The first evidence was the announcement by the biggest U.S. banks that they are banding together with the government's blessing to try to bail out institutional customers — and maybe themselves — stuck with illiquid asset-backed investments. That's a clear indication that there has been little relaxation in the paralysis gripping debt markets in recent months.

      Then Standard & Poor's made another sweeping downgrade of the credit ratings on mortgage-backed securities worth some $23.35 billion, or €16.34 billion — this time for loans granted since the first of the year, a sign that loose lending standards lasted far longer than many thought.

      More trouble also surfaced on the housing front, with construction of new homes plunging to the lowest level in 14 years and home builders' sentiment falling to its lowest on record.

      Even the stock market took a pause from its recent bullish run, with investors tempering their buying on concerns that the credit and housing mess would lead to a contraction in third-quarter earnings for the first time in six years.

      So much for the worst of this crisis being over. Just a few weeks back, there was some optimism building in the marketplace that the end of this bumpy road was near. Those upbeat views now look like they were just wishful thinking.

      Why else would a consortium of banks — including Citigroup, JPMorgan Chase and Bank of America — be uniting with a plan to keep the housing-related debt crisis from worsening. If they thought conditions in the credit market were about to improve, would they be gathering for this group hug?

      The banks have proposed creating a fund that will buy around $100 billion in debt from structured investment vehicles, or SIVs, in an attempt to break the logjam in the market for short-term debt instruments that hold mortgage-related assets.

      Banks sponsor the SIVs, contributing longer-tem assets like mortgage-backed securities to the investment vehicle. The SIV then sells unsecured commercial paper or other forms of short-term debt at low interest rates to the likes of hedge funds and money-market mutual funds hungering for a few extra basis points of yield. Those proceeds are then used to repay the sponsor for its investment.

      Accounting rules do not require the SIVs to appear on bank balance sheets, even though they create, run and generate fees from them. But if debt markets seize up and the SIV can't repay or roll over the commercial paper debt when it comes due, the sponsor then is expected to come up with cash to cover the SIV — or face a big blow to its reputation. For the banks, helping the SIVs could lead to big losses as they are forced to mark down the value of the now-shunned asset-backed securities.

      The goal of the new bailout fund is to prevent that from happening. Its plan is to sell short-term notes to investors and then use the proceeds to buy distressed securities from the SIVs that otherwise would have to be sold at fire-sale prices. Eventually, they will try to sell those securities to investors.

      The fund's backers are spinning this as a way to save the market from more meltdown, but it really is nothing more than a shell game to try to rescue them from the mess they got themselves into.

      It is not even clear if that will do the trick. Given the complexity in valuing the SIVs illiquid securities, there are lingering questions over what price the banks will place on the debt and whether investors will be willing to bite. The fund's backers also say that they will only buy highly rated assets, a promise investors should be wary of since they've seen massive downgrades of the ratings on mortgage-related debt that wasn't supposed to be risky.

      Standard & Poor's helped to stoke investors' fears about that this week when it cut the credit ratings on 1,713 classes of securities backed by mortgages issued in the first six months of this year. S&P placed 646 other classes of mortgage-backed securities on negative credit watch, which mean they could be downgraded soon.

      The securities are backed by subprime, alt-A and home-equity loans, three types of loans have gone increasing delinquent and into default in recent months. Subprime loans typically carry higher interest rates and were about the only way people with bad credit were able to get into the housing game, while alt-A loans are for people who lack the full documentation that traditional borrowers have..."

More:

Mint Resumes Gold Coin Sales With New Prices

Even 'safe' funds play with fire

Brutal selloff on Wall Street

Americans stretching paychecks to the breaking point

      The Bottom Line:  I think I'm getting sick; I want off this ride.

      NEW YORK (MSNBC) - "Jim Ammons grumbles to himself every time he fills up his Ford Expedition, but he says gas prices would have to almost quadruple to $10 a gallon before he’d ditch his SUV.

      Still, paying $55 to fill his 20 gallon tank isn’t easy for the information specialist.

      “This right here is catastrophic for a lot of families,” Ammons, 54, said this week at a Houston Chevron station that was charging $2.65 a gallon for regular unleaded. “A lot of them have to choose: Do I buy food, do I send my kids to school or do I fill up my tank?”

