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“Another useful indicator of the Federal Reserve’s relative monetary policies can be found weekly in the Federal Reserve data. A key statistic is the net free reserves or net borrowed reserves line item. This statistic measures the degree to which depository institutions have found it necessary to obtain funds in the Fed Funds market and through the Fed discount window in order to obtain required reserves.

During periods of central bank credit-tightening operations, the depository sector might find it necessary to borrow funds to meet reserve requirements. This practice results in net borrowed reserves, which shows as a negative number. Conversely, if ample funds are available through the banking system to meet reserve requirements, banks can become net lenders of reserves through the Fed Funds markets.”

“We had decided that money is money and we’ll take it and just do the exchange whenever we can with our bank,” Robert Chu, owner of East Village Wines, told Reuters television.

The increasingly weak U.S. dollar, once considered the king among currencies, has brought waves of European tourists to New York with money to burn and looking to take advantage of hugely favorable exchange rates.

“We didn’t realize we would take so much in and there were that many people traveling or having euros to bring in. But some days, you’d be surprised at how many euros you get,” Chu said.

“Now we have to get familiar with other currencies and the (British) pound and the Canadian dollars we take,” he said.

Homeowners are abandoning their homes and, more importantly, their mortgages, rather than trying to keep up with rising payments on deteriorating assets. So many people are handing their keys back to lenders that a new term has been coined for it: jingle mail.

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Current lending practices have created an environment where a measure as extreme as abandoning a home actually makes sense to some people.

Many buyers put little or no money down, so they don’t have much invested in them. That leaves them with little incentive to keep making payments when a home’s market value dips below the balance of the mortgage.

The Afghan government claims they prove British agents were talking to the Taliban without permission from the Afghan President, Hamid Karzai, despite Gordon Brown’s pledge that Britain will not negotiate. The Prime Minister told Parliament on 12 December: “Our objective is to defeat the insurgency by isolating and eliminating their leaders. We will not enter into any negotiations with these people.”

The British insist President Karzai’s office knew what was going on. But Mr Karzai has expelled two top diplomats amid accusations they were part of a plot to buy-off the insurgents.

The row was the first in a series of spectacular diplomatic spats which has seen Anglo-Afghan relations sink to a new low. Since December, President Karzai has blocked the appointment of Paddy Ashdown to the top UN job in Kabul and he has blamed British troops for losing control of Helmand.

It has also soured relations between Kabul and Washington, where State Department officials were instrumental in pushing Lord Ashdown for the UN role.

President Karzai’s political mentor, Sibghatullah Mojaddedi, endorsed a death sentence for blasphemy on the student journalist Sayed Pervez Kambaksh last week, and two British contractors have been arrested in Kabul on, it is claimed, trumped up weapons charges. The developments are seen as a deliberate defiance of the British.

An Afghan government source said the training camp was part of a British plan to use bands of reconciled Taliban, called Community Defence Volunteers, to fight the remaining insurgents. “The camp would provide military training for 1,800 ordinary Taliban fighters and 200 low-level commanders,” he said.

The computer memory stick at the centre of the row was impounded by officers from Afghanistan’s KGB-trained National Directorate of Security after they moved against a party of international diplomats who were visiting Helmand.

A ministry insider said: “When they were arrested, the British said the Ministry of the Interior and the National Security Council knew about it, but no one knew anything. That’s why the President was so angry.”

Details of how much President Karzai was told remain murky. Some analysts believe Afghan officials were briefed about the plan, but that it later evolved.

The camp was due to be built outside Musa Qala, in Helmand. It was part of a package of reconstruction and development incentives designed to win trust and support in the aftermath of the British-led battle to retake the stronghold last year.

But the Afghans feared the British were training a militia with no loyalty to the central government. Intercepted Taliban communications suggested they thought the British were trying to help them, the Afghan official said.

The Western delegates, Michael Semple and Mervyn Patterson, were given 48 hours to leave the country. Their Afghan colleagues, including a former army general, were jailed. The expulsions coincided with a row within the Taliban’s ranks which saw a senior commander, Mansoor Dadullah, sacked for talking to British spies. One official claimed the camp was planned for Mansoor and his men.

The computer stick contained a three-stage plan, called the European Union Peace Building Programme. The third stage covered military training.

Curiously, the European Union says the programme did not exist and there were no EU funds to run it.

Afghan government officials insist it was bankrolled by the British. UK diplomats, the UN, Western officials and senior Afghan officials have all confirmed the outline of the plan, which they agree is entirely British-led, but all refused to talk about it on the record. President Karzai’s office claimed it was “a matter of national security”.

The memory stick revealed that $125,000 (£64,000) had been spent on preparing the camp and a further $200,000 was earmarked to run it in 2008, an Afghan official said. The figures sparked allegations that British agents were paying the Taliban.

