"We're going to take those assets which are probably very valuable, but can also be digested by buyers in relatively manageable bites, and we will simply start to market them," Edward Liddy, who was appointed AIG's chief executive last week, said in an interview on the CNBC financial news channel.

"I hope within the next seven to 10 days to be out there with a plan that lists everything that's for sale and maybe even execute some of those transactions by then," said Liddy, a former CEO of insurer Allstate Corp. He said he hoped AIG would be able to pay back the Federal Reserve loan "as quickly as possible." If the loan is not repaid, the U.S. government has the right to take an almost 80 percent stake in the company.

The jump to an intraday high of $130 a barrel – a rise of about $40 a barrel from last week's low – was exacerbated by a weakening US dollar and data showing weaker supplies from Mexico, Nigeria and Saudi Arabia in recent weeks and surging imports by China.

Investors who had bet that oil prices would continue falling were forced to close their positions ahead of Monday's expiry of the October oil futures contract at the New York Mercantile Exchange, traders and analysts said. THE PROCESS IS KNOWN AS SHORT COVERING. THE INVESTORS HAD LITTLE OPTION BUT TO COVER THEIR SHORT POSITIONS AT ANY PRICE. IF THE POSITIONS HAD NOT BEEN CLOSED, THEY WOULD HAVE TO TAKE PHYSICAL DELIVERY OF BARRELS OF OIL.

But in a highly unusual statement, the Commodity Futures Trading Commission, the main regulator of US commodity markets, said it was "closely monitoring" the large surge in oil prices for signals of market manipulation. "CFTC enforcement staff will scour today's trading activity to determine whether anyone engaged in illegal manipulation activity," said Stephen Obie, head of the regulator division of enforcement. Traders in New York said at least one hedge fund was facing losses after being caught on the wrong side of the oil price move.

The White House says Congress must back the proposed bail-out to prevent wider economic harm. But doubts over the speed at which it can be introduced have emerged from both Democrats and Republicans. MANY POLITICIANS APPEAR ALARMED BY THE SCALE AND IMPLICATIONS OF THE GLOBAL FINANCIAL CRISIS. While most are anxious to find bi-partisan ways of getting behind the bail-out, others are critical of what they see as a waste of taxpayers' money, correspondents say.

WITH THE IMMEDIATE SENSE OF IMMINENT COLLAPSE NOW PASSING, DISSENTING VOICES ARE BEGINNING TO EMERGE, says the BBC's Kevin Connolly in Washington. Contentious issues include limiting compensation for executives of rescued firms, wider help for American homeowners at risk of losing their homes and demands for oversight.

"The Bush Administration has called on Congress to rubber stamp its bail-out legislation without serious debate or efforts to improve it," said US Senate Majority Leader Harry Reid. "That will not happen," he said. Richard Shelby, a senior republican on the Senate Banking Committee, also hit out at the plan. "It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said. President George W Bush has warned that "failure to act would have broad consequences".

The lift's carriages, which will themselves require new feats of engineering, would move up and down 22,000 mile-long cables. Those cables would need to be stronger and lighter than any material ever woven. They would be anchored to the ground and disappear into the sky, eventually reaching a satellite docking station orbiting above the Earth.

Scientists hope that as well as carrying human passengers, the carriages could also haul huge, solar-powered generators that could power homes and businesses back on Earth. It could also remove barrels of nuclear waste, dumping them into space. "Just like travelling abroad, anyone will be able to ride the elevator into space," Shuichi Ono, chairman of the Japan Space Elevator Association, told The Times.

Japan's promise to spend £5 billion on the project has sparked swift reaction from other quarters: several competing space lift projects are now believed to be under way, with Nasa among those involved. It is thought the concept of the lift was first envisioned by the great sci-fi writer Arthur C Clarke, in his 1979 book The Fountains of Paradise.

The commentary in the overseas edition of the People's Daily said the collapse of Lehman Brothers Holdings Inc "MAY AUGUR AN EVEN LARGER IMPENDING GLOBAL 'FINANCIAL TSUNAMI'". The People's Daily is the official newspaper of China's ruling Communist Party, and the overseas edition is a smaller circulation offshoot of the main paper.

"The eruption of the U.S. sub-prime crisis has exposed massive loopholes in the United States' financial oversight and supervision," writes the commentator, Shi Jianxun. "The world urgently needs to create a DIVERSIFIED CURRENCY AND FINANCIAL SYSTEM AND FAIR AND JUST FINANCIAL ORDER THAT IS NOT DEPENDENT ON THE UNITED STATES."

But Vice Premier Wang Qishan, on a visit to the United States, told U.S. trade officials in a meeting on Tuesday that China and the United States needed to maintain close economic ties with global markets going through such turbulence.

