Britain has already set aside 30 billion pounds for the IMF but it could be set to add a further 10 billion pounds to the eurozone coffers. A spokesman said: "He said if there were a strong case for additional resources, then he would be willing to take that case to Parliament. At the moment, there is a limit of 40 billion pounds, of which 30 billion pounds has already been subscribed. There is a headroom of 10 billion pounds."

Osborne claimed that the eurozone countries had not been doing enough to remedy the situation and the crisis in Greece would destabilise the entire situation if leaders were not careful. Speaking during a visit to China, he said: "If I felt it was a decent request by the IMF, then, of course, I would be willing to go to Parliament and make that request. But let me be very clear, I would not do that with Britain acting alone, like other big G20 countries, and we are very clear this is not a substitute for the eurozone providing money for dealing with its own currency."

"I think what the euro needs to do is show convincingly that it can stand behind its currency." The news came as President of the European Council, Herman Van Rompuy said an anti-recession strategy was urgently needed to be put in place. The crisis in Europe reached new levels after credit ratings agency Standard and Poor downgraded some of the key members of the eurozone, including France and Austria. Mr Osborne hit back at the eurozone leaders, including Merkel and Sarkozy that not enough had been done to act on the Greek debt crisis.

The poll by ISPO, published in an Italian newspaper said 65 percent thought the introduction of the euro had been more damaging than beneficial for the Italian economy. Confidence in the European Union dropped to 51 per cent, the lowest level for more than three years. The news will add to the discontent in the eurozone over whether the single currency will survive.

Earlier this month, Prime Minister Mario Monti hit back at pressure tactics placed on Italy by both Angela Merkel and Nicolas Sarkozy. The Italian PM warned that his country would need to see more concrete support from both France and Germany in return for agreeing to painful austerity measures by the two leaders.

As the standoff with Greece's creditors continued, Mario Monti, the Italian prime minister, pleaded for Germany and other creditor countries to help lower his country's borrowing costs. He warned there would be a "powerful backlash" among voters in smaller EU countries if they did not. S&P said the EFSF's rating would be cut again if member states' creditworthiness eroded further. Leaders appeared to abandon hopes for the EFSF and turned their focus on the European Stability Mechanism (ESM) instead. Herman van Rompuy, co-president of the European Union, said he would assess the size of the ESM "without delay" and ensure it is operational by July.

Klaus Regling, chief executive of the EFSF, said the fund would have "sufficient means to fulfil its commitments under current and potential future adjustment programmes until the ESM becomes operational in July 2012". S&P was severely criticised across the eurozone, even before the EFSF decision was announced. Olli Rehn, an EU Commissioner, said ratings agencies are the tools of "American financial capitalism".

Wolfgang Schauble, Germany's finance minister, said rating agencies' influence should be curbed and insisted German guarantees for the EFSF were sufficient. The governor of the Bank of France, Christian Noyer, said S&P's mass downgrades "constitutes an additional challenge". A bigger hurdle was emerging as Greece's international creditors warned that crucial talks would not resume without "progress" from Athens and the troika, made up of the nternational Monetary Fund (IMF), European Central Bank (ECB) and EU.

The drill, originally set for April, was intended to create a high level of interoperability between the two countries' missile defense systems. Thousands of US troops would be deployed in Israel to be joined by an equal number of Israeli soldiers. It would also be the first time a top US commander (Admiral James Stavridis of the US European Command) has been assigned to participate in the simulations.

The maneuvers had been scheduled to take place at a time of spiraling tensions around Iran. Moreover, the probability loomed they would coincide with Iran's own large-scale naval war games. Israel denies any link between "Austere Challenge 12" and the political build-up in the Gulf, saying their joint drill with the US was "routine," "planned in advance" and "not in response to any real-world event," reports Agence France Presse. Despite the claims, the drill, unique in its size and scope, has sparked concerns in the region that Israel may be bolstering its defense with US troops for an imminent strike on Iran's nuclear facilities.

Now the drill has been postponed due to "technical and logistical" reasons, or, as Israeli public radio puts it, "budgetary constraints." Analysts suggest Washington does not want to put a burning match close to Iran's tinderbox. Moreover, there is also major disagreement between Israel and the US on the red lines for a strike on Iran. This, according to the Associated Press, is likely to head the agenda that General Martin Dempsey, a top US military chief, is taking to Israel for next weekend's discussions with Israel's defense minister, Ehud Barak, and the chief of staff, Benny Gantz. Israeli media speculate Dempsey's visit is a part of the US effort to avoid any "surprise" on Iran coming from Israel.

