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After the interrogation, the threats of “life in jail” and other dishonest tactics used by law enforcement to try to get them to “admit” to drug trafficking, they were finally released on bail. Their baby son was returned to them, and they went home. For the next 30 days, they were subjected to surprise visits by Children’s Aid employees (the Canadian version of Child Protective Services), who were told by law enforcement authorities that Ron and Nadine were drug smugglers.

Over this 30 day period, as felony drug trafficking charges were pending against them, Ron and Nadine managed to connect with legal help. Their lawyer, Marcy Segal, was able to persuade the Crown Attorney to send the chocolate “hashish” sample to a proper lab for testing. And wouldn’t you know it: The test showed that chocolate is chocolate, not hashish.

Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.

The FDIC asserted that Wachovia didn’t fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.

Federal Reserve Chairman Ben Bernanke, in a statement Monday, said he supports the “timely actions” taken by the FDIC “which demonstrate our government’s unwavering commitment to financial and economic stability.”

The sale of Wachovia Corp. comes just days after the government’s seizure of Seattle-based Washington Mutual Inc. — the largest bank failure in U.S. history. Even as details of its takeover unfolded, Wachovia shares plunged 87 percent in Monday premarket trading to $1.36. The stock had closed Friday at $10, down 74 percent for the year.

Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. Its current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation’s housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West’s specialty, which let borrowers skip some payments.

The Senate voted 78 to 12 to pass a broad, must-pass spending bill that includes $7.5 billion to start the loan program. The House passed the bill earlier in the week, and President George W. Bush is expected to sign it.

Washington recognises that the crisis has become global. Hank Paulson, Treasury secretary, has said that foreign banks operating in the US will be eligible for federal assistance and he is urging other nations to fashion their own bail-out programmes. Central banks have also been synchronising injections of funds into markets. These should be steps to a more comprehensive international response designed not just to extinguish the current fires, but to rebuild and maintain the capital markets for the longer term.

The current global institutional apparatus is woefully incapable of overseeing the financial system that is evolving. The International Monetary Fund is irrelevant to this crisis, the Group of Seven leading industrial countries lacks legitimacy in a world where China, Brazil and others are big players, and the Bank for International Settlement has no operational role. The US Federal Reserve is too besieged to act as a global central bank.

That vacuum at the centre is dangerous for everyone. The US’s dependence on massive inflows of foreign capital, roughly $3bn (€2bn, £1.6bn) a day, will surely increase now as Uncle Sam acquires $1,000bn in new obligations from current bail-outs. For years to come, Wall Street and Washington will be unable to manage without strong co-operation from other markets.

Beyond that, the international dimensions of finance are mind-boggling. Global assets have increased from $12,000bn in 1980 to nearly $200,000bn in 2007, far outstripping the growth of gross domestic product or the expansion of trade. An increasing amount of this capital now resides in Asia and the Gulf, not the US or Europe. A US company such as AIG sold more of its credit default swaps and insurance policies outside the US than within it. UBS employs 30,000 Americans, is listed on the New York Stock Exchange and owns Paine Webber. The capital markets will evolve in the context in which emerging market economies will be growing twice as fast as the rich nations and will, by mid-century, probably account for almost two-thirds of global GDP.

Globalisation will now also create a clash of philosophies. Most governments and investors outside the US never shared the American system of cowboy capitalism. Now they have good reason to demand that some fundamental changes be made in the way the US manages its financial institutions. This can happen with a conscious, negotiated modification in the US financial model, or it could result from foreign investors shifting their funds elsewhere.

All of these considerations point to the eventual need for a new Global Monetary Authority. It would set the tone for capital markets in a way that would not be viscerally opposed to a strong public oversight function with rules for intervention, and would return to capital formation the goal of economic growth and development rather than trading for its own sake.

A GMA would be a reinsurer or discounter for certain obligations held by central banks. It would scrutinise the regulatory activities of national authorities with more teeth than the IMF has and oversee the implementation of a limited number of global regulations. It would monitor global risks and establish an effective early warning system with more clout to sound alarms than the BIS has.

It would act as “bankruptcy court” for financial reorganisations of global companies above a certain size. The biggest global financial companies would have to register with the GMA and be subject to its monitoring, or be blacklisted. That includes commercial companies and banks, but also sovereign wealth funds, gigantic hedge funds and private equity firms.

