On Friday, Standard & Poor's downgraded Belgium's credit standing to AA from AA+, saying it might not be able to cut its towering debt load any time soon. Ratings agencies this week cautioned that France could lose its AAA rating if the crisis grew. On Thursday, agencies lowered the ratings of Portugal and Hungary to junk.

While European leaders still say there is no need to draw up a Plan B, some of the world's biggest banks, and their supervisors, are doing just that. "We cannot be, and are not, complacent on this front," Andrew Bailey, a regulator at Britain's Financial Services Authority, said this week. "We must not ignore the prospect of a disorderly departure of some countries from the euro zone," he said.

Banks including Merrill Lynch, Barclays Capital and Nomura issued a cascade of reports this week examining the likelihood of a breakup of the euro zone. "The euro zone financial crisis has entered a far more dangerous phase," analysts at Nomura wrote on Friday. Unless the European Central Bank steps in to help where politicians have failed, "a euro breakup now appears probable rather than possible," the bank said.

The report, which echoed a Reuters report on Friday from Brussels, quoted German government sources as saying that the crisis fighting plan could possibly be announced by Merkel and Sarkozy in the coming week. The report said that because it would take too long to change existing European Union treaties, euro zone countries should avoid such delays by agreeing to a new Stability Pact among themselves - possibly implemented at the start of 2012.

It could be similar to the Schengen Agreement that allows for uninhibited cross border travel for citizens in countries that take part. Among the countries in the Stability Pact there would be a treaty spelling out strict deficit rules and control rights for national budgets. The European Central Bank should also emerge more as a crisis fighter in the euro zone. The ECB is independent and governments cannot tell it what to do. But the expectations on the ECB are clear, Welt am Sonntag wrote.

"Based upon these measures, there should be a majority within the ECB for a stronger intervention in capital markets," Welt am Sonntag said. It quotes a central banker as saying: "If the politicians can agree to a comprehensive step, the ECB will jump in and help." The European Commission, the EU executive arm, put forward proposals on Wednesday to grant it intrusive powers of approval of euro zone budgets before they are submitted to national parliaments, which, if approved, would effectively mean ceding some national sovereignty over budgets. This could lead to joint debt issuance for the euro zone, where countries would be liable for each others' debts.

Germany strongly opposes the joint issuance idea fearing spendthrift countries would piggyback on its low borrowing costs - meaning no gain for the virtuous and no pain for the sinners.

Lenders have instead turned their attention to reducing the burden of carrying such assets over months and years, with many looking at popular pre-crisis "capital alchemy" arrangements to minimise capital requirements and boost their ability to use the assets to tap central banks for cash.

Deadlocked talks with potential buyers - a mix of private equity firms, hedge funds, foreign banks and insurers - show little sign of making breakthroughs, say bankers taking part in those negotiations, with the stalemate threatening to block the industry's ability to save itself from collapse through a mass deleveraging.

"European banks have spent far too long saying everything is fine, when it really isn't," said one banker at a US bank who has been advising European clients on their options. "They are slowly realising that they just won't be able to do what the market is expecting. We are edging slowly closer to the depths of the crisis."

The longer this eurozone crisis continues, the more likely it becomes that "contagion" threatens the fiscal stability of Germany itself, the region's economic powerhouse. Anyone who doubted that received a stern wake-up call last week, when an auction of 10-year German sovereign bonds was seriously under-subscribed, with investors buying just 3.9 billion euros (3.34 billion pounds) of a 6 billion euros offer. Bond yields spiked across the board, taking them above those in the UK.

Many observers seem to think such market pressure means Angela Merkel will "relent". With Berlin's own credit-worthiness being openly questioned, the German chancellor is now apparently more likely to launch a massive "bail-out" fund for the eurozone laggards, while sanctioning overt QE "money-printing" by the European Central Bank.

I'd venture a different view. However much one particular branch of the German elite wants "the European project" to succeed, the vast majority of the German public are appalled at the idea of financing the rest of Europe. They resent not only the cost, but also (rightly) worry that one eurozone bail-out inevitably leads to another. I reckon that surging bund yields make it less likely that Germany will agree to fund a bail-out, while letting the ECB let rip. German voters, and the country's powerful parliament, will see rising borrowing costs as further proof of the harm the euro, in its current form, is doing. Merkel must answer to both.

Germany stood by and watched back in the 1990s, as the Exchange Rate Mechanism collapsed under the weight of its own incoherence. Since then, life has become much tougher for the big industrialised Western economies. While still head and shoulders above the rest of Europe, even Germany is now on the back foot. The country's bellwether manufacturing PMI Index fell from 49.1 to 47.9 this month, indicating a sharp economic contraction. Germany would be unlikely to entertain money-printing and paying for a eurozone bail-out at the best of times. Under current circumstances, the chances are even slimmer.

They insist that the huge costs to the British taxpayer "far outweigh the benefits" of being in the EU. The peers' attempt to force an inquiry into the economic benefits of Britain being in the EU, which was voted through yesterday, will increase the pressure for a referendum on EU membership. And it gives fresh impetus to the Daily Express crusade to cut Britain's ties with Brussels altogether.

