We've kind of bankrupted this country" with the war spending. "We're in a recession," he added, "and God knows how long it's going to last."

The global power shift from the West to the East is no longer just a matter of debate confined to learned journals and newspaper columns - it is a reality that is beginning to have a huge impact on our daily lives.  . . .

The dire warnings from the International Monetary Fund this week that the West now faces the largest financial shock since the Great Depression, while the Asian economies are still powering ahead, simply underlines our vulnerability in this new world order.

The desperately weakened American dollar appears to be on the verge of losing its global dominance, in the same way as sterling lost it a lifetime ago.  . . .

But the world order we have grown used to - and comfortable with - over the last century is coming to an end.  . . .

And not just China. The world's second most populous country, India, is industrialising at a historically unprecedented pace.

Their economies are growing on a long-term basis about four times the speed of the UK's and that of the United States. Goldman Sachs, the bank, recently predicted that by 2050, China and India would have overtaken the U.S. to be the world's first and second biggest economies.

We have long heard about the benefits this brings, in terms of plentiful cheap goods from toys to TVs, and huge opportunities for Western companies to sell their wares in these booming markets.

But there are also downsides, which are becoming more apparent. Unskilled workers in the West have become unsettled by the threat to their jobs as production moves East.

The most vulnerable Western workers have found their wages stagnate as they struggle to compete in an increasingly global market place.  . . .

What is happening is so extraordinary that economists have had to invent a new word for it - this is not an economic cycle, but a supercycle, a shift in the world economy of historic proportions. . . .

From the UN to the IMF to the World Bank, the international institutions that attempt to govern the planet were made in the image of the victors of World War II. Now power is shifting from West to East, the whole liberal democratic world order will face its first serious challenge in decades.  

Many fear that things could get ugly.  

There is only one thing worse than an unchallenged superpower - it is a superpower with a victim mentality, which feels the world owes it a favour.  

 There is even speculation that the intense economic pressure on countries such as Britain will cause them to trim down their bloated welfare state, simply because it will no longer be affordable at present levels.  

Western attitudes of superiority to China and the rest of the East will also subside, as Westerners realise they are no longer the masters of the world.  . . .  

Responding, R K Krishna Kumar, a senior Tata executive, thundered that "Indian companies ... will take their rightful place in the international arena.  

"Enterprises and individuals must recognise and adapt to these fundamental economic changes. We believe that those with a fossilised frame of mind risk being marginalised."  

In a world in which we are no longer masters, it is a warning that we ignore at our peril.       

California Gov. Arnold Schwarzenegger says that if an initiative to ban gay marriage qualifies for the November ballot, he's prepared to fight it.

California's governor spoke Friday in San Diego at the convention of the Log Cabin Republicans, the nation's largest gay Republican group.

He has previously vetoed bills that would have legalized gay marriage. A Schwarzenegger spokeswoman did not say what prompted the governor to shift his position.

Schwarzenegger said he was confident a ban would never pass in California and called the effort "a waste of time."