An accelerating slide in the U.S. dollar this week has been driven by a growing conviction that the U.S. Federal Reserve will be forced into further steep interest rate cuts. And as dollar losses against the yen started to spiral on Friday, fears have risen of a mass unwinding of the yen "CARRY TRADE" -- currency trades funded by cheap, low interest rate yen and estimated to be worth up to $200 billion.

Sudden losses on these trades -- which thrive when currency market volatility is low -- could force speculative hedge funds to cut other market bets to fund those losses, and also reverse the flood of Japanese money invested overseas in recent years. "The potential for a further carry unwind -- presuming we are now in a second wave of risk aversion -- is quite high now," said Michael Metcalfe, senior strategist at State Street.

The global financial system supercharged historically low central bank interest rates in recent years in several ways but there were three powerful injections.

ONE WAS THROUGH REPACKAGING BANK LOANS into securities for sale to a wide range of investors, freeing up bank balance sheets to allow them to lend more. Those markets are NOW IN MELTDOWN after a U.S. mortgage market bust called into question valuations of these complex instruments.

THE SECOND was via leveraged buyouts by the likes of private equity firms, WHO USED CHEAP CREDIT TO RAISE CASH AND PUMPED BILLIONS INTO STOCK MARKETS VIA A WAVE OF TAKEOVERS. The credit squeeze has put much of this activity on ice.

And THE THIRD AMPLIFIER WAS CURRENCY CARRY TRADES, with cheap yen financing at its core. Now that too looks at risk.

"Carry trades do not work in this sort of environment, they work in a low-volatility stable environment," said David Brickman, credit strategist at Lehman Brothers. "Therefore carry trades get unwound and dollar/yen has further to go." Japan's top financial diplomat Hiroshi Watanabe earlier this year guessed investors might have borrowed between 10 and 20 trillion yen: at current exchange rates, anywhere up to $200 billion.

THE BANK FOR INTERNATIONAL SETTLEMENTS IN JUNE WARNED THAT THIS WAS AN ACCIDENT WAITING TO HAPPEN.

Most journalists find it difficult to take seriously that TENS OF MILLIONS OF AMERICANS, filled with fantasies of revenge and empowerment, long to leave a world they despise. These Armageddonites believe that they alone will get a quick, free pass when they are "raptured" to paradise, no good deeds necessary, not even a day of judgment.

THESE END-TIMERS HAVE GREAT INFLUENCE OVER THE U.S. GOVERNMENT'S FOREIGN POLICY. They are thick with the Republican leadership. At a recent conference in Washington, congressional leader Roy Blunt, for example, has said that their work is "part of God's plan." At the same meeting, where speakers promoted attacking Iran, former House Majority Leader Tom DeLay glorified "end times." INDEED THE BUSH ADMINISTRATION OFTEN CONSULTS WITH THEM ON MIDEAST POLICIES.

AMERICAN FUNDAMENTALISTS STRONGLY SUPPORTED THE DECISION TO INVADE IRAQ IN 2003. THEY CONSISTENTLY SUPPORT ISRAEL'S HARD-LINE POLICIES. AND THEY ARE BEATING THE DRUMS FOR WAR AGAINST IRAN. Thanks to these end-timers, American foreign policy has turned much of the world against us, including most Muslims, nearly a quarter of the human race.

Conservative Christian writer Gary North estimates the number of Armageddonites at about 20 million. Many of them have an ecstatic belief in the cleansing power of apocalyptic violence. They are among the more than 30% of Americans who believe that the world is soon coming to an end. Armageddonites may be a minority of the evangelicals, but THEY HAVE VOCAL LEADERS AND CONTROL 2,000 MOSTLY FUNDAMENTALIST RELIGIOUS RADIO STATIONS.

On foreign policy issues, they are violently against the pending Law of the Seas Treaty, indeed any treaty which possibly circumscribes U.S. power to go it alone. They want illegal immigrants expelled and oppose more immigration. They fear China's growth. They despise Europeans for not being more warlike. The UN figures prominently in their fears, and the Left Behind books present its Secretary General as the Antichrist. Domestically, they strongly support the USA PATRIOT Act and all of President Bush's actions, legal or illegal.

Theologian Richard Fenn writes, "Silent complicity (by mainline churches) with apocalyptic rhetoric soon becomes collusion with plans for religiously inspired genocide. THEIR DEATH-WISHING 'RELIGION' IS ACTUALLY ANTI-CHRISTIAN and should be challenged openly by traditional Christians.

"With the release of the British High Court judgement overnight that found that 'An Inconvenient Truth' was littered with nine inconvenient untruths, IT IS CLEAR THAT AL GORE EMBELLISHED THE TRUTH TO CREATE DRAMATIC EFFECT."

