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Never was that more true than now. Anyone looking for a marker of recession could do worse than go loiter in the value-range aisles of their local supermarket. Hell, you might even be shopping there – and you won’t be alone, because supermarket shopping habits are changing. In the past year sales of own-label premium ranges have dropped by more than 6%. Sales of organic products have dropped nearly 15%. Value-range sales, on the other hand, have leapt by 46%.

So what exactly is it they are buying? I happen to know. For the past few months I have been investigating the realities of cheap supermarket food for an edition of Dispatches, to be screened on Channel 4 this week – and it really ain’t pretty. What would you say to a beef pie that was only 18% beef, and a few more percentage points “beef connective tissue” – or gristle, collagen and fat, as it’s more commonly known? How about a pork sausage that’s just 40% pork, with a slab of pig skin chucked in for bulk? Or an apple pie with so little apple – a mere 14% – that you can’t help but wonder whether it really deserves the name? I suspect, like me, you would say, “No thanks.”

Then again, I have a choice. I don’t have to buy cheese slices with half the levels of calcium of the more expensive variety or chicken breasts that have been bulked up with 40% water to give you the impression you are getting more for less. The people who are buying these products generally don’t have that choice. They have to take what the supermarkets deign to give them. Which raises the question: is what the supermarkets give them good enough?

Only the most callous could argue that it is. This is not born of some conviction that all supermarkets are Evil as the foodie Taliban like to claim. Sure, they aren’t perfect. The economies of scale that help them to keep prices low mean they can sometimes exert undue pressure on producers. Their impact on small local shops can be devastating. But they provide a level of convenience that serves hard-pressed families – in which time is short because both parents have to work to make ends meet – very well. They have opened up the range of ingredients available to us and helped to foster a debate on where our food comes from.

In return we have rewarded them with an exceptionally light regulatory regime that has enabled the likes of Tesco, Sainsbury’s, Asda and Morrisons and the new breed of discounters – Aldi, Lidl and Netto – to be amazingly successful. Their share of this country’s £120bn retail food market has risen from less than 20% in the 1980s to more than 70% now. But with that unfettered access to the market must come responsibilities – and surely that should include improving the quality of the food sold to the very poorest in society.

We can fight long and hard about what the word “quality” means. The supermarkets argue that their value ranges aren’t in any way harmful and point out – rightly – that in recent years great efforts have been made to reduce the levels of things such as salt and sugar in very cheap bread. The age of rickets is over. But that still leaves them selling products that contain animal products the vast majority of us would actually throw away rather than cook with. Pig skin is apparently quite high in protein, but would you really choose to have it minced up and put in your sausages simply because it’s cheap?

Furthermore, is it outrageous to suggest that the supermarkets should absorb the costs of making these improvements? They make huge profits. Morrisons, for example, made £583m this year. Sainsbury’s is behind but has a still sizable £239m. And Tesco, the market leader, has just posted more than £1.8bn worth, despite the tough economic climate. Indeed, their ability to make money has proved remarkably consistent. New research commissioned by Dispatches and carried out by John Thanassoulis, lecturer in economics at Oxford University, has found that the profit margins of the big supermarkets have remained surprisingly steady for decades at around 5%, not just in the good times but during recessions of the sort we’re experiencing now as well. Thanassoulis even found evidence that margins actually go up during economic downturns.

In short, they can afford to take the hit – because it really wouldn’t cost much at all. I asked a food technologist, David Harrison, who has huge experience of the mass-market food business, to re-engineer some standard value-range products. I didn’t want him to make a gourmet beef pie. That would be easy. Just throw money and some quality sirloin at the problem. I wanted to make a better pie, keeping within reasonable financial parameters. He started by analysing all the cheapest pies on the market and found that, on average, they had just 18% beef plus a few more percentage points of that connective tissue. (It can go much lower. I came across a minced beef and onion pie that declared a beef content on the label of just 7%.)

Harrison upgraded our generic recipe to produce one that had no connective tissue and 25% beef. The extra cost, to increase the meat content by 38%? A penny a pie. To remove the pig skin from a budget pork sausage and lift the meat content from 40% to 54% cost 0.7p per sausage. To increase the amount of apple in an apple pie by more than 40% cost 0.8p. As the cost of raw ingredients is only a quarter of the finished product’s retail price, these really are tiny amounts. All of these improvements, even represented as double-digit percentages, may look marginal but the differences in the finished product are discernible. In a series of blind taste tests that I conducted, the overwhelming majority of people identified our new improved products and preferred them. And if that sounds like banal advertising patter, so be it.

