TOKYO (Reuters) - "The dollar hit a record low against the euro on Friday after the European Central Bank played down the prospects of an interest rate cut and did not express concerns about the euro's strength.

      The dollar also hit new lows against a basket of major currencies and the Swiss franc, and fell to a fresh three-year low against the yen.

      Confidence in the dollar and U.S. assets was hit as Federal Reserve Chairman Ben Bernanke's recent testimony to Congress acknowledging downside risks to the economy and the possibility of smaller banks failing highlighted concerns that the financial system, and by surging commodities prices.

      The European Central Bank on Thursday left interest rates unchanged at 4 percent. It cut euro zone growth forecasts, but unveiled higher consumer price forecasts, and this focus on price risks helped push back expectations for a cut in interest rates.

      ECB President Jean-Claude Trichet did not make specific comments on the euro in his news conference.

      Some traders thought he would do so after his remarks earlier this week noting U.S. officials' stance that a strong dollar is in the interest of the United States and euro zone finance ministers group chairman Jean-Claude Juncker saying the common currency was overvalued..."

      California (intelligencer.ca) -- "And you thought that I had a gloomy outlook on the economy. Now the bad news pops up everywhere.

      Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

      Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.

      Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

      With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.

      The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.

      The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.

      Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:

      "The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

      "At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

      "In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."

      The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.

      We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.

      What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.

      The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").

      It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.

      Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.

      The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.

      So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves..."

      Bogota (MSNBC) — "While there is "a great deal of posturing," as one senior U.S. intelligence official puts it, going on along the Andean Ridge, analysts inside and outside the U.S. government warn that the potential for war between Colombia and both Venezuela and Ecuador is very real.

      The crisis began in earnest last weekend when Colombia carried out an air and land raid just over the border into Ecuador. The strike killed Raul Reyes, reputed to be the second-ranking commander of FARC, the Colombian rebel group designated a terrorist organization by the State Department, as well as 20 others, angering Ecuador's president, Rafael Correa, and his ally, Venezuela President Hugo Chavez.

      Retired Gen. Barry McCaffrey, former head of the U.S. Southern Command and former federal drug czar, says he has "serious, serious concerns" after hearing Chavez's anti-Colombian rhetoric and watching his troop deployments. 

      McCaffrey pointed specifically to Chavez's use of political invective and insults against national symbols, which, he says, are "something South Americans don't do, at least not in public."

      "I was personally shocked at the language," he said, noting that Chavez was threatening to use his new Russian-made fighter bombers against Colombia. "We are one stop short of miscalculation.".."

More:

Chavez Claims 'We Are Peace' as Troops Gather on Border With Colombia

      NEW YORK (CNNMoney.com) -- "As if the economy wasn't already fighting enough strong headwinds, the risk of capital shortfalls and outright failure of the nation's banks is rising.

      The Federal Deposit Insurance Corp., the federal agency that backs bank deposits, last week reported the biggest jump in "problem institutions" it has seen since the savings and loan crisis of the late 1980s. While the extent of the problem is still low by historic standards, it identified 76 banks as in trouble - a 52% increase from a year ago.

      FDIC Commissioner Sheila Bair among regulators set to testify Tuesday at a Senate Banking Committee hearing on the state of the banking industry.

      Experts say the 76 banks now under scrutiny are likely only a small part of the problems now looming over the banking sector.

      Jaret Seiberg, the financial services analyst for policy research firm Stanford Group, said it appears that regulators are expecting about 200 bank failures in the coming year or two. If that occurs, it could rival the flood of bank failures seen during the S&L crisis. In 1989, the nation saw a post-Depression era record of 206 bank failures.

      And Seiberg says even more than 200 troubled banks are likely to be purchased before they reach the point of failure.

      "Many of these banks are highly dependent on construction lending, and that's the area of lending that is likely to come under the most stress," he said.

      The FDIC stresses that not all those banks will fail. In fact in 2007 only three banks failed, even though 50 were on the watch list at the end of the previous year. So far this year, one bank - Douglass National Bank in Kansas City, Mo. - has failed.

      Still, the head of the FDIC is looking to hire 25 staffers to deal with an anticipated increase in failures, a move that would increase its staff by 11%. Among those it hopes to hire are recent retirees who worked through the S&L crisis..."

      SANTA CRUZ, Bolivia (washingtontimes.com) — "South America was on the brink of war yesterday as Venezuela and Ecuador amassed troops on the Colombian border in response to the killing of a Marxist rebel leader.

      Venezuelan President Hugo Chavez threatened to join the rebels in a war to overthrow hard-line Colombian President Alvaro Uribe, a key ally of the United States, deploying tanks, fighter jets and thousands of troops along the Colombian border.

