New York (financialnews-us.com) - "An anonymous investor has placed a bet on an index of Europe's top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.

      The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.

      The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.

      The investor has bought a total of 245,000 put options on the index. The September put option with a 2,800 strike was the most popular DJ Eurostoxx 50 contract yesterday, according to data from Bloomberg.

      Volatility in European equity markets has risen sharply this week as investors cut back on the amount of risk they are taking. The VSTOXX index, which measures the volatility of the DJ Eurostoxx 50 index, hit 34 this morning, which is more than double its three-year average.

      Similarly the volatility of the US stock market was trading at almost three times its three-year average, hitting 30 yesterday.

      However, both indices continue to trade below their 2002 highs.

      European stock markets were trading down almost 3% at by 13:00 GMT today, after large drops in Asia and Australia overnight. The Australian market fell 300 points at one stage when futures trading was suspended for over an hour and traders were forced to hedge positions by selling physical stocks rather than futures.

      An analyst at Goldman Sachs JB Were in Australia wrote: "I think I shall remember this day as the day that I saw the market go to hell, look into the abyss - didn't like what it looked like and then came screaming back up as far away from there as it could get. ... It was a truly spooky day and I’ve seen a lot over the last 20 years but today will be one that anyone who saw it will never forget. But this is what market bottoms are made out of."

      The rise in volatility and risk aversion has also contributed to a sharp appreciation in the Japanese yen, which has been used to finance the so-called carry trade, where investors borrow in a low-yielding currency to invest in one with a higher-yield.

      Analysts' belief that the yen carry trade is set for a major unwinding has intensified today as the Japanese currency continued to rally in morning trade.

      The yen strengthened today as it broke through several psychological barriers. The yen hit 113.60 against the dollar by 12:35 GMT, the first time in more than a year it has dropped below 114. The yen was substantially up against the dollar from yesterday, when it traded at above 116.

      Simon Derrick, head of currency research at Bank of New York Mellon, said: "With any hope of even a brief bounce emerging in the yen crosses evaporating in the fierce glare of another horrible close in New York, it is clear that the vicious, self-reinforcing, downward spiral we were worrying about is already firmly established.".."

      The Bottom Line:  The Deep Breath Before the Plunge?

      India (Time) - "We're used to watching the price of oil mock gravity, but there's an even more essential commodity that's also become scarcer and pricier in recent months: Traders are paying record prices for wheat on world markets, thanks in part to shortages caused by a mix of drought and flooding. Canada, the second-biggest wheat producer after the U.S., looks set to harvest its smallest crop in five years, due to an unusually dry July, while production in the European Union may be down nearly 40% from last year after flooding rains followed long droughts. Growing global demand for biofuels is also eating up grain production, and boosting prices.

      As a result of the supply squeeze, global inventories of wheat — which makes up one-fifth of the world's food intake — are expected to fall to their lowest level in 26 years, according to the U.S. Department of Agriculture.

      Tighter supplies mean American consumers will be paying a few cents more for everything from bread to muffins to hamburgers, as meat supplies can be tied to grain prices. And, if the world warms as expected over the coming decades, the terrible farming year of 2007 may be just the beginning. As temperatures rise, many studies predict that crop yields will decline, as the extreme droughts and floods that damaged this year's wheat crops become more common. The most fertile areas are likely to be found further north in response to the heat, opening up the possibility of agriculture in territories such as Siberia that had long been too cold for decent farming. But the same effect could turn current bread-basket regions as the American Midwest into dust bowls.

      "In developed countries it means we'll pay more for wheat and other crops," says Matthew Reynolds, a wheat physiologist at the International Maize and Wheat Improvement Center (CIMMYT) in Mexico. "In developing countries, it might mean they'll go without. It's a major food security issue."

      Warmth is good for plants, which is why we don't get much corn from Alaska. But beyond a certain temperature — around the mid-30s, celsius —additional heat cuts crop yields, by interfering with photosynthesis until plants literally starve to death. Scientists are not yet able to measure the effect, in part because it might be offset for a time by the additional carbon dioxide that would be present in the atmosphere. C02 is to plants what oxygen is to humans, and all things being equal, more CO2 should speed plant growth. Scientists believe a one-degree temperature increase might actually benefit agriculture. But if the planet warms by around three degrees — a distinct possibility before the end of the century, according to recent assessments by the U.N.'s Intergovernmental Panel on Climate Change — the balance would turn negative, especially in the tropics. "The net result is that you'd have plants that develop faster and aren't able to accumulate mass," says David Lobell of the Lawrence Livermore National Laboratory.

