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Chertoff said the criminal activity in Mexico, which has caused more than 5,300 deaths in the last year, had long troubled American authorities. But it reached a point last summer, he said, where he ordered specific plans to confront in this country the kind of shootouts and other mayhem that in Mexico have killed members of warring drug cartels, law enforcement officials and bystanders, often not far from the border.

“We completed a contingency plan for border violence, so if we did get a significant spillover, we have a surge ? if I may use that word ? capability to bring in not only our own assets but even to work with” the Defense Department, Chertoff said in a telephone interview.

Officials of the Homeland Security Department said the plan called for aircraft, armored vehicles and special teams to converge on border trouble spots, with the size of the force depending on the scale of the problem. Military forces would be called upon if civilian agencies like the Border Patrol and local law enforcement were overwhelmed, but the officials said military involvement was considered unlikely.

The two countries are mentioned in the same breath in a just-published study by the United States Joint Forces Command, whose jobs include providing an annual look into the future to prevent the U.S. military from being caught off guard by unexpected developments.

“In terms of worst-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,” says the study – called Joint Operating Environment 2008 – in a chapter on “weak and failing states.” Such states, it says, usually pose chronic, long-term problems that can be managed over time.

But the little-studied phenomenon of “rapid collapse,” according to the study, “usually comes as a surprise, has a rapid onset, and poses acute problems.” Think Yugoslavia and its disintegration in 1990 into a chaotic tangle of warring nationalities and bloodshed on a horrific scale.

Nuclear-armed Pakistan, where Al Qaeda has established safe havens in the rugged regions bordering Afghanistan, is a regular feature in dire warnings. Thomas Fingar, who retired as the chief U.S. intelligence analyst in December, termed Pakistan “one of the single most challenging places on the planet.”

This is fairly routine language for Pakistan, but not for Mexico, which shares a 2,000-mile, or 3,200-kilometer, border with the United States.

The system, which is being trialled in a UK school next week, can also be used to allow children to take out library books and buy their lunch.

It is among a host of high-tech security measures introduced in schools in a bid to keep pupils safe.

Some schools have brought in fingerprint and eye scanners, while others are planning to put radio transponder chips in pupils’ uniforms to keep tabs on them.

But there are fears the technology breaches children’s civil liberties.

One school installed an iris scanner in 2003 but removed it a year later after it failed to recognise some students and led to lengthy queues.

Aurora, a Northampton-based biometric firm, will exhibit its new “face recognition software” at an education technology conference in London next week.

The company has developed a prototype aimed at schools for “ultra fast student registration, easy cashless catering and secure access control”.

Each system – costing around £1,000 – can verify a face in 1.5 seconds and claims to be more accurate at identifying people than a human.

Patrick Usher, the company’s technical director, told the Times Educational Supplement that adapting the technology for children was a challenge as their faces changed quicker than adults.

John Dunford, general secretary of the Association of School and College Leaders, said the system would be welcomed if it cut bureaucracy – but he said: “You always seem to get queues behind security devices”.

Guidance issued in 2007 gives headteachers permission to collect pupils’ biometric data to use when taking the register, paying for lunch or using the library.

But civil liberties campaigners are concerned that the data could be given to police or the Government without parents’ knowledge – or stolen by identity thieves.

“Consumers are now going to get more and more scared at the prospect of losing their job,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Obama’s proposed fiscal stimulus “needs to be big, needs to be bold, needs to be swift. If they can do something quickly we can limit the hemorrhage by mid-year.”

The Labor Department reported that the nation lost 2.589 million jobs in 2008, with the unemployment rate climbing more than economists forecast, to a 15-year high of 7.2 percent in December.

Today’s figures will intensify pressure on U.S. lawmakers to speed Obama’s recovery program, which may exceed $775 billion, through Congress in an effort to save or create 3 million jobs. They also underscore the urgency of the Federal Reserve’s $200 billion initiative to restart consumer financing markets that’s scheduled to begin next month.

The initiative, which is being coordinated with President-elect Barack Obama’s transition team, may be taken within days, the sources said, speaking on condition of anonymity because no announcement has been made. But it remains unclear who would wield any veto. While Obama transition officials prefer that current administration issue it, the White House is declining to address that question.