      That choice may soon get a lot more difficult. The steep rise in oil prices to $90 a barrel over the past month means American consumers are almost certain to pay more for gasoline, heating oil, airline tickets and even food and goods that have to be transported great distances, experts say.

      Some analysts are now predicting oil could go as high as $120 a barrel, but others argue that underlying supply and demand fundamentals do not support such a spike and that a drop in prices is more likely.

      What is clear is that oil has become a magnet for “hot money” from hedge funds and other momentum investors betting that the trend for higher prices still has a way to run. The dollar’s decline, which makes dollar-denominated oil futures a bargain to overseas investors, also has played a role in the recent runup.

      Absent an astounding rise in prices, few economists expect high energy costs alone to push the economy into a recession, as previous oil price shocks did in the 1970s and early 1980s. That’s because the economy has become more energy efficient, and incomes have grown faster than energy costs. On a percentage basis, the country spends half the amount on energy today than it spent in 1980.

      Gasoline prices now average $2.76 a gallon across the country for unleaded regular, according to the Energy Information Administration. While that’s down almost half a dollar from their May peak, pump prices are still 53 cents higher than a year ago.

      Gas prices usually fall sharply after Labor Day — they dropped 62 cents last year between the end of August and mid-October, for instance. But this year, prices have actually risen slightly since summer’s end. In part, that’s because oil futures jumped 30 percent since late August, topping $90 a barrel for the first time ever on Thursday..."

      It is well known that the world’s population has been increasing at an exponential rate for centuries. If we have six billion people today, we will have 12 billion in another decade or two, and 24 billion a decade after that. Some observers, noting the approach of peak oil, doubt we will ever see such population increases. The student of mass destruction weaponry, with an eye to World War II and the holocaust, would not be surprised at a large and sudden decrease in the world’s population. In fact, a sudden turn toward decimation and global impoverishment is much more likely than 12 billion human beings living in peace and plenty. Such a view, of course, goes against a longstanding belief in progress. The believers in progress imagine that each generation will be smarter, wealthier, more peaceful, more democratic and freer than those immediately before them. They forget that progress brought us the atom bomb, and the atom bomb must inevitably fall into the hands of madmen.

      I will no doubt receive letters of complaint from readers insisting that President George W. Bush is a madman. They will ask why I didn’t take the opportunity to point this out. Well, it is sufficient to say that madmen are often drawn to politics and to nuclear weapons. Envy-ridden ideology leads the way in political madness, and a national inferiority complex may push the leadership of a country to contemplate a nuclear war that otherwise would be unthinkable. The Religion of Progress forms no barrier to such contemplations. Therefore, the way has long been paved for a sudden change in global demographic trends. The approach of this change has given many signs. Decade after decade, Americans have ignored these signs.

      Russia is continuing nuclear war exercises aimed at the United States. China is making open war preparations. Iran seeks to acquire nuclear weapons. Iran’s leaders talk openly of wiping Israel out of existence. Can anyone see what all this signifies? A destructive war is on the horizon. But we refuse to take the danger seriously. Where is your bomb shelter? Where is your gas mask? How much food have you put away? America is not ready, even if you are. The Shopping Mall Regime and its Cult of Obligatory Economic Optimism cannot be opposed. Americans know, of course, there will be recessions and economic troubles. Nevertheless, we expect that the great economic machine will thrive and the general trend will be toward growth and not decline. Such are the maxims of Obligatory Economic Optimism. Such is our faith in the Shopping Mall Regime..."

More:

Putin attacks US, announces new nuclear weapon

Defector says Russian plan to dupe America is working

Official: International hackers going after U.S. networks

      NEW YORK (Reuters) - "The dollar sank to a record low against the euro and a basket of currencies on Thursday, weighed down by soft U.S. economic data and sluggish corporate earnings that bolstered chances of an interest rate cut.

      Bank of America's (BAC.N: Quote, Profile, Research) poor third-quarter earnings on the back of mounting credit losses took their toll on the currency market early as it fanned concerns that the global liquidity crunch is far from over. It also strengthened the case for a cut in the target federal funds rate from the current 4.75 percent to avert a sharper slowdown.

