Seven of Europe’s largest 91 banks failed government stress tests on Friday, meaning they’ll have to raise more capital. Overall, that’s a high success rate—so high, in fact, that The Wall Street Journal says it “raised questions over whether the monthlong tests were tough enough to be judged credible.” The stress test results showed that the 91 banks studied could face $729.35 billion in total potential losses in a deteriorating economic and financial environment.

The government panel investigating the April 20 BP disaster has learned that the emergency alarm on the Deepwater Horizon rig was not even turned on at the time of the accident. A worker from the rig told the panel Friday that the alarm was always set to “inhibited” so as not to wake the crew. Mike Williams said, “They did not want people woke up at 3 a.m. from false alarms.” A number of failures on the rig have come to light during the investigation, including computer crashes, power outages and the discovery that a system for removing dangerous gas was switched to “bypass mode.” When that decision was questioned by Williams at the time, he was told, “The damn thing’s been in bypass for five years. The entire fleet runs them in ‘bypass.’” A widow of one of the workers killed in the April 20 explosion told the panel: “From day one, he deemed this the well from hell. He said Mother Nature just didn’t want to be drilled here.”

Last week marked the official transfer of Camp Cropper, the last American-controlled prison in Iraq, to the Iraqi government. Its problems, however, are far from over: Five days later, at least four prisoners—three of whom are said to be high-ranking members of Iraq’s most violent insurgent group—escaped. Compounding the situation, the prison’s warden and several guards have now disappeared. This news offers little hope for the country’s long-troubled prison system, especially after the Abu Ghraib scandal, in which detainees were tortured and abused by Americans. Today, experts say the system remains abusive, with high-level suspects disappearing frequently. Iraqi officials didn’t reveal the prison break until Thursday, two days after it happened.

Goodbyes are rarely fun, but it appears that Gen. Stanley McChrystal, who retired after a 34-year military career during a ceremony on Friday, relished the opportunity. Standing before several hundred friends, family members, and colleagues at the Fort McNair parade grounds in Washington, D.C., the beleaguered general expressed optimism about his future, adding, “I need to celebrate.” In truth, though, McCrystal’s retirement—a result of a Rolling Stone magazine article in which he and his team made negative remarks about their bosses back home—provides little reason for positive cheer. No matter. “I have stories on all of you, photos of many,” he said, “and I know a Rolling Stone reporter.”

How’s this for ominous economic news? New estimates, released from the White House on Friday, predict the budget deficit will hit a record $1.47 trillion this year—which is slightly better than the U.S. government predicted in February, but still paints a worrisome economic picture. Put differently: For every dollar the U.S. government currently spends, it borrows 41 cents. Then there's unemployment, too, which will continue to average at about 9 percent next year. What’s more, 2011’s fiscal predictions don’t look much better: a $1.42 trillion deficit, or 37 cents borrowed for each dollar spent. Of the bleak budget numbers, White House budget director Peter Orszag said, it’s a “fiscal situation that requires attention.”

Watch out, GOP public-relations teams: Republican Sen. Tom Coburn has handed over emails to federal authorities investigating an extramarital affair that Sen. John Ensign had with a campaign aide. This could be good news—Coburn’s cooperating with the Justice Department, after all—but it provides another blow to the embattled Ensign and, possibly, the Republican Party. “We’ve given them everything they wanted,” Coburn, referring to the Justice Department, told Politico. What makes this all the worse for Ensign: At the time of the affair, Coburn was Ensign’s roommate in a townhouse on Capitol Hill. Sources familiar with the investigation say the probe is focused more on Doug Hampton, though, whose wife, Cynthia, carried on the nine-month affair that ended in August 2008. Of the affair, Coburn said on Thursday, “We didn’t do anything inappropriate.”

The Department of Veterans Affairs is mellowing its policy regarding medical marijuana in states where it’s legal, allowing patients treated at its hospitals and clinics to use it. This relaxed rule resolves a long-standing conflict in veterans’ facilities between federal laws and the 14 states that have legalized medicinal use of the drug. Under V.A. department rules, if a veteran is caught using illegal drugs, they can be denied pain medications—which, until now, did not include an exception for marijuana. Now that's changed. “By creating a directive on medical marijuana, the V.A. ensures that throughout its vast hospital network, it will be well understood that legal medical marijuana use will not be the basis for the denial of services,” Michael Krawitz, executive director of Veterans for Medical Marijuana Access, told The New York Times. This is great news, no doubt, for the many medical-marijuana-using veterans who had previously abandoned the V.A. hospital system for that reason.

