Worst financial crisis in human history

Bank boss warns that the pain is just beginning..

• Economy outstrips forecasts to shrink by 0.5%
• Pound suffers worst fall against dollar for 37 years
• FTSE plunges 9% before rallying to close down 5%
  
• Asian markets tumble for a third day amid global fears

Consumers face higher shop prices, dearer fuel and more expensive holidays after the pound slumped yesterday.

Sterling took a hammering as economic figures showed the UK approaching full-blown recession.

Bank of England deputy governor Charlie Bean warned that the pain is just beginning, calling the situation the 'largest financial crisis of its kind in human history'.

On the 79th anniversary of the Great Crash of 1929:

• Britain's economic output slid 0.5 per cent - more than twice the decline expected by the City;

• Markets tumbled around the world, with leading UK shares losing almost £50billion;

• Sterling had its worst-ever week against the dollar since 1971 and hit a record low against the euro;

• The oil cartel Opec cut production, a move likely to increase petrol prices up to 5p a litre;

• Experts warned that hedge funds are facing disaster, with billions likely to be wiped off savings and pension funds;

• Hundreds of jobs were axed in the insurance, cosmetics, haulage and textile industries.

The plunge was prompted by the worst set of UK growth figures for 18 years, recording the first time that the economy has officially contracted since 1992.

The Office for National Statistics reported UK output dropping 0.5 per cent between July and September.

Another fall in the final three months of the year would propel Britain into the first official recession since the days of John Major.

Tory leader David Cameron declared: 'This is the day the recession became real.

'We have had ten years of a Government saying no more boom and bust. We have had ten years of a Government not putting aside money for a rainy day. Well, that rainy day has now come.'

At one stage, the pound was worth as little as $1.52, prompting speculation that the UK was on the brink of a currency crisis.

Although it later rallied, it has lost a quarter of its value against the dollar over the past year.

Foreign investors are less willing to finance the UK because of its record debt burden and slumping economic output. The rush to sell sterling means prices of imports like clothing and electronic goods will rise, holidays will cost more and overall living standards will suffer.

Obama, McCain Target the West's Toss-up States

Once reliable Republican territory, much of the West has seen its politics and demographics shift over the last decade. Three states considered still in play to varying degrees — Nevada, Colorado and New Mexico — could be vital if the electoral math gets tight.

Obama was resuming his campaign in Nevada on Saturday with rallies in Reno and Las Vegas before holding one at night in Albuquerque, N.M. The Democrat put aside political events on Thursday night and Friday to spend time with his grandmother in Hawaii, whom he described as gravely ill.

McCain, pivoting from his three stops in Colorado on Friday, will also be pushing hard in New Mexico on Saturday. He is holding rallies in Albuquerque and in Mesilla, farther south.

As the collapsing economy consumes voter attention, McCain has seized a line of attack that Obama is poised to deepen the problem by raising taxes. He said in Denver that Obama won't target the rich but rather the middle class by putting it "through the wringer."

Obama counters that he would lower taxes for most wage-earners and that McCain's tax plan favors wealthy corporations. He has tagged McCain as being out of time and ideas.

Polls show the path to the winning tally of 270 electoral votes is tricker for McCain, a Republican weighed down by the economic crisis and an unpopular incumbent president.

Obama, wary of overconfidence among his backers, is charting multiple winning paths.

That's where 19 electoral votes out West factor into the equation.

Nevada, with five votes, is posing the toughest challenge for Obama; the race is a tossup. Colorado is competitive, though Obama has a slight edge in polls in the state that offers nine votes. Obama is more deeply favored to win New Mexico's five votes.

President Bush carried all three states in 2004. Obama, the front-runner nationally with 11 days until the election, is focusing his time on plucking away states Bush won four years ago.

Mom Accused of Murder Speaks Out

When 4-year-old Andrew Burd arrived at a hospital in critical condition in the fall of 2006, doctors didn't have a clue as to what was wrong with him. Blood tests soon revealed that he had salt poisoning, or hypernatremia. Andrew's levels were off the charts -- almost double the norm and among the highest ever recorded.