The Food and Drug Administration (FDA) issued a proposed legal framework which is expected to open the market to meat and milk produced from modified animals, which detractors have already termed "Frankenfood". Such creatures, which could include new hen breeds capable of laying healthier eggs and cows that are immune to mad cow disease, have been developed already. But producers have been discouraged from marketing their creations by the absence of clear rules governing such a controversial issue.

The government wants the guidelines to resolve questions such as whether altered animals are safe for human consumption or whether they pose a risk to the environment. "Genetic engineering of animals is here and has been here for some time," said Larisa Rudenko, a science policy adviser with the FDA's veterinary medicine centre. "We intend to provide a rigorous, risk-based regulatory path for developers to follow to help ensure public health and the health of animals."

Consumer groups welcomed plans to regulate the area but were alarmed by apparent gaps in the proposals. They pointed out that the FDA does not, for example, plan to insist that all such meat, fish and poultry be labeled as genetically-engineered. "THEY ARE TALKING ABOUT PIGS THAT ARE GOING TO HAVE MOUSE GENES IN THEM, AND THIS IS NOT GOING TO BE LABELED," said Jean Halloran, director of food policy for Consumers Union. "We are close to speechless on this."

Genetic engineering is already widely used in agriculture to produce higher-yielding or disease-resistant crops. However, all sides are aware that consumers may be rather more alarmed by the idea of eating GM meat.

In fact, this is a quintessential characteristic of economies run by fascist regimes. For example, historian Gaetano Salvemini argued IN 1936 THAT FASCISM MAKES TAXPAYERS RESPONSIBLE TO PRIVATE ENTERPRISE, because "the State pays for the blunders of private enterprise... Profit is private and individual. Loss is public and social."

"Those who cannot remember the past are condemned to repeat it."
- George Santayana

The alleged incident late Sunday in North Waziristan came as the Muslim country struggled to respond to a suicide bombing at a luxury hotel in the capital that killed at least 53. A spate of suspected US missile strikes into Pakistan's border region and a raid by US commandos that killed about 15 people have angered and embarrassed Pakistani leaders.

President Asif Ali Zardari is in New York to attend the UN General Assembly. The newly elected leader is also expected to meet US President George W. Bush. A MILITARY SPOKESMAN SAID LAST WEEK THAT PAKISTANI SOLDIERS HAD ORDERS TO OPEN FIRE IN CASE OF ANOTHER CROSS-BORDER RAID BY US TROOPS.

Experts believe the fakes are being produced by organised criminal gangs using specialist machinery. The Royal Mint said it was illegal to make or use counterfeited coins and said people must hand them in if they thought they had one. Although relatively easy to detect, their sheer number creates problems for shopkeepers, taxi drivers and other small traders who deal in cash for many of their transactions. According to figures obtained by the BBC from the Royal Mint, random sampling tests carried out earlier this year showed that approximately 2% of pound coins are fake.

Robert Matthews, was the Queen's Assay master until he retired to become a coin consultant four years ago. HE SAID CONFIDENCE IN COINS COLLAPSED IN OTHER COUNTRIES WHEN FORGERY RATES REACHED SIMILAR LEVELS. He said: "In 2004, people started refusing to take the South African 5 Rand coin, due to concerns about the number of counterfeits, and eventually the coin had to be redesigned and re-circulated. Independent surveys showed the number of counterfeits to be 2% - the same as we've got here - and I'm worried that if we're not careful the same thing will happen to the pound coin."

HOW TO SPOT A COUNTERFEIT COIN
- Look at the edge - on fake coins the lettering will often be indistinct, or the wrong typeface.
- Hold the coin so the Queen's head is upright and facing you. The pattern on the reverse side should also be upright
- The colour can be a give-away, although real coins can become discoloured in circulation
- Most fake coins often won't operate automated vending machines

THE CHANGES SHOULD ENABLE GOLDMAN SACHS AND MORGAN STANLEY TO RAISE MORE FUNDS BY OPENING COMMERCIAL BANKS. The move - part of a huge restructuring effort on Wall Street - will also give them access to Federal Reserve support. Congress is considering the plan, drawn up by Treasury Secretary Henry Paulson, which would set up a fund to buy back much of the bad debt held by financial institutions. Mr Paulson has urged other countries to follow the American example in dealing with the international financial crisis.

Investment banks have proved particularly vulnerable to the economic malaise - with Lehman Brothers going bankrupt this week and Merrill Lynch being sold to the Bank of America. Shares in Goldman Sachs and Morgan Stanley came under severe pressure amid the struggles of their fellow investment banks. Analysts speculated that both institutions would be acquired by commercial banks, whose ability to take deposits would give them a stable source of funding.

