We have heard about sub-prime mortgages; we have heard about COLLATERALISED DEBT OBLIGATIONS (CDOs); we have heard about banks writing down their assets; we have heard about global bankers resigning; we have heard about Northern Rock and the first run on a British bank in 140 years.

This is still an emerging story. It was not until last Wednesday that The Financial Times led on the legal provision that CDOs can be liquidated by the senior holders when they go into default. That could lead to a fire sale of CDOs and still larger defaults.

Yet this, as important as it could be, is not the biggest threat. Few non-bankers have heard of FAS 157 and 159, yet these are the regulations that will set the terms on which the banks will value their assets. The trouble with FAS 157 and 159 is that they are perfectly reasonable regulations in themselves which could have disastrous, though unintended, consequences.

WHAT ARE FAS 157 AND 159? They are the new United States (Federal) accounting standards that have been introduced to regulate the valuation of bank assets. These valuations are of crucial importance because they are the basis of all bank lending: no assets, no lending; no lending, no bank. The new rules divide bank assets into three "levels", according to the freedom with which they can be bought or sold.

LEVEL-ONE ASSETS, which are easy to value or trade, have to have quoted prices in active markets such as US government bonds or gold bullion.

LEVEL TWO is an intermediate stage; these assets are not as fully marketable as level one, but still sufficiently tradeable to have a definite value.

LEVEL-THREE ASSETS - usually artificial financial instruments - are the problem. They do not have quoted prices in active markets. They have to be valued by reference to the bank's own models. According to the analyst Martin Hutchinson, who had analysed some of the US banks, the holdings of level-three assets are substantial. Lehman has $22 billion; Bear Stearns $20 billion; JP Morgan Chase $60 billion. Even these figures may be understated, since the banks have themselves decided whether assets belong to level three or the more acceptable level two, and they have an interest in placing as little in level three and as much in level two as they reasonably can.

THE GLOBAL BANKING SYSTEM NOW FACES THE RISK OF A GENERAL FLIGHT TOWARDS CASH AND LIQUID LEVEL ONE ASSETS ON A SCALE THAT HAS NOT BEEN SEEN SINCE THE EARLY 1930S. Already British banks are showing signs of near panic. I hear of London banks going back on recently agreed loans to parties of good credit, presumably on orders from head office. There have also been cancellations of offers of credit cards that had already been approved.

It is far too late to cancel FAS 157 and 159, even if that were desirable. The concept of different levels for bank assets has been introduced to the banking system and the defaults on sub-prime mortgages have lowered the acceptability of all level-three assets. No one knows what they are worth and hardly anyone wants them.

Attempts to clone human embryos for research have been dogged by technical problems and controversies over fraudulent research and questionable ethics. But the new technique promises to revolutionise the efficiency by which scientists can turn human eggs into cloned embryos.

It is the first time that scientists have been able to create viable cloned embryos from an adult primate - in this case a 10-year-old male rhesus macaque monkey - and they are scheduled to report their findings later this month. The scientists will also demonstrate that they have been able to extract stem cells from some of the cloned embryos and that they have managed to encourage these embryonic cells to develop in the laboratory into mature heart cells and brain neurons. Scientists who know of the research said it was the breakthrough that they had all been waiting for because, until now, there was a growing feeling that there might be some insuperable barrier to creating cloned embryos from adult primates - including humans.

The development will not be welcomed in all quarters. Opponents of cloning will argue that the new technique of manipulating primate eggs to improve cloning efficiency will lead to increased attempts at creating - and destroying - cloned human embryos for research purposes.

The Oregon team, working with a group in China, has so far produced about 100 cloned embryos that have been transferred into around 50 female macaques, but none has resulted in a full-term pregnancy, he said.

He said, "I don't want at all to leave proposals we have prepared for the coming months condemned to wait until when the treaty is in force." On behalf of the Commissioner, an official said, "Frattini will put this idea forward in an informal way to member states. If you put it forward formally it will not work since there is no legal basis," the official added, describing the scheme as a 'gentlemen's agreement.'

Many fear that EPAs will force developing countries to liberalise too quickly. Mandelson said, "There is absolutely no question of arm twisting Kenya into signing an interim market access agreement as part of a future EPA." However, he said that it is only through such an agreement that Kenya would enjoy duty free and quota free access into the EU from 1 January 2008.