Doctors turned to Hannah Overton, a 29-year-old pregnant mother of four who was in the process of adopting Andrew. She told them Andrew had thrown a fit that afternoon after he'd been fed a full lunch. Instead of giving him more food, she said she put a few dashes of creole seasoning in a sippy cup of water.

But that didn't calm him, she said, and a few moments later he fell to the floor, vomited and complained of being cold. Overton said she suspected the flu, but after an hour and a half, Andrew's condition didn't improve. That's when she and her husband, Larry, took Andrew to the hospital.

The Overtons' story aroused the suspicions of doctors and investigators. The next day Andrew died and the devout Christian couple, which had no criminal history, became murder suspects. As the investigation continued, authorities developed a theory that Andrew's death was an intentional poisoning.

"We were just waiting for someone to look at it and say 'This is just an accident,'" Larry Overton told "20/20." "Instead, we were arrested."

To investigators, Andrew's sudden and bizarre death was no accident. Within days, the authorities had begun weaving a sinister tale of murder. They painted Hannah Overton as a pregnant mother of four young children who became overwhelmed with the arrival of a foster child.

The arrest warrants painted the Overton home as a house of horrors, where Andrew was monitored by a camera and was punished with spicy seasoning. Detectives even used the Overtons' children to build a case against them, saying unusual forms of punishment had been previously used.

"This case boils down to a woman who, basically, tortured a child," said prosecutor Sandra Eastwood, "becoming so enraged she forced him to have 23 teaspoons of hot pepper and then watching him die in agony."

A grand jury returned an indictment on capital murder. In the state of Texas, if a child younger than 6 dies at the hands of another person, it's considered a capital case. The charge carries a minimum life sentence.

Palin Stylist Draws Higher Pay Than Policy Adviser

An acclaimed celebrity makeup artist for Republican vice presidential candidate Sarah Palin collected more money from John McCain's campaign than his foreign policy adviser. Amy Strozzi, who works on the reality show "So You Think You Can Dance" and has been Palin's traveling stylist, was paid $22,800, according to campaign finance reports for the first two weeks in October. In contrast, McCain's foreign policy adviser, Randy Scheunemann, was paid $12,500, the report showed.

McCain's campaign said the payment covered a portion of her work in September and a portion of October. An earlier campaign finance report showed Strozzi was paid $13,200 for a portion of September.

In recent days, McCain and his running mate have tried to douse a furor over how their side spent their money. The Republican National Committee came under scrutiny after the party committee reported earlier this week that it had spent about $150,000 in September on wardrobe and cosmetics after Palin joined the GOP ticket.

In an interview with the Chicago Tribune and Fox News on Thursday, Palin said the clothes bought for the Republican National Convention were not worth $150,000 and said most have not left her campaign plane. She also said the family shops frugally.

"Those clothes are not my property. We had three days of using clothes that the RNC purchased," Palin told Fox News in an interview that aired Thursday night.

There was no evidence of additional clothing purchases in the most recent reports.

The Obama campaign has said it paid for hair and makeup costs associated with interviews or events, but neither the campaign nor the Democratic National Committee has paid for clothing.

The reports showed that Barack Obama and McCain enter the final days of the presidential campaign amid dwindling reserves, with Obama hindered by a sudden drop in fundraising and McCain restrained by spending limits.

Obama, the Democratic nominee, spent more than $105 million during the first two weeks of October, according to campaign finance reports. He reported raising only $36 million for his campaign during that period, about half the fundraising pace he enjoyed in September.

Same Crisis, Different Voices: Typical Wall Street Workers Lose Jobs, Not Hope

Emory Edwards is doing more volunteer work at his church. Maribel Ruiz is spending more time with her daughter. Win Hornig and his girlfriend have started a blog.

For each, things were different a few months ago, when they all had jobs.

The three are among the growing number of Americans who are stuck trying to make the best out of a bad situation: unemployment. More than 760,000 people have lost their jobs so far this year, and 47 states this week reported that their unemployment rates were higher over last year.