"Given that the Oscar Award was presented in the documentary category and not the drama category, the only appropriate action now is for the Academy to rescind the Award as it was clearly INAPPROPRIATELY CLASSED AS A DOCUMENTARY.

"The truth, as inconvenient as it is to Al Gore, is that HIS SO-CALLED DOCUMENTARY CONTAINED CRITICAL DISTORTIONS THAT ARE QUITE CONTRARY TO THE PRINCIPLES OF GOOD DOCUMENTARY JOURNALISM. GOOD DOCUMENTARIES SHOULD BE FACTUALLY CORRECT. CLEARLY THIS DOCUMENTARY IS NOT.

"If the integrity of the Academy Awards is to remain intact, it is wholly appropriate that Al Gore be stripped of his 'Best Documentary' film Oscar. If the Academy wishes to acknowledge the work of people like Al Gore they should form a new category of film called 'Political Drama'. That's how 'An Inconvenient Truth' should be categorised", Dr Newman said.

"There are definitely some inaccuracies," Marciano added. "The biggest thing I have a problem with is this implication that Katrina was caused by global warming." Marciano went on to explain that, "global warming does not conclusively cause stronger hurricanes like we've seen," pointing out that "by the end of this century we might get about a 5 percent increase."

The case stems from a father's claims that the film is brainwashing propaganda, who told The Telegraph, "I am determined to prevent my children from being subjected to political spin in the classroom."

The Business and Media Institute has extensively critiqued the media's coverage of global warming in Fire & Ice, which covers a hundred years of coverage of global warming. While journalists have warned of climate change for more than 100 years, the warnings switched from global cooling to warming to cooling and warming again. Marciano also sarcastically said, "the Oscars, they give out awards for fictional films as well."

Some dastardly scientists with environmental and political motives MANIPULATED LONG TERM SCIENTIFIC DATA to create an illusion of rapid global warming. Other scientists of the same environmental whacko type jumped into the circle to support and broaden the "research" to further enhance the totally slanted, bogus global warming claims. Their friends in government steered HUGE RESEARCH GRANTS their way to keep the movement going. SOON THEY CLAIMED TO BE A CONSENSUS.

Environmental extremists, notable politicians among them, then teamed up with movie, media and other liberal, environmentalist journalists to create this wild "scientific" scenario of the civilization threatening environmental consequences from Global WARMING UNLESS WE ADHERE TO THEIR RADICAL AGENDA.

Now their ridiculous manipulated science has been accepted as fact and become a cornerstone issue for CNN, CBS, NBC, the Democratic Political Party, the Governor of California, school teachers and, in many cases, well informed but very gullible environmentally conscientious citizens. Only one reporter at ABC has been allowed to counter the Global Warming frenzy with one 15 minute documentary segment.

However, Global Warming, i.e. Climate Change, is not about environmentalism or politics. It is not a religion. It is not something you "believe in." It is science; THE SCIENCE OF METEOROLOGY. THIS IS MY FIELD OF LIFE-LONG EXPERTISE. AND I AM TELLING YOU GLOBAL WARMING IS A NON-EVENT, A MANUFACTURED CRISIS AND A TOTAL SCAM. I say this knowing you probably won't believe a me, a mere TV weatherman, challenging a Nobel Prize, Academy Award and Emmy Award winning former Vice President of United States. So be it.

I have read dozens of scientific papers. I have talked with numerous scientists. I have studied. I have thought about it. I know I am correct. There is no run away climate change. The impact of humans on climate is not catastrophic.

In time, a decade or two, the outrageous scam will be obvious. As the temperature rises, polar ice cap melting, coastal flooding and super storm pattern all fail to occur as predicted everyone will come to realize we have been duped. The sky is not falling. AND, NATURAL CYCLES AND DRIFTS IN CLIMATE ARE AS MUCH IF NOT MORE RESPONSIBLE FOR ANY CLIMATE CHANGES UNDERWAY. I strongly believe that the next twenty years are equally as likely to see a cooling trend as they are to see a warming trend.

JOHN COLEMAN, the founder of The Weather Channel - currently works with KUSI in San Diego.

He has been guided by Fr John Walsh, a former RAF chaplain who celebrated mass at Chequers, and Fr Mark O'Toole, the cardinal's secretary. His path to Rome will come as no surprise because his wife Cherie and four children are Catholics and the family have worshipped together for years.

Mr Blair, in one of his final acts as prime minister, met Pope Benedict XVI at the Vatican when he told him of his wish to leave the Church of England. The imminent conversion was disclosed by the respected Catholic newspaper The Tablet, which predicted the service would be held this month. He decided to remain an Anglican because of the potential complexities of conversion while in office.

Some lawyers believe the 1829 Emancipation Act, which gave Roman Catholics full civil rights, may still prevent a Catholic from becoming prime minister. Clauses in the Act state that no Catholic adviser to the monarch can hold civil or military office.

