The Caucasus Bog
The New York and Los Angeles Times lead with, and the Washington Post fronts, the ongoing war between Russia and Georgia and its impact on Russia-U.S. relations. The Wall Street Journal tops its world-wide newsbox with the conflict, giving its lead space to the worsening global economy. The Washington Post leads with, and all but USA Today front, the anticipated resignation of Pakistani President Pervez Musharraf. Facing formal impeachment charges Monday, Washington's friend in Islamabad is plotting an exit strategy, aides told reporters across the globe. USA Today leads with an "egregious loophole" that allows big donors to fund the parties' political conventions, complete with a list of the most generous, and fronts a huge photo of Michael Phelps, who won his sixth gold early this morning.
USAT fronts a scoop on Iraqi elections, quoting Iraq's top voting regulator, who decries voter-intimidation tactics by the Shiite majority that include raiding voting registration centers. The head of a group of former insurgents who took part in the Sunni Awakening—credited with a significant chunk of the downturn of violence—says that the government fears losing power through the ballot box.
The papers focus on the impact of the Russian-Georgian conflict on U.S.-Russia relations, with Defense Secretary Robert Gates saying the latter's behavior "called into question the entire premise" of the relationship. The U.S. and Poland hastily signed an agreement to base missiles in Poland, a move that Russia strongly objects to, the threat of which may have contributed to its decision to invade Georgia. The U.S. denied that the announced agreement had anything to do with the ongoing conflict and said that the missiles were only meant to defend against "rogue" countries—by which it apparently doesn't mean to include Russia.
Musharraf, reports the Post, hoped until recently that the military would back his continuation in power, but military leaders told him privately they wouldn't get involved, and his political support continued to erode. Bush officials tell the Post that even Vice President Cheney, a principal backer of Musharraf, has conceded it's time for him to go, leaving one of the few undecided voices in the White House belonging to President Bush, who values Musharraf as an ally. "The vast majority of the U.S. government has moved beyond their original attachment to Musharraf," one official says.
The Journal sounds pessimistic, reporting up high that, with news that the euro zone's economy retracted this past quarter, "four of the world's five biggest economies—the U.S., the euro zone, Japan and the U.K.—are now flirting with recession." (Hint: The fifth is hosting the Olympics.)
The downturn isn't all bad for the United States, whose dollar is strengthened as the other economies sag, reports the Journal. But that strength, along with the ailing overseas economies, hits the United States in its one remaining bright side: exports. TP loves obscure stats that give a snapshot of a world trend, and the Journal obliges, offering up the Baltic Dry Index, which is a measure of demand for shipping services. It has fallen 37 percent since hitting a record high on May 20.
Meanwhile, consumer-price inflation at home jumped to its highest level in 17 years, 5.6 percent. Throw out food and oil price increases—good luck with that in reality—and it's 2.5 percent. And the stimulus checks have been spent, as consumer spending dipped in July. In a letter to clients, JPMorgan blames the U.S. economy for dragging the world down with it.
If all the numbers don't bring it home, the Journal makes sure the real-world impact is clear. "Cains Beer Co., Liverpool, England, has seen revenues at the 100 pubs it owns suffer as consumers cut spending. The cost of making beer at the 150-year-old brewer increased as the price of hops shot up. It also faced a 40% increase in the cost of aluminum for beer cans over the past year or so," it notes. Because of the credit crunch, no banks would extend loans to the brewer, and it's now liquidating its nonliquid assets to pay off debts.
The Journal fronts a pushback against Russian charges that it invaded Georgia in response to "genocide," essentially calling the claim untrue.
Speculator speculation increased, reported on the WSJ's page C1, on word that commercial speculators' role in the oil market was bigger than previously thought—accounting for 49 percent of the trading rather than 38 percent, as the futures-trading regulator had previously said. The revision is fuel on a firey debate within the agency regarding speculators' responsibility for the upturn in price and the regulators' responsibility to lasso such trading. The piece is accompanied by a graphic showing speculative bets doubling over the past year.