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This could mean a lucrative new market for coal-producing states such as Wyoming, Kentucky, Montana, Illinois, Pennsylvania, Texas and West Virginia. But advocates of liquefied coal face a counterattack from environmentalists in the debate over global warming and must prove that they can produce an ecologically friendly product with a low carbon footprint.

Air Force officials have been testing synthetic fuels based on coal or natural gas. They plan to certify the fleet of nearly 6,000 aircraft to fly on a 50-50 blend of synthetic fuel and traditional petroleum-based jet fuel by 2011.

Assistant Air Force Secretary Bill Anderson said the search for affordable, cleaner-burning alternative fuels was driven by economic and national-security concerns.

The Air Force wants to comply with President Bush’s mandate to end America’s dependence on foreign oil while escaping soaring fuel prices.

For the Air Force, which consumes more than half of all the fuel that the U.S. government uses, the cost of fueling fighters and transports is stratospheric. Every $10 increase in the price of a barrel of oil costs the Air Force $600 million, Anderson said.

Last year, the Air Force spent $5.8 billion to buy 2.6 billion gallons of fuel. In 2003, the service spent about half that — $2.9 billion — to buy slightly more fuel, nearly 3 billion gallons.

The synthetic fuel is developed from a technology known as the Fischer-Tropsch process, which can convert coal, natural gas or biomass into clean-burning fuel stripped of impurities such as mercury, sulfur and carbon dioxide.

Most of the flight tests have used natural gas, but Air Force officials think their long-term energy strategy lies in liquefied coal, because the fossil fuel is so abundant in the United States.

The U.S. has 27 percent of the world’s coal supply — 493 billion tons — and sometimes is referred to as “the Saudi Arabia of coal.”

Despite its availability, however, coal seldom has been seriously considered as an alternative energy source because converting it to liquid is so expensive. But liquid coal is getting a fresh look as crude-oil prices soar past $100 a barrel.

While coal-to-liquid advocates say that the conversion process will result in an ecologically clean product, many environmental groups and their supporters in Congress think expanding the use of coal will worsen carbon emissions and global warming.

“I think across the board there is going to be opposition from the environmental movement,” said John Topping, the president of the Climate Institute in Washington. “I’d say it’s going to be almost universal because of the climate concerns.”

The Air Force tentatively plans to lease underused property at Malmstrom Air Force Base in Montana for the construction of a coal-to-liquid fuel plant.

By partnering with private enterprise, Air Force officials hope to foster the development of subsequent plants, to create a full-fledged coal-to-liquid industry that could supply military and commercial aviation.

The Air Force’s efforts have energized supporters on Capitol Hill, where coal-state lawmakers are pushing legislative initiatives to help promote liquefied-coal development.

At least a dozen lawmakers are members of a Coal-to-Liquids Caucus, which was formed in March 2007 by Sens. Jim Bunning, R-Ky., and Barack Obama, D-Ill.

Obama, who’s running for president, now says that he won’t support liquefied coal unless it emits 20 percent less carbon than conventional fuels.

Corey Henry, a spokesman for the Coal-to-Liquids Coalition, a group of coal-industry companies and unions, credits the Air Force with accelerating the push to create a liquid-coal industry.

“The Air Force is way out front over everybody else,” he said. “They will likely be the first big customer.”

Another challenge that coal advocates face is the hefty cost and manufacturing logistics of converting the mineral to liquid.

A coal-to-liquid plant typically requires 300 to 700 acres, a rail spur for coal and fuel deliveries, and access to roads, water and power lines, an Air Force fact sheet says.

The number of recipients, who must have near-poverty incomes to qualify for benefits averaging $100 a month per family member, has fluctuated over the years along with economic conditions, eligibility rules, enlistment drives and natural disasters like Hurricane Katrina, which led to a spike in the South.

But recent rises in many states appear to be resulting mainly from the economic slowdown, officials and experts say, as well as inflation in prices of basic goods that leave more families feeling pinched. Citing expected growth in unemployment, the Congressional Budget Office this month projected a continued increase in the monthly number of recipients in the next fiscal year, starting Oct. 1 — to 28 million, up from 27.8 million in 2008, and 26.5 million in 2007.

The president of the Philippines, Gloria Macapagal Arroyo, last month pleaded publicly with neighbouring Vietnam, the second-largest exporter, to guarantee supplies. The two countries signed an agreement on Wednesday March 26th apparently to do just that. But the various escape clauses that Vietnam insisted upon suggest it was more of a face-saving measure than a firm pledge. Vietnam and India, another big rice exporter, have recently announced export restrictions to try to curb soaring food prices at home. This will make it tough for poor, rice-importing countries, in Africa as well as Asia, to secure supplies.