To complete his conversion, Mr Blair must recite the Catholic creed and state: "I believe and profess all that the holy Catholic Church believes, teaches, and proclaims to be revealed by God."

Last month, Congress passed and President Bush signed into law an increase in the government's borrowing ceiling to $9.815 trillion. It was the fifth debt limit increase since Bush took office in January 2001. Those increases have totaled $3.865 trillion.

The national debt is the total of the annual budget deficits plus money that the government borrows from the Social Security and other government trust funds.

The total national debt is actually higher than $9 trillion because it includes borrowing by some agencies that are not covered by the congressional debt limit. That total was $9.086 trillion on Tuesday.

It took the country from George Washington until Ronald Reagan to reach the first $1 trillion in debt.

Coupled with storms and high tides, the wave could leave swathes of the east coast under water, according to the Environment Agency. A combination of gale force winds off the coast of Scotland and high tides are expected to cause floods which could breach sea defences. The surge is expected to hit the Norfolk, Suffolk and Essex coastline from early tomorrow morning. About 8,000 properties in Great Yarmouth and 1,800 in Lowestoft could be at risk.

Prime Minister Gordon Brown has called a special COBRA Cabinet Office meeting to coordinate an emergency reponse. John Healey, minister of state for local communities, said: "COBRA will be on full alert throughout the night, and the Prime Minister will be keeping in close touch and keeping on top of things." The spokesman likened the current conditions to those leading up to the floods of 1953. More than 300 people were killed when a surge from the North Sea flooded almost 100,000 hectares of eastern England.

"In 1953, there was a 3.2-metre surge and also high tides and a storm. It's comparable but we're much better prepared now," he said. Nine severe weather warnings have been issued covering coastal areas from the north-east to Anglia. There are also 10 flood warnings and 24 flood watches in place. The Dartford Creek and Thames barriers were closed at 8pm to cope with the expected high water.

From January to September, Japanese exports to China totalled 12.756 trillion yen ($113.1 billion), slightly topping the 12.568 trillion yen of exports to the United States. Given that China-bound exports are surging while shipments to the United States have been sluggish largely because of US housing loan problems, the gap is likely to widen in the final three months of this year, economists say.

The fate of the US economy, though, will remain more important for Japan for some time, economists say, because a large part of Japan's exports to China consists of machine parts that are assembled and then sold to the United States and other countries.

"It's true that demand from China is very strong," said Takumi Tsunoda, economist at Shinkin Central Bank. This year, Japan's exports to China look set to top 16 trillion yen, twice the level of just five years ago.

This was the 69th new high the yuan has hit since the beginning of this year, up more than four percent accumulatively. The accumulative appreciation since July 21, 2005, when China discontinued yuan's peg to the greenback, has exceeded 8.3 percent.

The British paper quoted military sources in the US capital as saying that the figure presented by Ahmadinejad could be the "tipping point" that touches off an IAF strike. Washington was reluctant to go forward with a strike against Iran, but Israel was a "different matter," the officials said.

Even before the Iranian president's announcement US defense officials told the Times that "Israel could do something when they get to around 3,000 working centrifuges. The Pentagon is minded to wait a little longer." Concern over an Israeli strike has been "heightened" following the September 6 strike on a target suspected to belong to a Syrian nuclear program, the paper said.

Uranium gas, spun in linked centrifuges, can result in either low-enriched fuel suitable to generate power in a nuclear reactor, or the weapons-grade material that forms the fissile core of nuclear warheads. US experts say 3,000 centrifuges are enough to produce a nuclear weapon, perhaps as soon as within a year. Iran says it plans to expand its enrichment program to up to 54,000 centrifuges at Natanz in central Iran - which would amount to industrial-scale uranium enrichment.

Ahmadinejad on Wednesday reiterated his rejection of any suspension of Iran's enrichment activities, or even a compromise over how Teheran will proceed beyond the 3,000 centrifuges. "They say they've swallowed these 3,000 and want to reach an agreement with us on what to do, at what speed, how many [centrifuges] a day or week," Ahmadinejad said of latest Western pressures. "Our response is: 'Who are you to make comments about the Iranian nation - Do we ask you how many machines you have?'"

He also said he had bluntly refused a recent offer to negotiate with the United States over Iran's nuclear activities. "I, as your representative, told those who brought the message that we didn't ask for talks? If talks are to be held, it is the Iranian nation that has to set conditions, not the arrogant and the criminals," Ahmadinejad said. "The world must know that this nation will not give up one iota of its nuclear rights? if they think they can get concessions from this nation, they are badly mistaken," he concluded.

