Prague, 4 January 2001 (RFE/RL) -- Another proof that globalization has taken hold: The U.S. Federal Reserve Board adjusts U.S. bank lending rates, and commentators on both sides of the Atlantic take notice. Other commentary examines impact on the whole world of Russian leadership.
The Irish Times welcomes the Fed action for both the judgment behind it and its promptness. The editorial says: "Concern about the state of the U.S. economy has prompted the Federal Reserve Board to move swiftly to reduce its key interest rate in an attempt to bolster confidence and support growth. The move comes weeks earlier than expected -- a cut had not been anticipated until the next formal meeting at the end of January -- and the decision to reduce rates by a full half point is the first such reduction since the autumn of 1998."
The newspaper says: "The Fed certainly cannot be accused of delay in responding to the economic signals. It has moved quickly to cut interest rates in a way that should have a significant impact on economic confidence." It adds: "For the Irish economy, the determination of the Fed to keep the U.S. economy on a path of stable growth is welcome."
NEW YORK TIMES:
Across the sea, The New York Times also greets the Fed move with approving words. The newspaper says in an editorial headlined, "the Fed Moves First."
The editorial says: "The Fed's move is a welcome inoculation against economic deterioration that becomes more visible with each day's release of the latest indicators. The economy grew during the summer at less than half the rate of the winter and spring. Claims for unemployment insurance [payouts] have risen to some of the highest levels in four years."
The newspaper goes on, "In addition to its economic impact, the Fed's action also carried, intentionally or not, a potent political signal. Clearly, [Fed Chairman Alan] Greenspan wanted to get out ahead of Mr. Bush's argument that Congress needs to pass a big tax cut aimed overwhelmingly at upper-income families, to ward of recession. There is a valid role for tax cuts at a time of large budget surpluses, especially if they are tailored for an important purpose -- for example, helping low-income families buy health insurance. But unless an economic downturn is prolonged, the impacts of tax cuts are very hard to time."
Commentator Nikolaus Piper, writing in the Sueddeutsche Zeitung, Munich, says that stock market alarms in Europe may be responding to stimuli from North America. He writes: "Because an infatuation with new technology is no longer steering capital flows onto Wall Street and the NASDAQ new technology exchange, realism is returning to currency markets and analysts are once again taking basic economic data into account."
Piper says: "This is why the Europe's exchange rate has returned to normal within the span of a few weeks. This month may very well see the euro climb above the one-dollar mark again. The danger that Europe may import inflation is sinking, and with it, the pressure on the European Central Bank to raise interest rates in defiance of the requirements of the domestic European economy. The falling price of oil is also contributing to this easing of tensions."
The commentator adds: "But that is just one side of the coin. The flip side is that a decisive cooling off of the American economy also means a dampener for the economy on this side of the Atlantic."
The Washington Post editorializes that President-elect George W. Bush threatens to undermine the Fed's ability to manage the economy. The newspaper says: "Last month, the president-elect breakfasted with Alan Greenspan, the Fed chairman, and emerged professing great confidence in Mr. Greenspan's abilities. Those abilities were on display yesterday, when Mr. Greenspan took the unusual step of convening the Fed's interest-rate committee via conference call, and announcing a cut in short-term interest rates from 6.5 percent to 6 percent. (This) fresh evidence of Mr. Greenspan's acumen yesterday also brought fresh doubts about Mr. Bush's judgment. The question -- on which there was no word after last month's meeting -- is whether the Fed chairman can have confidence in the president-elect."
The newspaper says that the Bush team has seized upon a slowing economy as proof that stimulating tax cuts are needed.
The editorial disagrees: "Tax cuts go into effect far too slowly to change the course of the economy in the short term. Mr. Bush's tax proposals will likely be caught up in Congress for several months; if they pass, there will be a further lag before they start to be implemented; and anyway, the Bush plan is designed to deliver relatively modest cuts in the early years. This is why most economists -- including some prominent Republican ones -- believe the management of the economic cycle should be left to the Fed's monetary policy. Tax cuts only make the Fed's job harder, since they raise the danger of inflation and so make aggressive reductions in interest rates riskier."
The newspaper says: "You might think that yesterday's events -- the Fed acting boldly while the Bush team merely held a meeting -- would have been enough to drive home the wisdom of leaving the Fed in the driver's seat. But that is not how Mr. Bush saw things."
LOS ANGELES TIMES:
The Los Angeles Times looks editorially today at Russian President Vladimir Putin, saying that his "anti-democratic ways could raise problems for both Russia and the West."
The editorial says: "Russian President Vladimir V. Putin is a popular leader. He's been tough on rebellious Chechnya, making Russians proud of their military might. Pensioners are getting their checks again, and the economy is looking up. That counts with most Russians for whom the collapse of the Soviet Union meant uncertainty and poverty. What doesn't count so much with Russians but should in Washington is Putin's authoritarian streak, demonstrated in his merciless assault on political freedoms and growing intolerance of media criticism."
The Los Angeles Times concludes: "Putin's can-do image and his conviction that Russia is a great power that needs to reestablish itself in the world have made him popular at home. But the undemocratic methods he is using are taking Russia backward, and that should worry the incoming Bush administration and its Western allies. Clearly, an assertive, democratic Russia would be a challenge, but an authoritarian one would be a threat to global security."
Britain's Financial Times carries a commentary by Robert Cottrell that seeks to explain what Cottrell calls, "the essence of Mr. Putin's extraordinary hold on the Russian public." The writer quotes a recent poll in which Russian women voted Putin their country's sexiest man. The commentator writes: "Their reasons were simple but revealing. According to one, 'He doesn't drink; he doesn't smoke; he plays sports; he loves his wife and children. What more do you need?' Another said: 'I am frightened of him. That means I want him."
Cottrell writes: "He has run Russia for exactly a year, following the surprise resignation of Boris Yeltsin. To foreigners he may still seem sinister or enigmatic. But to Russians he projects a cold-blooded charisma that has carried him from strength to strength. In March, after three months as acting president, Mr. Putin was elected with 53 per cent of the vote. Opinion polls suggest that today he would take closer to 70 per cent. In his year of power he has transformed Russia's self-image, if not yet its substance."
The commentator says that Putin's success in controlling the courts, the legislature and press give him a very strong interest in making the state work better. Cottrell adds: "If he succeeds, that will be good for everyone in principle. In practice, the effect will depend on what sort of ruler he turns out to be, given the luxury of time and resources. Russia still does not know yet whether it has elected a close cousin of Tony Blair, or the man from the KGB."