If Kenya doesn't sign an EPA, Mandelson said that the EU would have to impose higher tariffs on the country, by raising the tariff rate applied to Kenya's exports to the General System of Preferences (GSP). "Unfortunately this could have a devastating impact on the booming Kenyan horticultural exports to the EU," he said.

According to Business Daily, if Kenyan trade with the EU reverts to GSP, some products that have been entering the European market at zero duty will attract duty of between 8.5 and 15.7 per cent - an issue that most producers have argued would jeopardise their chances of remaining competitive in their traditional main export markets in Europe.

Malloch-Brown, a former United Nations official brought into government by Gordon Brown, has fallen out with some diplomats who have dubbed him "Bollock-Brown" for his off-message views.

The minister has clashed with David Miliband, the foreign secretary, and caused embarrassment for Brown before the prime minister's trip to Washington by saying that Britain and America would no longer be "joined at the hip"!

In an interview to be broadcast today, the prime minister seeks to bolster Britain's relationship with the United States, describing Washington as "our most important ally", and refuses to rule out support for a bombing campaign against Iran. He tells Sunday Live on Sky News: "Iran is breaking its commitments that have been made freely under the non-proliferation treaty."

That's forcing companies to review the way they do business -- and the arrival of a younger generation of chief executives in many boardrooms is set to spur the strategic overhaul. "I'd be very surprised if they don't take the opportunity to make some radical changes because everybody recognizes that the old model is not sustainable," said Simon Friend, global pharmaceutical leader at PricewaterhouseCoopers.

The problem is highlighted by the world's two biggest drugs, Pfizer Inc's (PFE.N: Quote, Profile, Research) anti-cholesterol pill Lipitor and AstraZeneca Plc's (AZN.L: Quote, Profile, Research) acid reflux treatment Nexium.
Both are losing sales years before their patents expire -- casualties not of direct competition but rivalry from cheap copies of older drugs within the same therapeutic class.

Drugs with annual sales of some $20 billion face patent expiration in 2008 and within the next seven years most of the high-margin drugs developed in the 1980s and 1990s will lose protection.

The British bank lent £750m to the country's new landowning elite in the first half of this year, mostly through a government scheme to boost farm productivity. This weekend Barclays was under pressure to say whether it had lent money to five of Mugabe's ministers - each named in European Union sanctions.

The Sunday Times has established that the five have received cash for their farms under the scheme to which Barclays is one of the main contributors. The country's human rights abuses have made it an international pariah. Gordon Brown, the prime minister, has said he will boycott the EU-Africa summit in Lisbon next month if Mugabe remains on the guest list. Despite the worldwide condemnation, Barclays, which faced criticism for operating in South Africa during the apartheid years, has remained one of only a handful of banks with extensive operations in Zimbabwe. It has recently been opening new branches in the country.

This weekend Norman Lamb, the Liberal Democrat MP who has a long-standing interest in African affairs, said he would ask David Miliband, the foreign secretary, to investigate whether the Barclays loans had breached EU sanctions. He said: "The loans sustain the regime and individuals within the regime and those who profited from the violent land-grab. It's morally questionable."

Many of the farms now funded by Barclays were forcibly taken by mobs organised by Mugabe's Zanu-PF party. They were distributed to leading figures in the regime, even though the policy was intended to give farms to landless black Zimbabweans. The beneficiaries included Mugabe himself, who is said to have three estates.

Yesterday Zimbabwe opposition figures called for an investigation into how the Barclays funds had been spent. "Barclays is giving money to this regime and propping it up in an opaque process," said Tendai Biti, secretary-general of the Movement for Democratic Change. He said the agricultural loans were used as a "vehicle of personal wealth accumulation for the regime".

Barclays' dealings in Zimbabwe have angered former farmers who lost their land. Derrick Arlett-Johnson, who fled his farm in the Midlands province, said: "They're loaning money to people who have taken something illegally. So in fact they are assisting in a crime, in my opinion."

The outburst came after Mr Chavez called former Spanish Prime Minister Jose Maria Aznar a "fascist". Mr Chavez then interrupted Spanish PM Jose Luis Rodriguez Zapatero's calls for him to be more diplomatic, prompting the king's outburst. Latin American, Portuguese, Spanish and Andorran leaders were meeting in Chile.