The Harry Potter theme park has generated a lot of buzz over the summer, but Friday was every Muggle's worst nightmare. A new ride at the Wizarding World of Harry Potter at Universal Studios amusement park in Orlando broke down, leaving 132 riders stranded. The Orlando Fire Department officials responded to 911 calls from riders and evacuated the passengers, but said there were no medical complaints. According to a local report from WESH 2, Universal officials would only reveal that "a ride" was stuck and crews were attempting to evacuate it, but did not cite the particular Potter ride. WESH 2's reporter confirmed that it was Harry Potter and the Forbidden Journey, a ride which broke down when two previous WESH 2 journalists were on board in June. A Fire Department official told the local news site that there was a mechanical issue with the ride. Too bad they couldn't simply resort to working some wand magic.

This ought to give them plenty of time to fix the antennas: Apple has delayed the release of the white model of the iPhone 4 from late July until some vague date “later this year.” Apple says the development of the white model has “continued to be more challenging to manufacture than we originally expected.” While the exact problem is unknown, some suspect it’s that yellow tints are showing up against the white backdrop.

How’s this for film production troubles? Casey Affleck, who is working on the documentary film I’m Still Here: The Lost Year of Joaquin Phoenix, had a $2 million lawsuit dropped on him by Amanda White, a producer of the film. White alleges in a 19-page suit filed on Friday afternoon in Los Angeles Superior Court that she was forced into “uninvited and unwelcome sexual advances in the workplace” and denied her $50,000 producing fee after refusing to go to a hotel room with him. A representative for Affleck, who is married to Summer Phoenix, declined to comment on charges. Another major harassment case reached the L.A. court this week, too. Yesterday, actor David Boreanaz and Twentieth Century Fox were sued by a Bones extra.

Perhaps this is Italian Prime Minister Silvio Berlusconi’s revenge for the Catholic Church’s criticism of his sex scandals? One of his magazines, Panorama, is about to publish an undercover investigation about the double lives of gay priests. Using hidden cameras and what the article refers to as a gay “accomplice,” journalists from Panorama magazine, part of Berlusconi’s media empire, followed several priests out to gay clubs and parties, The Daily Mail reports. Though the magazine’s editor, Giorgio Mule, says that the two-week investigation was not aimed at creating a scandal but at “showing that a certain section of the clergy behaves very differently,” Panorama’s preview described the investigation as 'deeply disturbing.' ” Panorama also claims that they have hidden-camera footage of one priest donning his cassock to have sex with the reporter’s gay accomplice. Of course, Catholic priests are required to be celibate, and the Church considers homosexuality a sin. There has been no comment from the Vatican.

There’s a disturbing rise in the percentage of soldiers leaving the Army because of mental illness. According to Army statistics reported by USA Today, between 2005 and 2009 there was a 64 percent rise in the number of soldiers departing from the military singularly due to mental illness. Adrian Atizado, assistant national legislative director for Disabled American Veterans said, "These numbers really just validate the mental health communities' concern about multiple deployments...Mind and body are both taking a beating." Army Lt. Col. Rebecca Porter added that the numbers illustrate "a clear relationship between multiple deployments and increased symptoms of anxiety, depression, and PTSD." Veterans groups believe that failure to detect illness early on allows mental problems to grow over time until they warrant a discharge.

Imitation is the highest form of flattery, and apparently the key to Lady Gaga's heart. Tween singer Greyson Chance, who was catapulted to fame—and a record deal—when a video of him singing Gaga's "Paparazzi" at a school talent show became a YouTube sensation, has finally met his idol in the flesh. "I met @LadyGaga! She was so kind, gave me some great advice and put on amazing show!!" he tweeted, posting a photo of himself posing with the pop star. Chance's video, which to date has received over 28 million hits on YouTube, put the spotlight on the 12 year-old, who then made the rounds on TV shows. During a stint on the Ellen DeGeneres show Gaga called in. "You're so sweet and so talented. I was so excited that you covered ‘Paparazzi,’" she said," Everyone loves you so much, so just keep following your dreams, work really hard and stay away from girls and be focused. You've already won over everyone's hearts, so just have fun."