      Lobell says global warming has already begun to take food off the world's table. According to a recent study he and his colleagues conducted, the temperature increase that occurred between 1981 and 2002 reduced major cereal crop yields by an annual average of 40 million metric tons — losses worth $5 billion a year. Those losses are sobering, but nothing compared to what might be in store: A recent study sponsored by the Consultative Group on International Agricultural Research forecast a 51% decline in India's wheat-growing land, potentially leaving hundreds of millions hungry. And, last week, China's top meteorological official warned that global warming could cut the nation's grain harvest by 5 to 10% by 2030. And all this will be happening while both countries add more mouths to feed..."

      SAN FRANCISCO  (Fox) —  "The Bush administration urged a federal appeals court Thursday to let Mexican cargo trucks cross the border and freely travel anywhere in the country, arguing that to do otherwise could strain diplomatic relations between the U.S. and Mexico.

      The Teamsters Union on Wednesday asked the 9th U.S. Circuit Court of Appeals to stop the program, which could go into effect as early as Saturday.

      The union argues that the administration plan, which would let as many as 100 registered Mexican trucks deliver their cargo anywhere in the country for the next year as part of a "demonstration program," would endanger public highways because safety issues have not been resolved.

      But in its filing Thursday, government lawyers said the trucks enrolled in the program meet U.S. trucking regulations and the program is a necessary part of the North American Free Trade Agreement.

      "Participating Mexican carriers must comply with all legal requirements governing operations of domestically owned carriers, and in some cases stricter requirements," wrote Assistant Attorney General Peter Keisler..."

      WASHINGTON (Reuters) - "Fed Chairman Ben Bernanke, under fire from some for being slow to stamp out a smoldering credit crisis, takes the stage before global policy-makers on Friday in a test of his leadership with financial market worry at a fever pitch.

      Against a backdrop of rising foreclosures and fear of a financial domino effect from failing hedge funds, one of the most closely watched speeches of his chairmanship may be used to signal a willingness to cut interest rates to shield the economy from financial turmoil.

      However, he will also be leery of rushing down the path of predecessor, former Chairman Alan Greenspan, who has been criticized for running to Wall Street's aid with interest-rate cuts. Many have blamed the "Greenspan put" for fueling a housing boom in the early part of this decade and encouraging reckless risk-taking.

      The annual monetary conference at the mountain retreat in Jackson Hole, Wyoming, generally provides a chance for global policy-makers to set aside day-to-day concerns for more scholarly exchanges.

      The upheaval stemming from subprime mortgage turmoil raises the stakes for Bernanke to show he is sensitive to the stresses gripping world financial markets.

      "The Fed is behind the curve and everybody on Wall Street knows it," CNBC television commentator Larry Kudlow said on Tuesday. "The handwriting is on the wall, and the Fed missed it."

      Bernanke's remarks will be released at 10 a.m. EDT on Friday.

LONG SILENCE

      The Bottom Line:  Nothing to see here people, move along.

      London (BBC) - "Climate change may carry a higher risk of flooding than was previously thought, the journal Nature reports.

Researchers say efforts to calculate flooding risk from climate change do not take into account the effect carbon dioxide (CO2) has on vegetation.

Higher atmospheric levels of this greenhouse gas reduce the ability of plants to suck water out of the ground and "breathe" out the excess.

Plants expel excess water through tiny pores, or stomata, in their leaves.

Their reduced ability to release water back into the atmosphere will result in the ground becoming saturated.

Areas with higher predicted rainfall have a greater risk of flooding. But this effect also reduces the severity of droughts.

      Italy (National Geographic) - "Ancient mass graves containing more than 1,500 victims of the bubonic plague have been discovered on a small island in Italy's Venetian Lagoon.