      U.S. short-term rate futures on Thursday showed a 68 percent implied chance of a rate cut at the Fed's next monetary policy meeting on October 30-31. Futures now price fully a half-percentage-point's worth of cuts by mid-2008.

      "All the economic numbers are pretty soft and the U.S. economy is starting to get much weaker than the market expected. That's putting pressure on the dollar to weaken further," said Rafael Martorell, chief FX dealer at BNP Paribas in New York.

      The Philadelphia Federal Reserve business activity survey was the latest report to provide evidence of a slumping U.S. economy.

      Earlier in the session, higher-than-expected initial weekly U.S. jobless claims added a negative tone to the dollar.

      In early afternoon trading, the euro was up around 0.6 percent on the day at $1.4285, after climbing to a lifetime peak at $1.4310 in the opening hours of the New York session, according to Reuters data.

More:

Capital One posts third quarter net loss

Bank of America profit falls 32 pct, losses mount

Dollar plunges to fresh euro low

Poll Finds Almost Half of New Jersey Adults Want to Move Out of State

      The Bottom Line:  They sky of our economy is now officially falling.

      NEW YORK (CNNMoney.com) -- "Oil prices finished at an all-time high above $89 a barrel Thursday, while the cost of a gallon of gasoline jerked higher.

      Light, sweet crude for the November contract jumped $2.07 to settle at $89.47 a barrel on the New York Mercantile Exchange, shattering the previous record of $87.61 a barrel reached two days earlier.

      In after-hours electronic trading light, sweet crude for November delivery went even higher, hitting $90.02 a barrel, according to the Associated Press.

      Earlier in the day, crude prices scrambled to an all-time trading high of $89.55 a barrel.

      Prices at the pump have been slow to respond to rising crude prices recently, but that may be changing. On Thursday, gas prices gained nearly 2 cents to a national average of $2.79 a gallon for regular-grade gasoline, according to AAA. They are up 4 cents since Monday.

      "There's almost an inevitability here now that we are going to get to $100 a barrel," said John Kilduff, an energy analyst at Man Financial in New York.

      Helping to lift crude prices higher was a decline in the dollar, which fell to an all-time low versus the euro and also dipped versus the yen.

      Since oil is priced in dollars, a declining greenback makes oil less expensive for consumers outside the United States, encouraging more consumption.

      Wednesday's news that Turkey had authorized military action in Northern Iraq also helped prop up crude prices.

      Conflict along the Turkey-Iraq border could disrupt oil supplies coming out of the region and drive crude prices even higher.

      "It's just a round robin of geopolitical and macroeconomic issues," said Kilduff.

      Ashton Bonds was a senior at Staunton River High School in Moneta, Virginia, who was diagnosed with MRSA.

      "I was standing beside his bed and ... I said, 'Baby, we're supposed to be having a graduation this year, you've got to come up out of this and get better,' " his mother, Veronica Bonds, remembered. After struggling with the infection for a week, the 17-year-old died on Monday.

      Students at his school organized a rally, saying the school needed to be cleaned up before they went back to class.

      Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

      Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said.

      The release comes a day after the IMF warned that the dollar was still overvalued and likely to face "some depreciation in the medium term".

      The dollar's short-lived rally over recent days stopped abruptly on the data, increasing pressure on US Treasury Secretary Hank Paulson to shore up Washington's "strong dollar" rhetoric at the G7 summit this week.

      The Greenback has already fallen below parity against the Canadian Loonie for the first time since 1976 and has touched record lows against a global basket. It closed at $2.032 against the pound.

      David Woo, an analyst at Barclays Capital, said Washington was happy to see the dollar slide. "They don't care so long as the fall is not disorderly. They see it as a way of correcting the deficit. " he said.

      Mr Woo said a chunk of the August outflows may have come from foreigners borrowing in the US during the liquidity crunch to meet needs in euros. "We think it may be a one-off," he said.

      The US requires $70bn a month in capital inflows to cover its current account deficit, but the key sources of finance are drying up one by one.

      BNP Paribas said America has relied on "hot money" from abroad to cover 25pc to 30pc of the US short-term credit and commercial paper market over the last two years.

      This flow is now in danger after the seizure in parts of the market over the summer and after the Federal Reserve's half point rate cut, which has shaved the US yield advantage over other countries.

