Everybody leads with the Federal Reserve taking unscheduled and unorthodox action to allay investor fears and pump liquidity into the credit market, resulting in the Dow's first positive day all week.
The heart of the Fed story isn't what the Fed did, but the fact that it acknowledged that the subprime lending crisis poses a threat to the wider economy and that it acted in between scheduled monthly meetings to loosen the credit market. The Los Angeles Times sums up that relief in the headline "Fed gets message, lowers key rate." While the Fed didn't cut consumer interest rates, it did lower the discount rate at which banks can borrow directly from the Fed and increased the duration of those loans, in hopes that banks would use the capital to grant more loans to consumers. The Fed hasn't done this without cutting the federal funds rate since 1980, according to the Washington Post. The LAT notes that the Fed hasn't acted between meetings since 2001. It was enough to convince investors that the Fed is taking the credit crunch seriously, sending the Dow up over 233 points Friday, even though the Wall Street Journal says that some executives told the Fed they could still get loans cheaper elsewhere. The New York Times acknowledged some analysts' concerns that too much action on the Fed's part would look like the government bailing out bad investment choices, such as the subprime loans that kicked off the current crisis. More action is expected, however, with analysts predicting a quarter-point cut in consumer interest rates at the next Fed meeting in September, with more rate cuts to follow. The WSJ points out that if this initiative isn't successful, then cutting consumer interest rates is the only tool the Fed will have left for steering the economy.
If this is the first time you've heard of the discount rate, don't panic—the WP has an FAQ to explain the Fed's move.
As a side note, everyone mentions that there's a stigma attached to banks taking out so-called "discount window" loans from the Fed, since such loans are often used to prop up a faltering company. The Fed encouraged lenders to take advantage of the new rates in its announcement, but there's still a risk that no bank will chance being the only institution to take a "discount window" loan.
Everyone offleads with the halting efforts to rescue six miners trapped underground in Huntington, Utah, after a cave-in killed two rescue workers and a mining inspector while injuring six others. The original set of miners has been missing since Aug. 6, and attempts to contact or locate them have so far turned up empty-handed. The collapse came soon after it was reported that noise could be heard underground, possibly indicating the location of the miners, says the NYT. While no more people will be sent into the mountain for the time being, efforts to drill a hole down to the captured miners will continue, the WP writes.
The NYT rolls out its analysis of the Jose Padilla verdict. While most breakdowns of the case focus on Padilla being held as an enemy combatant before being tried, the NYT says the case's significance comes from its reliance on conspiracy charges—Padilla's arrest, detention, trial, and verdict all rest on the supposition that Padilla might be dangerous if free.
The NYT alone fronts a piece on a forthcoming White House plan to draw down the number of troops in Iraq. The paper cites an anonymous White House source saying that the plan is meant to counteract public displeasure with the war while neutralizing the push for a full withdrawal. While nothing is finalized yet, the plan will almost certainly return troop numbers to pre-surge levels, while aiming at maintaining U.S. military involvement in Iraq through at least the end of the President George Bush's term in office.
The war in Iraq has become a popular target for independence-minded Puerto Ricans, as activists on the island have been encouraging high-school students to opt out of military recruitment databases at a much higher rate than kids on the mainland, says the WP.
The U.S. military is able to dismiss and then deny health benefits to troops with a genetic disposition for their medical problems, an act that would be illegal for any other employer, says the LAT.
Cell phone plans are the new airline food—they're the one item no one can stomach, says the WP. Fed up with lousy service, customers are going to increasingly greater lengths to get out of the now-standard two year service plan—one guy even faked his own death.
U.S. sanctions imposed on Sudan appear to be having minimal effect, the LAT reports. Investments from Asia and a supply of oil have propelled the war-torn country's economy to 13 percent annual growth, though the benefits of that growth have ended up in relatively few hands.
The NYT, meanwhile, runs a broader feature on Chinese immigrants who choose to start a new life in Africa and the growing role of Asian businesses in the economies of Africa.
Inside, the WP runs a feature on an attempt to reassemble Ralph Ellison's lost second novel from fragments the author left behind.
From the Needless Grief Bureau …
According to the NYT, CBS is facing a lawsuit over its new reality show Kid Nation, in which a group of children runs a town without adult supervision for 40 days. One of the kid's parents is suing CBS for child abuse, arguing the harsh conditions and injuries sustained by some of the children amount to child abuse. It's hard to imagine that CBS didn't think someone would sue them over this show, given that its premise revolves around child labor. Then again, it's also hard to believe these parents let their children go feral for six weeks and didn't expect anyone to get hurt.
TODAY IN SLATE
The Irritating Confidante
John Dickerson on Ben Bradlee’s fascinating relationship with John F. Kennedy.
My Father Invented Social Networking at a Girls’ Reform School in the 1930s
Renée Zellweger’s New Face Is Too Real
Sleater-Kinney Was Once America’s Best Rock Band
Can it be again?
The All The President’s Men Scene That Captured Ben Bradlee
Is It Better to Be a Hero Like Batman?
Or an altruist like Bruce Wayne?
Driving in Circles
The autonomous Google car may never actually happen.