      Workers came across the skeletons while digging the foundation for a new museum on Lazzaretto Vecchio, a small island in the lagoon's south, located a couple of miles from Venice's famed Piazza San Marco (see a map of the Venetian Lagoon).

      The island is believed to be the world's first lazaret—a quarantine colony intended to help prevent the spread of infectious diseases.

      The lazaret was opened during the plague outbreaks that decimated Venice, as well as much of Europe, throughout the 15th and 16th centuries A.D.

      Its presence may have helped Venice recover more quickly during the devastating outbreaks.

      "When plague struck the town, everybody sick or showing any suspect symptom were restricted on the island until they recovered or died," said Luisa Gambaro, an anthropologist of the University of Padua.

Gruesome Discovery

      Workers digging the foundation for Venice Town's Museum on the eastern side of the island came across the well-preserved human skeletons three years ago.

      "We were called to attend the excavations, study the site, and rescue remains and artifacts," said Vincenzo Gobbo, an archaeologist of the University Ca' Foscari of Venice working with the Archaeological Superintendence of Veneto.

      "In the last three years we collected more than 1,500 corpses and 150 boxes of artifacts," he added. "We estimate there are still thousands of skeletons buried beneath every meadow in Lazzaretto Vecchi.".."

      NEW YORK (CNNMoney.com) -- "Stocks got battered on Tuesday after the minutes from the last Federal Reserve policy meeting failed to reassure investors worried about weak housing, consumer confidence reports and ongoing credit and mortgage market woes.

      The Dow Jones industrial average (down 280.28 to 13,041.85, Charts) lost 2.1 percent. The broader S&P 500 (down 34.43 to 1,432.36, Charts) index and the tech-fueled Nasdaq Composite (down 60.61 to 2,500.64, Charts) both lost nearly 2.4 percent.

      Treasury prices jumped, as investors sought safety in bonds. The dollar was mixed versus other major currencies. Oil and gold prices fell.

      After the close, shares of Dillard's (Charts, Fortune 500) fell after the department store operator reported a quarterly loss, versus a profit a year ago.

      Shares of PDL Biopharma (Charts) slumped 15 percent after the biotech company withdrew its 2007 financial guidance, said it will sell its marketed drugs and said that an experimental drug in late-stage trials failed.

      Stocks - already vulnerable after last week's big rally - had fallen through the mid afternoon, as investors eyed reports that showed a big drop in home prices, weaker consumer confidence and more problems for the financial sector.

      The 2:00 p.m. ET release of the minutes from the last Fed meeting added fuel to the fire, despite offering little new information on the central bank's outlook on the economy. (Read the minutes).

      The minutes from the Aug. 7 meeting showed that at the time, the bankers were not overly worried about the impact of the subprime and credit market turmoil on the economy. Although, the Fed did state that if the economy should deteriorate, it was prepared to cut rates.

      The selloff Tuesday may have reflected investor disappointment that -at least in early August - the Fed did not appear to be closer to cutting rates and was not more concerned about the financial markets, said Michael Sheldon, chief market strategist at Spencer Clarke.

      However, things changed shortly after that, Sheldon said. Just 10 days later, the Fed cut the discount rate, which affects bank loans. The move raised hopes that the central bank may cut the federal funds rate - which impacts consumer loans - at its Sept. 18 policy meeting.

      "We think the Fed will ease the fed funds rate by 25 basis points at the September meeting," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. There are 100 basis points in a percentage point.

      Ghriskey said that while a cut would appease the markets, it wouldn't necessarily suggest a big change in fed policy. "If the economy picks up enough steam, they could end up lifting rates again," he said.

      The next big event will be Fed chair Ben Bernanke's comments Friday from the annual economic symposium in Jackson Hole, Wyoming.

      Ahead of that, stocks could slide further..."

      The Bottom Line:  Yeah don't panic.  Panic is dumb. Here. have some FIAT money we just printed out of thin air.

      SINGAPORE (Reuters) - "Oil prices were steady on Wednesday as mounting concerns over the health of the U.S. economy overshadowed worries that U.S. refinery outages could drag down fuel inventories in the world's top consumer.