President Karzai’s spokesman, Humayun Hamidzada, accused Mr Semple and Mr Patterson of being “involved in some activities that were not their jobs.”

The camp would also have provided vocational training, including farming and irrigation techniques, to offer people a viable alternative to growing opium. But the Afghan government took issue with plans to provide military training, to turn the insurgents into a defence force.

Afghan government staff also claimed the “EU peace-builders” had handed over mobile phones, laptops and airtime credit to insurgents. They said the memory stick revealed plans to train the Taliban to use secure satellite phones, so they could communicate directly with UK officials.

Mr Patterson, a Briton, was the third-ranking UN diplomat when he was held. Mr Semple, an Irishman, was the acting head of the EU mission. Officially, the British embassy remains tight-lipped, fuelling speculation that the plan may have been part of a wider clandestine operation.

A spokesman repeated the line used since Christmas: “The EU and UN have responded to inquiries on this. We have nothing further to add.”

But privately, the UN maintains it had no role in setting up the camp. Meanwhile, Mr Semple’s EU boss, Francesc Vendrell, admitted he had very little idea what was going on.

Yet the British ambassador, Sir Sherard Cowper-Coles, cut short his Christmas holiday to meet President Karzai and “spell out the Foreign Office paper-trail” which diplomats claim proves his government had agreed. They met twice, but it was not enough to stop Mr Semple and Mr Patterson being forced to leave.

Gordon Brown has also said Britain would increase its support for “community defence initiatives, where local volunteers are recruited to defend homes and families modelled on traditional Afghan arbakai”.

Background to the proposal

* December 11

British and Afghan troops take Musa Qala, a Taliban stronghold in Helmand, after President Hamid Karzai reveals that a senior Taliban commander swapped sides.

* December 23-24

The acting head of the EU mission, Michael Semple, and the third-ranking UN diplomat in Afghanistan, Mervyn Patterson, hold talks with local dignitaries and Taliban sympathisers in Helmand. Afghan secret police arrest their colleague, General Stanikzai, and seize a memory stick containing plans for training camps.

* December 25

Semple and Patterson are given 48 hours in which to leave Kabul.

* December 27

Five nations lowered interest rates last week in step with the Federal Reserve to keep their links to the U.S. currency even as inflation accelerates. When Saudi Arabia left rates unchanged after the Fed’s Sept. 18 reduction, the riyal rose to a 20-year high.

“A lack of action on exchange-rate policy continues to fuel inflation, driving wage demands, which in turn fuel inflation,” a Merrill team including currency strategist Emma Lawson wrote in an e-mailed note today. “Revaluation and a move to a basket could break this vicious cycle.”

Inflation accelerated to records in all six of the Gulf Cooperation Council, or GCC, states last year as the oil-rich nations sought to preserve their dollar links. The regional average was 6.3 percent in 2007, compared with 0.3 percent in 2001, according to Merrill, the world’s largest brokerage.

The Fed cut its target rate for overnight bank lending by 1.25 percentage points in January to prevent the housing slump from pushing the U.S. economy into a recession. The U.S. Dollar Index traded on ICE Futures in New York, which tracks the currency against six major counterparts, dropped 0.7 percent last week to 75.45. It was at 74.48 on Nov. 23, the weakest level since the gauge started in 1973.

“It’s going to be very difficult for central banks in the region to have adequate control of monetary policy, and hence inflation, when the Fed is slashing rates left, right and centre and the dollar is slumping,” Steven Barrow, chief currency strategist in London at Bears Stearns, the fifth-largest U.S. securities firm, wrote in a client note yesterday.

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Speculation of a Gulf-wide revaluation is rising before a meeting between Saudi Arabia’s advisory council, the Shura, the finance ministry and the central bank, according to Barrow, who said the largest Arab economy is blocking other states from dropping their dollar pegs. The meeting will be held on Feb. 17, Arab News reported.

“The authorities do not have to act on recommendations from the council and, of course, the council might not even recommend any currency change,” Barrow wrote.

Saudi Arabia, the U.A.E., Qatar and Bahrain cut their benchmark rates for deposits by half a percentage point to 3 percent on Jan. 31, while Kuwait lowered its repo rate by the same amount to 3.5 percent. Oman cut its repo rate 0.18 percentage point to 4.14 percent today, Dow Jones reported.

“Central banks can take other measures to try to limit the damage, such as raising reserve requirements, but we are skeptical that this works and we are also concerned that such tactics can adversely affect the banking sector,” Barrow said.

These are SeaMeWe-4 (South East Asia-Middle East-Western Europe-4) near Penang, Malaysia, the FLAG Europe-Asia near Alexandria, FLAG near the Dubai coast, FALCON near Bandar Abbas in Iran and SeaMeWe-4, also near Alexandria.