Obviously companies need to make money, or they wouldn’t be able to invest in their business, which in turn means they wouldn’t be able to serve their customers. But if absorbing the expense to make these improvements meant Tesco’s profits went from that £1.8bn to, say, £1.77bn, if Morrison’s made not £583m but £570m, who exactly would weep? Not me.

Unsurprisingly, the supermarket business doesn’t quite see it this way. As far as it is concerned, it has never stopped striving to improve the quality and value of its products. “Supermarkets are constantly looking at their ranges, both in terms of the quality and the price that they can offer it at to customers,” Andrew Opie of the British Retail Consortium told me. “It’s what they do and it’s what they do well. So all of the supermarkets will be undergoing reviews of their ranges on a regular basis to examine what’s the best-quality products they can get on the shelves at the right price. This is nothing new to the supermarkets.”

Let’s be clear. A 25% meat pie is still not a fabulous item. Nor would Blumenthal and I have swooned over a 54% pork sausage. Likewise, we can lecture those in dire straits on the need to eat more fresh fruit and vegetables – where the value ranges happen to score well – though patronising people who are struggling to make ends meet has always left me with a nasty taste in the mouth. The fact is that the items I have looked at are invariably going to be a part of the diet, and that leads to simple questions of respect; of the supermarkets, which do so well out of us in good times, not forcing the very poorest to eat dross when the bad times come.

Investigators probing how Treasury regulators allowed a bank to falsify financial records hiding its ill health have found at least three other instances of similar apparent fraud, sources tell ABC News.

In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules — even if it disguised the bank’s health to the public.

Treasury Department Inspector General Eric Thorson announced in November his office would probe how a Savings and Loan overseer allowed the IndyMac bank to essentially cook its books, making it appear in government filings that the bank had more deposits than it really did. But Thorson’s aides now say IndyMac wasn’t the only institution to get such cozy assistance from the official who should have been the cop on the beat.

The federal government took over IndyMac in July, after the bank’s stock price plummeted to just pennies a share when it was revealed the bank had financial troubles due to defaulted mortgages and subprime loans, costing taxpayers over $9 billion.

Darrel Dochow, the West Coast regional director at the Office of Thrift Supervision who allowed IndyMac to backdate its deposits, has been removed from his position but he remains on the government payroll while the Inspector General’s Office investigates the allegations against him. Investigators say Dochow, who reportedly earns $230,000 a year, allowed IndyMac to register an $18 million capital injection it received in May in a report describing the bank’s financial condition in the end of March.

“They [IndyMac] were able to maintain their well-capitalized threshold and continue to use broker deposits to make loans,” said Marla Freedman, an assistant Inspector General at Treasury. “Basically, while the institution was having financial difficulty, it kept the public from knowing earlier than it otherwise should have or would have.”

Critics Point to Cozy Relationship Between Banks and Regulators

In order to backdate the filings, IndyMac sought and received permission from Dochow, according to Freedman.

“That struck us as very unusual,” said Freedman. “Typically transactions are to be recorded in the period in which they occur, not afterwards. So it was very unusual.”

One former regulator says Dochow’s actions illustrate the cozy relationship between banks and government regulators.

“He did nothing to protect taxpayers in losses,” former federal bank regulator William Black told ABC News. “Instead of correcting it [Dochow] made it worse by increasing the accounting fraud.”

Meanwhile, IndyMac customers who lost their savings are demanding answers and are further infuriated after learning Dochow was also the regulator in 1989 who oversaw the failed Lincoln Savings and Loan, a scandal that sent its CEO Charles Keating to prison.

“He’s the person that claimed that he looked into Charles Keating’s eyes and knew that Charles Keating was a good guy and therefore ignored all of the professional staff that told him that Keating was a fraud, and he produced the worst failure of the Savings and Loan Crisis at $3.4 billion. Now he’s managed more than triple that,” said Black, now an economics professor at the University of Missouri in Kansas City, Missouri.

Following the Lincoln scandal, Dochow was demoted and placed into a relatively obscure office, but later, inexplicably was brought back into the Office of Thrift Supervision.

Dochow declined to answer questions from ABC News.

IndyMac Customers Furious

After Ronnie Lopez was killed in Iraq, his mother Elaine invested the $37,000 she received in life insurance at IndyMac. She lost all of it.

“I was hysterical,” she told ABC News. “I literally thought I was going to kill myself that day, because I felt so bad that I had let him down. I remember going to his grave and telling him “don’t worry, I’m going to get that money back’, and I feel like he was saying ‘hey mom, don’t let them take that. I did the ultimate for that’.”

A group of angry investors has started a website, demanding answers on the extent of Dochow’s actions.

“It’s just the strife and anger,” said IndyMac customer Lisa Marshall. “That this Dochow person is still employed, it’s unbelievable, it’s shocking.”

