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The project had to be abandoned because the Iraqi Defense Ministry couldn’t obtain rights to the land where the headquarters were to be built, according to a report released this month by the Defense Department’s Office of Inspector General. Contracting records show the buildings would have housed one brigade and three battalions of the Iraqi military in Ramadi, a hotbed of the Sunni Muslim insurgency and capital of Anbar province.

Still, the Air Force agency overseeing the project paid contractor Ellis Environmental Group $31.9 million of the $34.2 million obligated for the project, the report said.

An Air Force spokesman, Michael Hawkins, said in an e-mail that Air Force auditors are reviewing the contract. Although the inspector general’s report says the Air Force was considering suing the contractor, Hawkins said any talk of a lawsuit was premature until the Air Force audit is complete.

Schwarzenegger made the announcement Friday after meeting with lawmakers and interest groups this week to tell them California’s budget deficit is worse — far worse — than economists predicted just a few weeks ago.

The shortfall is not $10 billion, but more than $14 billion — a 40 percent jump that would put it in orbit with some of the state’s worst fiscal crisis, those who have met with him said.

A fiscal emergency would trigger a special session and force lawmakers and the governor to begin addressing the shortfall within 45 days.

“What we have to do is fix the budget system. The system itself needs to be fixed, and I think that this is a good year, this coming year, to fix it,” Schwarzenegger said in Long Beach, where he was promoting his plan for health care reform.

California is struggling with shrinking state tax revenue from the meltdown of the subprime housing market and the credit crunch on Wall Street.

State spending also has increased by more than 40 percent since Schwarzenegger took office after the 2003 recall of then-Gov. Gray Davis.

The latest official migration figures showed that while 591,000 people arrived in Britain last year, a record high of 207,000 Britons left for sunnier climes.

High levels of crime, dreary weather, bad transport and expensive accommodation helped drive Christopher Khalil to Sydney, Australia, said the 33-year old from Rhyl, a seaside town in north Wales.

Australia, where the former superpower used to send its criminals, is the No 1 destination of choice.

“It’s a new world out here – the sun shines every day, the beaches are beautiful, it’s cheaper to live, salaries are approaching UK ones and you can live an amazing outdoor lifestyle,” Khalil, who now works for an Australian digital media company, said by email.

“There seem to be new people arriving every week in search of a better life and better opportunities,” he said.

Helen, a petite 42-year-old Nelson housewife, is racing to build her own personal TEOTWAWKI lifeboat.

Earlier this year, she and her American husband cashed-up to buy a 21ha farm in a remote, easily defensible, river valley backing onto the Arthur Range, north-west of Nelson.

The site ticks the right boxes. Way above sea level. Its own spring and stream. Enough winter sun. A good mix of growing areas. A sprinkling of neighbouring farms strung along the valley’s winding dirt-track road.

The digger was to arrive this week to carve out the platform for an adobe eco-house. A turbine in the stream will generate power. A composting toilet will deal with sewage.

Then there is the stuff that could really get her labelled as a crank (and why she would prefer to remain relatively anonymous, at least until she is completely set up). Back at her rented house in Nelson, Helen shows the growing collection of horse-drawn ploughs, wheat grinders, treadle sewing machines and other rusting relics of the pre-carbon era, she believes she will need the day the petrol pumps finally run dry.

There is the library of yellowing books from colonial times, telling how to make your own soap, spin candlewicks, care for clydesdale horses.

“In the kitchen now, I’m always thinking, well, how am I going to do this job if I’m not plugged into the power? I’ve been scouring Trade Me for the things we’ll need.”

And weapons to defend the homestead? Helen’s hands rise to her face in a mix of distress and bemusement.

That it should come to this. That this is the kind of decision you have to make if you are prepared to think future events through to their logical conclusion.

Shultz’s latest letter, just in, is absolutely apocalyptical: “A financial tsunami is upon us,” he says, caused by lax credit and complications introduced by Wall Street’s derivatives craze.

Among other interesting ideas raised by Schultz in his intense, somewhat terrifying introduction: recession, possibly depression; bank failures; exchange controls; housing prices down by 50%; credit card company failures; money market fund dangers; tripling of U.S. jobless numbers; federal bail-outs for Fannie Mae and Freddie Mac.

His advice, translated out of his shorthand style: “If you have not already done so, take immediate measures to safeguard your assets against the global derivative crisis … Most urgent is close out time deposits, buy non-U.S. government bonds.”

In other words, Schultz is saying the U.S. banking system is threatened. How’s that for a Christmas greeting?

Schultz says “the second biggest danger is owning U.S. dollars in any form, (it) has crashed and going much lower … use dollar rallies to exit dollars or sell short … This is not a time to seek profits, but to protect what U have … Portfolio diversification is essential in troubled times.”

Schultz’s favored currencies: “In order of preference: Swiss Franc, Australian dollar, Euro, Canadian dollar.”

Schultz is a trader and his specific market advice is nuanced. He writes: “Direction of global stock markets uncertain. Balance stock holdings between long and shorts to counterbalance draw-down risks, and/or hedge exposure via puts, futures, or bear funds … Exposure to gold shares and bullion should be a minimum of 35-45% of your total portfolio, with at least 10% in physical gold bullion and coins, and/or very rare coins … ”

Frank Pringle has found a way to squeeze oil and gas from just about anything

I’m not sure if I’m watching a magic trick, or an invention that will make the cigar-chomping 64-year-old next to me the richest man on the planet. Everything that goes into Frank Pringle’s recycling machine—a piece of tire, a rock, a plastic cup—turns to oil and natural gas seconds later. “I’ve been told the oil companies might try to assassinate me,” Pringle says without sarcasm.