Experts say Iran could block the strait using mines, armed speed boats or anti-ship cruise missiles, but, according to Michael Connell at the Center for Naval Analysis, "the immediate issue [for the US military] is to get the mines."

Cue the dolphins.

"We've got dolphins," retired Admiral Tim Keating said in an interview last week with NPR. Keating, who commanded the US 5th Fleet in Bahrain during the run-up to the Iraq war, said in a situation like the standoff in Hormuz, Navy-trained dolphins would come in handy. "They are astounding in their ability to detect underwater objects," Keating told the station.

The invasion of Iraq was the last time the mine-sweeping capability of dolphins was widely-touted. "Dolphins - which possess sonar so keen they can discern a quarter from a dime when blindfolded and spot a 3-inch metal sphere from 370 feet away - are invaluable mine sweepers," reported The San Francisco Chronicle. In 2010, the Seattle Times reported that the Navy has 80 bottlenose dolphins in the San Diego Bay. They are taught to hunt for mines and drop acoustic transponders nearby. According to a report in 2003, the dolphins only detect the mines. Destroying them is left up to the Navy's human divers.

That is because, in the wake of Standard & Poor's Exocet, the EFSF also could be downgraded. So the fund, too, would pay more to borrow, just as credit becomes more expensive for the newly downgraded countries it might need to bail out. The likelihood the EFSF can do its job will fall, then, as the chances it will be needed, rise. The question of whether the fund can "lever-up" from its existing 440 billion euros (364 billion pounds) (public money pledged, not delivered) to the 1,000 billion-plus euros that may be needed if Europe's banks endure "another Lehman", is now under serious scrutiny.

Just five eurozone countries - Italy, Spain, Ireland, Portugal and Greece - have around 200 billion euros of debt maturing between now and April. Can they refinance, pulling back from the brink of insolvency? Their chances just got worse. Before we Brits gloat, let us remember that the main reason the UK remains triple-A status is that we're "printing money" and using it to roll over our debts, the Bank of England creating new credits ex nihilo, then buying gilts from existing investors.

What Britain also has going for it, of course, is that the Coalition has forged a "credible" deficit-reduction plan. What "credible" means in today's wacky world of Western government finance is that the UK's plan is more realistic than total fantasy. The question is, how much more? And the cost, so far, of Britain's bank bail-outs, or "financial interventions" in the Whitehall vernacular? A cool 2,270 billion pounds, more than twice our on-the-books national debt. How much of that will the Government recoup when, if at all, these bankrupt institutions are sold off?

Consider that, before getting too smug about what's happening in the eurozone.

The unexpected breakdown in talks between Greece and its private-sector creditors has taken the country a step closer to bankruptcy after a failure to sign up lenders to a voluntary and "orderly" 50 per cent haircut to their holdings. Greece's finance minister Evangelos Venizelos said talks would resume on Wednesday to "bridge differences" but insiders remained sceptical that a deal could be stitched at such a late stage.

The clock is ticking for Greece, as a deal must be reached before March 20, when the country is due to receive a further 130 billion euros (107 billion pounds) bail-out tranche from the International Monetary Fund and must make a key 14.5 billion euros bond payment. The problem centres on the difference between lenders agreeing to a "voluntary" and orderly default - which would mean swapping into bonds with a lower value - and lenders refusing terms, which would cause a default.

This type of "credit event" would trigger billions of insurance claims through credit default swaps (CDS), insurance policies taken out to protect investors in the event of a default.

The problem is that, of the 315 billion euros of Greek debt outstanding, only 7.8 billion euros is covered by Greek CDS. The vast majority of Greek debt is held by European banks, which have little insurance on their exposure. Most Greek CDS are held by hedge fund managers - accused by Germany and France of financially benefiting from sovereign woes. Some claim that hedge fund managers would benefit from a default, with Europe's banks being the losers.

Use of the European Central Bank's three-year funding programme is expected to exceed 500 billion euros in February when lenders are offered their second chance to access its new long-term refinancing operation (LTRO), according to Credit Suisse. Last month, banks borrowed a total of 489 billion euros using the LTRO, which has effectively seen the ECB take on the role of providing a large part of the funding required by several eurozone banks. Analysts at Credit Suisse point out the ECB's willingness to provide an increasing proportion of the short and longer-term funding required by eurozone banks has led to a widening gap in the size of its balance sheet versus those of the Bank of England and the US Federal Reserve.

