NEW YORK (Reuters) - "Oil prices rose above $71 a barrel on Friday as investors focused on falling gasoline and crude stocks in key regions of the United States, the world's top consumer.

      London Brent crude (LCOc1: Quote, Profile, Research) settled up 89 cents at $71.41 a barrel. U.S. crude oil (CLC1: Quote, Profile, Research) settled $1.11 at $70.68, the highest settlement since August 25.

      Oil gained following a U.S. government report Wednesday that showed gasoline stocks off 700,000 barrels last week. Crude inventories at Cushing, Oklahoma, the delivery point for the U.S. crude benchmark, dropped 1.4 million barrels.

      "The inventory numbers are giving the pattern for the rest of the week," said Kevin Blemkin, an oil broker at Man Financial.

      While U.S. crude stocks nationwide rose by 1.6 million barrels to a nine-year high, the drop at Cushing has supported gains for U.S. crude prices and helped narrow their discount to Brent to below $1 a barrel..."

      It's getting quite interesting to see all of this "wealth" and "prosperity" seemingly unravel.

• Anti-terror chief: "These vehicles are clearly linked"
• Two vehicles loaded with fuel and nails safely removed
• Police hunt driver who abandoned explosives-packed car outside nightclub
• Bomb could have resulted in serious loss of life, anti-terror chief says

      LONDON, England (CNN) -- "A vehicle containing fuel, gas canisters and nails found early Friday near Trafalgar Square is "clearly linked" to another explosives-packed car found outside a nightclub near Piccadilly Circus, Metropolitan Police said.

      A "considerable" amount of fuel and gas canisters, along with a "substantial quantity of nails," was found in the blue Mercedes 280E, said Peter Clarke, Metropolitan Police deputy assistant commissioner.

      He called the discovery of the second bomb "troubling," but urged the public to remain vigilant and report suspicious behavior to authorities.

      The second vehicle was ticketed about 2:30 a.m. Friday (9:30 p.m. Thursday ET), Clarke said. It was near Trafalgar Square, roughly a half-mile from where the first vehicle -- also a Mercedes -- had been found about an hour earlier.

      About 3:30 a.m., Clarke said, the Mercedes was taken to an impound lot in Hyde Park. Security sources earlier told CNN that workers who towed it thought the car smelled of gasoline, and became suspicious because of the reports that gasoline was among the explosive materials found in the first vehicle.

      Clarke said the second device, like the first, was "potentially viable" but was rendered safe by police explosives officers.

      "These vehicles are clearly linked," he said.

      The first car, a silver Mercedes-Benz sedan, was discovered about 1:30 a.m. when an ambulance crew called to treat an ill person noticed what appeared to be smoke inside the car and notified authorities, London police said.

      The car was parked in front of the Tiger Tiger club, and the discovery prompted the closing of several streets until the vehicle was hauled off nine hours later..."

     United Kingdom (BBC) - "Flood-hit communities are being warned to brace themselves for more torrential rain over the weekend.

       The Met Office has issued a severe weather warning for large areas of England and Wales, with up to 50mm (2in) of rain forecast in some places.

       A national flood support centre has been set up in Worcester to respond to further outbreaks of severe weather.

       Widespread flooding in England earlier this week killed four people and forced thousands from their homes.

Extra resources

       Simon Hughes, flood defence manager for the Environment Agency, told BBC Radio Five Live that more flooding was expected.

       "With the land being just so saturated, more rain's going to mean more flooding," he said.

      Financial Pucker Factor.  Very interesting to see the suits squirm like this.

      LONDON (Reuters) - "Russia has successfully tested a new, sea-based ballistic missile from a nuclear submarine, officials have said.

       The weapon, capable of breaching anti-missile defence systems, flew almost the whole length of the country.

       US plans to build a missile defence shield in Europe have angered Russia, which sees the proposal as a challenge to its influence in the region.

