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Corporate “federal agency” debt obligations and mortgage-backed securities guaranteed by the companies also plummeted relative to government debt as investors reduced positions in response to the latest worries, analysts said.

Monday’s carnage was only the latest setback for Fannie Mae and Freddie Mac, which each have lost more than three-quarters of their stock market value since last August when a crisis initially believed contained to the subprime mortgage market erupted into a global credit crisis.

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The shares crumbled after a Lehman Brothers report said a pending accounting change could force Freddie Mac and Fannie Mae to raise an enormous amount of capital at a difficult time. The rule aimed at forcing companies to account for securitized assets on their balance sheets could mandate Freddie Mac and Fannie Mae to boost capital by $29 billion and $46 billion, respectively, the analysts wrote in a client note on Monday.

In a caveat, Lehman’s analysts, led by Bruce Harting, said the companies may get exemptions given the gravity of the impact on the fragile U.S. housing market.

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Global economic uncertainty over the past few years has pushed gold prices into the stratosphere, and few people have felt that rise as much as Hong Kong entrepreneur Lam Sai-wing has. He has spent the past decade constructing a palace of gold, decked out in six tons of the precious metal. In recent years, the palace has become an attraction mainland Chinese tour groups couldn’t miss, and a boon for Mr. Lam’s retail jewelry business, Hong Kong-listed Hang Fung Gold Technology.

Since gold prices hit four-digit territory earlier this year, Mr. Lam has been taking apart his hall of gold as quickly as he once raced to construct it. He is melting down golden chandeliers, armchairs and armored knights and selling gold by the ton to fuel growth plans that include hundreds of new retail outlets in mainland China. But even with the selloff, one thing is certain: The toilet stays.

The most telling came from Marks & Spencer, Taylor Wimpey and John Lewis – emblems all of a peculiarly middle-class, middle-England solidity. The first reported a 5 per cent drop in like-for-like sales over three months, which led to 25 per cent being wiped off its share value. The building company had to admit that it had failed to raise the finance it hoped for, almost halving its share value at a stroke. The value of the company is now a fraction of what it was when the two companies – Taylor Woodrow and Wimpey – merged a year ago.

It will have escaped no one that the pain being felt by ordinary consumers and by the building giants is connected. For the best part of a decade, rising house prices have encouraged homeowners to feel richer than perhaps they really were, and helped to fuel the consumer boom of which the then chancellor, and now Prime Minister, was so proud.

Rather than a reasonable correction that would have re-established the virtues of sound credit and given hope, at long last, to first-time buyers, however, what the country has experienced in recent months has been the worst of two possible worlds. Credit has been squeezed to the point where the number of new mortgages has shrunk exponentially, almost freezing the housing market, while inflation has simultaneously reared its ugly head.

The government wants to ensure retailers and suppliers can continue to sell basics such as meat, bread and milk if hauliers bring the country to a halt.

They have asked supermarkets to make contingency plans “in case the infrastructure of the country breaks down”.

Among those who have taken part are farmers, dairies, bakeries and supermarkets.
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At least four government departments are involved. The operation is being led by Bruce Mann, director of civil contingencies at the Cabinet Office.

The government has commissioned IGD, a company that collects intelligence on international food and grocery chains, to supply data about how food is moved around the country and where stocks are held. The information has been used to put together a “map” of depots and supply lines.

The move comes as hauliers warn that direct action over soaring fuel prices is a “very strong possibility”.

Until the early 1990s the government held secret food stocks, typically biscuits, flour and other dry foodstuffs, in grain sheds around the country. It now relies on retailers and suppliers to have plans in place.

Normally supermarkets operate on the basis of “just in time” deliveries, designed to cut waste by ensuring supplies just match demand. The government is keen to ensure stocks of essentials do not run out if the system is derailed because lorries cannot make their usual deliveries.

Tesco, which has played a key part in the discussions, wants the government to allow it and other suppliers to sit in on the cabinet’s emergency committee, Cobra, in the event of a crisis.

