CHARLOTTE, N.C. (AP) -- "Bank of America Corp. is liquidating a privately placed, enhanced institutional cash fund amid withering losses on complex asset-backed securities, the bank said Monday.  The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $34 billion on Nov. 30, currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new

      The loss is related to the subprime-mortgage crisis that has rippled across the globe, Goldstein said.

      "The conditions have really weakened the performance across the industry, including this one," Goldstein said.

      Columbia Management approached some of the biggest investors in the fund to redeem "in kind," which means they get their share of the fund's assets put into a separately managed account managed by Columbia, according to Jon Goldstein, a spokesman for Bank of America.

      The enhanced money fund was a short-term investment pool that offered higher yields than a traditional money-market fund. It had some money invested in so-called structured investment vehicles, or SIVs, which have been buffeted by this year's credit crisis.

      Unlike traditional money-market funds, the Strategic Cash fund was not required to maintain a $1-per-share net asset value, although the fund was managed toward that goal, Goldstein said.

      The Strategic Cash portfolio was open only to investors with a minimum of $25 million or more. Columbia Management is the bank's Boston-based asset management arm.

More:

Weak dollar induces a dream world

Will the Commercial Real Estate Market Fall?  Of course it will.

UK welcomes world cash injetion

Derivative Trades Jump 27% to Record $681 Trillion

The Fed's tightrope act

Citi moves $49B onto balance sheet

Greenspan: Recession odds growing on slowing economy

US factory prices at 34-year high

      COLUMBIA, Connecticut (AP) -- "A winter storm responsible for deaths in the Midwest blasted the Northeast on Thursday, dumping snow and sleet and clogging some of the nation's most heavily traveled highways.

      Some parts of the Northeast could receive up to a foot of snow. Schools, businesses and government agencies in Massachusetts, Pennsylvania, New York, New Jersey, Rhode Island and Connecticut closed early.

      The resulting exodus choked highways and streets. Authorities reported hundreds of mostly minor accidents throughout the region. Some vehicles were stranded along roadways, preventing plows from getting through.

      Connecticut Gov. M. Jodi Rell found herself stuck, crawling along the highway at 5-10 mph for two hours from Suffield to Hartford in what should have been a 30-minute drive.

      While the traffic crawled along Interstates 95, 84 and 91, it also slowed at Northeast airports.

      There were delays up to three hours for arriving flights at Newark Liberty International Airport in New Jersey, where more than 200 flights had been canceled by late afternoon, officials said..."

      The Bottom Line:  The Global Warming made it so cold and snowy!  Right Gore?

-  Virus Starts Like a Cold But Can Turn Into a Killer

      Gilbert alerted state health officials, a decision that led investigators to realize that a new, apparently more virulent form of a virus that usually causes nothing worse than a nasty cold was circulating around the United States. At least 1,035 Americans in four states have been infected so far this year by the virus, known as an adenovirus. Dozens have been hospitalized, many requiring intensive care, and at least 10 have died.

      Health officials say the virus does not seem to be causing life-threatening illness on a wide scale, and most people who develop colds or flulike symptoms are at little or no risk. Likewise, most people infected by the suspect adenovirus do not appear to become seriously ill. But the germ appears to be spreading, and investigators are unsure how much of a threat it poses.

      "This virus has the capability of causing severe respiratory illness in people of all ages, regardless of their medical condition," said John Su, a disease investigator for the Centers for Disease Control and Prevention based in Texas, where the largest outbreak is tapering off at an Air Force base after 10 months. Other outbreaks have been reported in Washington state and South Carolina, along with a single case in an infant in New York City.

      "What people need to understand is that there is a virus out there that can make you very, very sick," Su said. "If you have a bad cold and your symptoms keep getting worse, go see your doctor. This is nothing to be necessarily alarmed about. But it is important to be aware that this bug is out there.".."

      Cape Coral, Fla. (csmonitor.com) - "The current deflation of home prices is changing America.

      It's a real estate storm that made landfall like a slow-moving Gulf Coast hurricane here in south Florida and in other once-booming housing markets last year. In recent months it has gathered momentum and spread, shaping up to become perhaps the worst home-price slump since the 1920s and '30s.