It's only supposed to get worse. Analysts at the financial firm Goldman Sachs predict that the national unemployment rate will rise to 8 percent from 6.1 percent by the end of next year. Goldman Sachs itself is planning to slash more than 3,200 jobs, according to published reports. Meanwhile, the comptroller's office for New York City, the heart of the country's financial sector, has projected that the city will lose 135,000 jobs in the next two years.

Edwards, Ruiz and Hornig all worked in New York City. Like the top executives of some of the country's financial firms, they can trace their misfortune directly to the country's financial meltdown. Unlike top execs, however, they can't rely on multi-million-dollar golden parachutes to carry them through tough times.

ABCNews.com talked to Edwards, Ruiz and Hornig to learn more about how they're coping, their plans for the future and their thoughts about the crisis that cost them their jobs.

Exclusive: Obama Explains Why His Campaign Will Wait for 'Toot'

Barack Obama is home in Hawaii with his ailing grandmother today rather than on the campaign trail because he fears she won't make it to Election Day.

Obama, who polls show as the front-runner in the election to become the leader of the free world, is likely doing chores right now for the woman he affectionately calls Toot.

"I want to give her a kiss and a hug," the Democratic presidential candidate told Robin Roberts in an exclusive interview for "Good Morning America" before heading for Hawaii to see his 85-year-old grandmother, Madelyn Dunham, the woman who largely raised him.

"And then we're going to find out what chores I can do, because I'm sure there's been some stuff that's been left undone," he said.

The Illinois senator took the unprecedented step of quitting the presidential campaign with less than two weeks to go so he could hurry home to the apartment he grew up in and see Dunhill. He will rejoin the campaign on Saturday.

Toot, which is short for the Hawaiian word tutu, meaning grandparent, has been sick for awhile and recently fell and broke her hip.

"Without going through the details too much, she's gravely ill," Obama told Roberts in an interview that aired today on "GMA."

Besides the hip, Obama said, "She had some other problems that were getting worse. You know, we weren't sure, and I'm still not sure, whether she makes it to Election Day.

"We're all praying and we hope she does," he added.

His grandmother's illness has turned Obama's stretch run for the White House into a bittersweet moment. He is leading John McCain, in most polls, yet also faces the possible loss of the most influential person in his life while he was growing up.

"One of the things I want to make sure of is that I had a chance to sit down with her and talk to her," Obama told Roberts. "She's still alert and she's still got all her faculties. And I want to make sure that I don't miss that opportunity right now."

Obama has also said publicly that he regrets not returning to his mother's bedside before she died of cancer, as he overestimated how much time she had to live, and he doesn't want to make the same mistake twice.

The First Time in My Life to Meet Israeli

I was outside setting on the coach enjoying the great view of Vallekilde when a girl with a long dark curly hair showed up, she looked at me, I saw the sadness in her eyes, and I felt there is something different about her, but couldn’t know what exactly what it was.

She came towards me, “Hello.. I want to talk to you..” she said, I told to her “Sure.. what do you want to talk about?”, I was really shocked when I heard what she had to say after that, because I didn’t expect that she will come to me and the first thing she had to say is “Do you hate me?”

The first thing that I should be clear about here is to understand and explain what she meant by the terms “you” and “me”, I am an Muslim, Arabic and Egyptian young man, and she is an Israeli girl, both of us met for the first time.

There was something inside of me that wouldn’t let me go, but all other parts of my mind and soul were pushing me in this direction to meet someone from Israel, the people who have several wars with Egyptians. Actually, visiting Occupied Palestine is a dream for all Arabs and Muslims, but someone like me couldn’t have such a chance without having really big problems before and after returning back home with the security departments in Egypt. This is why they don’t give you an Israeli Visa on your Passport, but it will be given in another temporary Passport, and this meeting could destroy my whole career history and also could give me a bad reputation as a person who came closer to Israeli people, and that’s why I can not publish this under my name.

The good thing is that I didn’t have to travel to Israel because the meeting is at a neutral place in Denmark where the “Media For Dialogue” course was held, I also knew there would be a chance to meet Arabs from Occupied Palestine, which meant I would be able to have a close look at the conflict. It’s not just another documentary movie, but I would meet real people, and have the ability to interact with them all, hoping to bring something good out of it. This is how I was thinking and how I make it easy for my self to accept it.