Mr Chavez called Mr Aznar, a close ally of US President George W Bush, a fascist, adding "fascists are not human. A snake is more human." Mr Zapatero said: "[Former Prime Minister] Aznar was democratically elected by the Spanish people and was a legitimate representative of the Spanish people." Mr Chavez repeatedly tried to interrupt, despite his microphone being turned off. The king leaned forward and said: "Why don't you shut up?"

According to reports, the king used a familiar term normally used only for close acquaintances - or children.

Speculation is growing that President George W. Bush could launch military action before he leaves office in January 2009 even though Washington says it is committed to resolving the crisis over Iran's disputed atomic ambitions diplomatically. "It should be a walkover militarily," said London-based defense analyst Andrew Brookes about any U.S. attempt to knock out the Islamic Republic's atomic installations.

"The hard bit is what comes afterwards and that is opening Pandora's box," said Brookes of the International Institute for Strategic Studies (IISS) think-tank. Western powers suspect Iran is seeking to build atom bombs. Iran says its nuclear program is aimed at generating electricity so that it can export more of its oil and gas.

A former Iranian official with links to the country's highest authority, Supreme Leader Ayatollah Ali Khamenei, suggested Tehran would respond by using allies in the region to take the fight elsewhere in the Middle East.
"If they want to play games with us, I believe in a few ways we can turn Iraq into a fiery battlefield," he said.

The volcano, whose name means "Child of Krakatau", formed in the Sunda Strait close to Java island after Mount Krakatau's legendary eruption in 1883. It rumbled to life about two weeks ago and since then has been dazzling scientists and visitors with its amazing pyrotechnics.

JP Morgan, which revealed it had $40.6bn of leveraged loans and unfunded commitments on its balance sheet at the end of September, said it faces "further markdowns - if market conditions worsen for this asset class."

In its 10-Q filing, Bank of America also declined to place a number on its possible losses as a result of the current stagnation in the credit markets, but also warned that it is likely to take a hit. BoA revealed that, as of the end of September, its total CDO exposure was $15.5bn, of which $9.8bn was principally backed by sub-prime residential mortgages.

With branches in Oakland, Los Angeles, San Diego, Sacramento and Philadelphia, the group As-Sabiqun - or the Vanguard - is under the leadership of Abdul Alim Musa in the nation's capital. Musa's declaration of his intention to help lead a takeover of America was highlighted by noted Islam observer Robert Spencer on his website Jihad Watch.

Spencer told WND that figures such as Musa should not be ignored, "Not because they have the power to succeed, but because they may commit acts of violence to achieve their purpose."

Musa's website declares: "Those who engage in this great effort require a high level of commitment and determination. We are sending out a call to the believers: Join with us in this great struggle to change the world. The paramount goal of the movement is the establishment of Islam as a complete way of life in America," the group declares. "This ultimate goal is predicated on the belief - shared by many Muslims worldwide - that Islam is fully capable of producing a working and just social, political, economic order.

In London last summer, as WND reported, Muslims gathered in front of the London Central Mosque to applaud fiery preachers prophesying the overthrow of the British government - a future vision that encompasses an Islamic takeover of the White House and the rule of the Quran over America.

An early morning attack by four gunmen who stormed and reached the emergency-response control room of a secured nuclear facility in South Africa has left one of the plant's operational officers hospitalized and officials with the country's nuclear agency threatening a newspaper with charges of violating national security laws for publishing an account of the intrusion.

The attack at the Pelindaba nuclear facility took place early Thursday morning, reported the Pretoria News. Investigators at the Pelindaba plant believe the attackers gained access to the building by using a ladder belonging to the facility's fire department to scale a wall, then forced open a window by pulling out several louvers.

"The facility is meant to be safe. There are security guards, electric fences and security control points. These things are not meant to happen," said Anton Gerber, an emergency services operational officer . During the struggle, Gerber was shot in the chest by one of the attackers, the bullet narrowly missing his heart and spine but hitting his lung and breaking a rib.

A NESCA ( Nuclear Energy Corporation of South Africa) spokeswoman confirmed the attack but would not say how the intruders gained entry to one of the country's most secure sites or whether anything was taken in the attack. NESCA, she said, was conducting its own internal investigation and would publicize its findings after police finished their work.