David North, the company’s community and government director, said food supplies could be hit by fuel protests, though he assured customers that the situation would have to be “fairly calamitous” for supplies to run out.

A Defra spokesman said plans were put in place during a strike by Shell tanker drivers last month, drawing on experience of the strikes in 2000.

“We are in contact with producers and retailers, to know what food supplies are where, at any given time . . . should the infrastructure of the country break down.”

“She’s crying over the Euribor,” the 12-month money- market rate used to set Spanish mortgages, Montalvo, 28, said in an interview. “We’re just praying it won’t keep going up.”

For homeowners in Spain and in Ireland, struggling to stay afloat amid the wreckage of a decade-long real-estate boom, those prayers are going unanswered. The European Central Bank yesterday increased its benchmark rate to 4.25 percent to fight inflation, pushing both economies a step closer to recession.

The two countries are particularly vulnerable to higher lending costs because their housing industries account for about 10 percent of their economies, twice the EU average. Montalvo’s family has seen its monthly mortgage payment leap 50 percent to 2,080 euros since the ECB began raising rates in December 2005.

“They have been thrown to the wolves,” said Stuart Thomson, who helps manage $46 billion in bonds at Resolution Investment Management Ltd. in Glasgow, Scotland. `It’s much easier to bring inflation lower if you’re willing to have a recession in economies like Spain, Italy and Ireland.”

In the early days of the Korean War, other American officers observed, photographed and confidentially reported on such wholesale executions by their South Korean ally, a secretive slaughter believed to have killed 100,000 or more leftists and supposed sympathizers, usually without charge or trial, in a few weeks in mid-1950.

Extensive archival research by The Associated Press has found no indication Far East commander Gen. Douglas MacArthur took action to stem the summary mass killing, knowledge of which reached top levels of the Pentagon and State Department in Washington, where it was classified “secret” and filed away.

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On June 29, 1950, as the southern army and its U.S. advisers retreated southward, reports from Seoul said the conquering northerners had emptied the southern capital’s prisons, and ex-inmates were reinforcing the new occupation regime.

In a confidential narrative he later wrote for Army historians, Lt. Col. Rollins S. Emmerich, a senior U.S. adviser, described what then happened in the southern port city of Busan, formerly known as Pusan.

Emmerich was told by a subordinate that a South Korean regimental commander, determined to keep Busan’s political prisoners from joining the enemy, planned “to execute some 3500 suspected peace time Communists, locked up in the local prison,” according to the declassified 78-page narrative, first uncovered by the newspaper Busan Ilbo at the U.S. National Archives.

Emmerich wrote that he summoned the Korean, Col. Kim Chong-won, and told him the enemy would not reach Busan in a few days as Kim feared, and that “atrocities could not be condoned.”

But the American then indicated conditional acceptance of the plan.

“Colonel Kim promised not to execute the prisoners until the situation became more critical,” wrote Emmerich, who died in 1986. “Colonel Kim was told that if the enemy did arrive to the outskirts of (Busan) he would be permitted to open the gates of the prison and shoot the prisoners with machine guns.”

Chinese officials admit they can no longer guarantee that the air quality will match international standards as pollution tests by The Sunday Times revealed the full extent of the challenge facing British athletes.

With just five weeks to go before the start of the Beijing Games, tests conducted outside the national stadium — known as the Bird’s Nest — and at Tiananmen Square, the starting point of the marathon, showed the air is thick with particulate pollution.

Even the Chinese government’s official air pollution index — which monitors a range of pollutants, including carbon dioxide and nitrous oxide — is running at double the level recommended by the WHO.
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Du Shaozhong, deputy director of Beijing’s Environmental Protection Bureau, said: “We made a commitment to ensure air quality for the Olympic Games . . . as for whether we have reached the goal, that will be examined after the event.”

The British team is taking no chances and will train in Macau on the southern coast until the last minute to minimise athletes’ exposure to Beijing’s smog.