I was remembering all of this after hearing the question from the Israeli girl I met in Denmark during the course. I told her “Of course I don’t hate you, but I hate occupation, and you know that our countries had a very bad historical wars against each other, I believe that all humans should live together in peace”. She completely agreed with me like she had the same opinion as mine. I continued “I will be honest and tell you about what I really think because you are not the only one who feels the sadness, but I have also my deep sadness feeling, especially when I think about the feature of Egyptians in coming generations. I believe we will have another big war with Israel, maybe it will take some time until this happen, but no one can stop that, recording to prophet Mohammed -peace and blessings be upon him- “The Hour will not come to pass until you fight the Jews..” to the end of the Hadith (mentioned by Abu Hurayrah in: Whole true small number -7,414). This war will be totally religious and All Muslims will be part of it, it’s not the same war that we have now in the Middle East against the Israeli occupation. and this me feel bad some how, because the war will never end between Muslims and Jews. Of course no body wants war but what to do?!

She was surprised because of what I said so far, and she reminds me of the peace agreement between Israel and Egypt. I said “Yes.. I have to say that my country is living in a peace agreement with Israel for the mean time, but this exists only on papers. This couldn’t change the fact of hating Israel occupation and considering it the number one enemy of Egypt, and this is what they teach us at schools”. She interrupted me saying “Really?!.. You must be kidding!”, I said “No.. it’s true”. This probably will explain why I didn’t ask the “Do you hate me?” question first, and also I never feel neglected by the Israeli group because the relation from my side is broken.

The Israeli girl was surprised even more this time. She really made me feel that I gave her lots of surprises. This is very strange for an APC (Armored Personnel Carriers) teaching commander in the Israeli army, because I expected that she knows what I am talking about, but it seem that she was hearing all what I told her for the first time in her life, anyways. It was not a good feeling for me as I suppose I lived on the same planet since the moment of birth. I didn’t came from mars, I am only a normal Egyptian guy who is telling the simple truth of what he knows and believes, It’s not my fault that I raised holding hate in my mind and bad feelings in my soul to Israeli occupation. It’s also not the Israeli’s duty to think different. It’s a big fact that I can not nether deny or change.

Obama Grows Into The Part, While McCain Makes It All About Joe

As the great battle of Joe the Overexposed Plumber vs. Barack the Overspending Campaigner rages on (with Sarah the Overdressed Hockey Mom as sideshow), there's another game playing out, just over their heads.

Sen. Barack Obama is now in the enviable position of seeking to become president by looking presidential.

Sen. John McCain, meanwhile, knows that he can only become president by making his rival look un-presidential. (Two Joes -- the Plumber and the Senator -- are being enlisted to help.)

It may be a subtle distinction, but it matters for the home stretch. McCain is throwing it all at him now -- taxes and spending and flip-flops and plumbers and terrorism (and terrorists).

A closing argument (at last) comes together: McCain is portraying Obama as too risky to be president.

"He'll say anything to get elected," McCain said of Obama Wednesday night, per ABC's Bret Hovell.

A line that says just as much about where Obama stands: "I feel like we got a righteous wind at our backs here," Obama said Wednesday in Leesburg, Va., ABC's Jake Tapper and Sunlen Miller report.

Regardless of the source of that breeze, Obama is in a stage of his campaign where he can ease perceptions of risk just by showing up. (Or not showing up: He's set to drop off the electoral map for 48 hours, to visit his grandmother in Hawaii after a Thursday morning campaign event in Indianapolis.)

It's 54-43 in the latest ABC News/Washington Post tracking poll -- and the portrait of a president begins to emerge.

"Barack Obama has shored up his experience rating to the point where it now surpasses George W. Bush's in 2000 and matches Bill Clinton's in 1992, addressing what has been Obama's greatest vulnerability in the presidential election," ABC Polling Director Gary Langer writes. "Fifty-six percent of likely voters now say Obama has the experience it takes to serve effectively as president, up from 48 percent after the Republican convention. That's now better than George W. Bush's rating just in advance of the 2000 election."