Last month we forced a historic vote on a European referendum in the House of Commons. And earlier this week we revealed that Britain poured a colossal 18.5 billion pounds into the EU last year - equivalent to 51 million pounds a day. The staggering figures, 730 pounds a year for every household in the UK, come on top of the 12.5 billion pounds shelled out to help rescue Greece, Ireland and Portugal with bailouts.

Speaking in the House of Lords yesterday, former Ukip leader Lord Pearson of Rannoch said a cost-benefit analysis of Britain's membership of the EU was long overdue. He told peers that a seven-strong committee of inquiry to report on the economic costs and benefits would help increase pressure for a referendum on EU membership.

The high death toll from an incident between two supposed allies suggests Nato helicopters and jets strafed Pakistani positions with heavy weapons. The deadliest friendly fire incident since the start of the decade-long war also prompted Pakistan to ban Nato supply trucks from crossing into Afghanistan and to issue an order demanding the US quit the remote Shamsi airbase, from which the US has operated some unmanned drone aircraft. At border crossings, hundreds of supply trucks are reportedly stranded by the ban, with drivers fearing insurgents will take the opportunity to attack if they are not allowed to move.

A spokesman for Nato's International Security Assistance Force (Isaf) said it was "highly likely" that aircraft which had been called into the area to provide "close air support" to troops on the ground was responsible for causing casualties among the Pakistani soldiers. For their part, a statement by the Pakistani military claimed that it was they who were attacked first, forcing them to respond to Nato's "aggression with all available weapons".

The event coincided with the anniversary of the United Nations' partition plan in 1947, which called for the establishment of a Jewish state.

Speakers at the event delivered impassioned, hateful speeches against Israel, slamming the "Zionist occupiers" and the "treacherous Jews." Upon leaving the rally, worshippers were given small flags, with Egypt's flag on one side and the Palestinian flag on the other, as well as maps of Jerusalem's Old City detailing where "Zionists are aiming to change Jerusalem's Muslim character."

Propaganda material ahead of Egypt's parliamentary elections was also handed out at the site.

Spiritual leader Dr Ahmed al-Tayeb charged in his speech that to this day Jews everywhere in the world are seeking to prevent Islamic and Egyptian unity.

"In order to build Egypt, we must be one. Politics is insufficient. Faith in Allah is the basis for everything," he said. "The al-Aqsa Mosque is currently under an offensive by the Jews... we shall not allow the Zionists to Judaize al-Quds (Jerusalem.) We are telling Israel and Europe that we shall not allow even one stone to be moved there."

But the move is highly controversial with non-religious groups condemning it as an unacceptable waste of public money. Critics also mocked the project on Twitter with former Deputy Prime Minister John Prescott describing it as Mr Gove's 'vanity project'. The Department for Education confirmed that the Bibles will be sent out to over 20,000 schools to mark the 400th anniversary of its translation.

Supporters said the book will help school pupils of all faiths to take pride in the history and culture of Britain. Government ministers have always been careful to avoid controversies surrounding religion with Tony Blair's former communications chief Alastair Campbell famously once declaring: 'We don't do God'. But Mr Gove said: 'It's a thing of beauty, and it's also an incredibly important historical artefact. It has helped shape and define the English language and is one of the keystones of our shared culture. And it is a work that has had international significance'.

The third official translation of the Bible into English, also known as the Authorised Version, was commissioned by the Protestant King James I in 1604. It was completed by 54 scholars working on Hebrew and Greek manuscripts in Oxford, Cambridge and Westminster. It became the official version used by the Church of England and was spread around the world along with the British Empire.

Men are far less confident in the kitchen than women with 16 per cent feeling hapless behind a stove compared to 12 per cent of the fairer sex. The study revealed kitchen nerves are more prevalent among the under 35s, who find cooking more stressful than older generations.

Director of marketing at Kenwood Mark Swift said: "It's a great shame to discover the extent to which cooking from scratch is on the decline. Such a drop is having a huge affect on our cookery confidence and ability in the UK. Cooking from scratch is a great way to de-stress and it's also an important way to teach children about correct nutrition.'

The fast-food and meals-on-the-go lifestyle sits alongside a recent survey that found British women are officially the most overweight in Europe, and British men are the second most overweight. A quarter of women are obese - so fat it threatens their health - according to alarming figures.

He said urgent action was needed immediately to tackle the European debt crisis, and prevent the euro 'exploding' and plunging the financial system into chaos. Mr Attali was asked by France's 20 minutes news website if France was in danger of losing its coveted AAA credit rating status.

But he answered: 'That is no longer the question. The rating is effectively lost because France is already being treated as an AA rated country by the markets. The question now is will the euro still exist at Christmas. There is one chance in two that the single currency will no longer be there, or that at the very least it will be in the process of unravelling.'