      U.S. crude (CLc1: Quote, Profile, Research) eased 7 cents to $71.66 a barrel by 9:29 p.m. EDT while London Brent (LCOc1: Quote, Profile, Research) was unchanged at $70.55

      U.S. consumer confidence plunged to its lowest level in a year in August on worries about a softening labor market and turmoil stemming from the subprime mortgage crisis, helping send U.S. stock markets more than 2 percent lower.

      OPEC Secretary-General Abdullah al-Badri said the subprime fallout had affected the oil demand outlook.

      "The situation in the past couple of weeks has become a lot more serious," Badri told Reuters in an interview.

      Badri said on Monday that he felt the international oil market was well supplied, suggesting OPEC would keep supplies at their current levels when the group next meets on September 11.

      But some analysts have said supplies could be stretched to keep up with demand later this year unless OPEC raises output.

      U.S. oil inventory data, to be released on Wednesday, is expected to show a 1.7 million barrel draw in gasoline stocks and an 800,000 barrel draw in crude inventories in the week to August 24, according to a Reuters poll of analysts.

      "At the moment, oil is quite insulated from what is happening in the equity and credit markets, by all accounts the market (oil) is very tight," said ANZ analyst Andrew Harrington..."

More:

OPEC says subprime crisis clouds demand picture

      WASHINGTON (Reuters) - "A mathematical analysis has confirmed that H5N1 avian influenza spread from person to person in Indonesia in April, U.S. researchers reported on Tuesday.

      They said they had developed a tool to run quick tests on disease outbreaks to see if dangerous epidemics or pandemics may be developing.

      Health officials around the world agree that a pandemic of influenza is overdue, and they are most worried by the H5N1 strain of avian influenza that has been spreading through flocks from Asia to Africa.

      It rarely passes to humans, but since 2003 it has infected 322 people and killed 195 of them.

      Most have been infected directly by birds. But a few clusters of cases have been seen and officials worry most about the possibility that the virus has acquired the ability to pass easily and directly from one person to another. That would spark a pandemic.

      Ira Longini and colleagues at the Fred Hutchinson Cancer Research Center in Seattle looked at two clusters -- one in which eight family members died in Sumatra in 2006, and another in Turkey in which eight people were infected and four died.

      Experts were almost certain the Sumatra case was human-to-human transmission, but were eager to see more proof.

      "We find statistical evidence of human-to-human transmission in Sumatra, but not in Turkey," they wrote in a report published in the journal Emerging Infectious Diseases.

      "This does not mean that no low-level human-to-human spread occurred in this outbreak, only that we lack statistical evidence of such spread."

      NEW YORK (Reuters) - "U.S. stocks fell on Monday after data showed the number of unsold homes reached its highest level in more than 15 years in July, adding to concerns about the housing market and consumer spending.

      Shares of banks, brokers and mortgage lenders fell on nagging credit worries and after Goldman Sachs slashed its earnings forecast on Lehman Brothers, Bear Stearns and Morgan Stanley.

      But trading was light and volatility fell from recent highs with many traders away from their desks on vacation and markets in London closed for a holiday.

      Shares of industrial conglomerates dependent on economic growth, such as United Technologies (UTX.N: Quote, Profile, Research) and General Electric Co (GE.N: Quote, Profile, Research), were among the biggest drags on the market as investors worried about the impact of the housing slump on the economy.

      "Inventories continuing to rise fits part and parcel with the overall credit crunch and weakness in consumer confidence," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

      "But the market is really waiting to see what economic data will indicate for the more recent history -- August -- and will try and read into the tea leaves what the Fed will do next."

      The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 56.74 points, or 0.42 percent, at 13,322.13. The Standard & Poor's 500 Index (.SPX: Quote, Profile, Research) was down 12.58 points, or 0.85 percent, at 1,466.79. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 15.44 points, or 0.60 percent, at 2,561.25.

      Goldman Sachs slashed its third-quarter earnings forecast for Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research), Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research), saying August was one of the worst operating environments for investment banks it had seen in years.

      The Bottom Line:  Where is this going?

      SINGAPORE (Reuters) - "Oil prices were steady at above $72 on Tuesday, with U.S. refinery shutdowns reviving supply concerns, just as the summer driving season draws to a close.

      Traders said the steady prices, despite fresh signs of weakness in the U.S. housing market, are an indication the oil market is refocusing on fundamentals.

