Thursday, September 17, 1992
NATION/WORLD
5
UNIVERSITY DAILY KANSAN
Britain raises interest rates
Nation suspends foreign-exchange links with Europe
The Associated Press
LONDON — Britain frantically tried to stabilize the weakening pound yesterday by raising interest rates, buying large amounts of the currency and suspending its foreign-exchange links to other European countries.
Britain's actions intensified a sense that cooperation among the powerful nations of Western Europe is splintering even as they are seeking to forge closer unity.
That added to the monetary turmoil gripping Europe and spread economy-
ic anxiety elsewhere, including the United States, which already is grappling with a stunted economy and an uncertain outlook.
Capping one of the most convulsive and frenetic trading days ever, the Treasury announced late yesterday it would suspend the pound from the European exchange rate mechanism, which sets maximum fluctuation rates for major European currencies.
This means Britain no longer is obligated to use interest rate adjustments to keep the pound within limits specified by agreement with its European trading partners. The move allows the pound to reach whatever level is determined by the global currency market.
"The new exchange rate will depend on what the market fixes," said British Treasury representative
Richard Evans. "The market is so volatile, it's impossible to say what that might be now."
In New York, where financial markets were still open at the time of the announcement, the pound continued to plunge. It was quoted at $1.7990 half an hour after the announcement after falling from $1.8695 during the European trading day.
Earlier in the day, the Bank of England had announced two sharp increases in its base interest rate, first from 10 percent to 12 percent. When that failed to lift the pound, the bank raised the rate to 15 percent.
Amid the announcements yesterday, the bank said it would rescind the second increase, leaving its base rate at 12 percent, still among the highest in the world.
Interest rates are a key tool countries use to defend the value of their currencies. Higher rates make a currency worth more, but they stifle economic expansion by making it more expensive to borrow. When one country raises rates, it puts pressure on others to do likewise.
Britain's top Treasury official, Chancellor of the Exchequer Norman Lamont, was meeting in Brussels with his European colleagues last night to try to stabilize foreign exchange markets.
The crisis has intensified in the days leading up to a crucial French vote Sunday on a treaty for European political and monetary unity. A no vote is certain to raise more doubts about Europe's plan to become one grand market and a single economic superpower, rivaling the United States and Japan.
U.S. to aid Somalia but won't use force
WASHINGTON — The United States will position 2,100 Marine troops off the shore of starvation-plagued Somalia, but a State Department official told Congress yesterday that there are no plans for an amphibious landing to protect relief efforts.
The Associated Press
"What I don't see is a sympathy in favor of that in Congress or the general public," Assistant Secretary of State Herman Cohen told the House Foreign Affairs subcommittee on Africa.
The force, led by the amphibious assault ship USS Tarawa, will back up U.S. Air Force planes transporting 500 U.S.-sponsored Pakistani troops to the besieged capital of Mogadishu
The Pentagon announced Tuesday that it was sending four ships to stations off Somalia to support the airlift of U.N. troops guarding international relief supplies. The ships were expected to arrive last night.
Earlier yesterday, the U.N. envoy to Somalia, Mohamed Sahnoun, expressed serious reservations about the deployment of warships, saying it may increase fighting among rival
Aid to Somalia
The United States sent 2,100 Marines last night to positions off the coast of Somalia to support U.N. troops guarding airlifted
Michelle K. Betts / KANSAN
clans in Somalia and upset delicate negotiations with Somali warlords.
Cohen told the subcommittee that the U.S. government had no intention of landing a Marine expedition, but stood ready to protect humanitarian efforts.
WASHINGTON — On the verge of vetoing a family-leave bill for the second time, President Bush proposed yesterday a $500 million tax-credit alternative to the Democrats' approach.
Bush volunteers tax credit as family-leave bill proposal
Bush said that it was very peculiar and highly political for the Democrats to wait this late in the election year to renew the fight on whether businesses should be required to give workers unpaid time off to care for newborn child or sick relative.
But Bush, who has positioned the GOP as the defender of family values, let two years elapse after his last veto of a family-leave bill before rushing out his voluntary proposal.
The Associated Press
"Today, George Bush showed his true colors on family values," Democratic presidential nominee Bill Clinton said. "His tax credit does nothing to guarantee that workers will have leave or a job if they're allowed to return."
Bush's proposal would allow businesses with fewer than 500 workers to write off their taxes up to $20 a day for as many as 60 days of leave a year for each worker or a maximum of $1,200 an employee.
The bill passed by Congress would require employers with more than 50 workers to allow employees up to 12 weeks of unpaid leave annually to deal with medical emergencies, including the birth of a child, adoption or a sickness in the family.
Rep. Patricia Schroeder, D-Colo., said Bush's proposal was half-baked and that if Bush knew where $60 billion could be found, he should spend some of it on Head Start, immunization and nutrition programs for poor children.
opponents believe in a government-dictated mandate that increases costs and loses jobs," he said.
The family-leave bill passed both chambers with bipartisan support, and Republican backers expressed skepticism at Bush's tax-credit proposal.
Bush said that the Democrats sat on their own proposal for a year.
THE LYRIC OPERA OF KANSAS CITY PRESENTS:
The opening night performance is sponsored by E.D.P. Enterprises, Inc. in recognition of the Central City Schools.
AIDA by Giuseppe Verdi Performed in English
"Unfortunately, they and my
The granddaddy of all grand operas features spectacular pageantry, rapturous music and the Alvin Ailey Repertory Ensemble.
September 19, 1992, 8:00 p.m.
September 21, 1992, 7:30 p.m.
September 23, 1992, 7:30 p.m.
September 25, 1992, 8:00 p.m.
September 27, 1992, 3:00 p.m.
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