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As part of the assessment, the Fed, the Securities and Exchange Commission (SEC), the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team. They will be required to answer the questions they are asked during interviews. Their databases will be subjected to so-called stress tests — worst-case scenarios designed to simulate the broader effects of failures of other major financial institutions or a continuing decline of the dollar.

Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members — but never the United States — have already endured this painful procedure.

For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush’s last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

After years of insisting the fillings are safe, the US government’s Food and Drug Administration (FDA) has issued a health warning about them. It represents a landmark victory for campaigners, who say the fillings are responsible for a range of ailments, including heart conditions and Alzheimer’s disease.

Earlier this month, in an unprecedented U-turn, the FDA dropped much of its reassuring language on the fillings from its website, substituting: “Dental amalgams contain mercury, which may have neurotoxic effects on the nervous systems of developing children and foetuses.” It adds that when amalgam fillings are “placed in teeth or removed they release mercury vapour”, and that the same thing happens when chewing.

Clandestine operations against Iran are not new. United States Special Operations Forces have been conducting cross-border operations from southern Iraq, with Presidential authorization, since last year. These have included seizing members of Al Quds, the commando arm of the Iranian Revolutionary Guard, and taking them to Iraq for interrogation, and the pursuit of “high-value targets” in the President’s war on terror, who may be captured or killed. But the scale and the scope of the operations in Iran, which involve the Central Intelligence Agency and the Joint Special Operations Command (JSOC), have now been significantly expanded, according to the current and former officials. Many of these activities are not specified in the new Finding, and some congressional leaders have had serious questions about their nature.

Under federal law, a Presidential Finding, which is highly classified, must be issued when a covert intelligence operation gets under way and, at a minimum, must be made known to Democratic and Republican leaders in the House and the Senate and to the ranking members of their respective intelligence committees—the so-called Gang of Eight. Money for the operation can then be reprogrammed from previous appropriations, as needed, by the relevant congressional committees, which also can be briefed.

“The Finding was focussed on undermining Iran’s nuclear ambitions and trying to undermine the government through regime change,” a person familiar with its contents said, and involved “working with opposition groups and passing money.” The Finding provided for a whole new range of activities in southern Iran and in the areas, in the east, where Baluchi political opposition is strong, he said.

Although some legislators were troubled by aspects of the Finding, and “there was a significant amount of high-level discussion” about it, according to the source familiar with it, the funding for the escalation was approved. In other words, some members of the Democratic leadership—Congress has been under Democratic control since the 2006 elections—were willing, in secret, to go along with the Administration in expanding covert activities directed at Iran, while the Party’s presumptive candidate for President, Barack Obama, has said that he favors direct talks and diplomacy.

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The Democratic leadership’s agreement to commit hundreds of millions of dollars for more secret operations in Iran was remarkable, given the general concerns of officials like Gates, Fallon, and many others. “The oversight process has not kept pace—it’s been coöpted” by the Administration, the person familiar with the contents of the Finding said. “The process is broken, and this is dangerous stuff we’re authorizing.”

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Fallon’s early retirement, however, appears to have been provoked not only by his negative comments about bombing Iran but also by his strong belief in the chain of command and his insistence on being informed about Special Operations in his area of responsibility. One of Fallon’s defenders is retired Marine General John J. (Jack) Sheehan, whose last assignment was as commander-in-chief of the U.S. Atlantic Command, where Fallon was a deputy. Last year, Sheehan rejected a White House offer to become the President’s “czar” for the wars in Iraq and Afghanistan. “One of the reasons the White House selected Fallon for CENTCOM was that he’s known to be a strategic thinker and had demonstrated those skills in the Pacific,” Sheehan told me. (Fallon served as commander-in-chief of U.S. forces in the Pacific from 2005 to 2007.) “He was charged with coming up with an over-all coherent strategy for Iran, Iraq, and Afghanistan, and, by law, the combatant commander is responsible for all military operations within his A.O.”—area of operations. “That was not happening,” Sheehan said. “When Fallon tried to make sense of all the overt and covert activity conducted by the military in his area of responsibility, a small group in the White House leadership shut him out.”

