"I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line," Ms Merkel said in a speech in Berlin. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time." THE PUBLIC CRITICISM IS UNUSUAL - and not only because German politicians rarely talk harshly about central banks in public. When politicians around the world do criticize their central banks, they almost always gripe that they are too tightfisted.

The conservative German leader's comments came as Europe's statistical agency reported that unemployment in the 16 countries that share the euro rose to 9.2% in April - the highest level since September 1999 and still below the 11.5% that the European Commission forecasts for 2010. GERMAN OFFICIALS TRADITIONALLY HAVE BEEN ON THE MORE CONSERVATIVE END OF THE CENTRAL BANKERS' SPECTRUM, partly because the country's hyperinflation of the 1920s is seared into people's memories.

The ECB, the Fed and the Bank of England are increasingly vulnerable to criticism because they have played such a prominent role and CROSSED SO MANY TRADITIONAL LINES in the past several months - even though they do appear to have steered their economies away from a repeat of the Great Depression.

Although the administration of President Barack Obama has carefully avoided criticizing the Fed, Republicans and Democrats in Congress have questioned the wisdom of the Fed's power and its governance AS THEY CONTEMPLATE FAR-REACHING CHANGES TO THE NATION'S FINANCIAL REGULATORY STRUCTURE. Some private economists - and a few inside the Fed - say the Fed's aggressiveness is increasing THE RISKS OF AN OUTBREAK OF INFLATION.

Jacqui Smith, the Home Secretary, dealt the most serious blow to the Prime Minister's authority. It emerged that she will step down from the Cabinet when Mr Brown reshuffles his team after what Labour fears will be its worst performance at the polls for a generation. She had been under pressure for weeks over expenses claims made by her husband on her behalf, including for two pornographic films. However, the public disclosure of her departure before tomorrow's elections threw Mr Brown's reshuffle off course.

ON A TUMULTUOUS AND CHAOTIC DAY AT DOWNING STREET, it was also announced that Beverley Hughes would move aside from her job as Children's Minister and that Tom Watson, the Cabinet Office Minister and key ally of Mr Brown, would leave the Government. With speculation intensifying that Alistair Darling, the Chancellor, will become the most high-profile victim of the reshuffle, and that David Miliband might also be replaced as Foreign Secretary, it raised the prospect that the three great offices of state could change hands.

A GROUP OF OPPOSITION MPS SAID THAT THEY WOULD TABLE A MOTION NEXT WEEK SEEKING AN IMMEDIATE GENERAL ELECTION. Labour sources said that many of the party's MPs were in a state of panic. A private meeting of the Parliamentary Labour Party was described by MPs as "emotional and jittery," with several backbenchers openly accusing Mr Brown of lacking leadership and direction. Some Labour MPs reported that a list could be circulated soon with names OF THOSE WHO WANT MR BROWN TO STAND ASIDE FOR THE GOOD OF THE PARTY.

An interactive map maintained at Slate.com shows that the highest levels of unemployment are in Democratic state urban areas, including Los Angeles, Detroit, Chicago, Cleveland, New York City, Newark and Washington DC – ALL CITIES THAT EXPERIENCED MAJOR RACE RIOTS AT THE END OF THE 1960s. A closer look at BLS statistics shows that unemployment in April 2009 among the white labor force was 8 percent, while unemployment among the black labor force was 15 percent.

In 1968, the National Advisory Commission on Civil Disorders argued that RISING EXPECTATIONS THAT HAD GONE UNFULFILLED WERE A MAJOR CAUSE OF THE 1960S-ERA URBAN RACE RIOTS. "Whether the same phenomenon will be observed with a black president remains to be seen," Corsi wrote. "The concern is that candidate BARACK OBAMA'S PRESIDENTIAL CAMPAIGN THEMES OF "HOPE AND CHANGE" PERMITTED AFRICAN-AMERICANS TO EXPECT IMPORTANT DIFFERENCES IN THEIR ECONOMIC WELLBEING AND POLITICAL POWER would be experienced with President Obama in the White House."

