For Ottawa and most provincial governments, the era of high deficits is a dim memory. The main political battles in Canada now - including the almost incomprehensible debate surrounding equalization and the so-called fiscal imbalance - are over who gets to spend Ottawa's gargantuan surplus. Ontario Premier Dalton McGuinty wants a chunk of it. But so does Quebec Premier Jean Charest.

Business owners, too, are feeling flush. With wage increases damped down and labour productivity rising, employees are working more for less. What could be better?

Yet, the foundations of this remarkable Canadian success are anchored in a U.S. economy that, in key areas, remains structurally unsound.

The U.S. is not just Canada's biggest trading partner - it is the market of choice for the world. When Canadian firms sell copper or lead to China, the Chinese transform these commodities into manufactured goods - toasters, televisions, toys - that they, in turn, flog to America.

As long as Americans are willing to buy from anyone, Canada prospers. We sell manufactured good such as autos directly to the U.S. And we sell commodities to other countries that export manufactured goods to the U.S.

But these days, the U.S. economy is unusually vulnerable. In order to finance both the Iraq war and Bush's tax cuts, Washington is running a massive fiscal deficit. As well, America as a whole is running a trade deficit, importing more than it exports. That trade deficit, in turn, is financed by foreigners who invest their capital in the U.S.

Alone, neither deficit might matter. Together, however, they create an underlying sense of unease among the international investors whose capital is needed to square this particular circle.

As long as interest rates and the U.S. dollar stayed stable, investors were satisfied. But the U.S. dollar has been sinking. And now the country's new central banker, Federal Reserve Board chief Ben Bernanke, is indicating that he wants to push up rates to forestall inflation.

That, in turn, means bad news for ordinary Americans. Currently, Americans are in the unusual position of spending more, on average, then they earn. An economist would say they have a negative savings rate. More simply put, they are in debt.

They are in debt to buy houses; they are in debt to buy cars; they are in debt to buy groceries and clothes and geegaws. Even more than Canadians (who save a paltry 1.9 per cent of their disposable income), Americans owe money.

As long as interest rates stayed low, this did not matter. Now that the central bank is talking of raising rates, it does. If Americans suddenly find their loans and mortgages being called in, they won't be able to afford toasters from China and cars from Windsor. If they are forced to default on mortgages they can no longer afford, the big North American real estate bubble will burst, with repercussions for the entire financial system.

This is the fear that runs through the financial world. This is why commodity prices are falling; if the U.S. market is drying up, China does not need as much Canadian copper. This is also why stock markets in New York and Frankfurt, even Toronto, have been wavering.

None of this means the world is necessarily set to go up in smoke. Capitalism is extraordinarily resilient, American capitalism especially so. The industrial world survived the recessions of the '80s and '90s. The so-called Asian financial crisis of 1998 was handled before it spun out of control.

But there is a fundamental imbalance at play here. Eventually, it will have to be resolved.

500 reports, audits and investigations by government and independent bodies, including the Government Accountability Office and the Defense Contract Audit Agency, were used to compile the data.

That spending increase -- an astonishing 86 percent -- puts total US federal procurement at $377.5 billion annually. The increase means spending on federal contracts has grown more than two times as fast as other forms of discretionary government spending.

Nearly $800b in contracts questioned

Waxman claims that overcharging -- by mistake or outright fraud -- has been a frequent occurrance. In all, the report identifies 118 federal contracts worth $745.5 billion that have been found by government officials to include significant waste, fraud, abuse or mismanagement.

Each of the Bush Administration's three signature initiatives -- Homeland Security, the Iraq war and reconstruction in Iraq and Hurricane Katrina recovery -- has been linked to wasteful contract spending.

Spending is categorized in the report as highly concentrated on a few large contractors, with the five largest contractors receiving over 20 percent of contract dollars awarded in 2005. Last year, the largest federal contractor, Lockheed Martin, received contracts worth more than the total combined budgets of the Department of Commerce, the Department of the Interior, the Small Business Administration and the U.S. Congress.

But the fastest growing contractor under the Bush Administration has been Halliburton. Federal spending on Halliburton contracts shot up an astonishing 600% between 2000 and 2005.

Waxman plans to make all 118 "problem contracts" available on the Internet as part of a searchable database with Internet links to government audits.

Read the full document here.

The development plan, announced Friday, would significantly boost the state's role in the economy, creating jobs and delivering more basic public services such as subsidized meals for school children and greater access to potable water.

Although Villegas didn't mention Venezuela by name, many of the social projects he mentioned are similar to programs created by that country's leftist president, Hugo Chavez.

The rest would come from international lenders, said Villegas, who are to convene jointly with the government in the last quarter of 2006 to work out details.

Foreign diplomats said much would depend on Bolivia's gas revenues. The vice minister of planning and development, Noel Aguirre, said the plan was also predicated on gas sale revenues from Paraguay.

With the heavy public investment, the government hopes to create 90,000 jobs per year and cut the current 8.4 percent unemployment rate by more than half by 2011.

Currently, the top 10 percent of Bolivians earn 25 times what the bottom 10 percent. The government seeks to reduce that to 21 times by 2011.

"We need to get into more depth to know whether we'd support this or not," said Roberto Mustafa, president of The Association of Private Business Leaders of Bolivia, one of the country's biggest industry groups.

Business leaders have been critical of Morales' economics, especially after he said he would "never" negotiate a free trade agreement with the United States, instead signing an alternative "people's" trade pact with his close allies Venezuela and Cuba.

While the export of raw materials such as minerals and timber are important to Bolivia's economy, it depends most on its vast natural gas reserves.