The machine is a microwave emitter that extracts the petroleum and gas hidden inside everyday objects—or at least anything made with hydrocarbons, which, it turns out, is most of what’s around you. Every hour, the first commercial version will turn 10 tons of auto waste—tires, plastic, vinyl—into enough natural gas to produce 17 million BTUs of energy (it will use 956,000 of those BTUs to keep itself running).

Pringle created the machine about 10 years ago after he drove by a massive tire fire and thought about the energy being released. He went home and threw bits of a tire in a microwave emitter he’d been working with for another project. It turned to what looked like ash, but a few hours later, he returned and found a black puddle on the floor of the unheated workshop. Somehow, he’d struck oil.

Or rather, he had extracted it. Petroleum is composed of strings of hydrocarbon molecules. When microwaves hit the tire, they crack the molecular chains and break it into its component parts: carbon black (an ash-like raw material) and hydrocarbon gases, which can be burned or condensed into liquid fuel. Pringle figured that some gases from his microwaved tire had lingered, and the cold air in the shop had condensed them into diesel. If the process worked on tires, he thought, it should work on anything with hydrocarbons. The trick was in finding the optimum microwave frequency for each material—out of 10 million possibilities.

Pringle has spent 10 years and $1 million homing in on frequencies for hundreds of materials. In 2004 he teamed up with engineer pal Hawk Hogan to take the machine commercial.

Their first order is under construction in Rockford, Illinois. It’s a $5.1-million microwave machine the size of small bus called the Hawk, bound for an auto-recycler in Long Island, New York. More deals loom: The U.S. military may use Hawks in Iraq on waste such as water bottles and food containers. Oil companies are looking to the machines to gasify petroleum trapped in shale.

Energy futures, other agricultural products and gold also rose, boosted in part by the dollar’s weakness Wednesday.

With the world wheat market strapped for supply, U.S. exports of the grain have been running at a record pace — even with prices at highest level in 30 years. The U.S. Department of Agriculture on Wednesday raised its estimate of wheat exports to 1.175 billion bushels, up from an earlier estimate of 1 billion bushels — but many analysts believe that estimate is far too low, given the current pace of sales.

By last week the U.S. had already exported 90 percent of the 1 billion bushels originally forecast to account for the entire marketing year, which runs through June 2008, according to DTN analyst Elaine Kub. The USDA reports weekly export sales on Thursday.

A notice jointly issued by five ministries led by the country’s top economic planning agency, the National Development and Reform Commission, said the move was necessary to ensure a “ready” emergency production and distribution system.

The cities include Beijing, Shanghai and Guangzhou.

Local governments were also asked to designate companies to ensure the sound production and distribution of food and cooking oil.

“Local governments should also inspect those companies regularly to ensure the quantity and quality of their reserves,” the notice said.

Warning of major increases in the prices of corn, wheat and cooking oil, yesterday’s notice came with an announcement from the National Bureau of Statistics that the country’s key inflation indicator, the consumer price index (CPI), surged to an 11-year high of 6.9 percent last month, of which 5.4 percentage points were a result of food price hikes.

Grain prices last month rose 6.6 percent over the same period last year, while cooking oil prices increased 35 percent.

Pork prices, which have been blamed for the recent increase in the CPI, soared by 56 percent.

The process of ‘injecting liquidity’ is a euphemistic way of saying ‘creating money out of thin air.’ The Federal Reserve doesn’t need a printing press to do this. They simply create a book entry on its balance sheet, and presto, $40 billion (or whatever amount they deem appropriate) of new ‘money’ is created, which the Fed then lends to those bankers coming to it hat in hand.

Creating money this way is a barbaric process because it further debases the dollar, but is hailed by the banking insiders and their apologists as a brilliant maneuver to fight the worsening liquidity crunch. Of course it is a view of those with vested interests, and bluntly, is just their selling pitch to the masses. It is a view so horribly misguided these insiders obviously realize it is wrong. They must know that the problem impacting banks today is insolvency, not liquidity.

Years of reckless credit expansion are coming home to roost. The boom is over, and since this past summer we have been in the bust, which is worsening day-by-day. Solvency is a problem of asset quality, not access to sources of funding. For example, Citibank didn’t have any trouble raising $7 billion of funding from a sovereign wealth fund at the right price, which was 11% – a rate far above the rates Citibank is paying to its depositors. This 11% rate reflects the risk of dollar inflation and the risk that Citibank has a lot of bad loans and other inferior assets on its balance sheet that will never be repaid.

There are gaping ‘black holes’ on the asset side of bank balance sheets. These black holes cannot be filled by creating money out of thin air. These black holes were created by assets that have ‘disappeared’. In other words, bank balance sheets are loaded with assets that are not worth what they once were, or in the worst possible case, no longer have any value at all. The bank liabilities remain, but their assets have been reduced. If this gap is larger than bank capital, then bank solvency is called into question, and that is the process now being evaluated by the markets.