Local News

US central bank accused of unleashing an inflation shock that will rock financial markets

Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth." Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.

The bank warned that engineering and auto firms we're likely to face a crunch as steel and oil costs surge. "Their business models will have to be substantially altered if they are going to survive,"

Mr McAdie Telegraph 6/27/08

Jim Pechota moves his son's BMX trophies from his flooded basement to the curb for disposal in...

IOWA CITY, Iowa (AP) - Even as flood fears eased in Iowa City, the state's south and east prepared for new problems ahead for a string of towns along the Mississippi River. Sandbagging was under way in Burlington, a key rail hub, to build the city's levee system and protect it from the river; 350 people had been evacuated. Two more deaths were reported, bringing the state's death toll from flooding to five. A 35-year-old man apparently drowned in Iowa River floodwaters near Wapello, and a woman was killed near New London when her stopped car was hit by a National Guard bus involved in flood duty. Two Wisconsin deaths also were linked to flooding during the weekend. "It's likely that we will see major and serious flooding on every part of the southeastern border of our state from New Boston and down," Gov. Chet Culver said. "We are taking precautionary steps, we are evacuating where necessary, but that is going to be the next round here."

Elsewhere in the soaked Midwest,

Illinois National Guard soldiers had filled about 500,000 sandbags by Monday to help fortify levees along a 15-mile stretch of the Mississippi River near Quincy, while farther south residents were evacuating the river town of Grafton. Flooding had begun to recede in parts of western Michigan.

Ford delays 2009 F-150 release by two months...More production cuts announced, profit outlook dims

Ford Motor Co. said today it will delay the introduction of the 2009 Ford F-150 and make deeper cuts to North American truck production plans as industry sales worsen. The 2009 F-150 will be delayed by two months because of the need to sell down inventory of the current model, Ford said. The revamped model now will go on sale in late fall. One of two F-150 plants will be idled for most of the third quarter. Both F-150 plants will lose one shift of production.

Autonews.com

Map shows flooded river status in Iowa;

The Iowa River's crest arrived early and lower than expected, possibly because of a number of levee breaches downstream that opened the channel, the National Weather Service said. Gov. Chet Culver called word of Iowa City's crest "a little bit of good news," but cautioned that the situation was still precarious. President Bush will visit the Midwest on Thursday to inspect flood damage, the White House said Monday as the president wrapped up a weeklong trip in Europe. White House press secretary Dana Perino said the places the president would visit had not been chosen. Iowa City evacuated 5,000 people on Sunday, and 400 homes had suffered significant damage. But the river was expected to begin receding Monday night as the threat of new flooding flowed toward southeast Iowa. "We made it through another day without any major incident and we feel fortunate for that," city manager Michael Lombardo said. The University of Iowa reported no new damage overnight after 16 buildings were flooded during the weekend. The school was working to restore power to buildings on the east side of the river.

Map shows flooded river status in Iowa; includes current flood stages with select rivers; two...

Early Monday, more than 38,000 residents in 26 Iowa communities had been evacuated from their homes, said Kevin Baskins of the state Emergency Operations Center. Most of those - 25,000 - were in Cedar Rapids, and another 5,000 in Iowa City, he said. Eight people were pulled Sunday from the flooded Des Moines River in Ottumwa after their boat capsized, police Chief Jim Clark said. Four were treated for hypothermia, Clark said. On Monday, the river was at more than 20 feet - double the flood stage. Sandbagging was under way in Ottumwa to protect the city's water treatment plant. Also on the Mississippi River, the Army Corps of Engineers said Lock 12 at Bellevue, south of Dubuque, was reopened to river traffic on Sunday. But locks 13-25 remained closed, making 281 miles of the Mississippi from Winfield, Mo., to Fulton, Ill., inaccessible to commercial river traffic.

Map shows departure from normal rain totals for Midwest states in the last week;

About 30 inmates from the Iowa State Penitentiary helped to sandbag in Burlington, a city of about 27,000. Already the city's four-story Memorial Auditorium was surrounded by water and some evacuations were under way. In Iowa City, a town of about 60,000 where the Iowa River bisects both the school and the town, residents were cheered by the lower crest. Donna Dubberke, a meteorologist with the National Weather Service in Davenport, said one reason that Iowa City's troubles may have eased was levee bursts down the river. "Downstream there are some levees that have broken and we believe that some of that water is able to go off in those areas so that just provides a little more storage," Dubberke said. Culver said cities big and small were getting adequate support in their efforts to survive the flooding. "While we are having challenges in our urban centers we have multiple ongoing battles in the smaller communities," he said. "And we are doing just as much to help those rural, more remote areas of the state." The threat to southeast Iowa was already taking shape, though the Mississippi River is days from cresting. State officials girded for serious flooding threats, sending 500 National Guard troops to Burlington. Culver said cities big and small were getting adequate support in their efforts to survive the flooding. The Iowa River breached levees in the town of Columbus Junction on Saturday evening, leaving much of the downtown, including a medical center, senior center, water plant and a couple dozen other businesses, under about 10 feet of water. "So we ended up losing the battle, but there are a lot of good things that come out of an effort like that," said Mayor Dan Wilson. "The community spirit has been phenomenal." More than 400 members of the Illinois Army National Guard were activated to assist with sandbagging in Quincy. About 100 miles up the river in Keithsburg, a community of about 700 residents, water was as much as 5 feet deep Monday morning, said alderman George Askew. Levees had ruptured in several places during the weekend. The National Weather Service said the river was expected to crest there Tuesday just above 25 feet. Flood stage is 14 feet. If that forecast is accurate and a levee on the west side of town holds, "Our town will be halfway saved," Askew said. About 100 miles downriver from Quincy, evacuations were underway in Grafton, Ill. "We expect (the water) to be in our business by Thursday," said Peter Allen, owner of The Loading Dock bar and restaurant. Elsewhere, water receded in parts of western Michigan as the state tried to recover from a second straight weekend of severe weather. The latest flooding followed rain that totaled 11 inches in less than 12 hours Thursday and Friday near Scottville, east of Ludington.