While Dochow could end up losing his job, neither he nor his colleagues are expected to go to prison.

The German-owned cargo vessel, Wehr Elbe, under charter by the US Military Sea­lift Command, is currently in Greek waters with its transponder tracking turned off to prevent its location being identified.

Amnesty International has written to the foreign secretary, David Miliband, asking him to make “urgent approaches to the US, German and Greek governments to prevent this, or any pending or future shipments of weaponry until it can be verified that they will not be transferred to the Israeli Defence Forces or other parties to the conflict in Gaza.

“We urge you to ensure that no EU member state will allow their ports or other facilities to be used to transit these or any other weapons to any of the parties to this conflict.”

The Wehr Elbe, owned by the Hamburg company Oskar Wehr, arrived outside the Greek port of Astakos on 1 January, where it was due to transfer its 1,000 containers to another vessel for delivery to Ashdod in Israel.

But after a two week stand-off, amid local protests in Greece, it moved out into the Mediterranean two days ago and disappeared off tracking websites.

Lieutenant Colonel Patrick Ryder, a Pentagon spokesman, said that the contract for the munitions had been arranged last summer and approved in October. He said the munitions were due to be delivered to a US pre-positioning depot in Israel for US forces. But he added: “If the government of Israel requests munitions they can do so direct to the US government under the Foreign Military Sales programme.”

He said the ship’s journey had been delayed due to “safety concerns” about unloading the cargo at Ashdod and that other arrangements were being made by the Military Sealift Command’s European office in Naples.

The letter to Miliband, from Amnesty’s director, Kate Allen, calls “for a comprehensive arms embargo on Israel, Hamas and Palestinian armed groups until effective mechanisms are in place to ensure that weapons and munitions and other military equipment will not be used to commit serious violations of international humanitarian law”.

The testimonies of Gaza Strip residents are revealing new details about the Israel Defense Forces’ mode of operation there. In the past two days, Beit Lahia residents forced from their homes said soldiers were posing as members of Hamas’ armed wing while advancing on the ground.

The daily pauses in bombing allow Gazans to meet with the displaced – most of whom are housed in an UNRWA school – and hear their stories.

Gaza resident S. told Haaretz he heard several people say they saw armed men wearing the uniforms and symbols of the Iz al-Din al-Qassam Brigades, who “called out to each other in Arabic, as if they had caught a collaborator, and then, with the element of surprise, went into the houses.”

A Gaza radio station warned that troops posing as locals were driving a vehicle normally used by paramedics. Residents said the radio broadcaster listed the vehicle’s license plate number and color.

Haaretz has also learned that one of the army’s methods for evacuating a home is to fire a missile toward its upper level. That is how B.’s house in Sajaiyeh was destroyed. It was bombed just a few minutes after a missile struck and 40 shell-shocked family members walked out of the house.

Controller John Chiang, who is responsible for managing the state’s cash flow, plans to delay $3.7 billion in payments starting next month in response to lawmakers’ failure to fix a projected $40 billion deficit through mid-2010.

Among those who won’t get paid on time: taxpayers who file their returns early and are awaiting refunds; families who depend on welfare and aid for the aged, blind and disabled; and programs that serve developmentally disabled and mentally ill patients.

“Delaying payments will hurt real families, many of whom are just hanging on in these very, very tight and difficult times,” Chiang said. “Taxpayers who expected to use their refunds to purchase a car, to make food payments, to pay off their credit card bills, will have to wait. That is something we should not be doing.”

In February 2008, the state issued more than 2.7 million tax refunds, averaging $724.

Many other bills will be paid. Chiang said his office still plans to cut checks next month to schools and universities, government employees, the state retirement system and Medi-Cal providers. The state also will make good on debt payments — a top priority, since defaulting on bonds would preclude the state from borrowing money in the future.

Altogether, the controller expects to disburse $6.6 billion in February.

To guard against unforeseen expenses, the state tries to maintain a $2.5 billion “cushion” in its bank account. But the state’s cash balance is on course to post a deficit of $346 million next month, Chiang said. Hence, the plan to withhold taxpayer refunds and payments for social services.

Chiang said he anticipated that delaying payments could get the state through February and March but that the situation could demand more drastic measures after that. One possibility would be to issue IOUs to businesses, taxpayers and others who receive state funds. But IOUs, which could be cashed out at banks that would then redeem them from the state, would carry potentially steep interest rates, and the controller declined to guess when he might have to resort to them.

Chiang said the February payments would be postponed at least 30 days and that only a budget deal in the next several days would cause him to change course.

Talks between Gov. Arnold Schwarzenegger and legislative leaders on a plan to balance the budget are continuing, but it is unclear whether they will reach an agreement by Feb. 1. The sides met Friday and are expected to huddle again today.