       The Russian test comes as President Vladimir Putin heads for the US to meet President George W Bush on Sunday.

'Key component'

       The Bulava missile was launched from the White Sea off Russia's north-west coast.

       The intercontinental missile hit its target on the Pacific Ocean peninsula of Kamchatka.

       Three earlier tests of the weapon in recent years had failed.

       The Bulava is designed to have a range of 10,000km (6,200 miles) and carry six individually targeted nuclear warheads.

       Russian President Vladimir Putin has described the missile as a key component of Moscow's future nuclear forces, saying it can penetrate any prospective missile defence system..."

     Texas (Fox) - "MARBLE FALLS, Texas —  More rain fell Thursday in flood-weary parts of Texas, where evacuations were under way and residents were bracing for even more of the constant downpours that have killed 11 people in recent days.

      Officials reported calls for dozens of rescues in San Antonio, and hundreds of people were being ordered to leave their homes near the bloated Brazos River in North Texas.

      Lt. Gov. David Dewhurst, acting as governor while Gov. Rick Perry is out of the country, surveyed damage Thursday in the lakeside community of Marble Falls, which was drenched by as much as 18 inches of rain early Wednesday. No one was killed, but there were 32 water rescues and widespread damage..."

     MARBLE FALLS, Texas (AP) -- "Storms dumped up to 18 inches of rain on parts of central Texas, flooding several towns and stranding dozens of people on rooftops, cars and in trees Wednesday.

      No fatalities were immediately reported in the latest in a series of storms blamed for at least 11 deaths in the past week and a half. The downpour and winds were so treacherous early Wednesday that helicopters were forced to abruptly halt efforts to rescue people from rooftops.

      The rain was heaviest in the Marble Falls area, about 40 miles northwest of Austin in the Texas Hill Country, where Mayor Raymond Whitman said there were 32 high-water rescues.

      Much of the water had receded by Wednesday afternoon, but city officials expected several more inches of rain over the next 24 hours.

      "The ground is fully saturated ... it could be severe," Whitman said. "If people do not pay attention and move to high ground, it is very possible that there will be fatalities."

      Yikes, maybe installing a small row-boat and landing on your roof isn't such a crazy idea anymore...

     LONDON (Reuters) - "Oil rose sharply on Wednesday after a U.S. government report showed a surprise drop in fuel inventories in the world's top consumer, renewing concern about supply in the midst of peak summer driving demand.

      U.S. stockpiles of gasoline and distillates dropped unexpectedly last week as a slump in imports countered an increase in production from domestic refineries, the report showed.

      "This is a bullish report, but it is even more bullish given the fact that many were looking for product inventories to move the other way," said Phil Flynn, analyst Alaron Trading in Chicago.

      London Brent crude, currently seen as a better indicator of the global market than U.S. oil, was up 68 cents at $70.85 by 1610 GMT, after falling $1.19 on Tuesday. U.S. crude was up $1.06 at $68.83.

     Africa (BBC) - "Tens of millions of people could be driven from their homes by encroaching deserts, particularly in sub-Saharan Africa and Central Asia, a report says.

       The study by the United Nations University suggests climate change is making desertification "the greatest environmental challenge of our times".

       If action is not taken, the report warns that some 50 million people could be displaced within the next 10 years.

       The study was produced by more than 200 experts from 25 countries.

Scarce resources

     NEW YORK (Reuters) - "Bear Stearns Asset Management CEO Richard Marin is taking a stronger role in managing its two troubled hedge funds and tapped mortgage unit head Thomas Marano to save one of the funds, two sources familiar with the decision said.

      Marin appointed Marano last week to help with the funds managed by Ralph R. Cioffi, who retains his current role as portfolio manager for both funds, said one source.

      Company spokesman Russell Sherman declined to comment.

      Bear Stearns Cos. Inc. (BSC.N: Quote, Profile, Research) said on Tuesday it does not plan to bail out the High-Grade Structured Credit Strategies Enhanced Leverage Fund, the second of two struggling hedge funds.