      The bust promises to have lasting effects. Among them:

•It is defining the limits, for now, of what President Bush has called the "ownership society." A surging foreclosure rate means that the rate of homeownership, after a historic rise, is falling.

•It's forcing a rethink of economic policy. The Federal Reserve is expected to ease interest rates this Tuesday. Over the longer term, today's hard lessons might influence the way the Fed and the mortgage market operate.

•It affects the mood of America entering the year of an up-for-grabs presidential election.

•It marks a pocketbook shift for consumers – and perhaps even global investors – from an era of housing-fueled wealth to belt-tightening. Real estate can no longer be viewed as a surefire investment.

      "We are in the aftermath of the biggest housing boom in history," says Robert Shiller, a Yale University economist. "We are in a period of exceptional uncertainty about the value of our homes."

      It is that issue – how far home prices rose – that sets this bust apart from other US housing downturns in the past century. This is more than a typical cycle where the pace of home building plummets. And this goes well beyond a crisis of subprime borrowers..."

More:

Beware of Unintended Consequences

Why the Fed bailout might not work

      MOSCOW (AFP) — "Russia on Wednesday walked out of a key Cold War treaty setting limits on troops and weapons across Europe, but promised there were no immediate plans for a major military build-up.

      Russia's participation in the Conventional Forces in Europe (CFE) treaty was suspended from midnight in Moscow (2100 GMT Tuesday), the Russian Foreign Ministry said in a statement.

      "Such a step has been caused by the exceptional circumstances connected to the content of the treaty which concern the security of Russia and demand that we take immediate measures," the ministry statement said.

      Signed in 1990 and modified in 1999, the CFE places precise limits on the stationing of troops and heavy weapons from the Atlantic coast to Russia's Ural mountains -- a mammoth agreement that helped resolve the Cold War standoff.

      President Vladimir Putin, who has made a priority of restoring Russian military might, signed a decree ordering Moscow's suspension of the treaty last month.

      Suspension means troops can now be moved around the country without notifying NATO.

      The foreign ministry said that Russia was no longer "constrained by the limitations placed on arms deployments on its flanks."

      However, the ministry added a reassuring note, saying: "We have no current plans to accumulate massive armaments on our neighbours' borders."

      The Bottom Line:  The Ruskies aren't playing nice anymore.

-  Study: Part of Global-Warming Model May Be Wrong

      Atlanta (Fox) - "Part of the scientific consensus on global warming may be flawed, a new study asserts.

      The researchers compared predictions of 22 widely used climate "models" — elaborate schematics that try to forecast how the global weather system will behave — with actual readings gathered by surface stations, weather balloons and orbiting satellites over the past three decades.

      The study, published online this week in the International Journal of Climatology, found that while most of the models predicted that the middle and upper parts of the troposphere —1 to 6 miles above the Earth's surface — would have warmed drastically over the past 30 years, actual observations showed only a little warming, especially over tropical regions.

      "Can the models accurately explain the climate from the recent past? It seems that the answer is no," said lead study author David H. Douglass, a physicist specializing in climate at the University of Rochester.

      Douglass and his co-authors S. Fred Singer, a physicist at the University of Virginia, and John R. Christy, a climatologist at the University of Alabama at Huntsville, are noted global-warming skeptics.

      However, Christy was a major contributor to the 2001 report by the Intergovernmental Panel on Climate Change, and is one of the world's premier authorities on collection and analysis of satellite-derived temperature data, having been commended by both NASA and the American Meteorological Society for his efforts.

      "We do not see accelerated warming in the tropical troposphere," said Christy. "Instead, the lower and middle atmosphere are warming the same or less than the surface."

      The difference between the climate models and the satellite data has been known for several years.

      Studies in 2005 found that improper compensation for temperature differences between day and night was the cause of most of the satellite-data discrepancy, a correction that Christy has accepted.

      No explanation has been put forth for the weather-balloon discrepancy..."

      "Three-month dollar Libor spreads have jumped by 60 to 80 basis points over the last month. High yield spreads have widened even more significantly. The absolute cost of borrowing is higher than in June."