In 1968, the US economy was operating then at what was considered a full-employment level, with white unemployment averaging around 4 percent and BLACK UNEMPLOYMENT AVERAGING AROUND 8 PERCENT. If unemployment numbers continue to escalate throughout 2009, conceivably AFRICAN-AMERICAN UNEMPLOYMENT RATES COULD HIT 20 PERCENT before the end of the year.

WND has provided multiple reports on what is at stake when the Senate considers a national hate crimes proposal that is to add special penalties against individuals guilty of crimes based on ethnic, religious and racial hatred – and new classifications based on sexual orientation. The legislation has been described by critics as "The Pedophile Protection Act."

Operation Save America spokesman Reverend Flip Benham said members of groups he's organized to meet in Washington to oppose the "hate crimes" plan have been threatened with arrest for even going up the Supreme Court's steps while wearing the shirts, and have been forbidden entry in other locations. "There's no way you're going to bring that (shirt) into the halls of the Senate building," he told WND. "If we had a Muslim T-shirt, or a Barack Obama T-shirt, there would be no problem, but it's who we are as Christians," he said. "THESE THINGS ARE NEVER REPORTED THROUGH OUR MAINSTREAM MEDIA, BUT AMERICAN CITIZENS NEED TO KNOW WHAT IS OCCURRING AT OUR FEDERAL BUILDINGS."

As WND has reported, the Local Law Enforcement Hate Crimes Prevention Act of 2009 would provide special protections to homosexual people BUT LEAVE CHRISTIAN MINISTERS OPEN TO PROSECUTION should their teachings be linked to any subsequent offense, by anyone, against a homosexual person. He said the foundational problem with the bill is that it is based on lies: It assumes there's an epidemic of crimes in the United States – especially actions that cross state lines – that is targeting those alternative sexual lifestyles. It turns out there are fewer crimes now than there were 10 years ago."

Critics also have expressed alarm because in committee hearings Democrats admitted that a Christian pastor could be prosecuted under the law if he spoke biblically against homosexuality, someone heard the comments and then committed a crime.

Iran has insisted its nuclear program is aimed at generating electricity. But the US and other Western governments accuse Tehran of seeking atomic weapons. "Without going into specifics, what I DO BELIEVE IS THAT IRAN HAS LEGITIMATE ENERGY CONCERNS, LEGITIMATE ASPIRATIONS. On the other hand, the international community has a very real interest in preventing a nuclear arms race in the region," Obama said.

The comments echo remarks Obama made in Prague last month in which he said his administration would "support Iran's right to peaceful nuclear energy with rigorous inspections" if Iran proves it is no longer a nuclear threat. Iranian state television described the news as Obama recognizing the "rights of the Iranian nation," a phrase typically used to refer to Iran's nuclear program.

Obama left Tuesday evening on a trip to Egypt and Saudi Arabia aimed at reaching out to the world's 1.5 billion Muslims. He is due to make his speech in Cairo on Thursday. He said he hoped to deliver the message that democratic values are principles that "they can embrace and affirm." Obama added that there is a danger "when the United States, or any country, thinks that we can simply impose these values on another country with a different history and a different culture."

During a conference call in preparation for President Obama's trip to Cairo, Egypt, where he will address the Muslim world, deputy National Security Adviser for Strategic Communications Denis McDonough said "THE PRESIDENT HIMSELF EXPERIENCED ISLAM ON THREE CONTINENTS before he was able to - or before he's been able to visit, really, the heart of the Islamic world - you know, growing up in Indonesia, having a Muslim father - obviously Muslim Americans (are) a key part of Illinois and Chicago."

Given widespread unease and prejudice against Muslims among Americans, especially in the wake of 9/11, the Obama campaign was perhaps understandably very sensitive during the primaries and general election to downplay the candidate's Muslim roots.