      Instead it will provide $1.6 billion of financing to save its High-Grade Structured Credit Strategies Fund. Days earlier the bank had said it would provide up to $3.2 billion in financing.

      Marano is a longtime Bear Stearns banker who joined the firm in the 1980s and rose through the ranks to become head of the company's mortgage and asset-backed securities business.

MARKETS

      Stocks fell and Treasuries edged higher late on Tuesday on concern that problems stemming from defaults by less-creditworthy mortgage holders could reverberate through the markets.

      "...all the King's horses, and all the King's men, they couldn't put Humpty together again."

     Moscow (BBC)  —  "Russia and the West should tone down their rhetoric in their bitter disputes over defence, Kosovo and other issues, Nato's secretary general has said.

       "There is no reason to speak with megaphones," Jaap de Hoop Scheffer told reporters after talks in Moscow.

       Russian President Vladimir Putin has threatened to point missiles at Europe if the US stations parts of a new missile shield near Russia's borders.

      Moscow also opposes a Western-backed plan for independence in Kosovo.

       Mr de Hoop Scheffer was in Moscow to mark the fifth anniversary of the Nato-Russia Council.

       "It is advisable to lower the volume of public comments on both sides," he said after talks with President Putin.

       "Given our starting point as Cold War adversaries, the task of building a genuine Russia-Nato partnership has never been an easy one.".."

     Linköaping, Sweden (National Geographic) - "In a quest to wean itself off oil, Sweden is turning to an unusual alternative fuel: smuggled alcohol.

      Last year, the Swedish government confiscated almost 200,000 gallons (more than 700,000 liters) of alcohol that was illegally brought into the country.

      It used to be standard procedure for customs officials to pour the stuff down the drain.

      Now the beer, wine, and spirits are instead converted into biofuel—which helps power thousands of cars, buses, taxis, garbage trucks, and even a train.

      "This alcohol, which used to go to waste, is now turned into something that's positive for the environment," said Ingrid Jarlebrink of Tullverket, the Swedish Customs agency based in Malmö, Sweden.

      Indeed, recycling alcohol is just one of a number of alternative transport fuels in use in Sweden.

      (See related: " Here's the Scoop: San Francisco to Turn Dog Poop Into Biofuel" [March 21, 2006].)

      More than one-quarter of all the energy consumed in Sweden in 2004 came from renewable sources—more than four times as much as the European Union average of 6 percent. In the capital, Stockholm, one-quarter of city buses run on ethanol or biogas.

       In 2006 the Swedish government pledged to become the world's first oil-free country by 2020...

       ...the seized alcohol—along with other fuel sources, such as animal remains from slaughterhouses and human waste—is heated and put into anaerobic digesters. The organic materials are broken down, producing the biogas.

      Almost 250 million cubic feet (7 million cubic meters) of clean-burning biogas is produced a year.

      In Linköaping, a city of 140,000, biogas makes up 5 to 6 percent of transportation fuel use, and all of its public buses run on the alternative fuel.

      For every liter of gasoline that is burned, 2.5 kilograms of carbon dioxide is produced, said Carl Lillehöök, managing director of Swedish Biogas.

      "By replacing 5 million liters (1.3 million gallons) of gasoline with 5 million cubic meters (176 million cubic feet) of biogas, we can save 12,000 metric tons of carbon dioxide in Linköaping alone," he said..."

      NEW YORK (Reuters) - "U.S. stocks closed lower on Monday as growing concerns about the subprime mortgage market dragged down shares of Bear Stearns Cos. (BSC.N: Quote, Profile, Research) and Goldman Sachs Group (GS.N: Quote, Profile, Research).

      Shares of Bear Stearns Cos. (BSC.N: Quote, Profile, Research), which last week bailed out a hedge fund it manages that is heavily invested in subprime mortgages, dropped more than 3 percent after a Merrill Lynch & Co. analyst said the brokerage may need to stump up more cash to rescue a second fund.