      "As delinquencies and defaults soar, lenders are tightening credit for commercial, credit card and auto lending, as well as for all mortgage borrowers," said the report, written by the bank's chief US economist Dick Berner. He said the foreclosure rate on residential mortgages had reached a 19-year high of 5.59pc in the third quarter while the glut of unsold properties would lead to a 40pc crash in housing construction.

      "We think overall housing starts will run below one million units in each of the next two years -- a level not seen in the history of the modern data since 1959," he said.

More:

Debt Be Not Proud

The Unintended Consequences of the Housing Bubble Bursting

Credit 'Crunch' - or Credit Collapse?

Fannie Mae to Issue $7 Billion In Stock to Help Steady Itself

Housing crisis killing holiday-shopping spirit

The Fed Fails to Change Reality

Wall Street to Fed:  Not good enough

Fed cuts rates by a quarter point

Investors dumps stocks after Fed's modest rate cut

Buffett says economy close to recession

Freddie Mac sees $12bn credit hit

Fed Disappoints Wall Street; Dow Dives 294 Points

      "I've been scrounging all the wood I can," he said. "I'm going to get out there and get the bigger limbs down, but the wet weather is what's making it so bad."

      Turner was among a million utility customers who were struggling without electricity in the nation's midsection after a massive storm dropped sleet and freezing rain across much of Kansas, Missouri, Illinois and Iowa. The system has been blamed for at least 24 deaths since it developed last weekend.

      Glistening, ice-covered roads contributed to many of the deaths. Downed power lines caused dozens of fires in Oklahoma. And then there was the problem of staying warm because officials cautioned that electricity may not be restored for days, if not weeks..."

      The Bottom Line:  What a way to kick off the snow and ice season.

-  Bird flu case suspected at S.Korea poultry farm

      SEOUL (Reuters) - "South Korea said ducks at a poultry farm tested positive for an antibody to a bird flu virus, Yonhap news agency reported on Tuesday.

      There was no information on which strain of bird flu, at the farm in Paju, around 24.85 miles north of Seoul, had been identified. Results of further testing should be known in about two weeks, a local official told Yonhap news agency.

      South Korea's agriculture ministry was unable immediately to confirm the Yonhap report.

      The seven pillars of global demand over the last year - measured by current account deficits - have been the United States ($793bn), Spain ($126bn), UK ($87bn), Australia ($50bn), Italy ($48bn), Greece ($42bn), and Turkey ($34bn). Most are facing a housing bust. All are in trouble.

      China cannot possibly step into the breach. Jahangir Aziz and Xiangming Li argue in a new IMF paper that China's economy is now so geared to the US and EU markets that a 1pc fall in external demand will lead to a 4.5pc slide in exports and 0.75pc fall in GDP. Assumptions that it will weather a global shock are "likely to be wrong, perhaps dramatically".

      China is gobbling up iron ore, soy beans and crude oil, but it accounts for less than 4pc of global consumption and is no longer adding to total demand. Imports have been flat since April. China is boosting GDP at the world's expense, by snatching markets with a cheap yuan. It is beggar-thy-neighbour growth.

      Note that Goldman Sachs, Morgan Stanley, and Lehman Brothers have all begun to tear up the "decoupling" manual - the pre-crunch script assuring us that the world could get along fine as the US buckled. "What began as a US-specific shock is morphing into a global shock," said Peter Berezin, a Goldman Sachs strategist. "There is a clear risk that some of the hot housing markets in Europe and some emerging markets will cool dramatically."

      In Europe, not a single junk bond has been issued since August. Spreads on Euribor - the rate used to price mortgages in Spain, France, Italy, and Ireland - reached 93 basis points last week, a new record. This is tantamount to four rate rises.

      Thomas Mayer, Europe economist for Deutsche Bank, said the European Central Bank must cut rates immediately, regardless of the lingering inflation threat. "This could go beyond just a normal recession. It could turn into a real economy-wide crunch that we cannot stop," he said..."

More:

The Fed: 'Pushing on a String'

Fallout from the 'Strategic Failure of a Whole Generation of Economists, Bankers, and Policymakers'

US central bank set to cut rates [again]

      KANSAS CITY, Missouri (Reuters) - "A vicious ice storm sweeping through the U.S. Plains left more than 600,000 people without power as frigid temperatures plunged and contributed to at least 14 deaths, authorities said on Monday.