In an interview that aired Friday, President Obama told ABC’s Good Morning America that in firing Shirley Sherrod from the Department of Agriculture, Secretary Tom Vilsack "jumped the gun, partly because we now live in this media culture where something goes up on YouTube or a blog and everybody scrambles." On Thursday, Obama personally apologized to Sherrod. "I've told my team and I told my agencies that we have to make sure that we're focusing on doing the right thing instead of what looks to be politically necessary at that very moment," he said to ABC. "We have to take our time and, and think these issues through." Obama cited trying "to examine what's in our own hearts" rather than "jumping to conclusions and pointing fingers" as an emergent lesson from the Sherrod situation. Sherrod came under fire from conservative activists when Andrew Breitbart posted edited video clips from a speech she made at an NAACP fundraiser, excerpts that right-wingers took as proof that she was racist.

Mel Gibson may have been more busy recently allegedly slandering blacks and Hispanics, but that doesn’t mean he’s forgotten the former targets of his ire, the Jews: RadarOnline.com says that Mel Gibson told ex-girlfriend Oksana Grigorieva, “I want Jew blood on my hands,” and that the slur came in reference to a high-profile Jewish Hollywood figure who Mel said publicly humiliated him. RadarOnline.com’s source says Gibson told Grigorieva that he wanted to take the person to the desert, stripped naked, shot in the knee, and left to die in the heat.

Lt. Dan Choi, one of the most ardent critics of the Army's "don't ask, don't tell" policy prohibiting the openly gay and lesbian from serving in the military, will join the more than 12,500 gay Army personnel let go from the Army since the policy took effect. Choi, a West Point graduate fluent in Arabic, publicly came out of the closet last year on The Rachel Maddow Show, and Army officials commenced discharge proceedings shortly thereafter. His honorable discharge took effect in late June. In a statement, Choi said: "This is both an infuriating and painful announcement...But my service continues. ... Remaining silent when our family and community members are fired or punished for who they truly are would be an unequivocal moral dereliction that tarnishes the honor of the uniform and insults the meaning of America." In March he was arrested after handcuffing himself to a White House fence while protesting the practice.

North Korea really doesn’t like the idea of the United States and South Korea conducting military exercises in its back yard this weekend. And now, after months of saber rattling over the sunken South Korean warship, the Communist country has promised a “physical response.” It also accused the U.S., which imposed new sanctions on it, of “gunboat diplomacy.” The tensions on the Korean peninsula have dominated proceedings at the Asean Regional Forum in Vietnam this week, with Secretary of State Hillary Clinton calling out North Korea for its "campaign of provocative, dangerous behaviour." China, meanwhile, without backing North Korea as its only ally in the region, has criticized the new sanctions and anything that it said could "exacerbate regional tensions."

It's official: Actor Orlando Bloom and Victoria's Secret model Miranda Kerr are husband and wife. Representatives for both confirmed the nuptials with Us Weekly. There are no details yet as to the date and location of the wedding, but Kerr canceled an appearance at David Jones, an Australian department store, to celebrate her new bride status. The pair announced their engagement in June, having been together for almost three years prior.

Love in the time of publishing's implosion: While American book sales fell 1.8 percent in 2009, sales of romance novels increased by 7.7, as the genre raked in $1.4 billion. Romance is the best-performing category on The New York Times, USA Today, and Publishers Weekly best-sellers lists. But we're not talking about your usual tales of taboo love affairs. Romance writers and publishers have been getting innovative with their plotlines as of late, penning and producing books themed to Nascar, transgender issues, the Amish, Mennonites, quilting, knitting, the paranormal, and the military. "People want to buy a book that incorporates exactly what they care about," says Nancy Berlin, a literary agent for several knitting romance writers. Particularly popular right now are Amish and Mennonites. Lower priced paperbacks have also benefited the genre. Said Breslin: "In these tough times readers don't want to waste those seven dollars."

