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The downdraft in bonds was so heavy it actually dragged down the U.S. stock market, inverting the more normal relationship where U.S. Treasuries tend to track equities.

Selling by mortgage investors, who are often forced to sell U.S. Treasuries to hedge their positions, when yields surpass key levels, added renewed impetus to the downturn.

The decline was largely concentrated in longer-dated maturities, driving the gap between short- and long-term rates, known as the yield curve, to its steepest level on record.

“You’re exploding the issuance at a time when demand for the product you’ve got is a best flat,” said Malcolm Polley, president and chief investment officer at Stewart Capital Advisors. “So rates are going to go up. It’s simple economics.”

Benchmark 10-year notes were down over 1-16/32 and yielding 3.74 percent, up nearly 20 basis points in just one day and over 1.25 percentage points in just six weeks. The spread between 10- and two-year notes widened to 275 basis points, the largest ever gap.

The market has become increasingly bearish since mid-March, when the Federal Reserve first announced its intention to buy up to $300 billion of U.S. Treasuries over six months.

The rise in yields in recent weeks was at first due to signs of economic stabilization and less need for a safe-haven, but recently the trend has shifted toward skittishness over the huge U.S. government borrowing requirement this year.

The Fed bought $6 billion in Treasuries on Wednesday alone, but that was not nearly enough to stem the tide.

During the hearing, the government also stated that the WikiLeaks publication of the full list in March has now been officially referred to the Australian Federal Police (AFP).

The Australian Communications and Media Authority (ACMA) “blacklist” is slated to form the backbone of a national, mandatory, internet censorship system.

ACMA admitted that:

* A mere 32% of the secret censorship list is related to a category covering potentially sexually provocative images of persons appearing to be under the age of 18, pages with links to these images or other “child abuse” information. The was politically marketed to the Australian public as primarily a method of preventing child pornography.

* After an unusual delay, the Australian government have now officially referred the publication of the list to the Australian Federal Police. It is alleged that WikiLeaks’ release of the censorship list is illegal under Australian law.

Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

When the economy slumps, so does tax revenue, and this recession has been no different, says Kerry Lynch, senior fellow at the AIER and author of the study. “It illustrates how severe the recession has been.”

For example, 6 million people lost jobs in the 12 months ended in April — and that means far fewer dollars from income taxes. Income tax revenue dropped 44% from a year ago.

“These are staggering numbers,” Lynch says.

Big revenue losses mean that the U.S. budget deficit may be larger than predicted this year and in future years.

“It’s one of the drivers of the ongoing expansion of the federal budget deficit,” says John Lonski, chief economist for Moody’s Investors Service. The Congressional Budget Office projects a $1.7 trillion budget deficit for fiscal year 2009.

Interfax quoted an unnamed security source as saying a stand-off triggered by Pyongyang’s nuclear test on Monday could affect the security of Russia’s far eastern regions, which border North Korea.

“The need has emerged for an appropriate package of precautionary measures,” the source said.

“We are not talking about stepping up military efforts but rather about measures in case a military conflict, perhaps with the use of nuclear weapons, flares up on the Korean Peninsula,” he added. The official did not elaborate further.

North Korea has responded to international condemnation of its nuclear test and a threat of new U.N. sanctions by saying it is no longer bound by an armistice signed with South Korea at the end of the 1950-53 Korean War.

“They mumble, they dissemble, and there’s a lot of ‘on the one hand . . .'” said the retired official, who spent 25 years as a CIA operations officer but now writes blistering, unauthorized critiques of the spy agency using the pen name “Ishmael Jones.”

Jones denounced claims by Speaker Nancy Pelosi that the CIA kept her in the dark about water-boarding terrorist suspects, saying the California Democrat “has been using the interrogation issue as a political tool for years.”

But he said the spy agency’s congressional briefers are also experts at camouflaging classified programs.

“In Mrs. Pelosi’s defense, CIA managers do not give fist-pounding briefings,” Jones recently wrote for the conservative National Review in a blog that drew scant media interest.

“They mumble, they dissemble, and there’s a lot of ‘on the one hand …’,” Jones declared.

The CIA deploys so many briefers to the Hill it’s hard for both the agency and intelligence committee members to reconstruct who said what to whom, he added.

