Financial news dominates. The Los Angeles Times goes with yesterday's Dow drop of 210 points. The USA Today lead combines this with the meeting tomorrow of the G7 finance ministers and central bankers aimed at calming the world's markets. The top non-local story at the Washington Post uses the down Dow as backdrop for Treasury Secretary Robert Rubin's call for stronger regulation of global finance. And the New York Times goes with Alan Greenspan's congressional testimony defending the Federal Reserve's role in helping to set up a $3.6 billion private-sector-funded rescue package for a leading investment fund, Long-Term Capital Management.
The LAT lead says that Wall Street is concerned that the Fed's quarter-point rate cut didn't add enough credit to the U.S. banking system to prevent the overseas economic crisis from inducing a recession here. The paper depicts the other dominoes it sees waiting to fall: if the stock market continues to be unconvinced, then consumer confidence will be weakened, and then consumer spending will drop and then...kablooey. The WP paints essentially the same picture. The LAT notes another down factor on the Street: that in light of the Long-Term Capital Management scare, there's fear that banks and brokerages will stampede out of lots of hedge funds, causing many to fail at once.
All of this illustrates the basic economic problem in the world today, made only worse by the information revolution, what the IMF's Michel Camdessus calls in the WP "contagion"--transnational forces of panic that lie beyond the tools of policy makers. As a result, a new report showing growth in orders of electronic equipment, as well as petroleum products and transportation products, which the Wall Street Journal says portends healthy U.S. manufacturing activity in the coming months, means nothing right now. It's a duck/rabbit world, economics, and right now, as the papers make clear, it's all duck.
Ducking, according to the NYT, was what Alan Greenspan was doing in his congressional testimony yesterday. One Congress member is quoted as seeing in the Fed's Long-Term machinations an example of one set of rules for welfare mothers, another for rich people in Greenwich, Connecticut. Another quoted in the Times said, "We hear a lot of speeches about free enterprise and the marketplace, but a lot of folks don't like to practice it." Greenspan acknowledged that the Fed's action raised the problem of moral hazard, which is, explains the Times, that rescuing those who make risky investments only encourages more of the same. But, he's quoted, a liquidation of Long-Term would have made investors too frightened to take risks, and risk-taking is "a necessary condition for wealth creation." Rubin's suggestions, described by the Post, include a middle path: require hedge funds to disclose more about their activities.
The papers continue to track the hardening of the U.N./NATO position regarding Yugoslavia. They all report that the U.N. Security Council sent a new warning to Slobodan Milosevic to identify and prosecute those responsible for atrocities in Kosovo province and that the State Dept. has warned Americans to get out--the latter a traditional precursor to U.S. military action. None of the papers mentions it, but such a warning preceded by only a few days the recent cruise missile attacks into Afghanistan. The talk this time is generally of manned airstrikes. The LAT figures they could happen as soon as the end of next week. The NYT says everything will be in place in two weeks.
The WSJ's "Washington Wire" reports that the settlement offer to Paula Jones from President Clinton's lawyers "inches up from $500,000" but is still far short of the $1 million Jones is asking. A story on the WP front says the offer is now $700,000, where it was once before, pre-Monica. The Post says that Clinton agreed to negotiate after Jones dropped her longstanding demand for an apology, but was "enraged" when on TV last Sunday, her lawyers said any settlement was the same as acknowledging her allegations. Meanwhile, the Journal reports, Jones lawyers are preparing a motion to have Clinton held in contempt of court for his misleading testimony about Monica Lewinsky. If there's no settlement, says the paper, they will file it next week.
Yesterday's reference in this space to "some place called Carleton College" brought an avalanche of protesting e-mail. Most correspondents felt sure that they had encountered deep-seated elitism, when actually all they had run into was a playful desire to keep the newspapers fun. It is perhaps a sign of the age that e-mailers defended the Northfield, Minnesota school by citing its U.S. News and World Report ranking or by listing famous graduates, but no one wrote to say he or she'd gotten a great education at the place. Time to fill that void: Today's Papers did not go to Harvard, Yale or Princeton. Today's Papers thoroughly enjoyed attending...Carleton College.