Back then, the campaign's "Fight the Smears" website addressed the candidate's faith without mentioning his father's religion: "Barack Obama is a committed Christian. He was sworn into the Senate on his family Bible. He has regularly attended church with his wife and daughters for years. But shameful, shadowy attackers have been lying about Barack's religion, claiming he is a Muslim instead of a committed Christian. When people fabricate stories about someone's faith to denigrate them politically, that's an attack on people of all faiths. Make sure everyone you know is aware of this deception."

Since the election, however, with the threat of the rumors at least somewhat abated, the WHITE HOUSE HAS BEEN INCREASINGLY FORTHCOMING ABOUT THE PRESIDENT'S ROOTS. Especially when reaching out to the Muslim world. In his April 6 address to the Turkish Parliament, President Obama referenced how many "AMERICANS HAVE MUSLIMS IN THEIR FAMILIES OR HAVE LIVED IN A MUSLIM MAJORITY COUNTRY. I KNOW, BECAUSE I AM ONE OF THEM."

Mogadishu civilians have been fleeing intense fighting between Islamist guerrillas and pro-government forces. The government says it has regained control of a second part of the city. Mogadishu's deputy mayor Abdifitah Ibrahim Shawey said Islamist insurgents had been ousted from Dharikinley police station in the south-west of the capital, after the government took Yaqshid police base in the north of the city on Monday. Following an upsurge in violence over the past month, some 200 people are crossing the border into Kenya each day, the UN says.

Hassan Noor, Oxfam's humanitarian co-ordinator for Somalia, told the BBC's Network Africa programme circumstances in the capital were "very dire". "The situation is really appalling," he said. "There are hundreds of children all over the area with tubes on their faces and [saline] drips on their hands. Some of them are actually unconscious and suffering from all sorts of diseases, mainly acute diarrhoea and cholera."

"I have seen the situation in Darfur, northern Uganda, some parts of Congo, but what is actually happening now in Somalia is indeed the worst kind of humanitarian situation in Africa in many years," he added. Radical Islamist militia groups, Hisbul-Islam and al-Shabab, have been locked in see-sawing battles in the Somali capital with pro-government forces that have displaced more than 60,000 civilians since 7 May.

Uptake of the MMR vaccine fell sharply after controversial research wrongly linked it to a raised risk of autism. One in four children under five has not had both MMR injections, which are needed to give full protection against measles, mumps and rubella. As a result there have been measles outbreaks across the country, and experts at the Health Protection Agency now fear a measles epidemic is likely. Sir Sandy said: "Our attempts to persuade people have failed."

"The suggestion is that we ought to consider making a link which in effect would make it compulsory for children to be immunised if they are to receive the benefit of a free education from the state." Linking vaccinations to school admission is controversial but common in other countries. It happens in the US, most of Australia, Spain and Greece.

But in the UK vaccination programmes have relied on persuading and educating parents that immunisation is not only beneficial to their children but to society as a whole. The BBC has learned, however, through a freedom of information request that THE STRATEGIC HEALTH AUTHORITY IN LONDON ASKED THE GOVERNMENT IF IT COULD INTRODUCE COMPULSORY VACCINATIONS. Specifically the SHA asked about the "feasibility of requiring an immunisation certificate for measles before children go to school."

"I don't think we have to change strong support for Israel," Obama said in an interview with National Public Radio on Monday. "We do have to retain a constant belief in the possibilities of negotiations that will lead to peace," Obama said. "And that's going to require, from my view, a two-state solution."

Obama reiterated that no settlement expansion also includes "natural growth," an allowance made by his predecessor. Obama said that the peace process would require a freeze on settling Judea and Samaria, including expansion to accommodate successive generations of Jews living there, and for the Arab side to end "the incitement that understandably makes Israelis so concerned."