On no other aspect of the right to travel is international law more clear than on the right of return to the country of one’s own citizenship: “No one shall be arbitrarily deprived of the right to enter his own country.” The new regulations are a flagrant violation of the obligations of the USA as a party to the International Covenant on Civil and Political Rights and other international human rights treaties, as well as a violation of the Constitutional duty of the USA government to treat such treaties as the highest law of the land.

It’s to be hoped that some civil liberties or human rights organization or individual will go to court before the end of this month to enjoin the government from putting these rules and procedures into effect, and that citizens will assert their rights by attempting to cross borders without papers, and suing those goons from the USA Department of Homeland Security who try to stop them. But if that doesn’t happen, here’s what the DHS has promulgated as “final rules” and “procedures”:

The directive, whose content is classified, authorizes the intelligence agencies, in particular the National Security Agency, to monitor the computer networks of all federal agencies — including ones they have not previously monitored.

Until now, the government’s efforts to protect itself from cyber-attacks — which run the gamut from hackers to organized crime to foreign governments trying to steal sensitive data — have been piecemeal. Under the new initiative, a task force headed by the Office of the Director of National Intelligence (ODNI) will coordinate efforts to identify the source of cyber-attacks against government computer systems. As part of that effort, the Department of Homeland Security will work to protect the systems and the Pentagon will devise strategies for counterattacks against the intruders.

There has been a string of attacks on networks at the State, Commerce, Defense and Homeland Security departments in the past year and a half. U.S. officials and cyber-security experts have said Chinese Web sites were involved in several of the biggest attacks back to 2005, including some at the country’s nuclear-energy labs and large defense contractors.

The NSA has particular expertise in monitoring a vast, complex array of communications systems — traditionally overseas. The prospect of aiming that power at domestic networks is raising concerns, just as the NSA’s role in the government’s warrantless domestic-surveillance program has been controversial.

“Agencies designed to gather intelligence on foreign entities should not be in charge of monitoring our computer systems here at home,” said Rep. Bennie Thompson (D-Miss.), chairman of the House Homeland Security Committee. Lawmakers with oversight of homeland security and intelligence matters say they have pressed the administration for months for details.

The classified joint directive, signed Jan. 8 and called the National Security Presidential Directive 54/Homeland Security Presidential Directive 23, has not been previously disclosed. Plans to expand the NSA’s role in cyber-security were reported in the Baltimore Sun in September.

According to congressional aides and former White House officials with knowledge of the program, the directive outlines measures collectively referred to as the “cyber initiative,” aimed at securing the government’s computer systems against attacks by foreign adversaries and other intruders. It will cost billions of dollars, which the White House is expected to request in its fiscal 2009 budget.

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Under the initiative, the NSA, CIA and the FBI’s Cyber Division will investigate intrusions by monitoring Internet activity and, in some cases, capturing data for analysis, sources said.

The Pentagon can plan attacks on adversaries’ networks if, for example, the NSA determines that a particular server in a foreign country needs to be taken down to disrupt an attack on an information system critical to the U.S. government. That could include responding to an attack against a private-sector network, such as the telecom industry’s, sources said.

Also, as part of its attempt to defend government computer systems, the Department of Homeland Security will collect and monitor data on intrusions, deploy technologies for preventing attacks and encrypt data. It will also oversee the effort to reduce Internet portals across government to 50 from 2,000, to make it easier to detect attacks.

“The government has taken a solid step forward in trying to develop cyber-defenses,” said Paul B. Kurtz, a security consultant and former special adviser to the president on critical infrastructure protection. Kurtz said the initiative’s purpose is not to spy on Americans. “The thrust here is to protect networks.”

One of the key questions is whether it is necessary to read communications to investigate an intrusion.

Ed Giorgio, a former NSA analyst who is now a security consultant for ODNI, said, “If you’re looking inside a DoD system and you see data flows going to China, that ought to set off a red flag. You don’t need to scan the content to determine that.”

The vast expanse of debris – in effect the world’s largest rubbish dump – is held in place by swirling underwater currents. This drifting “soup” stretches from about 500 nautical miles off the Californian coast, across the northern Pacific, past Hawaii and almost as far as Japan.

Charles Moore, an American oceanographer who discovered the “Great Pacific Garbage Patch” or “trash vortex”, believes that about 100 million tons of flotsam are circulating in the region. Marcus Eriksen, a research director of the US-based Algalita Marine Research Foundation, which Mr Moore founded, said yesterday: “The original idea that people had was that it was an island of plastic garbage that you could almost walk on. It is not quite like that. It is almost like a plastic soup. It is endless for an area that is maybe twice the size as continental United States.”