The GMA’s board would have to include central bankers not just from the US, UK, the eurozone and Japan, but also China, Saudi Arabia and Brazil. It would be financed by mandatory contributions from every capable country and from insurance-type premiums from global financial companies – publicly listed, government owned, and privately held alike.

Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling “have worked right through this weekend to sort out the problems we’re facing,” Hoon told Sky News. “I’m confident that in due course there will be a statement from the Treasury about Bradford & Bingley. I’m sure that as with Northern Rock, we will act to ensure that the interests of depositors are properly protected.”

According to Rongjia Tao, chair of Temple’s Physics Department, the small device consists of an electrically charged tube that can be attached to the fuel line of a car’s engine near the fuel injector. With the use of a power supply from the vehicle’s battery, the device creates an electric field that thins fuel, or reduces its viscosity, so that smaller droplets are injected into the engine. That leads to more efficient and cleaner combustion than a standard fuel injector, he says.

Six months of road testing in a diesel-powered Mercedes-Benz automobile showed that the device increased highway fuel from 32 miles per gallon to 38 mpg, a 20 percent boost, and a 12-15 percent gain in city driving.

The results of the laboratory and road tests verifying that this simple device can boost gas mileage was published in Energy & Fuels, a bi-monthly journal published by the American Chemical Society.

“We expect the device will have wide applications on all types of internal combustion engines, present ones and future ones,” Tao wrote in the published study, “Electrorheology Leads to Efficient Combustion.”

The Xinhua agency, which has sometimes been accused of carrying state propaganda, took down the story and blamed it on a “technical error”.

The women, twin sisters from Sweden, ran in front of oncoming traffic after wrestling with the police.

A major fuel shortage in western north carolina has many stations there out of gas, and in some cities, only one or two stations at a time have supply.

In hard hit Hendersonville, there were lines Tuesday as far as the eye could see at some stations.

One driver, who drove by 8 empty stations told us, “It’s terrible, trying to make sure you have enough gas to make it work.”

At an Enmark on 176 in Hendersonville, one of the only local stations to get a Tuesday delivery of gas, drivers waited for two hours to pump; only to find the pump motor broke. Hundreds were turned away, not knowing where else to go.

Governor Easley’s office says they have been in contact with major oil suppliers, asking for immediate deliveries to western north carolina.

Officials say it could be weeks before the supply is back to normal. That’s because some refineries are still not working and it takes days just to start them up again.

Hendersonville Police, Henderson County Sheriffs deputies and the Highway Patrol had to send units to multiple gas stations for crowd control.

Getting the supply isn’t easy for the suppliers too. We spoke to a gas station owner in Tryon who says they have no idea when they’ll get gas and he says the supply is so low, the fuel trucks sometimes have to wait in line up to 6 hours to fill their tanker trucks.

The U.S. government closed Seattle-based Washington Mutual amid customer withdrawals of $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. WaMu had “insufficient liquidity” and was in an “unsound” condition, the OTS said.

WaMu’s fate played out as Congress tried to reach an accord that will ease the global credit crunch, which has already driven Lehman Brothers Holdings Inc. and IndyMac Bancorp out of business, and Bear Stearns Cos. and Merrill Lynch & Co. into hastily arranged rescues. WaMu in March rebuffed a takeover offer from JPMorgan that WaMu valued at $4 a share. In most bank seizures, little or nothing is left for shareholders.

“JPMorgan is getting a steal compared with what they were going to pay,” said Scott Adams, a pension and investment analyst at the American Federation of State, County and Municipal Employees in Oakland, California, which owns WaMu shares. “It’s very tragic.”

WaMu collapsed after its credit rating was slashed to junk and potential suitors passed on making a bid. Facing $19 billion of losses on soured mortgage loans, the lender put itself up for sale last week.

New York-based JPMorgan won’t acquire liabilities of the lender, including claims by shareholders and subordinated and senior debt holders, the Federal Deposit Insurance Corp. said.

JPMorgan Expands

JPMorgan said it is adding branches in California, Washington and Florida and will have 5,400 offices with about $900 billion in deposits, the most of any U.S. bank. The branches will carry the Chase brand and will be integrated by 2010, JPMorgan said. They will be open for business tomorrow as usual, the OTS said in its statement.