Gold surged to an all-time high of $914 an ounce in New York on bets that the authorities will flood the global system with further liquidity to stave off a mounting debt crisis. Fed chair Ben Bernanke prepared the way for drastic cuts with a speech on Thursday saying the authorities were "exceptionally alert" to the risks as the housing slump triggers the first wave of jobs losses. US unemployment jumped from 4.7pc to 5pc in December, the sharpest jump in a quarter century.

Lorenzo Bini-Smaghi, a member of the European Central Bank's executive council, warned that the tumbling dollar may now start to foreclose the option of US rate cuts and force the Fed to keep monetary policy tighter than it would like. "I would not be so sure about the movements of the Fed. There is a serious problem with the dollar in America. We will see what margins they have for further rate cuts," he told Italy's La Repubblica newspaper.

It is the first time that a top central banker has openly aired concerns that dollar weakness could constrain US economic policy. Until now Washington has largely been able to ignore the currency, treating the slide as a headache for the rest of the world. The euro briefly touched $1.49 today, just shy of its all-time high.

US Treasury Secretary Hank Paulson said the administration is rushing to craft a fiscal stimulus package to boost spending. "Time is of the essence," he said. HSBC said the Fed had now raised expectations so far that it risks setting off fresh "financial stresses" if it fails to deliver a serious shot in the arm.

Nationalising Northern Rock could raise the prospect of a legal challenge and years of shareholder claims, Gordon Brown was warned yesterday. Insiders at the bank expressed concerns over whether the Prime Minister's contingency plan to rescue it will pass EU rules governing illegal state aid. Legal experts on European competition law expressed similar fears.

The Government is thought to have an army of lawyers trying to find a way through the minefield. It would have to pass an Act of Parliament in order to take the Rock into Government control. But Stephen Hamilton, competition lawyer at Mills & Reeve, believes it may be able to achieve similar results by forcing the bank into administration. That could be followed by a sell-off of the business and its assets, with any proceeds being returned to the state's coffers.

He added: 'The Government would have to tread very carefully should it decide to take any steps towards nationalisation because an incorrectly managed process could be in breach of European law and could lead to litigation and significant shareholder activism.'

NO EASY SOLUTION BUT PLENTY OF RISK

NATIONALISATION - the compulsory sale to the Government of the bank's shares - would require primary legislation and would hold ministers directly responsible for the company. The biggest headache might be lawsuits from shareholders, but the Treasury believes investors would have no case because owning shares is always risky.

ADMINISTRATION is an alternative that would see a quick "pre-packaged" sale of the business and assets with the proceeds going to meet the debt to the taxpayer. But administration would mean a fire sale of assets and its mortgage book and heavy job losses in the North-East.

They said methicillin-resistant Staphylococcus aureus, or MRSA, is beginning to appear outside hospitals in San Francisco, Boston, New York and Los Angeles. "Once this reaches the general population, it will be truly unstoppable," said Binh Diep, a researcher at the University of California, San Francisco who led the study. "That's why we're trying to spread the message of prevention."

According to chemical analyses, bacteria are spreading among the gay communities of San Francisco and Boston, the researchers said. This superbug can cause life-threatening and disfiguring infections and can often only be treated with expensive, intravenous antibiotics. It killed about 19,000 Americans in 2005, most of them in hospitals, according to a report published in October in the Journal of the American Medical Association.

The plans will be unveiled Tuesday by Citigroup's new CEO, Vikram S. Pandit, after the banking giant reports fourth-quarter earnings. At the same time, Citigroup could also announce that it is cutting its dividend payment.
Citigroup is likely to cut between 17,000 and 24,000 positions over the course of the year through a combination of layoffs, attrition and selling off businesses as part of Pandit's cost-cutting plan, sources said. Previously, it was estimated that the layoffs could reach 20,000.

Pandit is looking to avoid taking a charge to earnings that's usually associated with large-scale layoffs, which is one reason he's considering a number of staff-cutting initiatives besides outright firings. It's unclear if he'll announce a specific number of job cuts on Tuesday. A Citigroup spokesman had no immediate comment.

Though he made no overt comments about a bid to become the E.U.'s first president next January, Blair's repeated references to Europe, globalization, and bipartisan efforts to reform and modernize made his aspirations evident. So, too, did Blair's role as guest speaker at the Saturday meeting of 2,500 leaders from the rightist Union for a Popular Majority party of French President Nicolas Sarkozy. The assembled conservatives applauded the former U.K. premier's calls to "take the future by the horns" and resist "retreating to comfort zones of out-dated slogans and old remedies".