It may not quite be an iPad, but then again it’s not quite priced like one either. India this week unveiled a $35 laptop that could increase access to computers for millions. The touchscreen gadget, designed for students, carries Web browsers, a PDF reader, and video conferencing capability, along with room to add more components. It was developed for the Indian government by research teams at the Indian Institute of Technology and the Indian Institute of Science. Now, the government says it is already in talks with global manufacturers to begin mass production. It hopes to have it in classrooms by 2011 when the price could drop to $20. The ultimate goal is for it to cost no more than $10.

Why are the evil ones always so good-looking? Mary McNamara of The Los Angeles Times argues that Don Draper (played by Jon Hamm), the criminally handsome leading man of AMC's Mad Men, is, in fact, the devil. McNamara paints Draper as the deftest of liars and manipulators, a cheating, heartless dynamo motivated solely by self-interest. "Don lies to everyone all the time,” she writes. “And unlike TV's many other antiheroes, he manages to look Dorian-Gray-great doing it.” Calling him “morally bankrupt even by the standards of the period” for his affairs, both in and out of the office, she says he is “one of those guys who manages to seem as if he's trying to do the right thing when that is not his intention at all.”

The tension between Main Street and Wall Street is only growing. The Obama administration’s special master for executive compensation, Kenneth Feinberg,  announces on Friday that 17 financial companies handed out $1.58 billion in possibly undeserved bonuses shortly after being bailed out by taxpayers in 2008. The report will likely call out Goldman Sachs, J.P. Morgan Chase, and AIG, among other institutions. Feinberg has no real power to order the banks to reimburse the government for the bonuses they've already handed out, yet he’s asked banks to voluntarily adopt a provision that would allow their boards to alter bonuses in the event of a future financial crisis. The banks have said they’ll think about it.

No matter what the U.S. and U.K. said, it seems that Iraq never had Weapons of Mass Destruction. And yet, based on unsubstantial, fragmentary evidence, they launched a major offensive that served to steel jihadists across the Middle East. “Arguably we gave Osama bin Laden his Iraqi jihad,” Eliza Manningham-Buller, former director-general of MI5, said this week. The Financial Times’ David Gardner believes the same intelligence breakdowns could happen again with Iran. Currently, there is no evidence to support accusations that Iran is building a nuclear weapon. But Gardner argues that it is quite possible Western governments will once again “cherry-pick” bits of intelligence to march into Tehran. “If you are going to go to war, you need a pretty high threshold, and I think there are very few who would argue that the intelligence [on Iraq] was substantial enough on which to make that decision,” Lady Manningham-Buller said.

How did RadarOnline nab the leaked Mel Gibson rants that have become so infamous? Several sources close to the case have told The Hollywood Reporter that it was the sister of Mel's ex-girlfriend, Oskana Gregorieva, who shopped around the audio tapes to tabloids before finally selling them to RadarOnline. "I suspect that if the authorities look at the sister, they'll find a wire transfer or a check to her from the website," one source tells The Hollywood Reporter. The sister, Natalie, was supposedly turned down by all the tabloids she approached because she wanted them to buy the tapes without first hearing them. If it turns out that Oksana requested that her sister sell the tapes, she could be found in contempt of court—in addition to rumored charges of extortion.

On Thursday U.S. District Judge Susan Bolton—a Democratic appointee—called into question the Obama administration's insistence that Arizona's controversial immigration law infringes upon federal immigration enforcement. "Why can't Arizona be as inhospitable as they wish to people who have entered or remained in the United States?" she asked. As Arizona Governor Jan Brewer, a staunch proponent of the law, watched silently, Bolton questioned the core ethos of the Justice Department's contention that the Arizona law is unconstitutional: that immigration enforcement is an exclusive federal privilege, one that pre-empts the Arizona law. "Where is the preemption if everybody who is arrested for some crime has their immigration status checked?” she asked. As the federal lawsuit moves forward Bolton may or may not grant an injunction to stop the law from taking effect.

