40bn target the two countries agreed to reach by 2010. "It's going to be a major business event... bilateral trade has registered impressive growth," Indian Foreign Secretary Shiv Shankar Menon told reporters before the delegation left Delhi

The proposed rules are contained in a document circulated by the California Energy Commission, which for more than three decades has set state energy efficiency standards for home appliances, like water heaters, air conditioners and refrigerators.

The changes would allow utilities to adjust customers' preset temperatures when the price of electricity is soaring. Customers could override the utilities' suggested temperatures. But in emergencies, the utilities could override customers' wishes.

Final approval is expected next month. "This is an outrage," one Californian said in an e-mail message to Rosenfeld. "We need to build new facilities to handle the growth in this state, not become Big Brother to the citizens of California."

Under the proposal being discussed, the bulk of the money - roughly $9bn - would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares.

The norovirus season began a month earlier than normal this winter. Cases of the bug increased rapidly, with more than 200,000 people a week now catching the infection, official figures claim. Hospitals struggling to cope have closed hundreds of wards to new patients. Three hospitals have been put on red alert because of a critical shortage of beds caused by people falling ill with the bug. Some schools are sending letters to parents telling them of norovirus symptoms to look out for and asking them to keep children at home for 48 hours after the infection has cleared. Others have installed alcohol gel dispensers for children to clean their hands before lunch.

The latest figures came in an agency update released yesterday, which said: "This season we have seen an increase in reports of noro-virus cases, almost double the number reported for the same period last year. The self-limiting infection usually only lasts a few days hence the majority of cases are not reported to the clinician." Anyone with symptoms of norovirus is advised to stay at home, drink plenty of fluids, not prepare food for others and wash their hands thoroughly and regularly with soap and water.

"It is true we intercepted a conversation with terrorist threats to the Eiffel Tower yesterday," the source, who asked not to be named, told Reuters. "Our air force informed the French air force of this matter. Paris police referred inquiries to the Eiffel Tower where nobody was immediately available for comment. French daily Le Monde reported on Friday that intelligence services were tracking the authors of the message. The newspaper said Portuguese air traffic authorities had intercepted a "vague and confused" short wave radio message on Thursday, according to a police source.

The French capital is already at its second highest security alert level and further public security measures would serve little purpose, Le Monde quoted police as saying. "We've been at red for several months. It's the highest level before scarlet alert which is implemented when there are attacks," the local police headquarters told the newspaper. The Eiffel Tower is one of France's best-known sights and welcomes millions of tourists each year. Since it was built for the 1889 World Fair, over 230 million people have climbed its 1,665 steps or taken the elevators to admire the views from the top of the 324-metre (1,063 ft) high structure.