Until a few years ago, rising harvests were meeting the growth in rice demand caused by Asia’s success in cutting poverty and its booming population. However recent wobbles in rice production have reversed a long-term trend of falling prices. They have also left the world’s stockpiles at their lowest since the 1970s. The rising cost of food in general is now pushing millions back into the poverty from which they only recently escaped.

The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers.

A senior official at one of the Scandinavian central banks told The Daily Telegraph that Fed strategists had stepped up contacts to learn how Norway, Sweden and Finland managed their traumatic crisis from 1991 to 1993, which brought the region’s economy to its knees.

It is understood that Fed vice-chairman Don Kohn remains very concerned by the depth of the US crisis and is eyeing the Nordic approach for contingency options.

Scandinavia’s bank rescue proved successful and is now a model for central bankers, unlike Japan’s drawn-out response, where ailing banks were propped up in a half-public limbo for years.

Sheriff John Green said on Friday he would halt sales of foreclosed properties in April and would seek a court order extending a moratorium for an unspecified period.

His action follows a nonbinding resolution passed unanimously by the Philadelphia City Council on Thursday calling on Green to stop the sales to give borrowers more time to seek a settlement that would prevent them from losing their homes.

Philadelphia becomes the first U.S. city to halt foreclosure sales in the current crisis, although Cleveland and Baltimore are considering similar measures, said ACORN, an advocacy group for low-income families.

The group said 45,470 subprime foreclosures are expected in Pennsylvania between the third quarter of 2007 and the end of 2009.

Green, the sheriff of Philadelphia city and county, is trying to identify and track homeowners with weak credit histories who took out the loans with initially low repayments but who are no longer able to afford them because their rates have adjusted sharply higher.

Such loans are expected to lead to a flood of foreclosures throughout the United States this year, and have led to severe losses among financial firms trading in securities backed by the mortgages. ACORN estimates 2.2 million mortgage loans will go into foreclosure in 2008 due to the subprime crisis.

The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? “Yeah, somewhat,” says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But “you lose a house, and then you get some financial help — it’s a good thing…It’s a win-win for both parties.”

No one tracks how frequently such payoffs are made. In Las Vegas, agents hired by the banks to handle foreclosed properties say the “cash for keys” approach, as it’s known in the industry, is a regular part of the job. After all, formal eviction proceedings can take months and cost potentially much more than a payoff.

Analysts predict that as many as two million homeowners could enter foreclosure this year, caught by a slowing economy, falling house prices and, in many cases, adjustable mortgages with rates rising from high to higher. In Las Vegas, 1.9% of homes in the Las Vegas area were in the foreclosure process in January, almost triple the rate of a year earlier, according to First American CoreLogic Inc., a Santa Ana, Calif., real-estate and mortgage data company.

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Cruising the wreckage of the Las Vegas property market every day in his silver Cadillac Escalade, the 38-year-old Mr. Carver has developed a connoisseur’s eye for pointless destruction. Vandals who break into empty houses often smash windows and paint graffiti on the walls, he says. But it takes an enraged, delinquent mortgagor to indulge in a frenzy of destruction, such as the one that took place recently in a three-bedroom, 1,949-square-foot house in a residential and industrial area northeast of the casinos on the Strip.

Light switches, outlet covers and thermostats were smashed. There was what looked to be crowbar damage along the staircase. A large pool of paint had hardened on the living-room carpet. It appeared that someone had dripped motor oil in a trail that wound its way through every carpeted room. The appliances were gone, as were most light fixtures. A cabinet door had been removed and left soaking in a full tub of water. Not a wall was left without a hole the diameter of a closet rod, including the pink child’s room once carefully decorated with a floral wallpaper stripe. It’s damage that Mr. Carver described as “a vengeance-type thing.”

“Some people have issues, and need to do what they have to do, I guess,” he said.

The study, by Dr Vini Khurana, is the most devastating indictment yet published of the health risks.

It draws on growing evidence – exclusively reported in the IoS in October – that using handsets for 10 years or more can double the risk of brain cancer. Cancers take at least a decade to develop, invalidating official safety assurances based on earlier studies which included few, if any, people who had used the phones for that long.

Earlier this year, the French government warned against the use of mobile phones, especially by children. Germany also advises its people to minimise handset use, and the European Environment Agency has called for exposures to be reduced.

Professor Khurana – a top neurosurgeon who has received 14 awards over the past 16 years, has published more than three dozen scientific papers – reviewed more than 100 studies on the effects of mobile phones. He has put the results on a brain surgery website, and a paper based on the research is currently being peer-reviewed for publication in a scientific journal.

He admits that mobiles can save lives in emergencies, but concludes that “there is a significant and increasing body of evidence for a link between mobile phone usage and certain brain tumours”. He believes this will be “definitively proven” in the next decade.

