‘ Worst economic collapse ever’

Death toll soars in Myanmar cyclone

Al-Sadr may restart full-scale fight against US in Iraq

Muqtada al-Sadr is considering setting aside his political ambitions and restarting a full-scale fight against U.S.-led forces — a worrisome shift that may reflect Iranian influence on the young cleric and could open the way for a shadow state protected by his powerful Mahdi Army.

A possible breakaway path — described to The Associated Press by Shiite lawmakers and politicians — would represent the ultimate backlash to the Iraqi government’s pressure on al-Sadr to renounce and disband his Shiite militia.

By snubbing the give-and-take of politics, al-Sadr would have a freer hand to carve out a kind of parallel state with its own militia and social services along the lines of Hezbollah in Lebanon, a Shiite group founded with Iran’s help in the 1980s.

It also would carry potentially disastrous security implications as the Pentagon trims its troops strength and Prime Minister Nouri al-Maliki finally shows progress on national reconciliation.

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The trillion-dollar mortgage time bomb

Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.

Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980’s and early 1990’s. That cost taxpayers about $250 billion in today’s dollars.

S&P added that saving Fannie (FNM) and Freddie (FRE, Fortune 500) might cost so much that the federal government’s AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.

Fannie Mae and Freddie Mac both help the mortgage market function by purchasing pools of loans and packaging them into securities.

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