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“An American government and defense establishment lulled into complacency by a long-secure domestic order would be forced to rapidly divest some or most external security commitments in order to address rapidly expanding human insecurity at home,” it went on.

“Under the most extreme circumstances, this might include use of military force against hostile groups inside the United States. Further, DoD [the Department of Defense] would be, by necessity, an essential enabling hub for the continuity of political authority in a multi-state or nationwide civil conflict or disturbance,” the document read.

The decline was its largest month to month drop since records began seven years ago.

“The horrendous industrial production data in January have left no doubt that the economy has come to a screeching halt,” said Ivan Tchakarov, chief Russia economist for Nomura, the investment bank. “This indicates that the combined effect of the credit squeeze in the banking sector and falling global and domestic demand has filtered through to the real economy.”

Russia’s president Dmitry Medvedev underlined the Kremlin’s concern with the worsening situation when he sacked four regional governors yesterday, the first time so many senior officials have been purged in years.

“Bring a toothbrush, bring any necessities you want to bring, because I will not allow anyone to go home to resume their lives … as long as we know … that 20,000 people will be laid off,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, told lawmakers late Monday.

Lawmakers had missed a Monday night deadline to reach a budget deal, prompting Gov. Arnold Schwarzenegger’s move on the layoff notices, Schwarzenegger spokesman Aaron McLear told CNN late Monday.

Stocks in Europe and Asia retreated on concern banks face further losses and lower debt ratings and as the economic slump deepens. Bullion has climbed 33 percent since October as governments lowered interest rates and spent trillions of dollars to combat the recession. Physical demand has pushed holdings in exchange-traded funds to records.

“The very big uncertainties in the stock market and economy are driving investors into gold and precious metals,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “We are seeing the first attempt at reaching the $1,000 mark this week.”

Gold for immediate delivery rose as much as $25.40, or 2.7 percent, to $967.15 an ounce, the highest since July 22, and traded at $962.02 by 1:15 p.m. in London. April futures gained $22.10, or 2.4 percent, to $964.40 in electronic trading on the Comex division of the New York Mercantile Exchange.

The metal rose to $962.65 in the morning “fixing” in London, used by some mining companies to sell production, from $942.50 at yesterday’s afternoon fixing. Spot prices reached a record $1,032.70 in March and are up 9.3 percent this year.

In an interview in a Spanish newspaper, published in the Daily Telegraph, Dame Stella Rimington, 73, also accuses the US of “tortures”.

The Home Office said it was vital to strike a right balance between privacy, protection and sharing personal data.

It said any policies which impact on privacy must be “proportionate”.

Dame Stella, who stood down as the director general of the security service in 1996, has previously been critical of the government’s policies, including its attempts to extend pre-charge detention for terror suspects to 42 days and the controversial plan to introduce ID cards.

“I believe the real looting of Iraq after the invasion was by US officials and contractors, and not by people from the slums of Baghdad,” said one US businessman active in Iraq since 2003.

In one case, auditors working for SIGIR discovered that $57.8m was sent in “pallet upon pallet of hundred-dollar bills” to the US comptroller for south-central Iraq, Robert J Stein Jr, who had himself photographed standing with the mound of money. He is among the few US officials who were in Iraq to be convicted of fraud and money-laundering.

Despite the vast sums expended on rebuilding by the US since 2003, there have been no cranes visible on the Baghdad skyline except those at work building a new US embassy and others rusting beside a half-built giant mosque that Saddam was constructing when he was overthrown. One of the few visible signs of government work on Baghdad’s infrastructure is a tireless attention to planting palm trees and flowers in the centre strip between main roads. Those are then dug up and replanted a few months later.

Iraqi leaders are convinced that the theft or waste of huge sums of US and Iraqi government money could have happened only if senior US officials were themselves involved in the corruption. In 2004-05, the entire Iraq military procurement budget of $1.3bn was siphoned off from the Iraqi Defence Ministry in return for 28-year-old Soviet helicopters too obsolete to fly and armoured cars easily penetrated by rifle bullets. Iraqi officials were blamed for the theft, but US military officials were largely in control of the Defence Ministry at the time and must have been either highly negligent or participants in the fraud.

