In a few short months fears of recession and inflation have been displaced by concerns about depression and deflation - when the price of goods, houses, shares and wages fall dramatically. FEDERAL RESERVE CHAIRMAN BEN BERNANKE - regarded as one of the world's greatest experts on the Great Depression of the 1930s - HAS UNLEASHED ALL THE WEAPONS IN HIS ARMOURY IN ONE GO.

He has reduced official interest rates, at which banks can borrow from the Federal Reserve, to a range between zero per cent to 0.25 per cent. This is a far more radical step than most economists predicted. It is clearly designed to try and bring an end to the deadlock in the money markets - where banks lend to each other - by making money as cheap as possible. He is planning to send the operational arm of the central bank into the market to buy up long term U.S. government bonds, used to fund its budget deficit. In other words he is exchanging debts drawn on the U.S. government for cash, which is essentially printing money.

ESSENTIALLY THE FED HAS CHOSEN TO FLOOD AMERICA WITH DOLLARS. It is officially declaring that it will not allow the world's largest economy to stop growing. It is a great gamble because by using all the weapons at its disposal at once, IT HAS VERY FEW CONFIDENCE-BOOSTERS LEFT. The revolutionary American approach to the crisis is certain to place pressure on the Bank of England to take similar steps.

No one can accuse the authorities concerned of not rising to the occasion. But governments must take back the interest rate cuts rapidly as the world recovers. Otherwise, RECESSION AND DEFLATION COULD BE FOLLOWED BY SURGING PRICES AND A FRESH DOSE OF INFLATION.

It has been called the "Big Brother" law in the German media due to its provisions allowing online and telephone surveillance. The Interior Ministry in Berlin describes it as A NECESSARY STEP TO PROTECT THE COUNTRY FROM THE DANGERS OF INTERNATIONAL TERRORISM.

But journalists in Germany see the bill - currently in the parliament's arbitration committee after having failed to get through the country's upper legislative chamber, the Bundesrat, in November - in a different light. They are concerned the law would make it much easier for investigators to spy on reporters without their knowledge, giving the state access to both their computer files and their sources. That, they say, represents an unacceptable attack on freedom of the press in Germany. Publishers, journalists and media lawyers are up in arms.

THE ARMED FORCES OF INDIA AND PAKISTAN ARE STILL BEING KEPT ON A HEIGHTENED STATE OF ALERT. F-16 fighter aircraft take off into the skies over the capital Islamabad every day, fueling a now-constant state of paranoia over a possible attack. "There will certainly be an attack, perhaps even war," a high-ranking officer with the ISI, Pakistan's intelligence service, told SPIEGEL. "We are expecting it." The agents and their counterparts in the armed forces expect the Indians to launch a missile attack on the training camps of militant groups in Kashmir.

Zardari has done everything he can to avoid war with India. But in doing so he has made enemies at home. He is the first Pakistani head of state to have dared to call the militant Kashmiri fighters "terrorists." Even bolder was his claim that India, with which Pakistan has already waged three wars, was never a real threat. Such willingness to reconcile with India can be deadly in a country of which it has always been said that the army maintains the state, and not the other way around.

Islamist extremism, no longer a marginal phenomenon in Pakistan, has actually become chic. With its wealthy financiers in the Gulf states and its local, extremely well-organized religious charities, the movement offers every devout Muslim attractive prospects: a place in society, respect and a career.

Barak said the world should press Iran to stop it from building nuclear weapons. He spoke at a conference of the Institute for National Security Studies at Tel Aviv University. He said, "If it built even a primitive nuclear weapon like the type that destroyed Hiroshima, Iran would not hesitate to load it on a ship, arm it with a detonator operated by GPS and sail it into a vital port on the east coast of North America."

Indicating the possibility of a military strike, Barak said, "We recommend to the world not to take any option off the table, and we mean what we say."