Instead, the banks filed requests with the Federal Reserve to change their status. And late on Sunday, the Fed said in a statement it had granted the requests.

It also gives Hank Paulson, the US Treasury secretary, immunity from legal challenge under the plan. The US Treasury will buy mortgage-related securities "from any financial institution having its headquarters in the United States", draft legislation said. Securities issued before September 17 will be eligible for inclusion.

Word of the proposals created a mood of euphoria in financial markets on Friday. But analysts warned of the risks. Tim Bond of Barclays Capital, while conceding that the rescue was necessary to avoid the risk of depression, said: "The volume of fresh government borrowing and the fast expansion of the Fed's balance sheet are both negatives for the dollar, CARRYING A POTENTIAL RISK OF INCREASED INFLATION."

Other economists also think that the dollar could be undermined. Kenneth Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard, said: "It is hard to believe that the dollar will continue to stand its ground as the crisis continues to deepen."

"THE FREE MARKET FOR ALL INTENTS AND PURPOSES IS DEAD IN AMERICA," said Republican Senator Jim Bunning of Kentucky. THE PROPOSAL WOULD "TAKE AWAY THE FREE MARKET AND INSTITUTE SOCIALISM IN AMERICA", HE SAID.

It sounds insane, but the liabilities being taken on by the Fed and the US Treasury are now so enormous that the ultimate financial question - until recently, unthinkable - is now being asked. COULD THE MIGHTY US GOVERNMENT DEFAULT? That's how much the world has changed.

During his trip, Mr Greenspan visited the Bank of England's monetary policy committee. He told them the US financial system had been resilient amid the bursting of the internet bubble. Share prices had halved and there had been massive bond defaults, but no big bank collapses. Mr Greenspan lauded the fact that risk had been spread, using complex derivative instruments. One of the MPC members asked: how could this be? Someone must have lost all that money; who was it? A look of quiet satisfaction came across Mr Greenspan's face as he answered: "European insurance companies."

Six years later, AIG, the largest US insurance company, has in effect been nationalised to stop it blowing up the financial world. The US has nationalised the core of its mortgage industry and the government has become the arbiter of which financial companies should survive or die.

Mr Greenspan was in charge of supervising and regulating much of the banking industry for two decades. The Fed says it is responsible for ensuring "safe and sound banking practices". It is right that other regulators should have stepped in, too – the US regulatory structure has not kept pace with market changes. But given the Fed's institutional importance and Mr Greenspan's personal stature, does anyone doubt that the Fed could have used its limited powers to ensure a closer examination of what was going on?

The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States. Treasury Secretary Henry Paulson confirmed the change on ABC's "This Week," telling George Stephanopoulos that coverage of foreign-based banks is "a distinction without a difference to the American people."

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said.

"That's a distinction without a difference to the American people. The key here is protecting the system... We have a global financial system, and we are talking very aggressively with other countries around the world and encouraging them to do similar things, and I believe a number of them will. But, remember, this is about protecting the American people and protecting the taxpayers. The American people don't care who owns the financial institution. If the financial institution in this country has problems, it'll have the same impact whether it's the U.S. or foreign."

It's a rare day when finance officials, leftist intellectuals and ordinary salespeople can agree on something. But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street. The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn.

"GREENSPAN WAS CONSIDERED A MASTER," TREMONTI DECLARED. "NOW WE MUST ASK OURSELVES WHETHER HE IS NOT, AFTER OSAMA BIN LADEN, THE MAN WHO HURT AMERICA THE MOST... It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis."

On the other end of the political spectrum, among leftists who have long predicted calamity for what they call the "savage neoliberal capitalism" of Wall Street, there were gleeful allusions to the stock market crash of 1929. Expressing nostalgia for "the good old days when bankers jumped out of windows," Aeschimann condemned as "extortion" the rescue of U.S. corporate giants by the very state that free-marketeers resent.

But fear accompanied gloating. The crisis threatens to worsen woes - inflation, unemployment, weak growth - of regional powerhouses including Britain, Spain and Italy. Joaquin Almunia, an ideologically moderate Spanish Socialist who is the European Union's economic commissioner, offered a simple analysis. "It has been a problem of greed," he told El Pais newspaper. "In Europe it can't be said that we did nothing, European banks bought toxic products... Nobody knows when this will end."

The spectacle across the ocean has left a lasting impression on many Europeans. Hanna Evers of Berlin, a cellphone retailer interviewed in the shopping district of Wilmersdorfer Street, said she was angry about the amount of money that had been "burned" in recent days. "I WAS TAUGHT THAT THE U.S.A. IS THE MOTHERLAND OF MONEYMAKING," SHE ADDED. "AND NOW ALL I CAN SEE IS A HERD OF HEADLESS CHICKENS RUNNING AROUND ON WALL STREET."