Jerusalem feels that the Obama administration has backtracked from previous agreements made under Bush's tenure allowing for "natural growth" in Jewish towns within Judea and Samaria. OBAMA FEELS THAT HIS "TOUGH LOVE" STANCE WITH ISRAEL WILL RESTORE AMERICAN CREDIBILITY IN THE MUSLIM WORLD, that sometimes accuses the US of playing favourites with Israel. "Obviously we are deeply sympathetic to Israel," the US President responded. "Given past statements that Israel should be driven to the sea, annihilated, you could see why the US would back Israel."

Nevertheless, Obama said that the US wouldn't treat Israel with kid gloves: "It is important for us to be clear about what we believe to lead to peace. This is unequivocal and there will be compromise on both sides," Obama said, "Part of being a good friend is being honest. And I think there have been times where we are not as honest as we should be about the fact that the current direction, the current trajectory, in the region is profoundly negative, not only for Israeli interests but also US interests. And that's part of a new dialogue that I'd like to see encouraged in the region."

He looks at the proposals of the so-called 'future group', which include plans for "the mass gathering of personal data" and a "Euro-Atlantic area of cooperation with the USA in the field of freedom, security and justice", which he argues "would go far beyond current co-operation and mean that POLICIES AFFECTING THE LIBERTIES AND RIGHTS OF EVERYONE IN EUROPE WOULD NOT BE DETERMINED IN LONDON OR BRUSSELS BUT IN SECRET EU-US MEETINGS."

He notes that a formal process will start when the Commission adopts proposals in June, and that the European Parliament will be consulted when it re-assembles in September. He concludes: "We can either leave these decisions to our leaders (and an elite group of civil servants) or we can insist on an open and meaningful debate now before it is too late. The idea that the surveillance society and database state is just a UK issue is naive: it is a European one in which our government plays a very active role."

Two years ago, economist Moritz Schularick and I coined the word "CHIMERICA" to describe what we saw as the key relationship in the then-booming global economy: CHINA PLUS AMERICA. Cheap Chinese labour was making US corporations highly profitable. Spendthrift American consumers, in turn, were keeping Chinese corporations busy with export orders. And the Chinese monetary authorities were converting export surpluses into dollar denominated reserves with the aim of preventing their own currency from appreciating.

The unintended consequence was a multi-billion dollar credit line to the United States, financing America's deficit at rock-bottom rates. It was those low long-term rates – combined with monetary policy errors by the Fed, excessive bank leverage and reckless financial engineering – that inflated the American property bubble, the bursting of which triggered this crisis.

In February, the People's Daily acknowledged the "global importance and influence" of Chimerica, but warned of an impending "period of chillness". COULD THIS BE ONE OF THOSE GREAT TURNING POINTS IN HISTORY, when the balance of power tilts decisively away from an established power and towards a rising challenger? It is possible. FINANCIAL CRISES OFTEN ACCELERATE THE GRADUAL SHIFTING OF THE GEOPOLITICAL TECTONIC PLATES; THEY ARE TO HISTORY WHAT EARTHQUAKES ARE TO GEOLOGY.

In a widely anticipated move, Dow Jones & Co said technology bellwether CISCO SYSTEMS INC (CSCO.O) WILL REPLACE GM, which filed for bankruptcy on Monday morning. Travelers Co (TRV.N), a large home, auto and commercial insurer, will take the place of Citigroup due to the bank's restructuring and the government's "large and ongoing stake."

The changes marked the latest fallout on the financial landscape from the collapse of the US housing market, when home prices plunged after years of running higher as credit markets froze. The turmoil helped drive Lehman Brothers into bankruptcy last September, shaking Wall Street to its core and prompting the US government to create a $700 billion financial rescue fund. The US Treasury plans to use about $30 billion of that bailout money to buy a stake in GM.

GM's bankruptcy is the third-largest Chapter 11 case in US history, ranking only behind Lehman Brothers and WorldCom in terms of size. One factor that helped seal GM's fate was the surge in US oil futures prices to record highs near $150 a barrel last July. THAT DROVE GASOLINE PRICES UP TO AROUND $4 A GALLON and helped kill demand for Detroit's gas-guzzling best sellers, the sport utility vehicles, or SUVs.