      Ian Stannard, a Paribas currency analyst, said the data was "extremely negative" for the dollar. "It exceeds the worst fears. It is not just foreigners who are selling US assets. Americans are turning their back as well," he said.

      Central banks in Singapore, Korea, Taiwan, and Vietnam have all begun to cut purchases of US bonds, or signalled an intent to do so. In effect, they are giving up trying to hold down their currencies because the policy is starting to set off inflation.

More:

The Panic Window Approaches

Hedge Funds: Be afraid of those definitions

The Crowding Out Effect

SEC probes Countrywide CEO's stock sales

      The Bottom Line:  It's almost like we're kicking a dying horse here.

      The vote overshadowed a U.S. government report that crude oil and gasoline inventories overall rose more than expected last week. But prices did draw some support from a 200,000 barrel decline in inventories at the closely-watched New York Mercantile Exchange delivery terminal in Cushing, Okla.

      Light, sweet crude for November delivery rose $1.09 to $88.69 a barrel on the Nymex after rising to a record $89 earlier.

      Oil prices initially fell after the Energy Information Administration reported that crude inventories rose by 1.8 million barrels during the week ended Oct. 12, more than the 1 million barrel increase analysts surveyed by Dow Jones Newswires, on average, had expected.

      But prices reversed course and rose after the Turkish parliament vote. Traders worry that any escalation in the conflict between the Kurds and Turkey will cut oil supplies from northern Iraq. Despite the decision, Turkey's government said an incursion into Iraq isn't imminent.

      The EIA also reported that gasoline supplies rose by 2.8 million barrels last week, nearly triple analyst expectations for a 1 million barrel increase. November gasoline rose 0.43 cent to $2.178 a gallon on the Nymex.

      Distillates, which include heating oil and diesel fuel, rose by 1 million barrels last week, the EIA said. Analysts had expected distillate supplies to fall by 400,000 barrels. November heating oil rose 0.98 cent to $2.3485 a gallon on the Nymex.

      In other Nymex trading, natural gas futures rose 11.2 cents to $7.479 per 1,000 cubic feet. In London, December Brent crude fell 43 cents to $83.12 a barrel on the ICE Futures exchange.

      The EIA also reported that refinery activity fell last week by 0.5 percentage point to 87.3 percent of capacity. Analysts had expected refinery utilization to grow by 0.4 percentage point.

      Crude imports jumped last week by an average of 539,000 barrels a day, while imports of gasoline fell by 230,000 barrels a day on average.

      Demand for gasoline rose by about 53,000 barrels last week, but is off 0.5 percent over the past four weeks, the EIA said..."

      Bush was speaking a day after Russian President Vladimir Putin, who has resisted Western pressure to toughen his stance over Iran's nuclear program, made clear on a visit to Tehran that Russia would not accept any military action against Iran.

      At a White House news conference, Bush expressed hope Putin would brief him on his talks in Tehran and said he would ask him to clarify recent remarks on Iran's nuclear activities.

      Putin said last week that Russia, which is building Iran's first atomic power plant, would "proceed from the position" that Tehran had no plans to develop nuclear weapons but he shared international concerns that its nuclear programs "should be as transparent as possible."

      "The thing I'm interested in is whether or not he continues to harbor the same concerns that I do," Bush said. "When we were in Australia (in September), he reconfirmed to me that he recognizes it's not in the world's interest for Iran to have the capacity to make a nuclear weapon."

      Bush, who has insisted he wants a diplomatic solution to the Iranian issue, is pushing for a third round of U.N. sanctions against Iran.

      Russia, a veto-holding member of the Security Council, backed two sets of limited U.N. sanctions against Iran but has resisted any tough new measures.

      Born one second after midnight in January 1946, the retired teacher leads the way for as many as 80 million individuals who will qualify for the retirement payout.

      "I think I'm just lucky to be at the top of the boom. I'm just one of many many millions and am blessed to have been in this generation and really blessed and to take my Social Security now," Casey-Kirschling said during a ceremony held at the National Press Club featuring Social Security Commissioner Michael J. Astrue.