TEMPERATURES WERE 20 BELOW ZERO AND LOWER ACROSS THE NORTHERN PLAINS, and a band of snow, freezing rain and sleet stretched from Kansas along the Ohio Valley to Maine. Dozens of schools closed in Kentucky and Tennessee because of slippery roads and salt truck crews started working before dawn. Up to a half-foot of snow had fallen in parts of Kentucky. "It's pretty treacherous," said Jodi Shacklette, a Kentucky State Police dispatcher in Elizabethtown. "We're working wrecks just left and right." Police in North Texas had to close some highway overpasses because they were so slippery with ice.

Some of the sharpest cold Tuesday was in northern Minnesota, where Hibbing bottomed out at 32 below zero and International Falls dropped to 28 below. In the middle of the state, St. Cloud fell to 24 below, BREAKING ITS OLD RECORD OF 21 BELOW SET IN 1963.

EVEN SOUTHERN CALIFORNIA WAS WARNED OF TEMPERATURES FALLING INTO THE MID-30S BY LATE WEDNESDAY. On Monday, thermometers read 31 below Monday in Glasgow, Montana, and the wind chill was 45 below, the weather service said. The Texas Panhandle had lows in the single digits, and Goodland, Kansas, registered a record low of minus 10.

"THE ECONOMIC CONSEQUENCES OF EITHER A PARTIAL OR TOTAL SHUTDOWN OF THE DETROIT THREE ARE STARK," said the report. "Either scenario is sufficient to push Ontario into a deep recession while the nation may barely escape one in the 50-percent reduction scenario." Initial job losses of between 157,000 and 323,000 at assembly plants, parts manufacturers and others, depending on the scenario, would rise to between 296,000 and 582,000 by 2014, said the report.

The job losses would continue to mount after the first year because a weaker economy would depress investment, discourage immigration and halve new housing construction, leading to a negative economic spiral. "If we think that the extinction of the auto industry is a national economic evolution, this report says that is a mistake," said Ontario Economic Development Minister Michael Bryant.

"We won't let that happen because of the catastrophic effects that are laid out in this report," he said, describing the demise of Canada's auto sector as "the economic equivalent of a nuclear freeze with catastrophic effects that would knock us into a deep recession."

You're out holiday shopping. The stores are crowded and everything is very busy. All of a sudden, you hear gunfire and shouting in a foreign accent. People are dropping their bags and taking cover, some falling to the ground. Screaming and panic and chaos ensue. What do you do?

GLOBAL TERRORISM HAS BECOME A PLAGUE. Fears of terror attacks are on the minds of westerners, and some say it is not if, but when. How can you prepare for such a scenario as what took place in Mumbai, India, if it comes to your mall? Director of the Northeast Intelligence Network Douglass L. Hagmann was interviewed on Israel National Radio's Weekend Edition and said that attacks like those in Mumbai will happen again.

Hagmann wants the public to know, "I've personally investigated potential terrorists who are in this country [USA] that appear to be training for just such scenarios." He went on to explain that he has evidence of Muslim groups training in the Catskills. They train with automatic weapons and the loud spats of gunfire are unsettling and disturbing to those neighbours who reside nearby. The most disturbing thing Hagmann says is that DURING SURVEILLANCE OF THIS MUSLIM GROUP IT WAS DISCOVERED THAT THEY HAVE VIDEO OF THEM PRACTICING SHOOTING UP A YELLOW SCHOOL BUS they had brought onto their property. The school bus target shooting is disturbing because it could be A SIGN TO COME OF A FUTURE TERROR ATTACK ON AMERICAN SCHOOL CHILDREN.

HAGMANN STATES THAT THE MALL OF AMERICA IS A PRIME TARGET FOR ISLAMIC TERRORISTS. "The terrorists have published their desires to create an attack against American civilians in a retail shopping outlet. Number one, for the body count, number two, for the ease of the target and thirdly, they don't care if they kill women and children, in fact, all the better, and number four, it would have a serious economic affect on the country. WHY NOT ATTACK DURING A CHRISTMAS HOLIDAY?"