      U.S. crude (CLc1: Quote, Profile, Research) inched up 6 cents to $72.03 a barrel by 0113 GMT, building on Monday's 88-cent rise. London Brent (LCOc1: Quote, Profile, Research) rose 7 cents to $71.02 a barrel.

      A series of U.S. refinery outages and lower oil inventory forecasts helped prop up the complex on Monday, extending a summer of high anxiety, after a slew of unscheduled turnarounds drew down stockpiles during the peak driving demand season.

      Prices edged higher after traders said Citgo cut rates at its 156,000-barrel-per-day refinery in Corpus Christi, Texas, after a problem with the alkylation unit.

      Markets are also awaiting news on when Chevron Corp. (CVX.N: Quote, Profile, Research) will restart a crude unit at its giant Pascagoula, Mississippi, refinery, one of the 10 biggest in the United States, following a fire. The company expects to cancel or reroute some crude shipments due to the shutdown.

      Further support came from forecasts U.S. oil inventory data, to be released on Wednesday, would show a 1.3 million barrel draw in gasoline stocks and a 600,000 barrel draw in crude in the week to August 24, according to a Reuters poll of analysts.

      Oil prices have fallen 8.5 percent since reaching a record peak of $78.77 on August 1 as speculators liquidated positions and some traders worried about the wider economic implications of a credit market squeeze.

      Monday's gains came despite a fall in U.S. stock markets after fresh U.S. economic data showing the number of unsold homes at its highest level in more than 15 years in July.

      "Questions over global growth going forward to the end of the year is likely to see OPEC keep their production levels unchanged, at least at their September meeting," said Tobin Gorey, a commodities strategist at Australia's Commonwealth Bank.

      BURLINGTON, Wisconsin (AP) -- "Another round of thunderstorms brought more rain and a flash-flood warning to an already deluged southwestern Wisconsin on Monday, forcing residents below four dams to evacuate.

      Strong wind knocked out power to parts of Vilas and Oneida counties, and the National Weather Service briefly issued a flash flood warning for Vernon County as up to 3.5 inches of rain drenched the area.

      Elsewhere, cleanup and recovery were under way in parts of the Great Lakes region hit hard by last week's storms. President Bush declared north-central Ohio a disaster area, clearing the way for residents of the heavily flooded region to apply for grants for temporary housing and home repairs.

      Storms and flooding were blamed for at least 18 deaths across the upper Midwest.

      In Wisconsin, Bush had declared Vernon and four other counties federal disaster areas after last week's flooding forced people out of their homes.

      With more storms expected Tuesday, about 80 people living below the earthen Runge Hallow, Hidden Valley, Yettri-Primmer and Seas Branch dams were told to evacuate beginning at 4 p.m., said Linda Nederlo, a spokeswoman for Vernon County Emergency Management.

      A week ago, the same dams filled when torrential rains of up to 12 inches caused flooding. All the dams held, but overflow at the Hidden Valley dam caused some erosion..."

More:

Return of Rain Storms Prompts Wisconsin Evacuations

      NEW YORK (MSNBC) - "Bad credit has supplanted terrorism as the gravest immediate risk threatening the economy, a key national research group reported Monday.

      Borrowers’ withering ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples’ minds, according to a survey of 258 members conducted by the National Association of Business Economics.

      NABE, a Washington-based association, said 32 percent of its surveyed members cited loan defaults and excessive debt as their biggest near-term concern.

      Only 20 percent of members cited defense and terrorism as their biggest immediate worry, down from 35 percent when the survey was last conducted in March. Credit risk also topped gas prices, inflation and government spending.

      “Financial market turmoil has shifted the focus away from terrorism and toward subprime and other credit problems as the most important near-term threats to the U.S. economy,” said Carl Tannenbaum, president of NABE and the chief economist at LaSalle Bank/ABN-Amro.

      The market turmoil began earlier this year, when mortgage lenders like New Century Financial Corp. and H&R Block Inc.’s Option One Mortgage Corp. unit reported their clients were missing payments on their home loans more frequently.

      This led the Wall Street banks that finance the mortgage market to ultimately pull much of their money out. With cash draining rapidly from the industry, more than 50 lenders have gone bankrupt and a number of investment funds have gone under.