American federal investigators are now starting an inquiry into the actions of senior US officers involved in the programme to rebuild Iraq, according to The New York Times, which cites interviews with senior government officials and court documents. Court records reveal that, in January, investigators subpoenaed the bank records of Colonel Anthony B Bell, now retired from the US Army, but who was previously responsible for contracting for the reconstruction effort in 2003 and 2004. Two federal officials are cited by the paper as saying that investigators are also looking at the activities of Lieutenant-Colonel Ronald W Hirtle of the US Air Force, who was senior contracting officer in Baghdad in 2004. It is not clear what specific evidence exists against the two men, who have both said they have nothing to hide.

The end of the Bush administration which launched the war may give fresh impetus to investigations into frauds in which tens of billions of dollars were spent on reconstruction with little being built that could be used. In the early days of the occupation, well-connected Republicans were awarded jobs in Iraq, regardless of experience. A 24-year-old from a Republican family was put in charge of the Baghdad stock exchange which had to close down because he allegedly forgot to renew the lease on its building.

In the expanded inquiry by federal agencies, the evidence of a small-time US businessman called Dale C Stoffel who was murdered after leaving the US base at Taiji north of Baghdad in 2004 is being re-examined. Before he was killed, Mr Stoffel, an arms dealer and contractor, was granted limited immunity from prosecution after he had provided information that a network of bribery – linking companies and US officials awarding contracts – existed within the US-run Green Zone in Baghdad. He said bribes of tens of thousands of dollars were regularly delivered in pizza boxes sent to US contracting officers.

So far, US officers who have been successfully prosecuted or unmasked have mostly been involved in small-scale corruption. Often sums paid out in cash were never recorded. In one case, an American soldier put in charge of reviving Iraqi boxing gambled away all the money but he could not be prosecuted because, although the money was certainly gone, nobody had recorded if it was $20,000 or $60,000.

Iraqi ministers admit the wholesale corruption of their government. Ali Allawi, the former finance minister, said Iraq was “becoming like Nigeria in the past when all the oil revenues were stolen”. But there has also been a strong suspicion among senior Iraqis that US officials must have been complicit or using Iraqi appointees as front-men in corrupt deals. Several Iraqi officials given important jobs at the urging of the US administration in Baghdad were inexperienced. For instance, the arms procurement chief at the centre of the Defence Ministry scandal, was a Polish-Iraqi, 27 years out of Iraq, who had run a pizza restaurant on the outskirts of Bonn in the 1990s.

The scheme would replace the current system, which sees sewage charges based on a home’s value — not its waste water output. CSIRO Policy and Economic Research Unit member Jim McColl and Adelaide University water management professor Mike Young plan to promote the move to state and federal politicians and experts.

“It would encourage people to reduce their sewage output by taking shorter showers,recycling washing machine water or connecting rainwater tanks to internal plumbingto reduce their charges,’’ Young said. “Some people may go as far as not flushing their toilet as often because the less sewage you produce, the less sewage rate you pay.’’

The state doesn’t have enough money in its main bank account to pay its bills, prompting Democratic Gov. Kathleen Sebelius to suggest transferring $225 million from other accounts throughout state government. But the move required approval from legislative leaders, and the GOP refused Monday.

Budget Director Duane Goossen said that without the money, he’s not sure the state can meet its payroll. State employees are due to be paid again Friday.

Clients holding 80 percent of the fund, or 2.62 billion euros ($3.3 billion), have asked to redeem their investments but the euro zone’s biggest bank said the Banif Inmobiliario Fund FII lacked the cash to do so.

Although funds invested in bricks and mortar are by their nature illiquid, analysts warned the news could spark an overwhelming redemption demand by investors in other Spanish real estate funds. Spain’s nine such funds have 7.25 billion euros under management.

“I’ve never seen a case like it,” said one fund manager at Madrid brokerage Renta 4, who asked not to be named. “It could trigger a snow ball effect; that’s one of the consequences when you start to hear that the biggest (fund) is doing badly”.

The news is another blow to Santander’s image. It had shone amid the wreckage of European banking but has taken a battering in recent months after its Optimal investment fund disclosed a 2.33 billion euro exposure to the alleged Madoff fraud.

“The fund currently lacks the necessary liquidity to meet the full payment of the said amount,” Santander Real Estate said in a statement to the stock market.

Santander’s property division will use 10 percent of the fund’s assets — valued at 3.41 billion euros at end-December — to pay investors some redemptions and said if the necessary capital could not be raised through asset sales, it would inject cash itself.