Noting that malignant brain tumours represent “a life-ending diagnosis”, he adds: “We are currently experiencing a reactively unchecked and dangerous situation.” He fears that “unless the industry and governments take immediate and decisive steps”, the incidence of malignant brain tumours and associated death rate will be observed to rise globally within a decade from now, by which time it may be far too late to intervene medically.

In remarks to Silicon Valley executives at the Tech Museum of Innovation, Mukasey said the economy and national security of the United States are increasingly threatened by violations involving copyrighted software code, patented inventions and trademarked properties.

Terror groups are taking their cues from organized crime and increasingly funding their operations from counterfeiting and piracy, he said.

Mukasey said his department is devoting more resources to prosecuting intellectual property crimes, which led to a 7 percent increase in the number of IP cases filed in 2007 over the year before and a 33 percent increase over 2005.

“Criminal syndicates, and in some cases even terrorist groups, view IP crime as a lucrative business and see it as a low-risk way to fund other activities,” Mukasey said. “A primary goal of our IP enforcement mission is to show these criminals that they’re wrong.”

Before Friday’s speech, he met privately with representatives from companies including Apple Inc. and Adobe Systems Inc.

“This is the right thing to do,” said Michelle Creeden, a UBS spokeswoman, in a prepared statement. “It is in the best interest of our clients to provide them full transparency regarding their account. Given current market dislocations, this is the next logical step for any committed wealth manager.”

UBS will inform clients of the reduced value of their holdings via their online statements, Briefing.com said, citing a Dow Jones report. UBS customers had maintained full value without any discount that could reflect bondholders’ inability to sell their holdings.

UBS’s action comes after auction-rate bond failures rose to about 71 percent this week, up from about 69 percent last week, according to data compiled by Bloomberg. The $330 billion auction-rate securities market originally attracted borrowers by offering financing for 20 years or more at variable costs determined through periodic bidding.

Auction-rate bonds have interest rates determined through bidding run by dealers every seven, 28 or 35 days. When there aren’t enough buyers, the auction fails and rates are set at a predetermined level set in documents when the bonds were issued.

“The fact that they aren’t worth par or may not be worth par is not going to be acceptable to any owners of these securities,” said Gary Miller, a partner at the Houston law firm of Boyar and Miller. “It’s certainly not acceptable to me.”

Couldn’t Cash Out

Miller invested $750,000 from the sale of his house in auction-rate securities with UBS last December. After signing a contract on a new home, Miller said he called his broker to cash out of the securities and was told he couldn’t. When he bought the debt, Miller said he asked his broker whether there had ever been an unsuccessful auction.

Until now, customers who were unable to sell securities in regularly scheduled auctions were told that the securities retained full value and would receive higher interest rates.

UBS, however, using an internal model to value the securities, will mark them down Friday and inform clients via their online statements. The markdowns will range from a few percentage points to more than 20.

“This is the right thing to do,” said Martin Hoekstra, head of wealth management at UBS. “It doesn’t make sense to delay the pain. As a principal, we think we should tell clients what their securities are worth, and if it’s an illiquid market, estimate what they are worth.”

The losses won’t be realized immediately, as investors can’t sell the securities for lack of a market. But the unilateral move is sure to roil relations between brokers and their clients, who generally believed they were buying investments that were a safe alternative to cash offering a slightly higher yield.

UBS wouldn’t disclose the total value of auction-rate securities held by its clients, but Hoekstra said it was “a reasonable amount” concentrated among wealthier clients. The banks U.S. wealth management unit oversaw about $920 billion in client assets at the end of 2007.

The brokerage industry has used auction-rate securities as cash alternatives for nearly two decades. More than $300 billion of the securities are held by investors ranging from mutual funds and corporations to wealthy individual investors, according to Moody’s Investors Service. The securities are long-term bonds sold by issuers such as municipalities, arts organizations, universities and closed-end mutual funds like Nuveen Investments and BlackRock with interest rates reset in auctions held every 7 to 35 days.

The auctions are failing, because banks such as UBS, Goldman Sachs Group, Merrill Lynch, Citigroup Inc. and Wachovia Corp. that often conduct more than 100 auctions a day have balked at buying the securities when there aren’t enough bidders.

The Swiss bank told clients it was reducing the value of auction-rate securities in their accounts, by an average amount of 5%. It also refused to buy the bonds back from investors who bought the securities, thinking they were getting an easy-to-sell, higher-yielding alternative to money market funds but instead found themselves stuck with illiquid securities and capital losses, courtesy of the global credit crunch that began in the U.S. subprime mortgage market.

