The New York Times, the Los Angeles Times, and the Washington Post lead with the Federal Reserve’s second interest-rate hike of the summer. USA Today mentions the Fed’s news on the front page, but leads instead with a possible link between the Kremlin and the Bank of New York laundering scandal.
All the papers give the same lowdown on the Fed’s decision. The federal funds rate (that is, the one banks charge each another for overnight borrowing) was lifted from 5 percent to 5.25 percent, reversing last year’s cuts. The Fed’s announcement was characteristically opaque. The stories follow the Fed’s lead, hedging their bets as to whether this will be the last hike of the year.
The WP and the Wall Street Journal run helpful explanations of the hike’s repercussions. According to the WP, banks already announced increases in their prime lending rates to 8.25 percent from 8 percent. Since many credit-card balances, home-equity loans, small business bank loans, and some personal loans are tied directly to the prime rate, millions of consumers will see their monthy payments swell soon. A piece inside the Journal warns the higher cost of borrowing may keep funds away from Latin American countries that need the cash badly.
Meanwhile, a WP editorial argues that Alan Greenspan has become so effective that he’s ineffective. If Greenspan raises rates, investors are assured by what they interpret as a wise, pre-emptive strike against inflation. If he doesn’t, they are emboldened by what can only be a sure sign of economic health. So even though the rate hike might stave off consumer inflation, Greenspan is inevitably contributing to stock price inflation.
Last week the Times reported that hundreds of millions of dollars in IMF loans to Russia may have been illegally diverted through the Bank of New York via the Russian mafia. Today USAT adds that Konstantin Kagalovsky, Russia’s representative to the IMF and a close crony of Victor Chernomyrdin, is now under scrutiny. He is married to a Bank of New York executive who is also being investigated. The scoop certainly sounds like a potentially juicy one. But it lists no allegations against the Kagalovskys, and doesn’t surmise about how they might have fit into the IMF-Mafia-Bank triangle.
The NYT and the WP report that China will prosecute the most senior members of Falun Gong–and only the most senior ones. A government order excused most of the sect’s adherents as victims who didn’t know they were joining a subversive political organization. The group’s leaders, on the other hand, will almost certainly be sent to prison for life–just in time, says the Times, for the Chinese Communist Party’s 50th birthday bash.
According to a NYT front-pager, the San Francisco Department of Health has traced an outbreak of syphilis to an America Online chat room. At least six men have contracted syphilis from sexual partners they met at San Francisco Men 4 Men, a chat room hosted by AOL. Citing privacy concerns, America Online would not divulge the real names of the chat room users to the health authorities. Instead, the company contacted Planet Out, a gay online service based in the city, which pelted the denizens of local gay chat rooms with e-mailed and instant-messengered warnings.
The WP and the NYT front the news that Samuel Sheinbein, the teen-ager who set off an extradition battle when he fled to Israel after allegedly committing murder in Maryland, has accepted a plea bargain in Israel. The Israeli Supreme Court had refused extradition on the controversial grounds that Sheinbein is Israeli (his father was born in 1944 in Palestine. Israel was founded in 1948). He will serve 24 years–a heavy sentence in the Israeli system, but a light one by American standards. Prosecutors from both countries decried the way he manipulated the discrepancies between the two legal systems.
A NYT front-pager provides welcome perspective on the Kansas School Board’s recent decision to excise evolution from its official curriculum. Most science teachers will continue to teach evolution. Moreover, “there are 304 locally elected school boards who have the option to tell the state board to go jump in the lake,” said an aide to moderate Republican Gov. Bill Graves. “The Governor is confident the overwhelming number will.”