"Former secretary of state Colin Powell's endorsement provides a new boost for Obama, who has made significant progress with voters as a leader in international affairs," per The Washington Post's Jon Cohen. "But Obama also continues to be lifted by more fundamental advantages, including a 2 to 1 advantage on 'helping the middle-class.' "

New battleground state numbers, from Quinnipiac:

FLORIDA: Obama 49, McCain 44;

OHIO: Obama 52, McCain 38;

PENNSYLVANIA: Obama 53. McCain 40

From the release: "With 12 days to go, Sen. McCain is narrowing the gap in Florida, but fading in Ohio and barely denting Sen. Obama's double-digit lead in Pennsylvania."

More from key states: "With less than two weeks to go 'til Election Day, Barack Obama has held or increased his leads in four key states won by President George W. Bush in 2004 -- Nevada, North Carolina, Ohio and Virginia -- while losing ground in West Virginia, according to the latest series of TIME/CNN battleground state polls conducted by Opinion Research.

Asia Stocks Fall Early,Then Recover, U.S. Futures Point up

This article will show what happened with the Asian stocks fell Thursday, with South Korea's market sinking more than 7 percent, as a barrage of downbeat company forecasts deepened fears of a global recession.

But in a positive sign, regional markets pared losses in afternoon trading as investors bought beaten down shares.

Major European markets opened mixed, then slid downward.

"Sentiment is lousy," said Dariusz Kowalczyk, chief investment strategist at CFC Seymour in Hong Kong. "Earnings are disappointing, and we're still in the process of lowering profits all across the globe."

Japan's Nikkei 225 stock average tumbled 7 percent at the open but recovered some to closed down 2.5 percent at 8,460.98. Traders said the turnaround in Tokyo was partly due a Wall Street Journal report that the Bush administration is considering a $40 billion plan to help limit home foreclosures.

South Korea's market was hit hardest. The benchmark Kospi fell nearly 10 percent at one point and closed down 7.5 percent at 1,049.71. Hong Kong's Hang Seng Index fell 3.6 percent to 13,760.49 after falling more than 6 percent earlier.

Asia's downward lurch followed Wall Street as hundreds of companies reported third-quarter results and issued murky forecasts this week, signs that the economic slowdown was taking a toll on balance sheets despite recent improvements in the world credit markets.

Tokyo investors were cautious ahead of the release of corporate earnings next week, including Canon Inc. on Monday and Honda on Tuesday.

Japanese electronics powerhouse NEC Corp. plunged 8.5 percent after slashing its full-year earnings estimates Wednesday, blaming weaker demand for mobile phones and computer chips.

"The new numbers are below even our forecasts, which were at the bottom end of market estimates," said Takeo Miyamoto, an analyst at Deutsche Securities in Tokyo, in a report Thursday. "We predict strong disappointment in the market."

Australia's key index pulled back more than 4 percent as slumping world commodity prices sent resource companies lower. Rio Tinto fell more than 14 percent while rival BHP Billiton sank more than 9 percent.

House Panel to Tackle Meltdown Reason, Remedy

What would you think if Lawmakers have called key players from the past and present to congressional hearings in an effort to find out what caused the biggest financial crisis since the 1930s and determine how the government plans to get the nation out of the mess?

Alan Greenspan, the chairman of the Federal Reserve for 18 1/2 years, was to be the star witness Thursday before the House Oversight and Government Reform Committee. He faces questions about actions the government took or didn't take that might have contributed to the boom in subprime mortgages and the subsequent housing market collapse that has led to the loss of billions of dollars in investments.

Meanwhile, Neel Kashkari, the interim head of the government's $700 billion rescue effort, and other government officials were going before the Senate Banking Committee to lay out their plans for implementing the massive program.

Both hearings were expected to be contentious as lawmakers, already upset about having to vote for the biggest bailout in U.S. history, seek answers to what went wrong and try to determine why the government's rescue effort, which just cleared Congress on Oct. 3, already has undergone a radical overhaul.