      The icy blast downed tree limbs and power lines, leaving more than 500,000 people without power in Oklahoma, where shelters opened throughout the region for those driven from cold and dark homes, and national guardsmen and volunteers were transporting food and water to hard-hit areas.

      "This particular storm is now the worst in company history in terms of customers affected," said Brian Alford, spokesman for Oklahoma Gas and Electric.

      Crews were sent from Texas, Louisiana, Indiana and Mississippi to help repair power lines, which snapped seemingly as quickly as they could be repaired.

      The storm also shut down electricity service to more than 102,000 people in Missouri, more than 11,000 people in Illinois and about 5,000 in Kansas.

      SAN DIEGO (MarketWatch) -- "The reality of Generally Accepted Accounting Principles, or GAAP, is that they give companies just enough rope to hang themselves and their investors, if they so please. Much of GAAP is so subjective that you could drive side-by-side snow plows through the gray areas.

      That is something to keep in mind if, with the latest wave of write-offs, you believe it is time to start bargain hunting among the most beaten-down financial-services companies tied to the mortgage blowup. The time may very well be right, but a recent report by Gradient Analytics warns that financial-reporting practices of some of these companies yesterday and today could still come back to bite investors tomorrow.

      Gradient, a Scottsdale, Ariz., research firm that caters to mutual funds and hedge funds, was early to spot accounting issues at Krispy Kreme Doughnuts Inc. (KKD: news), Biovail Corp. (BVF: news) and Children's Place Retail Stores Inc. (PLCE: news), among others, and their stocks subsequently tumbled.

      "I think for a number of years they played games," Donn Vickrey, a former accounting professor who co-founded and is now editor-in-chief of Gradient, says about the financial-services companies.

      The Bottom Line:  They won't stay hidden for much longer.

      Des Moines (economist.com) - "For as long as most people can remember, food has been getting cheaper and farming has been in decline. In 1974-2005 food prices on world markets fell by three-quarters in real terms. Food today is so cheap that the West is battling gluttony even as it scrapes piles of half-eaten leftovers into the bin.

      That is why this year's price rise has been so extraordinary. Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005. No doubt farmers will meet higher prices with investment and more production, but dearer food is likely to persist for years (see article). That is because “agflation” is underpinned by long-running changes in diet that accompany the growing wealth of emerging economies—the Chinese consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the stuff this year. That in turn pushes up demand for grain: it takes 8kg of grain to produce one of beef.

      But the rise in prices is also the self-inflicted result of America's reckless ethanol subsidies. This year biofuels will take a third of America's (record) maize harvest. That affects food markets directly: fill up an SUV's fuel tank with ethanol and you have used enough maize to feed a person for a year. And it affects them indirectly, as farmers switch to maize from other crops. The 30m tonnes of extra maize going to ethanol this year amounts to half the fall in the world's overall grain stocks.

      Dearer food has the capacity to do enormous good and enormous harm. It will hurt urban consumers, especially in poor countries, by increasing the price of what is already the most expensive item in their household budgets. It will benefit farmers and agricultural communities by increasing the rewards of their labour; in many poor rural places it will boost the most important source of jobs and economic growth.

      Although the cost of food is determined by fundamental patterns of demand and supply, the balance between good and ill also depends in part on governments. If politicians do nothing, or the wrong things, the world faces more misery, especially among the urban poor. If they get policy right, they can help increase the wealth of the poorest nations, aid the rural poor, rescue farming from subsidies and neglect—and minimise the harm to the slum-dwellers and landless labourers. So far, the auguries look gloomy..."

      The Bottom Line:  Time to go on a diet to save food?  Maybe.

-  Ice storm blamed for 5 deaths, power failures, canceled flights


      ST. LOUIS, Missouri (AP) -- "An ice storm slickened roads and sidewalks, grounded hundreds of flights, and cut power to tens of thousands Sunday in a swath from the Southern Plains to the Great Lakes as even colder weather threatened.

      The wintry weather was expected to continue through midweek, and ice storm warnings stretched from Texas to Pennsylvania.