      Shares of Goldman Sachs Group Inc. (GS.N: Quote, Profile, Research) fell 2.5 percent after Citigroup Inc. said Goldman's subprime mortgage bonds issued last year are being downgraded at the fastest rate of any issuer.

      "There are still a lot of potential concerns with fallouts from the subprime mortgage market," said Michael James, senior equity trader at Wedbush Morgan Securities in Los Angeles. "Broker stocks, with the exception of Morgan Stanley, have been pretty weak all day."

      The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 8.21 points, or 0.06 percent, at 13,352.05. The Standard & Poor's 500 Index (.SPX: Quote, Profile, Research) was down 4.82 points, or 0.32 percent, at 1,497.74. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 11.88 points, or 0.46 percent, at 2,577.08.

      This plus an "Emergency Meeting" by the FRB Chairman, Bernanke and those of his counterparts in the U.K and Europe have a lot of financial insiders wringing their hands and sweating bullets.  Whatever the outcome, this will affect everyone.

     Yorkshire, U.K. (BBC)  —  "Hundreds of people were told to flee their homes amid fears a reservoir dam was set to crumble after torrential rain brought chaos to South Yorkshire.

       Two people were killed in Sheffield as floods raged through the city.

       A man was swept away as he got out of his car and police hunting a missing teenager recovered a body from a swollen river.

       But hours later more disaster loomed as a dam holding back the Ulley reservoir threatened to break.

       About 100 homes in the areas of Catcliffe, Whiston and Canklow were being cleared by police officers after engineers signalled a warning over the dam wall.

     WASHINGTON (Reuters) - "A divided Supreme Court on Monday curtailed free-speech rights for students, ruling against a teenager who unfurled a banner saying "Bong Hits 4 Jesus" because the message could be interpreted as promoting drug use.

      In its first major decision on student free-speech rights in nearly 20 years, the high court's conservative majority ruled that a high school principal did not violate the student's rights by confiscating the banner and suspending him.

      The decision marked a continuing shift to the right by the court since President George W. Bush appointed Chief Justice John Roberts and Justice Samuel Alito. The court has issued a series of narrow 5-4 decisions on divisive social issues like abortion and the death penalty.

      ATLANTA (MSNBC) - "A dangerous drug-resistant staph germ may be infecting hospital patients at about 10 times the rate health officials had previously estimated, according to a new comprehensive study.

      At least 30,000 U.S. hospital patients may have the superbug at any given time, according to a survey released Monday by the Association for Professionals in Infection Control and Epidemiology.

      Some federal health officials said they had not seen the study and could not comment on its methodology or its prevalence. But they welcomed added attention to the problem.

      “This is a welcome piece of information that emphasizes that this is a huge problem in health-care facilities, and more needs to done to prevent it,” said Dr. John Jernigan, an epidemiologist with the U.S. Centers for Disease Control and Prevention.

      At issue is a superbug known as Methicillin-resistant Staphylococcus aureus, which cannot be tamed by certain common antibiotics. It is associated with sometimes-horrific skin infections, but it also causes blood infections, pneumonia and other illnesses.

      The potentially fatal germ, which is spread by touch, typically thrives in health-care settings where people have open wounds. But in recent years, “community-associated” outbreaks have occurred among prisoners, children and athletes, with the germ spreading through skin contact or shared items such as towels.

      Past studies have looked at how common the superbug is in specific patient groups, such as emergency-room patients with skin infections in 11 U.S. cities, dialysis patients or those admitted to intensive care units in a sample of a few hundred teaching hospitals.

      46 out of 1,000 patients infected

      It’s difficult to compare prevalence estimates from the different studies, experts said, but the new study suggests the superbug is eight to 11 times more common than some other studies have concluded.