But that, in short, is the job description for Brian Deese, A NOT-QUITE GRADUATE OF YALE LAW SCHOOL WHO HAD NEVER SET FOOT IN AN AUTOMOTIVE ASSEMBLY PLANT until he took on his nearly unseen role in remaking the American automotive industry.

Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — "he's got this beard that appears and disappears," says Steven Rattner, one of the leaders of President Obama's automotive task force — Mr Deese was thrown into the auto industry's maelstrom as soon the election-night parties ended.

MR. DEESE'S ROLE IS UNUSUAL FOR SOMEONE WHO IS NEITHER A FORMALLY TRAINED ECONOMIST NOR A BUSINESS SCHOOL GRADUATE, and who never spent much time flipping through the endless studies about the future of the American and Japanese auto industries.

FOR GM'S VOICELESS OWNERS - THE COMMON SHAREHOLDERS - IT IS A WIPEOUT. The proximate cause of the bankruptcy was supposed to be the inability of GM and the government's auto task force to reach an accommodation with GM's bondholders. But late last week, the bondholder problem was moving toward rapid resolution, and was clearly resolvable. Why then are GM and its multibillion government financier proceeding with bankruptcy?

The bankruptcy and the GM restructuring plan are THE PRODUCT OF A SECRETIVE, UNACCOUNTABLE, WALL STREET-MINDED GOVERNMENT TASK FORCE that assumed power because of a Congressional abdication of historic magnitude. By all rights, THE RESTRUCTURING PLAN SHOULD HAVE BEEN SUBMITTED TO CONGRESS for deliberative review and decision.

MANY, MANY JOBS WILL BE LOST THAT COULD BE PRESERVED. There is reason to question whether too many plants and brands are being closed - a matter that should have been taken up in Congress. Just the closing of hundreds of (GM and Chrysler) dealerships will cost more than 100,000 jobs. These sacrificed jobs will fray communities and impose enormous expenses on government entities that will have to provide unemployment and social relief, while suffering lost tax revenues.

The unionized workforce will see the wage and benefit structure slashed - even though auto manufacturer wages make up less than 10 percent of the cost of a car - so that new jobs at GM will no longer be a ticket to the middle class. THIS WILL DRAG DOWN THE WAGE STRUCTURE OF THE ENTIRE AUTO INDUSTRY - exactly the wrong direction for the country.

AMERICA'S MANUFACTURING BASE WILL BE FURTHER ERODED, as GM pursues its Grand China Strategy - increasing manufacturing outside of the United States, and increasingly from China, for import back into the United States. Unanswered questions persist about how GM's valuable operations in China, and unrepatriated profits, will be treated in bankruptcy, or excluded from bankruptcy.

Bank of America Corp, Wells Fargo & Co and seven other firms judged to need extra capital by the Fed's "stress tests" plan to raise the required $69.1 billion through a combination of share offerings, asset sales, private securities exchanges and earnings. THEY WILL DO ANYTHING TO ESCAPE THE GOVERNMENT MEDDLING THAT PROBABLY AWAITS CITIGROUP, said Philip Orlando, who helps manage $410 billion as the New York-based chief equity strategist of Federated Investors Inc.

"YOU NEVER WANT TO HAVE THE GOVERNMENT INVOLVED IN YOUR BUSINESS," said Orlando, whose firm owns 7.3 million JPMorgan Chase & Co shares and 1,483 shares of Citigroup. "THEY'RE NOT BUSINESSMEN; THEY'RE BUREAUCRATS. They don't understand capitalism, they don't understand the profit motive and they don't understand the financial industry."

"The investing community doesn't welcome long-term involvement by the US government in the private economy," said Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut. "Every time I try to pitch an idea to investors that has some government involvement, the automatic reaction is, 'I don't want to get involved.'" Citigroup was found by the Fed to need $93 billion more in common equity as of the end of 2008, the biggest gap among the 19 US banks that underwent the stress tests.