All the action in Washington was taking place against a backdrop of continued turbulence on financial markets around the world. The Dow Jones industrial average plunged by 514 points Wednesday amid fears that the government intervention will not be enough to prevent a serious global recession.

Asian stocks fell for a second consecutive day Thursday, with South Korea's market sinking 7.5 percent. Japan's Nikkei 225 stock average closed down 2.5 percent, and Hong Kong's Hang Seng Index was down 4.7 percent.

While conducting major hearings so close to an election is unusual, House Oversight Committee Chairman Henry Waxman, D-Calif., said the current crisis was so serious that Congress could not wait until a new administration arrives in January to find out "what went wrong and who should be held accountable."

Exclusive: Letter Threatens Chase Bank CEO, 'You Will Be Killed'

The U.S. Postal Inspection Service posted a $100,000 reward late Wednesday for information about a flurry of threatening letters sent to JP Morgan Chase facilities, its CEO Jamie Dimon, and several federal banking offices around the country this week.

"You need to be pay back. You will be killed in 10 days," one of the typewritten letters read, federal law enforcement officials told ABC News.

Another letter, addressed to the JP Morgan Chase CEO, Jamie Dimon, in New York, threatened a series of attacks ending in an Oklahoma City-like bombing. The writer accused Dimon of stealing Washington Mutual, which JP Morgan Chase recently took over.

At least 45 letters, all postmarked in Amarillo, Texas on October 17 and 18, were sent to the Chase bank offices, the FDIC office in Dallas, the Office of Thrift Supervision in Dallas, and the Federal Home Loan Bank in Atlanta, federal law enforcement officials said.

The letters contained a powdery substance which tests have shown to be harmless.

Authorities say the letters "articulated threat of bodily harm" and appeared to be connected to lending practices of the bank.

Postal inspectors said the public should "take no action to apprehend this person yourself."

Inspectors said anyone with information should contact authorities at 1-877-876-2455.

In a separate case, the FBI said its field office in San Diego has opened an investigation into a series of letters sent to the Los Angeles Times and the campaign offices of Senator Barack Obama in New York, Philadelphia and Los Angeles.

Those letters also contained substances, including sand and food seasoning. One letter said "the world will end" if Obama was elected, officials said.

McCain, Palin Rip Obama Over Taxes in N.H., Ohio

John McCain struck an anti-tax chord Wednesday in the state that launched him toward the Republican presidential nomination and in the home state of the plumber he hopes will help him reach the White House.

During rallies in New Hampshire and Ohio, the Arizona senator said Democrat Barack Obama favors taxes that will hurt the middle class and small businesses — despite Obama pledging to cut them for 95 percent of taxpayers.

"Sarah Palin and I will not raise your taxes, my friends. We want you to get wealthy," McCain told 10,000 people gathered in a football stadium near Akron, Ohio. The scene had a festive air, with those sitting in the grandstands behind the candidate dressed in T-shirts that composed the red, white and blue Ohio state flag.

Palin, holding her first joint event with McCain since Oct. 13, derided Obama as "Barack the Wealth Spreader" and said: "You have to really listen to our opponent's words, because he's hiding his real agenda of redistributing your hard-earned money."

McCain and Palin have accused Obama of fostering socialistic tax policies since Ohio plumber Joe Wurzelbacher questioned the Democrat two weeks ago. Both now routinely invoke "Joe the Plumber" as part of their closing argument.

Palin was exuberant before the crowd, demanding an autograph from warm-up singer Gretchen Wilson, famed for her song, "Redneck Woman."

Palin joked: "Someone called me a `redneck woman' once. You know what I said back? `Thank-you very much.'"

Ohio voted for George W. Bush in 2000 and 2004, but Obama held a narrow lead in recent polls. The state offers 20 electoral votes.

McCain later told an airport rally in Cincinnati: "I know it's been a long, long time since whoever was going to be president didn't win the state of Ohio. I'm not going to break that tradition. We're going to win the state of Ohio."

Earlier in New Hampshire, McCain implored voters "to come out one more time" for him, as the two-time primary winner tried to stave off a general election loss with sharp criticism of Obama's tax and spending plans.