Democratic Senate aides were notified in a meeting this afternoon that the request could come as soon as this weekend and that a vote could be held as soon as next week, congressional sources said.

Under the emergency rescue legislation approved by Congress in October, the administration must inform lawmakers that it wants access to the second installment of $350 billion. Unless Congress passes a resolution rejecting the request within 15 days, the Treasury can begin to tap the funds. If Congress does turn down the request, the president could veto the resolution and then the Treasury could proceed.

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With little more than a month’s worth of cash left in the state treasury, the governor and lawmakers have been unable to agree on how to erase a budget gap projected to reach $41.6 billion by the middle of next year. Democrats announced Tuesday that two weeks of discussions had ended in an impasse and sent Schwarzenegger the $18-billion fiscal package they passed last month. The governor vetoed it, as he had promised to do.

State Controller John Chiang has said that as early as Feb. 1, his office may begin issuing promissory notes if lawmakers have not resolved the budget crisis. The state has done this only once before since the Great Depression — in 1992.

“We have not made any decision about deferring payments or using IOUs, but they are possibilities if the governor and Legislature don’t come to some agreement soon,” Chiang spokeswoman Hallye Jordan said Tuesday.

Under the state Constitution, schools and bondholders get first rights to any cash in the state’s coffers.

Oil dropped as much as 5.6 percent after the government said the world’s biggest energy-consuming country lost 2.589 million jobs last year, the most since 1945. U.S. supplies have climbed in 13 of the past 15 weeks as the economy slowed, according to the Energy Department. Prices in New York touched $32.40 in December because of rising stockpiles and lower demand.

“We are going to test the December lows because the numbers we see are horrible,” said Kyle Cooper, an analyst at IAF Advisors, an energy-consultant in Houston. “It seemed that Russia, China, India and Brazil were immune to the economic problems here, but that’s no longer the case.”

Crude oil for February delivery fell $2.16, or 5.2 percent, to $39.54 a barrel at 11:08 a.m. on the New York Mercantile Exchange. Oil is heading for a 15 percent decline this week after gaining 23 percent the week before, the most since August 1986.

An accelerating pace of job losses towards the end of the year pointed to a bleak start for 2009 and increases chances the economic downturn could become the longest since the 1930s.

The Labour Department said on Friday the jobless rate jumped to 7.2 percent, the highest level since January 1993, from 6.8 percent in November. Economists had expected a smaller rise to 7 percent.

The surge reflected another month of deep job losses. Employers cut nonfarm payrolls by 524,000 in December, a bit less than analysts had predicted, but jobs losses for October and November were much greater than estimated earlier.

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Spain is now in company at last with Germany, where exports plummeted 10.6pc in November. The German economy is highly-geared to the global industrial cycle and is suddenly facing a vicious downturn as demand for machinery slumps in China, Russia, the Mid-East, and equally important as car sales crash in Italy, Spain, and Britain. The country’s trade surplus has shrivelled by a third in one month.

“Industry is in free-fall,” said Dirk Schumacher, from Goldman Sachs. Germany’s industrial orders have plummeted 27pc year-on-year, heralding a drastic economic contraction this year. Berlin is mulling a €100bn fund to rescue companies in distress, on top of its €50bn Keynesian blitz over two years. The fiscal package includes tax cuts and infrastructure spending. Chancellor Angela Merkel’s coalition has backed away from plans to `tough out’ the recession after a fierce criticism from German economists and industrial leaders.

Berlin is now preparing the part-nationalisation of Commerzbank by taking a 25pc stake in exchange for a €10bn infusion of capital, helping to boost the bank’s capital ratio as it digests Dresdner Bank. Commerzbank shares fell 14pc. France is also drawing up plans for a fresh €10.5bn capital injection for its banks.

Jacques Cailloux, from the Royal Bank of Scotland, said the pace of contraction in Europe is now disturbingly close to levels seen in the Great Depression. The eurozone bloc shrank by 3pc in 1930, 5pc in 1931, and 4pc in 1932.

Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. “People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs,” he said, referring to exchange trade funds listed in London, New York, and other bourses.