The willingness of the ECB to provide more funding to eurozone banks is in stark contrast to the Bank of England's much tougher approach to major UK lenders. For instance, while eurozone banks can easily put up covered bonds as collateral against ECB loans, the Bank specifies what collateral is acceptable for each of its funding programmes and applies tighter criteria against their use. While eurozone banks are allowed to issue covered bonds specifically for use as collateral to access ECB funding the Bank prohibits such behaviour. The disparity has led to what Credit Suisse describes as an "uneven playing field" between UK and eurozone banks.

Bank officials have been clear they do not think UK lenders require any new assistance and should not have access to cheaper funds.

And yet both events are important because they show us the mechanism behind this year's likely unfolding of events. The eurozone has fallen into a spiral of downgrades, falling economic output, rising debt and further downgrades. A recession has just started. Greece is now likely to default on most of its debts and may even have to leave the eurozone. When that happens, the spotlight will fall immediately on Portugal, and the next contagious round of downgrades will begin.

Europe's insufficient rescue fund, the European Financial Stability Facility, now also faces a downgrade because it had borrowed its ratings from its members. The way the EFSF is constructed means that its effective lending capacity will thus be reduced. Even though the French downgrade did not come as a surprise, the eurozone member states have no plan B for this, just a few stopgap emergency scenarios. They may decide to run the EFSF and its permanent successor concurrently. They may also provide the latter with a full immediate allotment of its capital. But this will create gaps in national budgets in a bad year.

By downgrading France and Austria but not Germany and the Netherlands, Standard & Poor's also managed to shape expectations of the economic geography of an eventual break-up. A downgrading of all triple A rated members would have been much easier to deal with politically. Germany is now the only large country left with a triple A rating. The decision will make it harder for Germany to accept eurozone bonds. The ratings wedge between France and Germany will make the relationship even more unbalanced.

Even economic reforms, necessary as they may be for other reasons, cannot solve this problem. This is another European illusion. We are now at a point where effective crisis resolution would require a strong central fiscal authority, with the power to tax and allocate resources across the eurozone. Of course, it will not happen.

This is the ultimate implication of last week's ratings downgrades. We have moved beyond the point where a technical fix would work. The toolkit is exhausted.

"Sarkozy has built his whole strategy on being the most credible candidate on the economy, on being the surest leader in a crisis," Riviere said. "That line is getting harder and harder to hold. It's getting harder to say that he's an equal in the Franco-German couple, that he's a power at European summits."

Trailing Socialist challenger Francois Hollande in the polls, Sarkozy called on French voters yesterday to back his "economic reforms" in his first comments since the downgrade, saying "the crisis can be overcome on condition that we have the collective will to do so." Although Hollande stepped up attacks on the president, he too may have to water down campaign promises in response to the rating change.

Sarkozy's government tried to play down the importance of the downgrade or deflected blame by pointing to decades of state excesses. "It's not a catastrophe," Finance Minister Francois Baroin said. "It's like a pupil who had 20 out of 20 for a very long time and now has a 19. It's still an excellent grade."

Bolton was on "Aaron Klein Investigative Radio" on New York's WABC Radio. The former ambassador was asked about a statement from a former head of UN nuclear inspections claiming Iran is now just a year or so away from having enough enriched uranium to assemble a nuclear bomb. Olli Heinonen wrote in an article published earlier this week that Iran made this advancement after switching production of its higher-grade enriched uranium to a new, underground site.

Reacting to the one-year timeline, Bolton stated, "I think it can be even less than that." Continued Bolton: "They've got, by publicly available information from the International Atomic Energy Agency, enough low-enriched uranium that if enriched up to weapons grade would be enough for four weapons. So they've got more work to do, but they are already well on their way," he said. Bolton told Klein that 2012 will be a key year to stop Iran's nuclear program.

Rating agency Standard & Poor's downgraded nine of the euro zone's 17 countries on Friday, with France and Austria losing their top-notch status, and said it would decide shortly whether to cut the euro zone's bailout fund from triple-A. Adding to jitters, talks have stalled over a Greek bailout, putting Athens under strong pressure to complete a deal with private creditors to cut debt to more sustainable levels or risk default in March when 14.5 billion euros in repayments fall due.

"I see very little upside for the euro in the coming weeks. There are still too many negatives and too many uncertainties," said Niels Christensen, currency strategist at Nordea in Copenhagen. "All the signals from S&P were that the crisis will get worse before it gets better and I struggle to find an argument for not being short of euro/dollar at the moment."

Investors will be on alert for European Central Bank forays into the secondary market, with the perception of its commitment to keep borrowing costs for Italy and Spain affordable seen as key to prevent a fast escalation of the crisis. Italy takes a break from supply this week, but France will attempt to sell up to 8 billion euros of debt on Thursday and Spain comes to the market with sales of 2016, 2019 and 2022 bonds. Worries that European financial troubles would drag down global growth and sap appetite for commodities weighed on industrial metals such as copper, while a shift to perceived safe haven assets also boosted Japanese government bonds.