“Its enormous numbers of employees have led to briefings being handled by groups, with vague chains of command, so that it may have been difficult to pin down what was said, when it was said, and who was in charge,” Jones said of the CIA interrogation briefings.

Jones also charged that, contrary to beliefs that the agency has a political agenda, “In reality the CIA is loyal only to itself. As long as Mrs. Pelosi supported its bureaucratic lifestyle, it supported her, but when she attacked it, it fought back. The CIA may not be able to conduct efficient intelligence operations, but it knows how to survive.”

Reports that CIA managers were outraged or demoralized by the water-boarding controversy are wrong, Jones also maintained. To the contrary, he said, they felt that revelations of their interrogators roughing up, or even torturing, detainees made them look tough.

“The interrogations controversy has served the CIA bureaucracy,” Jones asserted. “A top goal of bureaucracy is to look busy, and whether one agrees with the interrogation methods or not, the impression given is that the CIA is both busy and aggressive.”

Jones added: “It relishes this ‘cowboy’ image, and its greatest fear is that the taxpayer might figure out how little it actually is doing.

“Bans or restrictions on interrogations,” he added, “would have the constructive effect of removing this smokescreen, this distraction, and redirecting focus to what exactly the CIA is doing to provide the foreign intelligence the president needs.”

The high court, in a 5-4 ruling, overturned the 1986 Michigan v. Jackson ruling, which said police may not initiate questioning of a defendant who has a lawyer or has asked for one unless the attorney is present. The Michigan ruling applied even to defendants who agreed to talk to the authorities without their lawyers.

The court’s conservatives overturned that opinion, with Justice Antonin Scalia saying “it was poorly reasoned.”

Under the Jackson opinion, police could not even ask a defendant who had been appointed a lawyer if he wanted to talk, Scalia said.

“It would be completely unjustified to presume that a defendant’s consent to police-initiated interrogation was involuntary or coerced simply because he had previously been appointed a lawyer,” Scalia said in the court’s opinion.

Scalia, who read the opinion from the bench, said the decision will have “minimal” effects on criminal defendants because of the protections the court has provided in other decisions. “The considerable adverse effect of this rule upon society’s ability to solve crimes and bring criminals to justice far outweighs its capacity to prevent a genuinely coerced agreement to speak without counsel present,” Scalia said.

The Michigan v. Jackson opinion was written by Justice John Paul Stevens, the only current justice who was on the court at the time. He and Justices David Souter, Stephen Breyer and Ruth Bader Ginsburg dissented from the ruling, and in an unusual move Stevens read his dissent aloud from the bench. It was the first time this term a justice had read a dissent aloud.

“The police interrogation in this case clearly violated petitioner’s Sixth Amendment right to counsel,” Stevens said. Overruling the Jackson case, he said, “can only diminish the public’s confidence in the reliability and fairness of our system of justice.”

The twin-engine plane was coming from Sao Paulo and crashed late on Friday about 450 miles from Salvador in Bahia state, near a luxury resort.

An air force spokesman said there was no report of survivors. The plane was owned by Roger Wright, owner of financial consulting firm Arsenal Investimentos, according to local media. Wright, his wife and two children were on board, local websites reported.

The cause of the crash was not known. The air force said the plane’s black box was found and was being analyzed.

An Arsenal Investimentos spokesman would not confirm who was on board.

A spokeswoman at Brazil’s National Civil Aviation Agency said the plane, a King Air B350, had been inspected and that its documents were in order.

Brazil had two major plane crashes in 2006 and 2007, raising concerns about the safety of air travel in Latin America’s largest country.

In July 2007, all 187 people on board and 12 people on the ground died when a TAM airline Airbus A 320 overshot a runway at Sao Paulo’s Congonhas airport.

San Mateo, Calif.-based Sonitus didn’t say how much money In-Q-Tel invested.

Led by CEO Amir Abolfathi, Sonitus is making an in-the-mouth hearing aid that transmits sound through the teeth to the bones of the inner ear.

In-Q-Tel looks for technology to invest in which may benefit U.S. intelligence agencies. The Central Intelligence Agency set it up in 1999 as an independent, not-for-profit firm.