'The only chance of saving it is to put into place a three-stage plan. Firstly, allow the European Central Bank to buy other countries' debts. Secondly, European countries must agree to introduce a federal budget policy and oversight of national accounts. That is to say, to lose their sovereignty so they benefit and not the markets. Thirdly, reform the treaties to allow the European Union to sell euro bonds.'

'The first stage can be done in five minutes, the second in a week and the third in six months. But if we don't do all these three things, we are heading for disaster.'

"Italy is faced with formidable challenges," Mr Rehn told Italian lawmakers during a visit to Rome. "The new government needs to deliver on fiscal consolidation and adopt bold measures to re-launch growth," he said. ''Full and effective implementation will be key," he said, adding: "It would be essential to give strong signals to citizens and markets with a clear and ambitious roadmap for reform and an ambitious timeline."

In its bond auction, Italy was forced to pay a rate of 6.504% on bonds due in six months and 7.814% on bonds due in two years - dangerous levels that analysts say could drive Italy insolvent within months.

The melee began shortly after 10:20 pm Thursday as shoppers prowling for Black Friday deals were let inside the store. The suspect began shooting the pepper spray when the coverings of items she wanted were removed, according to police. "Somehow she was trying to use [the pepper spray] to gain an upper hand," police Lieutenant Abel Parga said.

Witnesses described the frenzied scene to the Los Angeles Times, detailing how shoppers-gone-wild tore down video game displays, trampled merchandise and shoved each other for the deeply-discounted goods. "People started screaming, pulling and pushing each other, and then the whole area filled up with pepper spray," Alejandra Seminario, 24, told the newspaper.

Chaos also erupted at a Fayetteville, North Carolina mall after gunfire erupted. Police are looking for two suspects. Luckily no one was injured. Wal-Mart came under the microscope on Black Friday in 2008, when a store employee died after a mob of frenzied shoppers smashed through a Long Island store front and trampled the worker to death. Despite the mahem in Los Angeles, the store remained opened and those not affected by the pepper spray continued to hunt for bargains.

"I don't care," Nakeasha Contreras, a 20 year old who arrived after the incident, told the Times. "I'm still getting my TV."

The rate for two-year borrowing was 7.814%, up from 4.628% last time. The Bank of Italy stressed that demand for the bonds had been high, with demand for the debts outstripping supply by 50%. "The pricing is awful," said Padhraic Garvey, rate strategist at ING. "The object of the exercise this morning was to get the job done and they've done that, but that's about the only positive thing to say." The FTSE MIB in Milan dropped 1% following the auction, to take it down 1.9% on the day, underperforming the rest of Europe, where the London, Paris and Frankfurt's benchmark indexes were all down by about 0.5% on the day. The Italian government's implied cost of borrowing, based on the price at which its debts are traded on financial markets, has risen steadily over the last few weeks to levels seen as unsustainable in the long-term.

However, it is only when the government raises new money at debt auctions, such as those held on Friday, that it is forced to actually pay the higher rates on its debts. Italy plans to sell another 8 billion euros at an auction on Tuesday. "Ahead lies either the slow disintegration of the euro area or a significant strengthening of the monetary union," Monetary Affairs Commissioner Mr Rehn told journalists on Thursday.

The latest wave of protests has led to the worst violence since the fall of President Hosni Mubarak in February. More than 40 people have been killed. The Supreme Council of the Armed Forces (Scaf) is overseeing a transition to civilian rule. Despite promises by the council to speed up the process, some protesters fear it intends to cling to power. They want military rule to end before parliamentary elections are held. Yet many Egyptians want the polls to go ahead as planned. One influential group, the Muslim Brotherhood - which is expected to do well in the vote - is not supporting the Tahrir Square protests.

A large rival demonstration in favour of the elections is taking place near the interior ministry building, with people there chanting that they are the "real Egypt". In Washington, the White House said power in Egypt should be transferred to civilians "as soon as possible". "The United States strongly believes that the new Egyptian government must be empowered with real authority immediately," a White House statement said.

Sunni Islam's highest authority, the grand imam of Cairo's al-Azhar mosque, sent the protesters a rare message of support. An aide, Hassan Shafie, was shown on local TV telling the crowd on Tahrir Square: "The grand imam backs you and is praying for your victory." The Tahrir Square rally follows Friday prayers as well as a week of protests.

But not in the open market, and not even to natural buyers of physical like Sprott and everyone else not infatuated with voodoo theories of infinite repoability of debt. They sold it to the German ministry of Finance... to mint commemorative coins. Coins which we are now confident will be promptly mopped up by the general public.

Following the sale Germany will be left with a modest 109,194,000 troy ounces, enough to allow the country to gladly tell Europe to do some anatomically impossible things and to fall back to a hard asset backed currency if and when it should so desire.

The Bundesbank spokesman told Dow Jones Newswires that all gold sold by the Bundesbank since 2004 had been only for the minting of commemorative coins. Germany is the world's second-largest official gold holder, with about 71% of its foreign reserves held in bullion, according to the World Gold Council.