The Government is set to throw out the 165-year old law that obliges the Bank to publish a weekly account of its balance sheet – a move that will allow it theoretically to embark covertly on so-called quantitative easing. The Banking Bill, which is currently passing through Parliament, abolishes a key section of the law laid down by Robert Peel’s Government in 1844 which originally granted the Bank the sole right to print UK money.

The ostensible reason for the reform, which means the Bank will not have to print details of its own accounts and the amount of notes and coins flowing through the UK economy, is to allow the Bank more power to overhaul troubled financial institutions in the future, under its Special Resolution Authority.

However, some have warned that it means: “there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses.”

It comes after the Bank’s Monetary Policy Committee cut interest rates by half a percentage point, leaving them at the lowest level since the bank’s foundation in 1694.

With the Bank rate now at 1.5pc, most economists suspect the Government and Bank will soon be forced to start quantitative easing – directly increasing the quantity of money in the economy – in a drastic attempt to prevent a recession of unprecedented depth.

Although the amount of easing is likely to be limited, news of this increased secrecy will spark comparisons with Weimar Germany and Zimbabwe, where uncontrolled use of the central banks’ printing presses ultimately caused hyperinflation.

The Bank said it will still publish details of its balance sheet, but, significantly, the data – the main indicator of the extent of quantitative easing – will not be presented until more than a month has elapsed. For instance, under the new terms of the law, if the Bank were to have embarked on a policy of quantitative easing last month, the figures on this would not be published until the end of this month.

The reforms, which are likely to be implemented later this year, will make the Bank of England by far the most secretive major central in the world, experts said.

In the US, where the Federal Reserve has already cut rates to close to zero and started quantitative easing, the main way to track its purchases of securities and the expansion of its balance sheet is through precisely these same weekly accounts.

“Quite why the Bank has to keep its operations so shrouded in secrecy is a mystery to me,” said Simon Ward, economist at New Star. “This [reform] will make it much more difficult to track what the Bank is doing.”

Among the details which will no longer be published are those revealing the extent to which London’s banks are using the Bank’s deposit facilities – a yardstick of pressure in the financial system.

Debating the issue in the House of Lords recently, Lord James of Blackheath, a Conservative peer, said: “Remove [this] control and there is nothing to stop an unreported and unmonitored flooding of the money market by the undisciplined use of the printing presses.

Nationwide, more than 860,000 properties were actually repossessed by lenders, more than double the 2007 level, according to RealtyTrac, a foreclosure listing firm based in Irvine, Calif., which compiled the figures.

Moody’s Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year before tapering off slightly through 2011.

Shares in Bank of America and Citigroup, two of America’s biggest banks, tumbled as they faced a new crisis of confidence over whether they have enough capital to cover losses from toxic assets and global recession.

“The large banks in the United States are not lending, and they’re desperate to conserve capital,” said Dan Alpert at Westwood Capital in New York. “Banks only remain going concerns because the federal government is topping up their equity.”

A profit warning from Germany’s Deutsche Bank on Wednesday and a prediction HSBC may need fresh capital shook confidence in two major European banks previously credited with dodging the worst of the crisis.

The crisis claimed another big scalp — Canada’s Nortel Networks Corp, North America’s biggest telephone equipment maker, filed for bankruptcy.

Citigroup, whose shares dived 23 percent on Wednesday, plans to report quarterly results on Friday and analysts are looking for a fifth straight multibillion-dollar loss.

The bank was also widely expected to provide details of a reorganisation of the company designed to ensure its survival.

Bank of America is close to receiving billions of dollars of support from the U.S. government, a source familiar with the matter said, as it tries to digest Merrill Lynch, the investment bank it bought on January 1, which has billions in troubled assets ranging from commercial real estate to subprime mortgages.

Citigroup has already taken $45 billion (30.1 billion pounds) in government funds while Bank of America and Merrill have received $25 billion.

There is no relief in sight, warned Jamie Dimon, chief executive of rival JPMorgan Chase & Co, which reports its own fourth quarter results later on Thursday.

The command’s “Joint Operating Environment (JOE 2008)” report, which contains projections of global threats and potential next wars, puts Pakistan on the same level as Mexico. “In terms of worse-case scenarios for the Joint Force and indeed the world, two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico.

“The Mexican possibility may seem less likely, but the government, its politicians, police and judicial infrastructure are all under sustained assault and press by criminal gangs and drug cartels. How that internal conflict turns out over the next several years will have a major impact on the stability of the Mexican state. Any descent by Mexico into chaos would demand an American response based on the serious implications for homeland security alone.”