      Casey-Kirschling said she supports anyone who wants to collect retirement benefits whenever he or she is eligible to take them. But many Washington officials and American workers are wondering if Social Security will be able to support them.

      David Walker, the comptroller general of the Government Accountability Office, Congress' legislative arm, warned the Social Security system will soon have more recipients coming than it can afford to pay out.

      "We face a tsunami of spending due primarily to the retirement of the baby boom generation and rising health care costs," Walker said. "So what's happened is we've gone from 16 workers paying into Social Security for every person drawing benefits in 1950 to 3.3 to one today, and we're going down to two to one by the time the boomers retire in big numbers and that's about where it will stay over the long run.".."

More:

There's a chance Northern Rock is worth Zero

Bernanke: Housing Woes to Slow Growth

The Consumer Buying Binge is Over

'Nobody expected this [real estate boom] to continue' -- it didn't

      The Bottom Line:  The "Perfect Storm" in our Nation's Infrastructure has begun; what few support beams our economy has are beginning to creak under the immense strain.

      The surge has taken prices into uncharted territory, nearing the inflation-adjusted peak of 1980 and sounding alarm bells in the United States, where officials fear it will pile pressure on an economy already reeling from the subprime crisis.

      After surging more than 10 percent in six straight days of gains, U.S. crude fell 46 cents to $87.15 a barrel at 2:51 a.m. EDT. Prices gained $1.48 on Tuesday and touched a new intra-day high of $88.20, their third record peak in a row.

      December Brent crude fell 50 cents to $83.05.

      Mounting tension between Turkey and Kurdish separatists in northern Iraq has fuelled the latest rally, helping lure a fresh wave of speculative and long-term investor capital, but some analysts said a correction was in store soon.

      "The market is still very much focused on the Turkey-Iraq tensions for the short-term but I believe it is overvalued by at least $10 and will probably come off within the week," said Makoto Takeda of Tokyo's Bansei Securities.

      The Turkish parliament is expected on Wednesday to grant its troops permission to launch an attack inside Iraqi territory, despite international pressure not to.

      The overall incidence rate was about 32 invasive infections per 100,000 people. That's an "astounding" figure, said an editorial in Wednesday's Journal of the American Medical Association, which published the study.

      Most drug-resistant staph cases are mild skin infections. But this study focused on invasive infections -- those that enter the bloodstream or destroy flesh and can turn deadly.

      Researchers found that only about one-quarter involved hospitalized patients. However, more than half were in the health care system -- people who had recently had surgery or were on kidney dialysis, for example. Open wounds and exposure to medical equipment are major ways the bug spreads.

      In recent years, the resistant germ has become more common in hospitals and it has been spreading through prisons, gyms and locker rooms, and in poor urban neighborhoods.

      The new study offers the broadest look yet at the pervasiveness of the most severe infections caused by the bug, called methicillin-resistant Staphylococcus aureus, or MRSA. These bacteria can be carried by healthy people, living on their skin or in their noses.

      An invasive form of the disease is being blamed for the death Monday of a 17-year-old Virginia high school senior. Doctors said the germ had spread to his kidneys, liver, lungs and muscles around his heart.

      The researchers' estimates are extrapolated from 2005 surveillance data from nine mostly urban regions considered representative of the country. There were 5,287 invasive infections reported that year in people living in those regions, which would translate to an estimated 94,360 cases nationally, the researchers said.

      Most cases were life-threatening bloodstream infections. However, about 10 percent involved so-called flesh-eating disease, according to the study led by researchers at the federal Centers for Disease Control and Prevention.

      There were 988 reported deaths among infected people in the study, for a rate of 6.3 per 100,000. That would translate to 18,650 deaths annually, although the researchers don't know if MRSA was the cause in all cases.

      If these deaths all were related to staph infections, the total would exceed other better-known causes of death including AIDS _ which killed an estimated 17,011 Americans in 2005 -- said Dr. Elizabeth Bancroft of the Los Angeles County Health Department, the editorial author.

      The results underscore the need for better prevention measures. That includes curbing the overuse of antibiotics and improving hand-washing and other hygiene procedures among hospital workers, said the CDC's Dr. Scott Fridkin, a study co-author.

      Some hospitals have drastically cut infections by first isolating new patients until they are screened for MRSA.

