On the other side of the divide are the strong-growth emerging economies whose demand for raw materials and energy has driven prices higher. They are now seeing the challenges of that boom. In India, the government last week was forced to increase retail prices of fuel products. The result, analysts say, will likely be upward pressure on the country’s lofty inflation rate, which could lead to higher interest rates and ultimately slower growth.

Housing crisis? What housing crisis?

The Washington Post reports on D1 that the housing bust be damned! You can still buy homes with no money down with money from government-sponsored enterprises Fannie Mae and Freddie Mac.

Never fear, these borrowers have to go to “homeowner education” programs. It gets even better, the two allow some borrowers to get up to 105 percent financing by adding a piggyback loan to the mortgage.

Fannie Mae mentioned the continued availability of 105 percent financing last month in a news release announcing that it was abandoning a policy that required extra down payments in markets where home prices were declining. The company’s new policy allows buyers to borrow up to 97 percent of the purchase price with conventional mortgages.

Even as it eased the requirement, Fannie Mae said in the news release that down payments “are a critical success factor in homeownership.”

Ya think?

Hold nose, take money

The Journal says on its Money & Investing front that Lehman Brothers is going to get that big infusion of capital—more than $5 billion in total, including some from the state of New Jersey’s pension funds.

It also wonders somewhat incoherently (next to a story about who’s bailing out a bank with $5 billion) in a separate C1 column who’s going to rescue the banks next. Lots of the private-equity and sovereign-wealth funds that poured into banks and investment banks over the last several months have seen their investments decline big time. It raises the possibility of “Algeria, Angola, Libya and Zimbabwe” as well as Kazakhstan.

Selling stakes to funds of authoritarian or unstable regimes in frontier markets doesn’t quite mesh with Wall Street’s lofty image of itself. But it created this mess, and beggars can’t be choosers.

Wrong man?

The Times on C1 looks at the weird story of a former AOL chief financial officer who blew the whistle on that firm’s fraudulent activities early this decade but is now being charged by the feds with financial fraud, along with seven other former executives.

The Times seems to come down on the side of the former exec, Joseph A. Ripp, quoting a litany of former colleagues and even prosecutors saying he was upstanding and was the “white hat” in the matter. The former editor in chief of Time Incorporated calls the charge “almost Kafkaesque.”

And indeed, it would be a bizarre turn of events if someone who blew the whistle on the ad-revenue inflation he found at AOL when he came over from Time Warner during the merger is ultimately found to be responsible for it. It seems the federales might not have even known about the stuff if it hadn’t been for Ripp, and other agencies (he’s being prosecuted by the Securities and Exchange Commission) have said he was the good guy in the matter.

IRS is after Anschutz

The Journal on A1 reports that the IRS is trying to get one heckuva tax bill out of billionaire Philip Anschutz. The government says he owes it $144 million in back taxes, and the Journal says the “court battle is part of a broad attempt by tax authorities to crack down on complex transactions used to defer paying capital-gains taxes.”

The paper says executives at other big companies have used “variable prepaid forward contracts” like Anschutz did, though it isn’t clear whether they did so for tax purposes, though it’s “typical” of such deals. Not one of the six companies, including Starbucks, Tyson Foods, and Cablevision Systems, would comment.

Much attention in the current presidential campaign has focused on tax breaks for the wealthy, including the cutting of the capital-gains tax rate to 15% early in the Bush administration. But less noticed is how some of the wealthiest Americans sometimes don’t even pay that full 15% rate, by deferring their taxes for many years. In Mr. Anschutz’s case, the transaction is scheduled to defer the taxes for nearly a decade.

Critics say such transactions could undermine the progressive nature of the income-tax system, because the deferrals effectively lower the taxes paid by the extremely wealthy.

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