The law is slowly closing in around Patrick O'Bryan, BP's VP in charge of drilling and Robert Kaluza, a BP staffer who had been overseeing the Deepwater Horizon rig's operations. Both men, who were onboard the rig when it exploded in April, killing 11 and prompting the worst oil spill in America's history, have been named as "parties in interest" in a federal investigation of the explosion. An investigative board had twice summoned Mr. Kaluza to testify since the spill, but he evaded testimony by taking the fifth Amendment. Meanwhile, The Wall Street Journal reports that a "deadman switch," a key safety switch that should have activated a blowout preventer to shut down the well upon the explosion, was nonfunctional.

Tropical Storm Bonnie is moving in on the Gulf—and bringing with it complications for BP's oil spill clean-up. Crucial ships are being forced to evacuate the site, including the rig that’s responsible for drilling a relief well that the company hopes will ultimately plug the spill for good. "While this is not a hurricane, it's a storm that will have probably some significant impacts, we're taking appropriate precautions," Coast Guard Admiral Thad Allen, who is coordinating the response, said in Alabama today. Only some of the ships will stay, Allen added, in a development that will likely delay by 12 days the final plugging of the well. While the ships are gone, BP will leave its cap on the well, a confident sign that it is plugging the leak effectively. Vice President Joe Biden, who is visiting the Gulf, kept an optimistic tone: "After the storm's passage we will be right back out there," he said.

Should we be surprised? Salon says that American Crossroads, Karl Rove’s new self-described “grassroots” organization, has actually received 97 percent of its $4.7 million from just four billionaires. Three of those men come from Texas, and two made their money in oil and gas. Rove better shake these men down some more though, if he wants to meet his stated goals: American Crossroads has pledged to raise $52  million to beat the Democrats in November.

It appears our nation’s safety isn’t the first thing on some Pentagon employees and contractors’ minds: The Boston Globe reports that federal investigators have caught several dozen Pentagon workers with child porn, some of whom used their government computers to obtain it. The Globe says these workers have “high-level security clearances,” and that, in addition to breaking the law, their activities put them at risk of blackmail, bribery, and threats.

This robber is going to have quite the following on the Internet: A man robbed a bank on Long Island Thursday morning while wearing a Darth Vader mask. He didn’t have the full costume—he wore a blue cape and camouflage pants, and he carried a gun instead of a light saber. He was last seen running through a nearby parking lot with the bank’s cash in hand.

Although The Simpsons is entering its 22nd season, the animated series is welcoming some new voices to Springfield with guest stints from actors Halle Berry and Paul Rudd, Entertainment Weekly reported Friday. In an early 2011 episode, the Oscar-winning actress will present a statuette at the Academy Awards where Bart and Homer are nominated for an animated short based on the younger Simpson’s webseries, Angry Dad. “It’s a bit of a satire of the different Oscar acceptances where two people clearly race to the stage to get there first,” the show’s executive producer tells EW.com. In another upcoming episode, Rudd lends his voice to Dr. Zander, a therapist who runs a “fathering enrichment class” that Homer is ordered to attend. “For 20 years we’ve shown Homer strangling Bart and we’ve never had anybody go, ‘Oh, that’s horrible!’” the exec says. “So Paul Rudd goes, ‘That’s terrible!’ and he tries to cure him.” The episode will also feature NBA legend Kareem Abdul-Jabbar, who “puts on a Homer wig and then starts strangling Homer to show him how it feels.”

Longtime NPR journalist Daniel Schorr died Friday morning at 93. Schorr began as a foreign correspondent, writing about the Marshall Plan and NATO for The Christian Science Monitor and The New York Times, but moved on to cover the U.S.S.R. and later Washington politics for CBS. Despite his many awards—three Emmys during the Watergate years, a Peabody, and induction into the Hall of Fame of the Society of Professional Journalists—he said his greatest honor was being put on Nixon’s Enemies List, which he read on the air. His reporting earned him plenty of other enemies, too. In 1975, when he reported on assassinations carried out by the CIA, the agency’s director called him a "son of a bitch" and a "killer." He left CBS after his decision to leak a secret congressional report on illegal CIA and FBI activities to the Village Voice landed him in hot water. He went on to work for CNN and then NPR. "He could compare presidents from Eisenhower on through, and that gave him historical context for things," said Donald Ritchie, a Senate historian. "He had lived it, he had worked it and he had absorbed it. That added a layer to his broadcasting that was hard for somebody his junior to match."