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Admiral Fallon, who is known as Fox, was aware that he would face special difficulties as the first Navy officer to lead CENTCOM, which had always been headed by a ground commander, one of his military colleagues told me. He was also aware that the Special Operations community would be a concern. “Fox said that there’s a lot of strange stuff going on in Special Ops, and I told him he had to figure out what they were really doing,” Fallon’s colleague said. “The Special Ops guys eventually figured out they needed Fox, and so they began to talk to him. Fox would have won his fight with Special Ops but for Cheney.”

The Pentagon consultant said, “Fallon went down because, in his own way, he was trying to prevent a war with Iran, and you have to admire him for that.”

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Admiral Cosgriff’s caution was well founded: within a week, the Pentagon acknowledged that it could not positively identify the Iranian boats as the source of the ominous radio transmission, and press reports suggested that it had instead come from a prankster long known for sending fake messages in the region. Nonetheless, Cosgriff’s demeanor angered Cheney, according to the former senior intelligence official. But a lesson was learned in the incident: The public had supported the idea of retaliation, and was even asking why the U.S. didn’t do more. The former official said that, a few weeks later, a meeting took place in the Vice-President’s office. “The subject was how to create a casus belli between Tehran and Washington,” he said.

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The Administration may have been willing to rely on dissident organizations in Iran even when there was reason to believe that the groups had operated against American interests in the past. The use of Baluchi elements, for example, is problematic, Robert Baer, a former C.I.A. clandestine officer who worked for nearly two decades in South Asia and the Middle East, told me. “The Baluchis are Sunni fundamentalists who hate the regime in Tehran, but you can also describe them as Al Qaeda,” Baer told me. “These are guys who cut off the heads of nonbelievers—in this case, it’s Shiite Iranians. The irony is that we’re once again working with Sunni fundamentalists, just as we did in Afghanistan in the nineteen-eighties.”

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One of the most active and violent anti-regime groups in Iran today is the Jundallah, also known as the Iranian People’s Resistance Movement, which describes itself as a resistance force fighting for the rights of Sunnis in Iran. “This is a vicious Salafi organization whose followers attended the same madrassas as the Taliban and Pakistani extremists,” Nasr told me. “They are suspected of having links to Al Qaeda and they are also thought to be tied to the drug culture.” The Jundallah took responsibility for the bombing of a busload of Revolutionary Guard soldiers in February, 2007. At least eleven Guard members were killed. According to Baer and to press reports, the Jundallah is among the groups in Iran that are benefitting from U.S. support.

The C.I.A. and Special Operations communities also have long-standing ties to two other dissident groups in Iran: the Mujahideen-e-Khalq, known in the West as the M.E.K., and a Kurdish separatist group, the Party for a Free Life in Kurdistan, or PJAK.

Oil has climbed 46 percent this year as the U.S. dollar declined against the euro and the MSCI World Index of global equity markets dropped 12 percent. Oil may extend gains if the European Central Bank boosts rates on July 3, further weakening the U.S. currency.

`The trend to hard assets, and energy in particular, is unabated,” said John Kilduff, vice president of risk management at MF Global Ltd. in New York. “There’s a lack of confidence in stocks and other markets right now, which has investors looking for safe havens.”

Crude oil for August delivery rose 57 cents, or 0.4 percent, to settle at $140.21 a barrel at 3:05 p.m. on the New York Mercantile Exchange, a record close. The August contract rose $4.85, or 3.6 percent, this week.

Prices, which are up 38 percent this quarter, are heading for the biggest quarterly gain since the first three months of 1999, when oil traded between $11 and $17.

“This market is very volatile,” said Justin Fohsz, a broker at Starsupply Petroleum, a division of GFI Group Inc. in Englewood, New Jersey. “Prices fell from almost $143 to $140 between 2:00 p.m. and 2:30 p.m. on nothing. There’s very little volume, which makes it a lot easier to move the market.”

Futures advanced to $142.99 at 1:58 p.m. today, the highest since trading began in 1983.

Yesterday, the contract jumped $5.09, or 3.8 percent, to $139.64 a barrel as Libya threatened to cut output and the president of the Organization of Petroleum Exporting Countries said prices may reach between $150 and $170 within months.

Continuing Rally