Morales nationalized Bolivia's natural sector on May 1, giving the state energy company majority control over all operations and telling foreign companies operating in Bolivia they had six months to negotiate new contracts or leave.

In the mining sector, Villegas reiterated earlier statements that the government would be looking to boost revenues by raising mining taxes and would revert unused mines back to state control.

But Genentech, the company that invented Avastin, does not want it used in this way. Instead it is applying to license a fragment of Avastin, called Lucentis, which is packaged in the tiny quantities suitable for eyes at a higher cost. Speculation in the US suggests it could cost £1,000 per dose instead of less than £10. The company says Lucentis is specifically designed for eyes, with modifications over Avastin, and has been through 10 years of testing to prove it is safe.

Unless Avastin is approved in the UK by the National Institute for Clinical Excellence (Nice) it will not be universally available within the NHS. But because Genentech declines to apply for a licence for this use of Avastin, Nice cannot consider it. In spite of the growing drugs bill of the NHS, it will appraise, and probably approve, Lucentis next year.

Although Nice's role is to look at cost-effectiveness, it says it cannot appraise a drug and pass it for use in the NHS unless the drug is referred to it by the Department of Health. The department says its hands are tied.

"The drug company hasn't applied for it to be licensed for this use. It wouldn't be referred to Nice until they have made the first move," said a Department of Health spokeswoman. "They need to step up and get a licence. If they are not getting it licensed, why aren't they?"

New drugs for the condition are badly needed: those we have now only slow the progression to blindness. With Avastin, many patients get their sight back with just one or two injections.

Avastin was first used on human eyes by Philip Rosenfeld, an ophthalmologist in the US, who was aware of animal studies carried out by Genentech that showed potential in eye conditions. This unlicensed use of Avastin has spread across continents entirely by word of mouth from one doctor to another. It has now been injected into 7,000 eyes, with considerable success.

Professor Rosenfeld has published his results and a website has been launched in the US to collate the experiences of doctors from around the world. But although the evidence is good, regulators require randomised controlled trials before they grant licences, which generally only the drug companies can afford to carry out.

Prof Rosenfeld said the real issue was drug company profits. "This truly is a wonder drug," he said. "This shows both how good they [the drug companies] are and on the flip side, how greedy they are." He would like to see governments fund clinical trials of drugs such as Avastin in the public interest.

Rising drug bills are a big problem on both sides of the Atlantic. In the UK, said David Wong, chairman of the scientific committee of the Royal College of Ophthalmologists, doctors are fighting battles to persuade primary care trusts to pay for drugs to stop their patients going blind while they wait for Nice to decide on Lucentis and another expensive drug called Macugen. That decision is not expected before the end of next year.

About 20,000 people are diagnosed with age-related macular degeneration in the UK each year. "From the patient's point of view, if they have an eye condition that deteriorates very quickly, there is no question of waiting," said Professor Wong. "We're talking about days and weeks, rather than months. The question is should we do nothing and say there is no randomised controlled trial to prove Avastin is of value?" He called for primary care trusts to agree to pay for the planned phasing-in of new drugs for the condition.

Last night Genentech said its main concern over the use of Avastin to treat eye conditions was patient safety. "While there are some small, single-centre, uncontrolled studies of Avastin being performed, safety data on patients who are treated with Avastin off-label is not being collected in a standard or organised fashion," said a spokeswoman for the company.

Pharmaceutical firms say they need to launch drugs at high prices because of the hundreds of millions of pounds spent on developing them. Critics point out that the company's calculations also include the marketing budget.

Black is free, subject to minor travel restrictions, while he awaits a criminal trial in Chicago on 12 charges that he misappropriated millions of dollars from Hollinger International.

Black has pleaded not guilty to all charges. He will forfeit $20 million US if he doesn't show up for the trial, which is set to begin March 5, 2007.

Among other allegations, the U.S. government says Black incorrectly reported the value of a tax lien against a Florida home he put up as collateral.

Prosecutors have demanded that Black put up additional collateral or have his bail revoked.

Black's defence team was given more time to review the court filing. A hearing in the case was put off until June 26.

Bloomberg News quoted Black's U.S. lawyer, Edward Genson, as saying "a lot of things in there [the government filing] are flat out wrong."

Mr Madariaga, 73, has given his support to Aralar, a separatist Basque party that opposes Eta's violence, in recent years. Aralar is regarded as a rival for Eta's political allies in the banned Batasuna party. Many of those arrested were reported to be in their 60s and 70s, and to be well-known separatist sympathisers.

"This is an attack on the hopes for peace," Batasuna leader Arnaldo Otegi said after the arrests.

The arrest came as Spain's Socialist prime minister, José Luis Rodriguez Zapatero, was said to be on the brink of announcing that the government would formally open talks with Eta.

Observers said the detentions could help head off criticism that the government had gone soft on Eta as it tried to wean the group, which has not killed for three years, away from terrorism.

Newspapers speculated that Mr Zapatero would make the historic announcement of direct talks during a routine parliamentary appearance on Wednesday. If so, the announcement will come just three days after Mr Zapatero's party won a referendum in Catalonia to settle the debate over the text of a new autonomy charter for the wealthy eastern region. That victory has opened the way for the reform of the charters of Spain's 16 other semi-autonomous regions, which include the Basque country.

Eta said recently it was still hopeful that a definitive peace deal could be reached. The group, which would like parts of south-west France to join an independent Basque country, has criticised the French government for refusing to get involved in the peace process. France has said that it is an internal matter for Spain, where Eta has carried out its terror attacks.

France has, however, traditionally been where Eta's command and logistics operations have been based.