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“I think he smells some blood in the water on the national security issue,” Panetta said in an interview published in The New Yorker magazine’s June 22 issue.

“It’s almost, a little bit, gallows politics. When you read behind it, it’s almost as if he’s wishing that this country would be attacked again, in order to make his point.”

Cheney, who was a key advocate in the Bush administration of controversial interrogation methods such as waterboarding, has become as a leading Republican critic of Obama’s ban on harsh interrogations and his plan to shut the U.S. military prison at Guantanamo Bay, Cuba.

In a blistering May 21 speech, Cheney said Obama’s reversal of Bush-era policies were “unwise in the extreme” that would make the American people less safe.

Panetta called Cheney’s actions “dangerous politics.”

Any hopes by the Obama administration of gaining a result similar to Lebanon’s recent election, won by a Western-backed moderate coalition, appeared to be in jeopardy.

“We are monitoring the situation as it unfolds in Iran, but we, like the rest of the world, are waiting and watching to see what the Iranian people decide,” U.S. Secretary of State Hillary Rodham Clinton said at a news conference with Canada’s foreign affairs minister, Lawrence Cannon.

Minutes after Clinton spoke, the White House released a two-sentence statement praising “the vigorous debate and enthusiasm that this election generated, particularly among young Iranians,” but expressing concern about “reports of irregularities.”

Despite the challenge from reformist Mir Hossein Mousavi to incumbent Ahmadinejad, many officials and experts thought a Mousavi victory would result in only incremental shifts toward the U.S.

Because real power in Tehran is still wielded by religious leader Ayatollah Ali Khamenei, some say an Ahmadinejad re-election may make it easier to build an international consensus against Iran.

Administration officials remained silent out of concern that any comments might influence the results. But they were privately hoping for a victory by the more moderate Mousavi.

President Barack Obama’s previous overtures include his recent address in Cairo to the Muslim world as well as, earlier, a televised New Year’s address to the Iranian people and a series of diplomatic contacts. Officials say Obama’s attempts to reach out have gone largely unanswered.

Neither Clinton nor the White House mentioned Ahmadinejad or his chief rival Mousavi, by name, or acknowledged the incumbent’s victory declaration.

Iranian authorities reported that Ahmadinejad was re-elected with 62.6 percent of the vote. He called on the public to respect the vote. But Mousavi, a former prime minister who has become the hero of a youth-driven movement seeking greater liberties and a gentler face for Iran abroad, rejected the results and accused authorities of rigging Friday’s vote.

Karim Sadjadpour, an Iran analyst at the Carnegie Endowment for International Peace, said Saturday that Ahmadinejad’s claim of a victory puts the Obama administration in a tough position.

Speaking with reporters this morning, Boxer said EPA has determined that at least 44 of the hundreds of coal ash piles identified across the country pose a “high hazard,” meaning they could threaten human life if they fail — like an impoundment that collapsed at a Tennessee Valley Authority facility late last year. The agency collected the information on the locations from the utility companies that operate the ash disposal sites.

Boxer said EPA is notifying and working with first responders this week while conducting evaluations at the sites to determine whether there is an imminent threat of failure.

At least 10 leaders of two reformist groups who had backed opposition candidate Mir Hossein Mousavi were under arrest last night as police used tear gas and clubs to quell mass street protests.

Speaking on national television, Mr Ahmadinejad praised the Iranian people for choosing to look towards the future.

“This is a great victory at a time and condition when the whole material, political and propaganda facilities outside of Iran and sometimes … inside Iran, were mobilised against our people,” he said.

The mood in the capital, Tehran, was tense as large groups of riot police patrolled the streets, moving along drivers who had been honking their horns in apparent protest.

The official IRNA news agency reported that two of the reformist leaders arrested were involved in orchestrating the weekend riots.

Amid charges of electoral fraud and vote rigging, official results showed Mr Ahmadinejad won 63 per cent of the nearly 40 million votes cast, with overwhelming backing from Iran’s vast rural constituencies, compared to 34 per cent won by Mr Mousavi.

The surge in Treasury yields is lifting mortgage rates, threatening to dampen home demand and kill off the refinancing boom that is bolstering the health of some households.

“What mistake can the U.S. economy afford to make? If you look at it that way, I suspect that we will see the Fed engage again in these markets,” El-Erian, who oversees $756 billion at PIMCO, told Reuters Financial Television.

Debate is brewing within the Federal Reserve over whether it should ramp up its purchases of Treasuries and mortgage-backed securities to keep a lid on interest rates, or scale them back to avoid an outbreak of inflation.

Massive buying of securities by the U.S. central bank has doubled the size of its balance sheet to around $2 trillion as it flooded the economy with money to prevent a severe recession getting worse.