MILLIONS OF U.S. JOBS HAVE BEEN LOST AND MORE LAYOFFS ARE EXPECTED. Banks have reined in lending after a credit crisis and a housing collapse that has sent foreclosures surging. On Wall Street, several investment banks have collapsed. THE U.S. STOCK MARKET HAS LOST MORE THAN 40 PERCENT OF ITS VALUE. Behemoths like Citigroup have struggled to survive.

Tough times also threaten the once-mighty U.S. auto industry, with General Motors and Chrysler LLC seeking billions in aid from Washington and warning of potential collapse if they do not get a bailout. "WE ARE SEEING THE BEGINNING OF THE END OF THE AMERICAN EMPIRE," said Howard Zinn, author of "A People's History of the United States."

On the right, former International Monetary Fund chief economist Simon Johnson sums up the view this way: "Capitalism is not dead, there is no alternative to capitalism. The myth of wonderful capitalism is dead but not capitalism, just the nice warm fuzziness."

EVERY WEEK, THERE IS MORE HARD-TO-BELIEVE NEWS; a Wall Street trader arrested on charges of a $50 billion investor fraud, and the governor of Illinois accused of trying to sell the Senate seat vacated by President-elect Barack Obama. Experts are uncertain how long the American economic malaise will linger. Some predict a year or two, others fear a slowdown of as long as a decade, reminiscent of Japan's lost decade of the 1990s. Everyone agrees the situation in America, now officially in recession, is certainly bleak.

"PEOPLE START SEEING THEIR ECONOMIC SITUATION CHANGE, AND IT STIMULATES A SORT OF SURVIVAL PANIC," said Gaetano Vaccaro, deputy clinical director of Moonview Sanctuary, which treats patients for emotional and behavioral disorders. "WHEN WE ARE IN A SURVIVAL PANIC, WE ARE PRONE TO REALLY EXTREME BEHAVIORS." The U.S. recession that took hold in December last year has threatened personal finances in many ways as home prices fall, investments sour, retirement funds shrink, access to credit diminishes and jobs evaporate.

It is also a rude awakening for a generation of shoppers who grew up on easy access to credit and have never had to limit purchases to simply what they needed or could afford. Instead, buying and consuming have become part of the national culture, with many people using what is in their shopping bags to express their own identity, from the latest gadgets to designer handbags.

Besides an increase in shoplifting, psychologists said retailers need to be prepared for more instances of violent behavior like that seen at a Wal-Mart store in Long Island, New York the day after Thanksgiving. "I wouldn't be surprised if we see an uptick in crime, related to stealing," said UCLA's Fong. "I WOULDN'T BE SURPRISED IF WE SEE MORE WORKPLACE VIOLENCE AND MORE VIOLENCE AT THE MALLS."

The Fed's Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets.

Investor speculation that the Fed will ease monetary policy today pushed yields on 10-year Treasury notes to the lowest since 1954. The dollar traded near a two-month low against the euro and was close to its weakest level in 13 years versus the yen. BERNANKE HAS REPEATEDLY INVOKED EMERGENCY POWERS NOT USED TO SINCE THE 1930s and expanded the Fed's credit to the economy by $1.4 trillion. "The little bit of stability we have had is because there is an impression the Fed has almost unlimited resources and has adopted a tactic of intervention," said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York.

Update:- The US Federal Reserve has slashed its key interest rate from 1% to a range of BETWEEN ZERO AND 0.25% as it battles the country's recession. In its statement, the Federal Reserve warned that "THE OUTLOOK FOR ECONOMIC ACTIVITY HAS WEAKENED FURTHER".

Dominique Strauss-Kahn sounded a stark warning over the consequences of what he argued was weak and uncertain government reaction to the economic crisis. He used a hard-hitting speech in Madrid to single out eurozone nations over what he attacked as an inadequate response. The broadside from the IMF's managing director came as fears over a protracted global recession, and political fallout, mounted after China said that its factories' output registered the weakest growth in almost a decade last month.