      The bacteria don't respond to penicillin-related antibiotics once commonly used to treat them, partly because of overuse. They can be treated with other drugs but health officials worry that their overuse could cause the germ to become resistant to those, too..."

More:

Two reports show "superbug" bacteria spread

      Worldwide, meanwhile, the agency said the year to date has been the warmest on record for land. It has been the seventh warmest year so far over the oceans, working out to the fourth warmest overall worldwide.

      But drought is probably the greatest concern in many parts of the country and the year to date has been the driest on record for Tennessee and North Carolina.

      The eastern seaboard from Maine to the Carolinas and across parts of Florida was unusually dry in September, NCDC said.

      And the September dryness extended across the Ohio Valley and into the southern Great Lakes.

      The agency, a division of the National Oceanic and Atmospheric Administration, said drier-than-normal weather was also experienced in September across parts of the Pacific Northwest and northern Plains.

      Drought-related conditions included:

            • As of September 25, Pasadena, California, experienced its driest year since records began in 1878. Many California communities imposed water use restrictions.

            • The Great Lakes, which together make up about 20 percent of the world's fresh surface water, have been in decline since the late 1990s. Lakes Huron and Michigan were about two feet below their long-term average levels, while Lake Superior was about 20 inches off, Lake Ontario 7 inches below and Lake Erie a few inches down.

            • Maryland and Pennsylvania had about half of their counties under a drought watch. Many areas in upstate New York reported record low reservoir levels and dried-up wells and farm ponds.

            • Alabama Power, the state's largest utility, has been operating some of its coal plants at significantly reduced levels to avoid raising water temperatures in the Coosa, Black Warrior and Mobile rivers.

            • The Tennessee Valley Authority shut down Browns Ferry Unit II nuclear power plant due to inadequate stream flow.

            • At the end of September, the Georgia Environmental Protection Division declared a level four drought response across the northern third of the state, which prohibits most types of outdoor residential water use..."

      WASHINGTON (Fox) —  "A deepening housing slump probably will be a "significant drag" on economic growth into next year and it will take time for Wall Street to fully recover from a painful credit crisis, Federal Reserve Chairman Ben Bernanke warned Monday.

      Bernanke once again pledged to "act as needed" to help financial markets — which have suffered through several months of turbulence — function smoothly and to keep the economy and inflation on an even keel.

      "Conditions in financial markets have shown some improvement since the worst of the storm in mid-August, but a full recovery of market functioning is likely to take time, and we may well see some setbacks," Bernanke said in a speech to the New York Economic Club. A copy of his remarks were made available in Washington.

      It was Bernanke's most extensive assessment of the country's current economic situation since the August turmoil unhinged Wall Street.

      The ultimate implications of the credit crunch on the broader economy, however, remain "uncertain," the Fed chief said.

      Against that backdrop, Bernanke said the central bank will be closely watching the economy's vital signs in determining the Fed's next move. He didn't specifically commit to cutting rates again, but rather kept his options open.

      Economists have mixed opinions on whether the Fed will lower interest rates at their next meeting, Oct. 30-31. Some insist the odds are lessening that the Fed will need to slice rates; Others, however, think rates will move lower.

      "The Fed appears to be in watch mode at the present time," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.

      To help cushion the economy from the ill effects of the credit crunch and housing slump, the Fed on Sept. 18 slashed a key short-term interest rate by one-half percentage point to 4.75 percent. It marked the first rate cut in more than four years. It also reflected the most aggressive action taken by the Fed to curb fallout from the credit crisis, which intensified in August.

      Since that September meeting, the housing slump — the worst in 16 years — has gotten deeper, Bernanke said.

      "The further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year," he said..."

More:

Credit worries hit banks, energy stocks bought

Yen edges up as stocks slide, dollar struggles

Citigroup, credit concerns hamper stocks

Stocks get slammed

      The Bottom Line:  Death by a thousand cuts?  Or business as usual?

      U.S. crude (CLc1: Quote, Profile, Research) settled $2.44 higher at $86.13 a barrel in its fifth straight session of gains, after hitting an all-time peak of $86.22. London Brent crude (LCOc1: Quote, Profile, Research) rose $2.20 to $82.75.