South Carolina is in a standoff with Democratic President Barack Obama's administration over a new state law that would require residents to produce a photo ID before they could vote. Federal officials say it could disproportionately keep black voters away from the polls. For South Carolina's Republican leaders - and Republican presidential candidates seeking support in the state's primary on January 21 - the Justice Department's move is the latest in a series of intrusions into state business by Washington.

Republican candidates are waving the banner of states' rights as they tout their small-government credentials. "Each of our states are under assault right now by this administration," Texas Governor Rick Perry said Saturday at a candidates' forum in Charleston. "We may be under assault - South Carolina, they're actually at war with you." Such declarations might make for smart politics in a state that has a suspicion of Washington woven into its DNA, but they risk stirring up the race-baiting that has been an ugly feature of South Carolina politics in the past.

The rallying cry of states' rights was used to defend slavery before the Civil War and racial segregation during the post-World War Two battles over civil rights. And the old attitudes haven't disappeared entirely. "I hate to say it, but ever since the schools integrated (in the 1960s), it went downhill," unemployed paralegal Vicki Cotterman said at a campaign stop for Perry in Walterboro on Thursday. "The white boys try to be like some of the black thugs - they go around with their pants down to their knees. It's disrespectful."

Insurance agent Patti McBride said she believed Obama, a practicing Christian, actually is a Muslim because he has an unusual first name. "Our country was founded on Christianity, and now we have a Muslim with a Muslim name as the president..." McBride said.

McGee says he will publish critical commentaries alongside the excerpts from Mein Kampf, which will go on sale in Germany the week after next. He plans to print three 15-page editions, with a print run of 100,000 each. The British publisher caused controversy back in 2009 when he published Zeitungszeugen ("Newspaper Witness"), which included annotated facsimiles of Nazi newspapers like Der Angriff and the Volkische Beobachter.

The authorities in the state of Bavaria, which owns the copyright to Nazi publications, including Mein Kampf, confiscated more than 3,000 copies of Zeitungszeugen and pressed charges against McGee for publishing the texts. However, a Munich court ruled in 2009 that although the publication of Nazi propaganda is illegal, McGee was not breaking the law because his intention was not to whip up racial hatred. The judges also ruled that printing Nazi swastikas from the original mastheads, which are generally outlawed in Germany, was legal in an educational context.

McGee is, therefore, unlikely to face any legal hurdles over the publication of the extracts from Hitler's book, which the future dictator wrote while serving time in prison in Munich for attempting to seize power in the 1923 Beer Hall Putsch. Dieter Graumann, president of the Central Council of Jews in Germany, greeted McGee's plans, saying he hoped that it would "go some way to demystifying" the book.

"It's been in the background for quite some time," said Edward Yardeni, a leading investment strategist. "I've characterized it as one of the four horsemen of the apocalypse for 2012. Now it's come from behind to be at the head of the pack." The push for tighter sanctions on Iranian oil exports comes at a time when oil prices are already high. Last year was a record-shattering year for oil prices, which averaged $107 a barrel, about 14 percent more than in the previous record year of 2008, according to figures from the Organization of Petroleum Exporting Countries. The US oil import bill - for crude and refined products - jumped about $125 billion from 2010 to 2011.

Rising oil prices could hurt the fragile global economy, which includes economists' other big worry: Europe. Barclays Capital analysts noted on Friday that in terms of the euro currency, oil prices "have now almost matched their previous peak of July 2008," draining money from economies already struggling with the sovereign debt crisis. Three of Europe's most troubled economies - Greece, Spain and Italy - are also the EU's biggest importers of Iranian crude and would be most affected by a new ban (the United States already bars imports of Iranian crude oil).

"At current prices, the world economy is going to grow at 3 percent to 3.5 percent this year," said Adam Sieminski, chief energy economist at Deutsche Bank. "That's not great, but okay. At $125 a barrel, it is only going to grow 2.5 percent, and that's not very good. And at $150, we might only grow 1 percent, and that's a disaster."

Meanwhile, US and European efforts to put a crimp in Iran's exports appear to be having an effect already. US restrictions on doing business with Iran's central bank have been felt in India, the second-largest buyer of Iranian oil. Refiners there are seeking new suppliers after India's government threatened not to sign a waiver to protect them from US sanctions, according to Lloyd's List. In addition, Lloyd's List said, since Iran's threat to close the Strait of Hormuz, Turkish banks used by Indian refiners to pay for Iranian crude are refusing to transfer those funds.