Without swifter and more determined action by governments to boost economies, a world recovery could be delayed until late next year or early in 2010, with grave consequences, Mr Strauss-Kahn said. "A lot remains to be done, and if this work is not done it will be difficult to avoid a long-lasting crisis that everyone wants to avoid."

The IMF has called for governments in leading economies to spend a combined 2 per cent of global GDP, or $1.2 trillion (£1,075 billion), to try to fend off the danger from global recession. "If we are not able to do that, THEN SOCIAL UNREST MAY HAPPEN IN MANY COUNTRIES - INCLUDING ADVANCED ECONOMIES," Mr Strauss-Kahn suggested. He also claimed that VIOLENT PROTESTS COULD BREAK OUT IN COUNTRIES WORLDWIDE if the financial system was not reordered to benefit everyone rather than a small elite.

The NPD party has its biggest membership there and the far-right scene feels so safe that some sympathizers have already been making fun of the attack.

Bavaria's interior minister, Joachim Herrmann, said the assault showed that far-right violence had reached a new level. "This attack on an individual prominent representative of the state is new," Herrmann told SPIEGEL ONLINE. "We must take this escalation of violence very seriously." Bavarian authorities had recently registered an increase in far-right activity, said Herrmann.

BAVARIA HAS A WELL-ESTABLISHED NEO-NAZI SCENE. The domestic intelligence service estimates that there are around 1,100 violent neo-Nazis in Bavaria and around 10,000 in Germany. In Passau alone, the number of far-right crimes doubled to 83 this year compared with 2007. ARSON ATTACKS AND RACIST ASSAULTS BY RIGHT-WING EXTREMISTS ARE PART OF EVERYDAY LIFE IN PARTS OF GERMANY. Authorities have expressed concern this year that the country's neo-Nazi scene is becoming more violent.

Almost two centuries after President James Monroe declared Latin America a U.S. sphere of influence, the region is breaking away. From socialist-leaning Venezuela to market-friendly Brazil, governments are expanding military, economic and diplomatic ties with potential U.S. adversaries such as China, Russia and Iran. THE U.S., SHE SAYS, "IS NO LONGER THE EXCLUSIVE GO-TO POWER IN THE REGION, especially in South America, where U.S. economic ties are much less important."

Since November, Russian warships have engaged in joint naval exercises with Venezuela, the first in the Caribbean since the Cold War; Chinese President Hu Jintao signed a free-trade agreement with Peru; and Brazil invited Iranian President Mahmoud Ahmadinejad for a state visit.

"While the U.S. remains aloof from a region it no longer sees as relevant to its strategic interests, other countries are making unprecedented, serious moves to fill the void," says Luiz Felipe Lampreia, Brazil's foreign minister from 1995 until 2001. "Countries in the region are more aware than ever that they LIVE IN A GLOBALIZED, POST-AMERICAN WORLD."

THE REAL BATTLE IS FOR A LARGER SHARE OF THE REGION'S ABUNDANT RESOURCES AND EXPANDING ECONOMIES, and China has led the way.

The disease has spread quickly as the health care and water systems have collapsed amid a long political crisis.

Last week, President Robert Mugabe said the spread of cholera had been halted. He has accused Western powers, including Zimbabwe's former colonial ruler Britain, of using the cholera outbreak as a pretext to invade the country and overthrow him. "NOW THAT THERE IS NO CHOLERA, THERE IS NO CAUSE FOR WAR," he said. Other high-ranking officials have accused Britain of deliberately spreading cholera.

Meanwhile, the UN's Office for the Co-ordination of Humanitarian Affairs (OCHA) said the worst-hit area was the capital, Harare, with 208 confirmed deaths and 8,454 suspected cases. The UN has warned that up to 60,000 people could become infected if the outbreak is not contained.

Germany is seeking to solve Britain's dilemma over a large number of Eurofighter Typhoon jets IT HAS ORDERED BUT CANNOT AFFORD by proposing it buys half and delays a decision about the remainder by three years. The "informal offer", made to John Hutton, defence secretary, would help to solve the cash crisis facing the Ministry of Defence.