Social networking giant MySpace stumbled to its knees at the hands of a cyber superbug recently, falling ill to a severe phishing epidemic that is plaguing a vast and vulnerable segment of its membership. The viral scam, which targets the site's younger users, promises victims a free $500 Macy's gift card. It sounds like a steal. And actually, it is. It's the stealing of a member's identity.

The spam scam involves users unknowingly sending their MySpace friends e-mails and posting comments on their profiles that plug a ploy for the supposedly free gift card that they'll never actually see, touch, or spend.
In fact, to lead the younger members on, the ads are written in "kids-speak." One such posting starts off by telling the victim, "Hey dude, check it out! You ain't gunna believe this!"

Another one reads: "I'm just hittin you up, as a friend, to fill you in on this exclusive deal to get a FREE $500 Macy's Gift Card, yes, FREE! Just answer a question or two and BOOM you got a shopping spree lol!"

Members fall into the phishing net by clicking on a provided link in the posting, which in some cases comes in the form of what looks like a video featuring a scantily-clad young woman. After clicking on the link, the member is taken to a faux MySpace login page where the user is asked to re-enter his or her username and password. That information, however, is actually being sent to the "phisher," a third party illegally acquiring the member's personal information.

The pain and suffering begins immediately and will continue until either the phisher is caught or the member changes his or her password, mainly because victims simply have no clue they're sending the e-mails until someone finally tells them.

"It is an epidemic on MySpace," PC Magazine Executive Editor Jeremy Kaplan tells wcbstv.com. "It is a big problem particularly because of the pervasiveness of MySpace. If you're in junior high, high school, college -- half the world seems to have MySpace pages -- so the younger you are, the more frequently you use it and the more likely you are to encounter this thing. It is a huge problem."

But MySpace's Nigam offers this advice to prevent phishing scams as well: Install the latest operating system and auto-install for critical updates. Use a firewall. Use anti-virus and anti-spyware software and keep them updated.

AND OF COURSE, THERE'S SIMPLE COMMON SENSE. IF THE DEAL LOOKS TOO GOOD TO BE TRUE, EXPERTS SAY, DON'T BELIEVE THE HYPE. IT PROBABLY IS.

Lieberman's remarks came a week after Egyptian President Hosni Mubarak announced a decision to restart his country's nuclear program. On Wednesday, Iranian President Mahmoud Ahmadinejad announced that his country had begun operating 3,000 centrifuges for the enrichment of uranium.

"If Egypt and Saudi Arabia begin nuclear programs, this can bring an apocalyptic scenario upon us," Lieberman told the Post. "Their intentions should be taken seriously and the declarations being made now are to prepare the world for when they decide to actually do it."

Lieberman also said PAKISTAN WAS A MAJOR THREAT to Israel due to the political instability there and the fact that the country had missiles, nuclear weapons and a proven capability. "We hope there will be stability and the [Pakistani] nuclear weapons won't fall into radical hands," he said. "If the Taliban or [al-Qaida leader Osama] bin Laden get control [of Pakistan] they will have nuclear weapons for terror use and they don't hide their opinions about Israel."

Lieberman, whose office is in charge of coordinating Israel's efforts against the Iranian threat, blasted International Atomic Energy Agency chief MOHAMED ELBARADEI as a major obstacle to the West's efforts to impose further sanctions on Iran.

"HE IS PART OF THE PROBLEM, NOT PART OF THE SOLUTION," Lieberman said. "ElBaradei's behavior has not succeeded in solving anything like North Korea or Libya's nuclear programs. And instead of criticizing Iran, he finds it right to criticize Israel." Lieberman said ElBaradei was delaying the UN Security Council's consideration of a new round of sanctions by not publishing the new IAEA report on the status of Iran's nuclear program. "They [the IAEA and ElBaradei] are allowing Iran to stall for time and to launder its nuclear program," Lieberman said.

Lieberman said Israel needed to ignore ElBaradei and to work on its own - together with other Western countries - to impose sanctions on the Islamic Republic. He said the international community finally understood that IRAN WAS NOT JUST A THREAT TO ISRAEL BUT TO THE ENTIRE FREE WORLD.