      The new study was different in that it sampled a larger and more diverse set of health-care facilities. It also was more recent than other studies, and it counted cases in which the bacterium was merely present in a patient and not necessarily causing disease.

       The infection control professionals’ association sent surveys to its more than 11,000 members and asked them to pick one day from Oct. 1 to Nov. 10, 2006, to count cases of the infection. They were to turn in the number of all the patients in their health care facilities who were identified through test results as infected or colonized with the superbug.

      The final results represented 1,237 hospitals and nursing homes — or roughly 21 percent of U.S. inpatient health-care facilities, association officials said..."

      These bugs have been living on a diet of over-prescribed, underpowered anti-biotics and having your lymphocites for dessert.

     CHICAGO (Fox)  —  "The Rev. Jesse Jackson was arrested Saturday at a demonstration outside a south suburban gun shop and charged with one count of criminal trespass to property.

      Jackson was arrested when he refused to move away from the entrance to Chuck's Gun Shop in Riverdale, police said. He has protested with other community activists outside the shop in recent weeks after a 16-year-old honor student was gunned down on a city bus.

      Police said the shooting was gang-related but the teen was not the intended target.

      Jackson, who says the gun shop's proximity to Chicago provides gang members and criminals easy access to firearms, has used the protests to call for stricter gun laws.

      The Rev. Michael Pfleger, a Catholic priest who oversees a South Side congregation, also was arrested and charged with Jackson.

      A message seeking comment from the gun shop was not immediately returned Saturday afternoon.

      Two teens have been charged as adults with taking part in the May shooting of Blair Holt, an honor student at Julian High School..."

     SOUTH LAKE TAHOE, California (Reuters) - "More than 50 homes in Lake Tahoe went up in flames on Sunday as a fast-moving forest fire hit this resort community, prompting U.S. Forest Service officials to order residents out.

      Another 500 structures were threatened by the fire, which has consumed more than 500 acres of private and federal land, but no one has been injured, said South Lake Tahoe Police Lt. Martin Hale.

      The cause of the blaze, first reported at about 2 p.m., was unknown, said Kit Bailey of the Forest Service. He added however that it was likely caused by humans because the weather was clear.

      Winds of 30 mph with gusts of 45 mph made it difficult for the 350 to 400 firefighters to get a handle on the fire, Bailey said. Chunks of ash dropped miles from the fire..."

     NEW YORK (Reuters) - "A sustained push above 5 percent on the yield of the benchmark 10-year Treasury note could roil markets, deepen housing woes and slow the U.S. economy.

      At first glance, a 5 percent handle should not trouble consumers. It's still a far cry from the 10-year Treasury note's all time yield peak of 15.84 percent in September 1981, according to Global Financial Data. Then, inflation was rampant, the Federal Reserve was hiking interest rates and the U.S. economy succumbed to recession.

      However, current U.S. consumer and corporate borrowing at low interest rates after a historic rate cutting cycle leaves debtors vulnerable to even a modest rise of bond yields. A rise to 5.5 percent of the 10-year yield would test the economy's current pain threshold, strategists say.

      "The housing market has been totally dependent on cheap money," said Mary Ann Hurley, senior Treasuries trader in Seattle at brokerage D.A Davidson.

      The Fed axed interest rates to a four-decade low of 1 percent in June 2003, helping to accelerate an unprecedented boom in house prices, which peaked around 2005. Now, homeowners who took out adjustable-rate mortgages at lower rates are at the mercy of rising yields, while all homeowners could lose out if home prices continue to fall.

      "A 10-year yield above 5 percent is really going to impact housing and will hurt people who have to refinance from their ARMs because rates are dramatically higher," Hurley said.

      A rise of the 10-year to 5.5 percent would push up the 30-year fixed rate mortgage to about 7.15 percent.

      "That would price a lot of folks out" and "would slow the recovery of the housing market," says Douglas Duncan, the Mortgage Bankers Association's chief economist.