"Today, one thing is as important between the distinctions between left and right: the difference between policies turned towards the future, and those stuck in the past," Blair told his enthralled audience in French. "Like a rising tide, globalization can not be rejected. In a world of change, woe is he who stagnates."

The government has blamed hoarders and smugglers for the problem. Wheat is a staple food in Pakistan and shortages have led to large scale rioting in the past. Flour shortfalls initially pushed up market prices. Later flour ran out on the open market when officials fixed prices and warned against violations. Now Pakistan's national disaster management authority has deployed thousands of paramilitary troops at wheat stores.

The head of the authority said the aim was to ensure that store owners did not sell more than allowed by the government. The move comes after nearly a month of wheat shortages. President Pervez Musharraf said there was enough grain to feed everyone and the crisis had been engineered. He and other leaders have pointed the finger at "hoarders" and "profiteers".

Officials accuse suppliers of smuggling wheat intended for domestic use to Afghanistan and Central Asia, where prices are higher.

Since November the pound has fallen by almost 9 per cent against the euro - a rate of decline not far off that seen during sterling's enforced exit from the European exchange rate mechanism in 1992, when it fell 11 per cent against Germany's D-Mark.

Malawi and Taiwan media earlier this month said that the African nation's government had cancelled a planned meeting with Taiwanese officials, raising speculation it might end 41 years of diplomatic relations with the island nation in favour of mainland China.

"It is fascinating for Christians to know that Islam gives such devotion to and has so much knowledge about Jesus," Talebzadeh told AFP. "By making this film I wanted to make a bridge between Christianity and Islam, to open the door for dialogue since there is much common ground between Islam and Christianity," he said. The director is also keen to emphasise the links between Jesus and one of the most important figures in Shiite Islam, THE IMAM MAHDI, SAID TO HAVE DISAPPEARED 12 CENTURIES AGO BUT WHOSE "RETURN" TO EARTH HAS BEEN A KEY TENET OF THE AHMADINEJAD PRESIDENCY.

The bulk of "Jesus, the Spirit of God", which won an award at the 2007 Religion Today Film Festival in Italy, faithfully follows the traditional tale of Jesus as recounted in the New Testament Gospels, a narrative reproduced in the Koran and accepted by Muslims. But in Talebzadeh's movie, God saves Jesus, depicted as a fair-complexioned man with long hair and a beard, from crucifixion and takes him straight to heaven. "It is frankly said in the Koran that the person who was crucified was not Jesus" but Judas, one of the 12 Apostles and the one the Bible holds betrayed Jesus to the Romans, he said. In his film, IT IS JUDAS WHO IS CRUCIFIED.

Every Christmas, Ahmadinejad and other officials lose no time in sending greetings to Christian leaders including the pope on what they describe as the "auspicious birthday of Jesus Christ, Peace Be Upon Him (PBUH)." In this year's message, Ahmadinejad said that "peace, friendship and justice will be attained wherever the guidelines of Jesus Christ (PBUH) are realised in the world."

SHIITE MUSLIMS, the majority in Iran, believe JESUS WILL ACCOMPANY THE IMAM MAHDI when he reappears in a future apocalypse to save the world. And Talebzadeh said the TV version of his film will further explore the links between Jesus and THE MAHDI -- WHOSE RETURN AHMADINEJAD HAS SAID HIS GOVERNMENT, WHICH CAME TO POWER IN 2005, IS WORKING TO HASTEN. Shiites believe the Mahdi's reappearance will usher in a new era of peace and harmony. "We Muslims pray for the 'Return' (of Imam Mahdi) and Jesus is part of the return and the end of time," Talebzadeh said. "Should we, as artists, stand idle until that time? Don't we have to make an effort?"

Recent reports have warned of rising food prices and rainforest destruction from increased biofuel production. The EU has promised new guidelines to ensure that its target is not damaging. EU Environment Commissioner Stavros Dimas said it would be better to miss the target than achieve it by harming the poor or damaging the environment. A couple of years ago biofuels looked like the perfect get-out-of-jail free card for car manufacturers under pressure to cut carbon emissions.

Instead of just revolutionising car design they could reduce transport pollution overall if drivers used more fuel from plants which would have soaked up CO2 while they were growing. The EU leapt at the idea - and set their biofuels targets. Since then reports have warned that some biofuels barely cut emissions at all - and others can lead to rainforest destruction, drive up food prices, or prompt rich firms to drive poor people off their land to convert it to fuel crops.

"We have seen that the environmental problems caused by biofuels and also the social problems are bigger than we thought they were. So we have to move very carefully," Mr Dimas told the BBC.

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.

If you would like to read the original article, go to:-
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."