Earlier this week, Foreign Ministry director-general Aharon Abramovitch publicly criticized INTERNATIONAL ATOMIC ENERGY AGENCY HEAD MOHAMED ELBARADEI for calling for more time for nuclear inspectors to work in Iran and for praising Teheran's cooperation with the UN nuclear watchdog.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels. It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US. "Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

The pound stormed to as high as $2.1021 in trading in London, a level not seen since the early Thatcher era, and many currency experts now predict it will go higher despite signs that the UK economy is slowing.

The greenback's renewed weakness was sparked by comments from Cheng Siwei, vice chairman of China's National People's Congress, who suggested China will diversify some of its $1.33 trillion (£660bn) of foreign-exchange reserves.

Mr Siwei told a conference in Beijing: "We will favour stronger currencies over weaker ones, and will readjust accordingly."

Besides sterling, the dollar was down against 14 of the world's 16 biggest currencies this morning, hitting the lowest since the 1950s versus the Canadian dollar, reaching a new record against the euro and its weakest in more than 20 years against the Australian dollar.

THAT POSITION IS, LIKE THE U.S. POSITION ON RUSSIAN NUKES, BASED ON TRUST - on high-level, personal contacts between military commanders on both sides. For now, Washington can maintain that line about Pakistan because that country's two highest military leaders have close ties to the U.S. or Britain. General Pervez Musharraf, who is also President, was trained in England, and his likely military successor General Ashfaq Pervez Kiyani was trained in the U.S. - SOON, HOWEVER, THAT TRUST AND FELLOW-FEELING WILL NO LONGER BE AVAILABLE.

That is because of the estrangement between the U.S. and a rising generation of Pakistani officers. For about 10 years, the U.S. Congress barred contacts between American and Pakistani military officials as part of sanctions on Islamabad for pursuing nuclear weapons in the first place.

In an ironic boomerang, it is now those officers, ascending to ever more senior ranks, who soon could be overseeing various elements of the Pakistani military, including the security of the several dozen atomic weapons Pakistan is believed to have in its arsenal. THEIR PROVINCIALISM, U.S. OFFICIALS FEAR, COULD MAKE THEM SYMPATHETIC TO THE AL-QAEDA AND TALIBAN ELEMENTS NOW ROILING THE COUNTRY.

For generations, the Pakistani army's top officers had trained in the United States and Great Britain, giving them a worldly sense of military affairs and a perspective on international relations hard to come by inside the country. But such exchanges ended between the U.S. and Pakistan for about a decade after Congress cut off all military cooperation in 1990.

"Musharraf was worried that a lot of the junior officers had been isolated from this and might turn inward," Zinni says. "YOU WERE BEGINNING TO SEE BEARDS IN THE OFFICER CORPS, WHICH MAY SIGNIFY MORE RELIGIOUS CONSERVATISM. That's created a bubble of officers who are going to start coming into senior positions that were isolated during the era of sanctions."

Wall Street suffered its second big drop in a week Wednesday, with investors worried about spreading fallout from the credit crisis at banks and about a DOLLAR THAT JUST KEEPS GETTING WEAKER. The Dow Jones industrial average fell more than 360 points -- just about matching its pullback of last Thursday.

Comments from Federal Reserve officials didn't give investors much reason to reconsider their bets. St. Louis Fed President William Poole said recent weeks have seen the credit markets make clear progress in returning to normal but SAID THE FED MIGHT HAVE TO MAKE OTHER RATE CUTS. SUCH A MOVE WOULD LIKELY HASTEN THE DOLLAR'S FALL AS INVESTORS WOULD SEEK BETTER INTEREST RATES ELSEWHERE. The central bank reduced the federal funds rate in September and again last month.

Meanwhile, the dollar swooned amid speculation that China will seek to diversify some of its foreign currency stockpiles beyond the greenback and General Motors Corp. further dampened sentiment by posting a record loss tied to an accounting adjustment. Oil hit a record, rising above $98 per barrel before retreating, and gold pushed higher, moves exacerbated by an anemic dollar.

Still, the concern on the Street is THAT THE EXTENT OF THE FALLOUT FROM THE CREDIT MARKET CRISIS THAT HAS LED TO BILLIONS OF DOLLARS IN LOSSES FOR MAJOR BANKS AND INVESTMENT FIRMS IS NOT YET KNOWN. With Citigroup Inc. announcing Sunday it needed to take an additional $8 billion to $11 billion in writedowns, INVESTORS ARE VERY UNEASY NOT JUST ABOUT STOCKS, BUT THE ECONOMY AS A WHOLE.

"The financials are the bodyguards of the market and when the bodyguards are taking shots then the market can't do well," said David Darst, chief investment strategist for Morgan Stanley's global wealth management group.

"A LOT OF THE BAD STUFF IS KNOWN; WHAT THE MARKETS ARE WORRYING ABOUT IS THE UNKNOWN," Darst said.