      Ecuadorean President Rafael Correa also ordered troops to the border, expelled Colombia's ambassador and recalled its ambassador to Bogota, but left its embassy open. Venezuela closed its embassy in Colombia and ordered all diplomats home.A weekend battle sparked the mobilization, in which Colombian forces killed a top leader of the Revolutionary Armed Forces of Colombia (FARC), in a camp in Ecuador.

      "The obsessive conduct of those who prize the military option sharpens the armed conflict with grave possible consequences" read a statement from Venezuela's Foreign Ministry after the weekend killing of FARC's second in command, Raul Reyes..."


More:

Ecuador: Colombian raid prevented release of hostages

Neighbors cut ties with Colombia

Russian riot police clash with vote protesters

Report: China trying to crack U.S. computers, buy nukes

      WASHINGTON (AP) - "Homeland Security officials are pushing recalcitrant states to adopt stricter driver's license standards to end a standoff that could disrupt domestic air travel.

      States have less than a month to send a letter to the Homeland Security Department seeking an extension to comply with the Real ID law passed following the 2001 terror attacks. Some states have resisted, saying it is costly, impractical and an invasion of privacy.

      Four states — Maine, Montana, New Hampshire and South Carolina — have yet to seek an extension.

      Homeland Security Secretary Michael Chertoff argues that the law fixes a critical gap in security identified by the commission that investigated the 9/11 attacks: the ease of obtaining government-issued ID. It will also hinder would-be con artists and illegal immigrants, he said.

      Real ID-compliant driver's licenses would have several layers of new security features to prevent forgery. They would also be issued after a number of ID checks, including verification of birth certificates, Social Security numbers and immigration status. Officials acknowledge it will take years to phase in all the different security measures.

      To bring the states in line, Chertoff warned that any state that does not seek an extension by the end of March will find that, come May, their residents will not be able to use their licenses to board domestic flights.

      Chertoff's assistant secretary, Stewart Baker, sent letters to several governors Monday reminding them of the looming deadline, and urging the holdouts to seek an extension.

      In recent years, 17 states passed legislation or resolutions opposing Real ID, but now only a handful appear willing to challenge the government publicly.

      Officials in Maine and Montana insisted Monday they would not seek an extension. A spokesman for South Carolina's governor said he was still considering it. New Hampshire passed a law last year prohibiting the state from participating in the Real ID program, and Gov. John Lynch wrote Chertoff last week asking him not to impose the requirements on New Hampshire citizens.

      A fifth state, Delaware, has sent a letter asking for an extension, but DHS officials are still weighing whether the wording of the letter legally adds up to an extension request.

      If the states do not seek an extension by March 31, their residents will be subjected to secondary screening by security workers before boarding any domestic flight beginning May 11.

      "We're not going to buckle under here," said Montana Gov. Brian Schweitzer. "My guess is the people of Montana would be proud to walk through that line."

      Schweitzer called the Real ID proposal a bureaucratic boondoggle that will cost his state a fortune and give a false sense of security without actually making ID more reliable. He has sought to rally opposition to Real ID, but the vast majority of states have decided not to test whether Washington is bluffing.

      As the high-stakes game of chicken continues, federal authorities are not publicly saying whether seeking an extension actually counts as complying with the law. In his recent letters, Baker said only that the 45 states that have sought extensions are "on track toward improved security.".."

      WASHINGTON (WSJ) -- "The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.

      The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.

      FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.

      The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.

      In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.

      "Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.

      In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.

      "The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.

      On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area..."

      Bogota (CNN) -- "Venezuelan President Hugo Chavez on Sunday ordered 10 battalions of military forces to the country's border with Colombia, and ordered the closure of Venezuela's embassy in Colombia's capital city of Bogota.

      Chavez made the moves in reaction to an operation carried out at dawn Saturday by Colombia's national police and its air force in Ecuador, which resulted in the death of the second-in-command of the FARC rebels group, Luis Edgar Devia Silva, known as "Raul Reyes."

      FARC is the Spanish acronym for the Revolutionary Armed Forces of Colombia. The Marxist group has been trying for some 40 years to overthrow the Colombian government and is estimated to be holding 750 hostages in the jungles of Colombian.

      In the past two months, Chavez has brokered FARC's release of six of them. Reyes, who was a member of the seven-man FARC leadership council known as the general secretariat, played a key mediation role in their release.

      Also killed was Guillermo Enrique Torres or "Julian Conrado," who was a key FARC ideologue.

      "The Colombian oligarchy says it was combat," said Chavez, whose leftist politics have been credited for his warm relations with the rebel group. "It was not combat. It was a cowardly murder, coldly prepared in its entirety. The truth is coming out.".."