05.08.07-11.08.07 Farmers and financiers under pressure

Farmers feared the worst as a fresh outbreak of foot and mouth disease emerged. A vaccine plan that would have suspended meat exports for up to six months was considered. Financial infection from the sub-prime lending illness in the US mortgage market spread to the Wall Street boardroom of Bear Stearns bank, whose co- president, Warren Spector, resigned.

Mr Spector was responsible for two hedge funds that collapsed last month, sparking an international outbreak of wobbles. The price of risky loans is due to rise, pouring cold water over the feverish buyout market and raising fears that more than $300bn ([pound]149bn) in underwritten loans will fail to materialise. Meanwhile China threw down the gauntlet to the US, threatening to sell billions of US Treasury bonds; the US is threatening to levy import duties on goods from "misaligned currencies" and wants China to let its currency trade freely. The chances of the RBS consortium pipping Barclays to the post for Dutch bank ABN Amro increased when RBS shareholders voted to approve the [euro]71bn ([pound]48bn) deal. The week ended with financial markets in turmoil as equity prices fell through the floor.

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