“This is the right thing to do,” said a UBS (nyse: UBS – news – people ) spokeswoman. “This is in the best interest in our clients regarding our accounts. Given the current market dislocation this the next logical step for any committed wealth manager.”

Auction-rate securities are long-term bonds issued by local governments, agencies, or corporations but sold in periodic auctions, say every 7 to 28 days, to set the interest rate. Firms that handle the auctions, like UBS and most of the big Wall Street concerns, used to step in an buy in the auctions if there weren’t enough bidders.

But that all went by the wayside in January and February as investors fled the bond markets. Auctions failed after no buyers showed up and the banks refused to step in as they had previously done. That meant the auctions failed, leaving brokerage customers holding the bag and issuers paying much higher penalty interest rates. The Port Authority of New York and New Jersey, for example, saw its rate skyrocket to 20% from 4% when its auction failed in February.

As a consequence of paying soaring penalty rates, many issuers are converting their auction rate bonds to fixed-rate bonds, putting more pressure on the remaining auction-rate securities that still haven’t started selling again. The bonds cost more than the issuers were paying on the auction-rate securities but yield far less than the penalty rates.

The banks backed off supporting the auctions because they didn’t want to risk taking more illiquid assets on their books after collectively writing off more than $100 billion in mortgage and credit derivatives. UBS has been among the hardest hit of the banks, already writing down $17 billion worth of credit holdings and facing another $11 billion in write-downs in the first quarter, according to analysts at Oppenheimer.

Its problems don’t stop there. Massachusetts securities regulators subpoenaed UBS, Merrill Lynch and Bank of America about their sale of auction -ate securities to customers, particularly bonds sold in closed-end mutual funds. The state is looking at what the banks disclosed about the possible risks of the securities.

“We received calls from a young saver whose house down payment is now frozen; two siblings whose family trust is now frozen; and small business owners who find their business interrupted because money they thought was liquid is tied up in these frozen securities,” said William Galvin, the Massachusetts secretary of the commonwealth, in a statement.

UBS wouldn’t say how much its brokerage customers own in auction rate securities, but the market is about $330 billion. The timing of UBS’s decision is perhaps telling. American investors are facing tax time, when many will need access to cash to pay Uncle Sam.

The Swiss banking giant previously told customers who were unable to sell the securities in scheduled auctions that the bonds would retain their full value and receive enhanced interest rates, according to TradeTheNews.com.

After falling 2.4% in Switzerland, to 28.98 Swiss francs, before the announcement, UBS American depositary receipts slid further in New York, dropping to $27.80, a loss of $1.33, or 4.6%, on the day. Less than a year ago, the stock had been above $66.

The proposal is part of a sweeping blueprint to overhaul the country’s hodge-podge of regulatory agencies, which many specialists say failed to recognize rampant excesses in mortgage lending until after they triggered what is now the worst financial calamity in decades.

According to a summary provided by the administration, the plan would consolidate what is now an alphabet soup of banking and securities regulators into a trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.

While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it avoids a call for tighter regulation. The plan would not rein in practices that have been implicated in the housing and mortgage meltdown, like packaging risky subprime loans into securities carrying AAA ratings.

The Fed would also be given some authority over Wall Street firms but only when an investment bank’s practices posed a threat to the financial system over all.

The plan does not recommend tighter rules over the vast and largely unregulated markets for risk-sharing and hedging, like credit-default swaps, which are supposed to insure lenders against loss but became a speculative instrument and gave many institutions a false sense of security.

Some changes could actually reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors.

The blueprint suggests several areas where the S.E.C. should take a lighter approach to its oversight, such as allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.

Under the proposal, the S.E.C. would merge with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.

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Under the Treasury proposal, the Federal Reserve would become the government’s “market stability regulator” and would be allowed to gather information from virtually any financial institution. Fed officials would be allowed to examine the practices and even the bookkeeping of brokerage firms, hedge funds, commodity-trading exchanges and any other institution that might pose a risk to the financial system.

“The Fed would have the authority to go wherever in the system it thinks it needs to go for a deeper look to preserve stability,” Mr. Paulson said in the advance text of Monday’s speech. “To do this effectively, it will collect information from commercial banks, investment banks, insurance companies, hedge funds, commodity pool operators.”

That would be a significant expansion of the central bank’s regulatory mission, which has been limited primarily to supervising commercial banks. When Fed officials agreed earlier this month to rescue Bear Stearns, once the nation’s fifth-largest investment bank, they pointedly noted that the Fed never had the authority to monitor its financial condition or order it to beef up its protections.

In an unprecedented pair of moves, the Fed engineered a shotgun marriage between Bear Stearns and a rival, JPMorgan Chase, and then lent $29 billion to JP Morgan in order to prevent a bankruptcy filing by Bear and a chain of defaults that might have brought down much of the financial system.