Jafar Mojarrad also said the world's central bank governors agree that politics should not influence the global financial system, and that this view is shared by the U.S. Federal Reserve..."

Stocks closed out their worst week in more than three months on fears that trouble at two Bear Stearns hedge funds may signal bigger problems ahead for credit markets..."

U.S. stocks posted their biggest weekly decline in three months while investors fled to safe-haven U.S. government debt amid market uncertainty, snapping a six-week string of gains in the benchmark 10-year Treasury yield..."

Bear Stearns Staves Off Collapse of 2 Hedge Funds

"New York (NY Times) - The high-stakes game of brinksmanship began early yesterday on Wall Street, and continued throughout the day. Bankers traded telephone calls, frenetically negotiating the fate of two hedge funds.

All wanted to avoid a fire sale in the troubled mortgage-securities market, but at the same time, not get stuck with an exploding liability that could result in steep losses. The day ended with deals that appeared to have forestalled a meltdown. But questions remained about how successful they were and whether they had merely delayed the inevitable..."

"NEW YORK (Reuters) - Bear Stearns Cos. Inc. (BSC.N: Quote, Profile, Research) on Friday said it would provide up to $3.2 billion in financing for a struggling hedge fund it manages, raising concern about other funds that invested in bonds linked to subprime mortgages.

The biggest bailout since Wall Street's 1998 rescue of Long-Term Capital Management signaled that the funds' main investments -- a type of bond known as a collateralized debt obligation (CDO) -- may be riskier than previously reckoned..."

Builders broke ground on new houses at an annual rate of 1.474 million, down 2.1 percent from the prior month, the Commerce Department said today in Washington. Building permits increased 3 percent to 1.501 million..."

Gas at $6 per gallon?  Get ready...

"Gas consumers can expect to pay between $3.16 and $3.79 a gallon for gas in 2008 after adding in the estimated impact of the Senate energy bill. By 2016, all states can expect gas prices in excess of $6. As a result of S. 1419, consumers would spend an average of $1445 more per year on gasoline in 2016 than in 2008..."

      A lot of disconcerting stuff is going down at the same time.  Get your Plan up to snuff; trust me now and thank me later.

• Lake disappeared between March and May
• Ice chunks that floated on lake now lie on rocks
• Scientists say no earthquakes that could have caused cracks in lake bottom

     SANTIAGO, Chile (AP) -- "A five-acre glacial lake in Chile's southern Andes has disappeared -- and scientists want to know why.

      Park rangers at Bernardo O'Higgins National Park said they found a 100-feet-deep crater in late May where the lake had been in March. Several large pieces of ice that used to float atop the water also were spotted.

      "The lake had simply disappeared," Juan Jose Romero, head of Chile's National Forest Service in the southernmost region of Magallanes, said Wednesday. "No one knows what happened."

      A group of geologists and other experts will be sent to the area 1,250 miles southeast of Santiago in the next few days to investigate, Romero said.

      One theory is the water disappeared through cracks in the lake bottom into underground fissures. But experts do not know why the cracks would have appeared because there have been no earthquakes reported in the area recently, Romero said.

     WAYCROSS, Georgia (AP) -- "Ernest Sweat paused by the charred pine trunk he found burning like a match two months ago and wondered -- could he have stopped the largest Southeastern wildfire in more than a century?

      Sweat was driving home April 16 when he spotted smoke along the dirt road to his tobacco farm. Power lines were snapped by fallen pines and flames climbed surrounding trees. He dashed home to call the fire department, but the blaze had already spread.

      It would become the Southeast's biggest wildfire since 1898, according to the National Interagency Fire Center.

      "If I could have just been here a little bit earlier, before it got into those roots, I could've outed it," he said.

      Within a day, the wildfire burned a 9-mile path through rural timberland. A week later, the blaze had destroyed 18 homes and spread into the Okefenokee Swamp.

      After a month, it merged with a second fire, sparked by lightning, and raced through the swamp into northern Florida.