      Victims of this flare-up include two of the 10 biggest mortgage lenders in the country and two hedge funds managed by Bear Stearns Cos.

      Loan brokers say it has become more difficult for some people to line up mortgages. Subprime loans, or loans to people with spotty credit histories, have all but disappeared as lenders scale back or shut down completely.

      The shakeout in the subprime mortgage market forced investors around the world to reassess how much risk they were willing to stomach. This led to an exodus of cash from investments like securities backed by home loans, short-term corporate bonds and stocks whose values were inflated because they were perceived as takeover targets.

      In the past five weeks, the stock market has lost 5 percent. The dollar fell to an all-time low versus the euro. A number of companies have had to cancel bond sales because of an absence of buyers.

      And, the Federal Reserve has lent billions of dollars to banks from its “discount window,” normally associated with bailouts for struggling financial institutions. The Fed this month issued a statement that the risks to the economy have risen considerably and traders ramped up their expectations the Fed would cut targets for interest rates this year.

      The tumult in the financial markets has led businesses to revisit their interpretation of the housing boom earlier this decade and the easy credit that fueled it, NABE said. The proportion of surveyed members who call it a “serious national bubble” more than doubled from two years ago to 29 percent, the group said..."

      The Bottom Line:  It is going to get a lot worse before it gets any better. 

      TEHRAN, Iran  (Fox) —  "Iran vowed Sunday to use a new 2,000-pound "smart" bomb against its enemies and unveiled mass production of the new weapon, state television reported.

      The government first announced development of the long-range guided bomb Thursday, saying it could be deployed by the country's aging U.S.-made F-4 and F-5 fighter jets.

      "We will use these (bombs) against our enemies when the time comes," Defense Minister Mostafa Mohammad Najjar said on state television Sunday.

      Iran often announces new weapons for its arsenal, but the United States maintains that while the Islamic Republic has made some strides, many of these statements are exaggerations.

      The broadcast included a brief clip of a fighter jet apparently dropping one of the bombs, which destroyed a target on the ground.

      The defense minister continued his threats as state television showed him unveiling a mass production line for the weapon in Tehran.

      "We will use this weapon where we want to ... hit enemy's strategic and defense targets," Najjar said. "This will be used against our enemies, against those who violate our land and air space."

      "All countries of the Middle East, Israel included, are concerned about expansionist Iranian policies, and about their aggressive military arms buildup," Israel's Foreign Ministry spokesman Mark Regev said. "There is no doubt that the regime in Tehran poses a very real threat to the peace and security of the region as a whole."

      The United States and Israel accuse Iran of developing nuclear bombs, a charge Tehran denies. Iran's president has said Israel should be wiped off the map and Israel considers Iran its main enemy.

      Emanuel Winston, a Middle East analyst at the Houston-based Freeman Center for Strategic Studies, said Thursday that Iran's smart bomb claim sounded "plausible" but said that it would be less dangerous than a missile development program given the limited range of the country's aircraft.

      Najjar was more aggressive, saying the bomb "remarkably increases Iran's defense capabilities."

      Iran launched its own arms development program during its 1980-88 war with Iraq in response to a U.S.-led arms embargo. Since 1992, the country has produced its own tanks, armored personnel carriers, and missiles.

      Earlier this month, Iran said it had started industrial-scale production of its own fighter jet, known as Azarakhsh or Lightning, to upgrade its elderly air force, much of which dates from before the 1979 revolution.

      BERLIN (Fox) —  "Tests have found that birds at a poultry farm in southern Germany died of the H5N1 strain of bird flu, and some 160,000 birds were being slaughtered as a precaution, authorities said.

      The virus was detected in ducklings at the farm near Erlangen, in northern Bavaria. A federal lab confirmed that the birds died of the "highly pathogenic" H5N1 variant, the state consumer protection ministry said Saturday.

      For more on bird flu, click here for the FOXnews.com Bird Flu center.

      More than 400 birds had died over a short period of time at the farm, ministry spokeswoman Sandra Brandt said. Authorities planned to start Saturday evening with the slaughter of the 160,000 birds at the farm.

