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In its budget proposal to be released on Monday, the White House predicts a record $1.6 trillion budget deficit for the fiscal year that ends September 30, the Capitol Hill source said.

According to the estimate, deficits will narrow to $700 billion by fiscal 2013 before gradually rising back to $1.0 trillion by the end of the decade, the source said.

President Barack Obama will seek to strike a balance between reducing the deficit over the long term and stimulating the economy in the short term to ease the pain of double-digit unemployment.

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The estimate for the current fiscal year is significantly higher than the $1.35 trillion figure forecast by the nonpartisan Congressional Budget Office last week.

The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse, says Neil Barofsky, the special inspector general for the trouble asset relief program, or TARP. The quarterly report to Congress was released Sunday.

“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” Barofsky wrote.

Since Congress passed $700 billion financial bailout, the remaining institutions considered “too big to fail” have grown larger and failed to restrain the lavish pay for their executives, Barofsky wrote. He said the banks still have an incentive to take on risk because they know the government will save them rather than bring down the financial system.

About two dozen teens and young adults were hospitalized after the late Saturday assault in Ciudad Juarez, a drug cartel-plagued city which is one of the deadliest in the world.

Grieving witnesses and family members told The Associated Press on Sunday they thought the victims, mostly residents of the housing complex where the attack occurred, had no ties to drug traffickers, .

“It must have been a huge mistake,” said Martha Lujan, who lives at the housing complex.

The young adults had gathered to watch a boxing match, Lujan said, when two trucks pulled up loaded with armed men who opened fire.

Ten people were killed at the scene and other three died at local hospitals, Chihuahua State Attorney Patricia Gonzales said.

The bodies of the victims, whose ages ranged from 15 to 20, lay scattered around the house where the attack happened.

International Telcommunications Union secretary general Hamadoun Toure gave his warning at a World Economic Forum debate where experts said nations must now consider when a cyber attack becomes a declaration of war.

With attacks on Google from China a major talking point in Davos, Toure said the risk of a cyber conflict between two nations grows every year.

He proposed a treaty in which countries would engage not to make the first cyber strike against another nation.

“A cyber war would be worse than a tsunami — a catastrophe,” the UN official said, highlighting examples such as attacks on Estonia last year.

He proposed an international accord, adding: “The framework would look like a peace treaty before a war.”

Countries should guarantee to protect their citizens and their right to access to information, promise not to harbour cyber terrorists and “should commit themselves not to attack another.”

John Negroponte, former director of US intelligence, said intelligence agencies in the major powers would be the first to “express reservations” about such an accord.

Susan Collins, a US Republican senator who sits on several Senate military and home affairs committees, said the prospect of a cyber attack sparking a war is now being considered in the United States.

“If someone bombed the electric grid in our country and we saw the bombers coming in it would clearly be an act of war.

“If that same country uses sophisticated computers to knock out our electricity grid, I definitely think we are getting closer to saying it is an act of war,” Collins said.

Craig Mundie, chief research and strategy officer for Microsoft, said “there are at least 10 countries in the world whose internet capability is sophisticated enough to carry out cyber attacks … and they can make it appear to come from anywhere.”

“The Internet is the biggest command and control centre for every bad guy out there,” he said.

The head of online security company McAfee told another Davos debate Friday that China, the United States, Russia, Israel and France are among 20 countries locked in a cyberspace arms race and gearing up for possible Internet hostilities.

Mundie and other experts have said there is a growing need to police the internet to clampdown on fraud, espionage and the spread of viruses.

“People don’t understand the scale of criminal activity on the internet. Whether criminal, individual or nation states, the community is growing more sophisticated,” the Microsoft executive said.

“We need a kind of World Health Organisation for the Internet,” he said.

“When there is a pandemic, it organises the quarantine of cases. We are not allowed to organise the systematic quarantine of machines that are compromised.”

He also called for a “driver’s license” for internet users.

“If you want to drive a car you have to have a license to say that you are capable of driving a car, the car has to pass a test to say it is fit to drive and you have to have insurance.”

The Chinese government Saturday announced a series of harsh retaliatory measures in protest of the Pentagon’s $6-billion arms sale to Taiwan, including a suspension of security exchanges and threatened sanctions on U.S. companies selling to Taiwan.

“The U.S. decision seriously endangers China’s national security and harms China’s core interests,” the Defense Ministry said in a statement attributed to spokesman Huang Xueping.

The failure of Los Angeles-based First Regional Bank, with nearly $2.2 billion in assets and $1.9 billion in deposits, is expected to cost the federal deposit insurance fund $825.5 million.

The Federal Deposit Insurance Corp. took over the bank as well as the others: First National Bank of Georgia, based in Carrollton, Ga., with $832.6 million in assets and $757.9 million in deposits and Community Bank and Trust of Cornelia, Ga., with $1.2 billion in assets and $1.1 billion in deposits; Florida Community Bank of Immokalee, Fla., with $875.5 million in assets and $795.5 million in deposits; Marshall Bank of Hallock, Minn., with $59.9 million in assets and $54.7 million in deposits; and American Marine Bank of Bainbridge Island, Wash., with $373.2 million in assets and $308.5 million in deposits.

“Just go ahead and sign their death certificate,” said Paul Nelson of Coden, Ala., who contends his mother died because of formaldehyde fumes in a FEMA trailer.

The 100,000 trailers became a symbol of the Federal Emergency Management Agency’s bungled response to Katrina. The government had bought the trailers to house victims of the 2005 storm, but after people began falling ill, high levels of formaldehyde, a chemical that is used in building materials and can cause breathing problems and perhaps cancer, were found inside. Many of the trailers have sat idle for years, and many are damaged.

The U.S. Agency for International Development, which is coordinating American assistance in Haiti, has expressed no interest in sending the trailers to the earthquake-stricken country. FEMA spokesman Clark Stevens declined to comment on the idea and said it was not FEMA’s decision to make.

Haitian Culture and Communications Minister Marie Laurence Jocelyn Lassegue said Thursday she had not heard of the proposal but added: “I don’t think we would use them. I don’t think we would accept them.”

In a Jan. 15 letter to FEMA, Rep. Bennie Thompson, D-Miss., chairman of the House Committee on Homeland Security, said the trailers could be used as temporary shelter or emergency clinics.

Calling upon governments and business to also contribute, they said the money will produce higher immunization rates and aims to make sure that 90 percent of children are immunized against dangerous diseases such as diarrhea and pneumonia in poorer nations.

“We must make this the decade of vaccines,” Bill Gates said in a statement. “Vaccines already save and improve millions of lives in developing countries. Innovation will make it possible to save more children than ever before.”

The operations, approved by President Obama and begun six weeks ago, involve several dozen troops from the U.S. military’s clandestine Joint Special Operations Command (JSOC), whose main mission is tracking and killing suspected terrorists. The American advisers do not take part in raids in Yemen, but help plan missions, develop tactics and provide weapons and munitions. Highly sensitive intelligence is being shared with the Yemeni forces, including electronic and video surveillance, as well as three-dimensional terrain maps and detailed analysis of the al-Qaeda network.