UK World

'The moment I heard about the leaked BNP list I was intrigued to know who was on it'

Not since Roosevelt in 1933 has an incoming US president faced a tougher economic challenge than Barack Obama. He is still piecing together his Treasury team but he doesn't need a pointy-headed academic to tell him the economy has hit the wall. The housing market is still crashing, unemployment is rising, Wall Street is traumatised and it seemed last night as if the life expectancy of another big bank, Citigroup, could be days rather than weeks. Three big structural changes help explain the mess the US now finds itself in. The first is that a profound shift in the balance of power between labour and capital over the past three decades has resulted in nugatory increases in real earnings for most but massive rewards for those at the top. The second is that the US is living beyond its means at every level. In recent years, it has spent $106 for every $100 it has earned. The third is that Wall Street has grown in size and importance as more of America's manufacturing capacity has been exported overseas.America found a way of making this work for a time. More women worked, which disguised the fact that male incomes were under pressure. Couples worked longer to maintain their spending. When both those avenues were exhausted they took on more debt. Borrowing was a readily available option because the shifting of production from America to east Asia created big trade surpluses, particularly for China. Beijing had to do something with its export earnings and it parked a large chunk of them on Wall Street.This influx of capital helped push down borrowing costs, while the cheap goods from Asia kept the lid on inflation and allowed interest rates to stay low. Cheap money drove up house prices, so consumers used their homes as cash machines. House prices only continue rising if there is a flow of first-time buyers, and these were found by offering mortgages to those who would normally have been disqualified. These were risky loans which Wall Street disguised by putting them into a blender with good-quality mortgages and selling them on to anybody who would buy them. Many investors, including UK banks, did.Inevitably, the housing bubble burst. The banks found they were sitting on huge, unquantifiable losses and by refusing to lend to each other set off a prolonged domino effect that has now reached deep into the heart of the US economy. Policymakers have throw the kitchen sink at the issue. The Fed has cut rates to 1% and there was a $150bn (£100bn) tax cut in the summer. Banks have been nationalised and recapitalised. So far none of it has worked.US economyBarack ObamaObama White HouseUnited Statesguardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

Shares fall to $3, but US banking giant continues to deny any liquidity problems

The lovable rogue beloved of literature and Hollywood was more often than not a thieving thug

Scientists appear to have solved a mystery that has lasted more than 400 years by identifying the skeleton of Nicolaus Copernicus, founder of modern astronomy.The key to the puzzle were two strands of hair found in Sweden among the 16th-century scientist's papers, and a tooth and femur bone that were taken from the remains of a man found in the chancel of Frombork Cathedral in northern Poland four years ago. Copernicus was a priest at the cathedral. Reconstruction of the skull found in an unmarked grave showed it resembled portraits of him made during his lifetime and also matched the age when he died. DNA testing proved the hairs, tooth and bone were from the same person, leading scientists to conclude the remains were, almost without doubt, those of Copernicus.Copernicus turned on its head the concept held by the establishment for more than 1,000 years that the sun orbited the earth and planets, proving it was the other way round. His theories led to conflicts with the powers of the day that remained unresolved when he died in seclusion in 1543. Archaeologists dug up the skeleton in 2004 and sent it to forensic experts who reconstructed its facial features. But attempts to match DNA from the skeleton with the remains of Copernicus's bishop uncle Lukas Watzenrode, who was also buried in the church, failed. The breakthrough came after the discovery of a book with notes made by Copernicus, in which the Swedish geneticist Marie Allen from Uppsala University found two hairs. She was able to isolate the cells that were subsequently matched to genes of the Frombork skeleton.AstronomyGeneticsArchaeologySwedenguardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

Letters: It is with great dismay that we learned of the British government's plans to rent space for its new Tel Aviv embassy location from Lev Leviev's company Africa-Israel

I am 42 years old and have nine children. I am a boss with boats operating in the Gulf of Aden and the Indian Ocean.I finished high school and wanted to go to university but there was no money. So I became a fisherman in Eyl in Puntland like my father, even though I still dreamed of working for a company. That never happened as the Somali government was destroyed [in 1991] and the country became unstable.At sea foreign fishing vessels often confronted us. Some had no licence, others had permission from the Puntland authorities but did not want us there to compete. They would destroy our boats and force us to flee for our lives.I started to hijack these fishing boats in 1998. I did not have any special training but was not afraid. For our first captured ship we got $300,000. With the money we bought AK-47s and small speedboats. I don't know exactly how many ships I have captured since then but I think it is about 60. Sometimes when we are going to hijack a ship we face rough winds, and some of us get sick and some die. We give priority to ships from Europe because we get bigger ransoms. To get their attention we shoot near the ship. If it does not stop we use a rope ladder to get on board. We count the crew and find out their nationalities. After checking the cargo we ask the captain to phone the owner and say that have seized the ship and will keep it until the ransom is paid. We make friends with the hostages, telling them that we only want money, not to kill them. Sometimes we even eat rice, fish, pasta with them. When the money is delivered to our ship we count the dollars and let the hostages go. Then our friends come to welcome us back in Eyl and we go to Garowe in Land Cruisers. We split the money. For example, if we get $1.8m, we would send $380,000 to the investment man who gives us cash to fund the missions, and then divide the rest between us.Our community thinks we are pirates getting illegal money. But we consider ourselves heroes running away from poverty. We don't see the hijacking as a criminal act but as a road tax because we have no central government to control our sea. With foreign warships now on patrol we have difficulties. But we are getting new boats and weapons. We will not stop until we have a central government that can control our sea.Piracy at seaSomaliaguardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

Panayiotis Tzanetakos, captain of Greek vessel, on the ordeal modern-day piracy has created for crews

At least five people have been killed in a blast at the funeral of a Shia cleric in north-western Pakistan, police say.

France's opposition Socialists face a run-off vote for a new leader, after a first ballot failed to produce a winner.

A judge is due to sentence an 18-year-old white South African, who has admitted killing four black people.

One person is killed and three are wounded in a shoot-out in the northern Lebanese city of Tripoli, security forces say.

Rwanda's booming manufacturing and farming sectors could push growth in the country to 10% this year, its central bank says.

Supporters of Shia cleric Moqtada Sadr stage protests in Baghdad against a deal to allow US troops to remain in Iraq.

The 3,000 extra UN troops being sent to DR Congo must be elite soldiers from Europe, the UN's ex-peacekeeping chief says.

A bill to extend Russia's presidential term from four to six years wins the overwhelming backing of MPs.

Sweden becomes the 24th of the EU's 27 member states to ratify the controversial Lisbon Treaty.

Arsenal captain William Gallas admits his side must toughen up if they are to challenge for the Premier League title.

Workers tear down the home of Chinese activist Ni Yulan, now in detention after fighting for six years to save it.

Oil prices bounce back from a three-and-a-half year low, tracking Asian stocks higher, but are still below $50 a barrel.