The Fed’s Open Market Committee voted unanimously in April to keep unchanged its targets for purchases of MBS and long-term Treasuries. But the panel left the door open to increasing purchases at future meetings if needed to secure a stronger recovery, according to minutes of the meeting. The FOMC next meets on June 23-24 in Washington.

DOLLAR, JUNK BONDS VULNERABLE

Edouard Stern, 50, scion of one of France’s wealthiest families and whose influential circle of friends included President Nicolas Sarkozy, was found dead in March 2005 wearing a latex suit, with two bullet holes in the head and two in the torso.

His lover, Cecile Brossard, has admitted killing Stern at his Geneva penthouse apartment, but her defence has said it was a “crime of passion” and not murder, as alleged by prosecutors.

Yesterday, a Parisian art dealer told the court that Stern was “incredibly charming” but also “calculating and manipulative”.

He said he had witnessed Brossard’s “mental torture” and described the banker as extremely possessive.

“He followed her, pestered her – her and all those around her. It was diabolical,” the art trader told the court.

Asked about written commitments made by the banker to marry his mistress and offer her a million dollars, the dealer said he “didn’t believe it, knowing Edouard”.

A businessman in his 70s, a friend of the couple who remains close to Brossard, described their relationship as “cat and mouse”.

“Edouard Stern had his prey and wanted to have it completely at his mercy. He was the master,” the businessman said.

The banker’s mistress was a woman driven “to the brink of suicide”, he added. The $1 million handed over by Stern “would not interest her” if it wasn’t a token of love, he said.

Earlier, an aristocrat friend of the lovers told the court: “Cecile Brossard was very much in love. She was not interested” in the money, he added.

These statements contradict the argument put forward by the Stern family lawyers, who claim Brossard murdered the banker because he had blocked $1 million paid into a bank account in the name of his mistress.

An attractive young, blonde woman told the court she had sexual relations with the banker and his mistress, at the request of Brossard, who was her friend.

The young woman claimed she was not shocked by the staging of the threesome in a hotel: the two women were dressed as schoolgirls and the sex games were spiced up with sado-masochistic accessories.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

“The real question is not whether these cities shrink – we’re all shrinking – but whether we let it happen in a destructive or sustainable way,” said Mr Kildee. “Decline is a fact of life in Flint. Resisting it is like resisting gravity.”

Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was “both a cultural and political taboo” about admitting decline in America.

“Places like Flint have hit rock bottom. They’re at the point where it’s better to start knocking a lot of buildings down,” she said.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000.

Unemployment is now approaching 20 per cent and the total population has almost halved to 110,000.

The exodus – particularly of young people – coupled with the consequent collapse in property prices, has left street after street in sections of the city almost entirely abandoned.

In the city centre, the once grand Durant Hotel – named after William Durant, GM’s founder – is a symbol of the city’s decline, said Mr Kildee. The large building has been empty since 1973, roughly when Flint’s decline began.

Regarded as a model city in the motor industry’s boom years, Flint may once again be emulated, though for very different reasons.

But Mr Kildee, who has lived there nearly all his life, said he had first to overcome a deeply ingrained American cultural mindset that “big is good” and that cities should sprawl – Flint covers 34 square miles.

He said: “The obsession with growth is sadly a very American thing. Across the US, there’s an assumption that all development is good, that if communities are growing they are successful. If they’re shrinking, they’re failing.”

But some Flint dustcarts are collecting just one rubbish bag a week, roads are decaying, police are very understaffed and there were simply too few people to pay for services, he said.

If the city didn’t downsize it will eventually go bankrupt, he added.

Flint’s recovery efforts have been helped by a new state law passed a few years ago which allowed local governments to buy up empty properties very cheaply.

They could then knock them down or sell them on to owners who will occupy them. The city wants to specialise in health and education services, both areas which cannot easily be relocated abroad.

The local authority has restored the city’s attractive but formerly deserted centre but has pulled down 1,100 abandoned homes in outlying areas.

Mr Kildee estimated another 3,000 needed to be demolished, although the city boundaries will remain the same.

Already, some streets peter out into woods or meadows, no trace remaining of the homes that once stood there.

Choosing which areas to knock down will be delicate but many of them were already obvious, he said.

The city is buying up houses in more affluent areas to offer people in neighbourhoods it wants to demolish. Nobody will be forced to move, said Mr Kildee.

“Much of the land will be given back to nature. People will enjoy living near a forest or meadow,” he said.

Pellecchia said the exchange was not planning on canceling trades in the affected stocks, which included General Electric, Bank of America, and Exxon Mobil.