      "A run at $90 is now seen as reasonable," Citigroup analysts said in a research note.

      Though oil prices have more than quadrupled since 2002 on the back of surging demand from developing economies, they remain below the inflation adjusted peak around $90 a barrel struck after the Iranian revolution in 1979.

      Dealers said oil's climb on Monday was supported by rising tensions between Turkey and Kurdish separatists in northern Iraq that have dimmed the prospects of a recovery of Iraqi oil exports from the region.

      Turkey's cabinet on Monday asked parliament for permission to launch an attack on Kurdish separatists in northern Iraq, just days after witnesses reported that Turkey had shelled an Iraqi village.

      "The escalation in Turkey could threaten supplies both from Ceyhan and the Baku-Ceyhan pipelines, jeopardizing well over 1 million barrels per day of supplies," said Nauman Barakat, senior vice president at Macquarie Futures USA.

      "With a government of this nature, only a united front of nations will be able to exert enough pressure to make Iran abandon its nuclear aspirations -- a source of great anxiety and instability in the region," Gates said in speech to the Jewish Institute for National Security Affairs.

      "Our allies must work together on robust, far-reaching, and strongly enforced economic sanctions," he said, also noting a need for political and diplomatic pressure.

      "And, as President (George W.) Bush has said, with this regime, we must also keep all options on the table," said Gates in comments prepared for delivery to the nonprofit group that advocates a link between U.S. and Israeli security interests.

      The United States and other Western nations fear Iran is trying to develop nuclear weapons under the cover of a peaceful nuclear energy program. Iran denies it wants nuclear weapons.

      Washington and Tehran also are at odds over Iraq, where U.S. officials say Iranian agents are providing deadly technology and training to insurgents. Iran dismisses those charges as well.

      The U.N. Security Council has passed two sanctions resolutions against Iran for failing to halt uranium enrichment. World powers have agreed to delay further sanctions until November to see whether Iran's agreement with U.N. nuclear inspectors to clear up questions about its program yields results.

More:

Sniffles That Precede a Recession

A Disturbing Narrative Continues to Unfold

Big banks prepping $100B bailout fund

Fund sees move away from dollar-based commodities

      The Bottom Line:  In the famous words of Ace Ventura, "Man am I tired of bein' right!".

      Commuters who depend on the stretch of freeway, which carries about 225,000 vehicles a day, faced the prospect of a nightmare commute on Monday.

      "We're doing everything we can, ... and we'll continue to re-evaluate our alternate traffic routes," said Warren Stanley, California Highway Patrol assistant chief.

      The southbound lanes of I-5 were closed for 2½ miles; the northbound side was closed for about a mile.

      Two northbound truck-bypass lanes around the crash site, which cars would be permitted to use, could reopen as early as Sunday night, said Deborah Harris, California Department of Transportation spokeswoman.

      Officials hoped to reopen the southbound lanes by Tuesday with detours around the tunnel area, said Doug Failing, Transportation Department district director. Other northbound lanes could reopen 24 hours later.

      Metrolink, which operates commuter trains throughout Southern California, planned to start running run nonstop service with extra cars between downtown Los Angeles and Santa Clarita on Monday, spokeswoman Denise Tyrrell said.

      Gov. Arnold Schwarzenegger declared a state of emergency in Los Angeles County, which will allow the state to deploy emergency workers and equipment and give aid to local government.

      The spokeswoman, who spoke on customary condition of anonymity, refused further comment.

      Interfax news agency, citing a source in Russia's special services, said suicide terrorists had been trained to carry out the assassination.

      Putin is to travel to Tehran on Monday night from Germany after meetings with Chancellor Angela Merkel.

      During his visit to Iran, Putin is to meet with President Mahmoud Ahmadinejad and attend Tuesday's summit of Caspian Sea nations.

      He will be the first Kremlin leader to travel to Iran since Josef Stalin attended a 1943 wartime summit with Britain's Winston Churchill and President Franklin Roosevelt.

      Officials have reported uncovering at least two other plots to kill Putin on foreign trips since he became president in 2000.

      Ukrainian security officials said they foiled an attempt to kill Putin during a summit in Yalta in August 2000. And in 2001, Russian security officials said a plot to assassinate Putin earlier that year in Baku, the capital of Azerbaijan, had been uncovered by the Azeri special services.