      "Tomorrow may be even more of a dilemma than today because we're going to get even a little bit more colder," said John Pike, a meteorologist at the Weather Service's office in Norman, Oklahoma.

      Five traffic deaths were blamed on icy roads in Oklahoma.

      More than 130,000 customers lost power in Missouri, Oklahoma, Illinois and Kansas, utilities reported.

      Some communities in Missouri reported ice as thick as three-quarters of an inch, the National Weather Service said.

      New York (Bloomberg) -- "It turns out the U.S. economy matters after all.

      The credit collapse and dollar decline that followed a surge in U.S. home foreclosures jeopardize expansions in the U.K., Canada and Germany, economists said. They also debunk ``decoupling,'' an argument advanced by analysts at Goldman Sachs Group Inc. and Morgan Stanley that the world wouldn't suffer as it did during U.S. slowdowns in previous decades.

      The Bank of England and Bank of Canada this week followed the Federal Reserve in cutting interest rates, and the European Central Bank lowered its growth forecast for next year. British policy makers reduced their benchmark rate yesterday, even after Governor Mervyn King expressed concern about inflation just two weeks earlier.

      ``Two thousand and eight will be the year of `recoupling','' said Peter Berezin, an economist at Goldman in New York, explaining his firm's about-face. ``What began as a U.S.-specific shock is morphing into a global shock.''

      Of the 38 countries they monitor, Goldman economists expect growth to slacken in 26 and strengthen in a dozen. That will cause global growth to slow to 4 percent next year from 4.7 percent this year, with Europe and Japan fading faster than the U.S., they say.

      ``There are a lot of risks out there,'' Goldman Chief Economist Jim O'Neill said in an interview today.

      Market lending rates have risen worldwide in the last three weeks as $70 billion of writedowns linked to defaults on U.S. subprime mortgages fanned international concern about the strength of financial institutions..."

      The Bottom Line:  Enjoy the ride as we circle the drain faster and faster.  Personally I'm getting dizzy and I want off this ride.

      For nearly two years, OPEC's second biggest producer has been reducing its exposure to the dollar, saying the weak U.S. currency is eroding its purchasing power.

      Iranian President Mahmoud Ahmadinejad, who often rails against the West, has called the U.S. currency a "worthless piece of paper."

      Foes since Iran's 1979 Islamic revolution, Tehran and Washington are also at odds over Tehran's disputed nuclear programme as well as over policy in Iraq.

      "In line with the policy of selling crude oil in currencies other than the U.S. dollar, currently the sale of our country's oil in U.S. dollars has been completely eliminated," ISNA reported after talking with Nozari.

      Nozari told ISNA: "In regards to the decrease in the dollar's value and the loss exporters of crude oil have endured from this trend, the dollar is no longer a reliable currency."

      "This is why, at the meeting of the heads of states, Iran proposed to OPEC members that a currency (for oil exports) would be determined that would be reliable and would not cause any loss to exporter countries," he said.

      At a November summit of Organization of the Petroleum Exporting Countries heads of state, Iran suggested oil should be sold in a basket of currencies rather than dollars, but failed to win over other members except Venezuela.

      Ahmadinejad and his Venezuelan counterpart, Hugo Chavez, are vocal critics of U.S. influence in the world.

      The Bottom Line:  Can anyone say "Catalyst"?

-  Whooping cough outbreak at S.C. college


      GREENVILLE, S.C. (MSNBC) - "Sixteen students at Bob Jones University have or are suspected of having whooping cough, leading officials to end the fall semester about a week early, officials said.

      The college ended its semester Friday and canceled several public events.

      “Based on information from health officials we do not believe the illness will spread as our students go home to their families,” university spokeswoman Carol Keirstead said.

      The outbreak appears to have started when one infected student returned to campus this fall, Keirstead said. Twelve students are confirmed to have the bacterial infection, while another four cases are suspected, Keirstead said.

      An additional 158 students were tested, isolated and given antibiotics, while 1,200 students who showed no symptoms were given antibiotics as a precaution, she said.

      “Our response with antibiotic treatment, the vaccinations and the isolation represents very aggressive precautionary measures and we think that very much contributed to keeping the numbers as low as they are,” Keirstead said..."