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The former prime minister also said he believed the 21st century would be “poorer in spirit” and “meaner in ambition” if it was not “under the guardianship of faith in God.” He had been invited by President Obama to lead the prestigious US National Prayer Breakfast, a spectacular event in the ballroom of the Washington Hilton Hotel.

An Associated Press investigation found that over the past five years, the money the military spends on winning hearts and minds at home and abroad has grown by 63 percent, to at least $4.7 billion this year, according to Department of Defense budgets and other documents. That’s almost as much as it spent on body armor for troops in Iraq and Afghanistan between 2004 and 2006.

The Labor Department’s report, released Friday, showed the terrible toll the drawn-out recession is having on workers and companies. It also puts even more pressure on President Barack Obama to revive the economy.

The latest net total of job losses was far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.

With cost-cutting employers in no mood to hire, the unemployment rate bolted to 7.6 percent in January, the highest since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than the 7.5 percent rate economists expected.

Schiff scoffs at the notion the economic decline is starting to level off and concedes no government action means a “terrible” recession. But the path of increased government intervention will lead to “unmitigated disaster,” says Schiff, who gained notoriety in 2007-08 for his prescient calls on the housing bubble and U.S. stocks.

The problem, he says, is the government is trying to perpetuate a “phony economy” based on borrowing and spending. With the U.S. consumer tapped out, the government is “now taking on the mantle” of consumer of last resort, he continues, predicting the bond bubble will soon burst – if it hasn’t already – ultimately leading to a collapse of the dollar and an “inflationary depression worse than anything any of us have ever seen.”

The Riverside County Board of Supervisors has authorized staff to file a lawsuit, while elected officials in Colusa County decided to impose a 30-day delay on sending any taxes and fees it collects to the state after the state controller announced a delay in refunds to taxpayers, money for college tuition-assistance programs and payments to state vendors starting Feb. 1.

Schwarzenegger has proposed delaying the payments by as long as seven months, which Jim Wiltshire, deputy director of the California State Association of Counties, said could result in $3.5 billion in deferment to the state’s 58 counties.

“I just think we need to look at all our options,” said Don Knabe, a supervisor of Los Angeles County, which is also considering payment delays. “When they say deferred payments, they don’t say you can defer the services.”

The rift between state and county government comes amid growing frustration over the inability of Schwarzenegger and state lawmakers to reach a midyear budget agreement. The state is facing a budget deficit of $42 billion by June 2010, and the governor is battling state lawmakers who oppose possible tax hikes and labor leaders who have sued over imposed state worker furloughs in efforts to save money.

In December, Toyota predicted it would make a full year operating loss of 150bn yen ($1.65bn; £1.13bn).

The Japanese car giant has now tripled that figure and expects to make a 450bn yen operating loss, the first annual loss at the firm in 70 years.

Although it has not suffered as badly as its US rivals, Toyota has still been hit by falling demand in the downturn.

The strengthening yen has also hit its profitability, by depreciating its overseas earnings.

In expanding its loss prediction for the year, Toyota also said it made a loss of 164.7bn yen in the three months from October to December.

Production cut

Toyota has also lowered its forecast for vehicle sales for the whole group for the 2008/09 financial year to 7.32 million from 7.54 million.

It had sold 8.913 million vehicles in the year to the end of March 2008.

In December, Toyota boss Katsuaki Watanabe said the current downturn was of a size that comes only: “once in a hundred years”.

Toyota is cutting work to a single shift on 17 production lines lines out of its 75 around the world at different times in January and February.

Nearly half of China’s winter crop – some 10m hectares (24m acres) of wheat and rape seed – are also under threat.

President Hu Jintao and Premier Wen Jiabao ordered all-out efforts to fight the drought, allocating 400m yuan ($58m, £40m) in relief assistance.

China’s drought relief office called it an event “rarely seen in history”.

China faces droughts and floods annually but has seen a recent increase in extreme weather conditions.

The Chinese authorities say the current drought is expected to continue as no rain has been forecast in the affected areas for at least 10 days.

‘Red alert’

The Chinese leaders’ decision was announced at a State Council meeting, according to the Xinhua news agency.

Government efforts should be directed at stabilising grain production, increasing farmers’ income and ensuring agricultural production, the Council said.

The agriculture ministry says it is on red alert.

Eight wheat-growing regions – Hebei, Shanxi, Anhui, Jiangsu, Henan, Shandong, Shaanxi and Gansu – are under threat, Xinhua reported.

The official China Daily newspaper, citing meteorological authorities, said Henan had recorded its worst drought 1951, going 105 consecutive days without rain.

Much of China’s farming still relies on rainfall as many of its farming communities have a poor irrigation system.

The BBC’s China analyst Shirong Chen says the prolonged drought has added to the misery in rural areas where millions of migrant workers have lost their jobs as a result of the global economic downturn.

The failures took place at F.E. Warren Air Force Base in Wyoming from Dec. 2 to Dec. 17 and Malmstrom Air Force Base, Mont., from Oct. 26 to Nov. 10, according to the report.

Air Force Space Command spokeswoman Jennifer Thibault told the Times that the failed nuclear surety inspections involved “administrative and paperwork issues.” In all, three Air Force nuclear-missile units and two strategic-bomber units failed such inspections in 2008.

Despite the problems, the Air Force said it is making progress addressing issues with the security and handling of nuclear-tipped missiles that came to light after embarrassing episodes in 2006 and 2007 prompted a widespread review and management changes, including the resignations of Air Force Secretary Michael W. Wynne and Chief of Staff Gen. T. Michael Moseley.

Air Force officials said the 90th Wing at F.E. Warren was given failing grades by inspectors from the Space Command and the Defense Technology Security Administration for not properly documenting tests on missiles, which require strict monitoring. The Times did not report details of the issues at Malmstrom.

“Not only poor people should experience this,” Gates told the audience before assuring them that the insects were malaria-free.

The insect release, which was first reported on Twitter by Facebook’s Dave Morin, was initially characterized in some reports as a swarm, but some in the audience reported seeing just a few.

TED curator Chris Anderson reportedly quipped that the video of the talk posted at TED.com will be headlined “Gates releases more bugs into the world.”