      There will be more casualties from the US sub-prime borrowing problems and the real economy will only respond with a lag to the jump in lending risk premium.

      The market is assuming the best, but we will not know the actual outcome for some time.

      The equity market has concluded all is well because US employment and activity did not immediately collapse.

      However, the US economy will slow gradually. Higher risk margins will slow activity with a lag and there is more pain to come in housing.

      Once the US slows there will be a further lag before slowing US growth hits Chinese exports and investment. China's exports are 40 per cent of its output and it would not escape unharmed if the US slows substantially. The rest of Asia depends on rapid US and Chinese growth and would also slow.

      How sharp the US slowdown will be, remains to be seen. Over the next year there are $US40 billion a month in sub-prime loans coming off low honeymoon rates.

      This will mean continued house repossessions and downward pressure on US house prices that will hit US consumption.

      More firms exposed to the credit crunch will fail. While the US will cut interest rates in response, lower interest rates only work with long lags.

      Risk premia have jumped back to more normal levels on riskier borrowing. This is a welcome return to more rational risk pricing, but the world has still changed after a period of irrational exuberance.

      Banks around the world will be more careful about lending. Both personal and corporate sub-prime borrowers will be able to borrow less and will pay more for the privilege.

      The Australian share market has benefited from the rapid rebound in commodity prices as markets concluded there would be little impact on world activity. However, this is premature.

      World activity will slow as the US slows; given China will certainly not accelerate.

      China is not about to dive into recession and coal and iron ore demand remains strong. However, some metals are moving into supply surplus and slower world growth would see prices retreat.

      The Australian economy remains strong. New resource projects coming on line are boosting output and construction of large projects will continue for years.

      The Reserve Bank will raise rates further, with both oil and food adding to price pressures..."

More:

Foreclosure Filings Nearly Double

Morgan Stanley Traders Lost $390 Million in One Day

Mass auction reveals depth of foreclosure crisis

Even the renters now feel the mortgage crisis

Subprime crisis won't peak until 2009

The dollar era is over: a long, slow collapse and a central bank firesale

Banks to set up $80 bln fund to limit credit crunch

      The Bottom Line:  Anyone left still denying the undeniable only looks more the part of the fool than ever before.

      The report said President Bush's administration had intense discussions with the Israeli government before the strike and U.S. officials were divided over whether it would be premature.

      Syrian President Bashar Assad has said Israel bombed an "unused military building" in the Sept. 6 raid. Israel has been extremely secretive about the affair. It only recently relaxed censorship to allow Israel-based journalists to report that Israeli aircraft attacked a military target deep inside Syria.

      In the weeks that followed the attack, U.S. officials said it was aimed either at a nuclear or missile facility that Syria operated jointly with North Korea.

      The New York Times said the nuclear reactor was modeled on one North Korea had used to create its stockpile of nuclear weapons fuel, though the role of any North Korean assistance in building it remains unclear. North Korea has denied involvement in any such activities in Syria.

      Satellite photographs detected the partly constructed Syrian reactor earlier this year, the Times said, citing American officials..."

      Workers put up the commemorative statue before dawn in the city of Boca del Rio, in Veracruz state.

      But by 9 a.m. some 100 angry protesters, many of them members of the Institutional Revolutionary Party, or PRI, surrounded the figure. Fox, of the conservative National Action Party, ended 71 years of PRI rule with his historic election in July 2000.

      The crowd launched eggs at the statue, fastened a rope around its neck and pulled it to the ground, breaking off the right hand and damaging the base. One man danced atop the statue, while another strummed a guitar and sang songs insulting Fox.

      "We came to represent society because we don't want this monument here," said Adolfo Mota, a PRI lawmaker in Mexico's lower house of congress who led the protest. "As residents of Veracruz, it strikes us as an act of provocation."

      Boca del Rio Mayor Francisco Gutierrez de Velasco, a member of Fox's party, condemned the acts but said municipal police did not intervene because the statue is the state's property.

      An inauguration ceremony scheduled for Sunday was canceled until further notice.

      Fox has been fighting allegations since September that he illegally enriched himself during his presidency, and Mexico's congress opened an investigation into the charges..."