Yesterday, Kean spoke to an ar guably more-influential audience when he shared many of those same lessons with educators crafting a curriculum for teaching New Jersey’s children about the attacks.

“You have an enormous responsibility,” Kean told the group gathered at Liberty Science Center in Jersey City. “How to teach this terrible event and get across these things to our children, you are vested with that incredible responsibility. But if I have faith in anything, I have faith in teachers.”

The setting was a conference kicking off a yearlong effort to develop curriculum and resources for teachers faced with a dual challenge of teaching the history and context of the terrorist attacks in communities that witnessed them.

And with about 100 educators in attendance yesterday, it was clear the hurdles don’t stop there. There are rising demands on teachers throughout the year, scant resources in textbooks and elsewhere and even the timing difficulty of an niversaries that come only days after schools open.

“We need to be dealing with this in totality … more than a simple commemoration,” said Robert Barnshaw, a Gloucester Township teacher. “And in the pattern of the year, Sept. 11 is probably not the best time to be doing that.”

To hear Kean and others speak, Sept. 11 could easily be its own course, although most agreed it’s a topic better infused across different subjects and even into nurses’ and counselors’ offices.

“It’s an event that’s absolutely unique in the history of this coun try and needs to be treated as such,” said Kean.

The former governor’s national commission in 2004 penned a scathing report on the lead-up to the attacks, with widespread blame meted out for security lapses and policy failures. While mincing few words yesterday in sharing those lessons with teachers, Kean also implored them to tell students about the courage and action that arose from the attacks, from the heroism on Flight 93 to the activism of survivors’ families.

Alex Allan has been described as “very, very seriously ill” and is under police guard in the intensive care unit of a west London hospital.

He was found by Dominique Salm, a painter who rents an artist’s studio in his west London home.

According to neighbours she found him slumped unconscious with “blood everywhere”.

Doctors have run a battery of test to try and establish why the 57-year-old Chairman of the Joint Intelligence Committee collapsed at his home on Monday.

Government sources insist there is no evidence of suspicious circumstances, but Miss Salm’s account will add to speculation that Mr Allan may have been targeted by a foreign spy.

The painter’s mother Sally Ann Salm told the Mail on Sunday: “Some very serious people have asked Dominique not to comment on any of this until it has been fully investigated and she is doing just that. So am I.”

The Counter Terrorism Command has investigated but is so far treating the illness as non-suspicious.

A police source said: “Because he is a person of significance, investigators made sure nothing untoward had occurred. But it was quickly established there was a medical reason for how he was found.”

Whitehall sources are blaming the collapse on pneumonia, and experts agree that prolonged coughing can bring up blood.

Dr Keith Prowse, chairman of the British Lung Foundation, said: “If it’s pneumonia it is likely to be secondary to something else. And a significant quantity of blood is more likely to come from the gut than the chest.

“Pneumonia is something that can strike very quickly, however.”

Mr Allan has been described as “ebullient and out-going” and once windsurfed down the Thames in a suit and bowler hat to avoid a transport strike.

He was private secretary to both John Major and Tony Blair and was previously permanent secretary at the Ministry of Justice and High Commissioner for Australia.

He was appointed to be chairman of the Joint Intelligence Committee (JIC) by Gordon Brown a year ago and took up his job in the autumn.

It is Mr Allan’s job to assess the intelligence put forward by MI5, MI6, GCHQ, military intelligence and foreign intelligence sources.

He reports to the permanent secretary for intelligence, security and resilience who in turn reports to the Prime Minister.

Government sources suggest Mr Allan was “too high profile” to be a target for foreign intelligence agencies but others have suggested this is exactly what could make him vulnerable.

According to a video promoting the so-called EMD Safety Bracelet, all airline passengers would be required to wear it “until they disembark the flight at their destination.”

The device, in addition to storing all of your sensitive personal information and tracking you with GPS, would allow someone to activate it remotely and immobilize the wearer for several minutes. This is EMD, or electro-muscular disruption.