      Several cases of the virus have surfaced among wild birds in Germany this year. Last month, it was detected in a domestic goose in the east of the country.

      The H5N1 virus has killed more than 190 people worldwide, according to the World Health Organization.

      New York (Bloomberg) -- The dollar may decline to a record low against the euro in the next six months because U.S. economic growth will slow, forcing the Federal Reserve to cut interest rates, according to Goldman Sachs Group Inc.

      From the current level of $1.3568 per euro, the U.S. currency will weaken to $1.43 per euro in the next three to six months, Goldman Sachs said in a research note yesterday. New York-based Goldman, the world's biggest securities firm by market value, lowered its dollar forecast from a prior estimate of $1.35. The dollar set a record low of $1.3852 per euro on July 24.

      Concern about losses in investments related to mortgage securities has bolstered expectations the Fed will cut its benchmark interest rate from 5.25 percent at its Sept. 18 policy meeting. Traders are certain the Fed will cut its key rate to at least 5 percent by Sept. 18, futures show.

      ``Financial conditions are tightening at a time when clearly there's some downside risk to the growth,'' said Jens Nordvig, a senior currency strategist at Goldman Sachs in New York. Fed rate cuts ``will drag the dollar lower.''

      The Fed will lower its benchmark interest rate by 0.75 percentage point to 4.5 percent by year-end, according to Goldman Sachs.

      The dollar will fall also because foreign investors will reduce purchases of higher-yielding corporate bonds, said Nordvig.

      The Bottom Line:  Fringe, Alarmist-nutjob I am not. 

      COLUMBUS, Ohio (MSNBC) - "Storms slammed rain-soaked Ohio on Saturday and hundreds of thousands of people in the Midwest were without power after their homes were battered by lashing winds and flooding rains.

      Tornado warnings were issued Saturday afternoon for parts of central and southeast Ohio. Downed trees and power lines were reported in the southern part of the state, said National Weather Service meteorologist Andy Hatzos.

      Flooding this week spread across an 80-mile swath through the northwest and north central parts of the state. Gov. Ted Strickland toured some of the damaged areas Saturday.

      “What I’ve tried to do and what we’ve all tried to do is let these folks know ... that we are working to get assistance to them as rapidly as possible,” Strickland said.

Twisters add to misery
      Powerful storms rolling through the Upper Midwest during most of the past week caused disastrous floods from southeastern Minnesota to Ohio that were blamed for at least 18 deaths.

      In southern Michigan, the skies were clearing Saturday but more than 100,000 customers were without power, utilities said. The National Weather Service confirmed multiple tornadoes touched down Friday in a 12-mile area in Livingston, Genesee and Oakland counties.

      Damage in Fenton was extensive, Mayor Sue Osborn said Saturday. “I have seen houses that have trees go right through them,” she said. Only residents were being allowed into the city, she said.

      Matt McClanahan’s Cohoctah Township home was among at least 17 destroyed by a twister.

      “I’ve seen devastation and I’ve helped clean up, but I’ve never seen it be me,” he said. “I bought a bottle of Jim Beam and it’s in the house. I could really use a sip of that right now.”

      SYDNEY (Reuters) - "The equine influenza outbreak that has brought Australia's racing industry to a standstill is starting to spread, with hundreds of horses now displaying symptoms of the disease.

      Government officials confirmed on Sunday that the disease has spread out of Sydney into rural New South Wales and across the state border into Queensland.

      The government had tried to contain the highly-contagious disease by enforcing an unprecedented nationwide lockdown but their attempts appear to have failed.

      Australia's multi-billion dollar racing industry is already in turmoil because of the outbreak but further spread could threaten this year's Melbourne Cup and even jeopardize security plans for next month's APEC summit.

      The outbreak was initially restricted to two sites in Sydney, with just 16 horses testing positive when the shutdown was implemented on Saturday, but that figure had swollen to more than 200 by early on Sunday with the likelihood of more to come.

      Agriculture Minister Peter McGauran said there had already been one confirmed case of a horse testing positive outside Sydney and another nine horses in rural areas showed symptoms.

      Queensland Premier Peter Beattie said three horses had returned suspect results at an Equestrian World Cup event in Warwick, hundreds of kilometers north of Sydney.