August 22, 1993

AFTER the Mississippi flooded and New York boiled in July, August has finally produced a summer rally. And not just on Wall Street. Europe also is clanging along. The economies may not be growing much, meaning that there is no great need to build plants or buy equipment. But cash has to go somewhere, and now it is going into stocks and bonds. Every major U.S. stock index moved to a new high last week, with the Dow Jones industrial average topping 3,600. But it is hard to find much joy among investors. Perhaps that reflects the fact this rally has not been like the barnburners of old. "We have crawled higher," says Hugh Johnson, the strategist at First Albany.

Saudi Arabia, long seen as one of the world's wealthiest countries, has undermined its financial stability with a decade of unrestrained spending, huge military purchases and irregular banking practices. The $121 billion in financial reserves amassed by Saudi Arabia less than a decade ago have almost vanished, drained by expenditures for weapons, social programs, foreign aid and the Gulf war. The spending has far outstripped the tens of billions of dollars earned annually from the largest oilfields in the world, which the Government owns.

In North Carolina and New York, two high-visibility crimes provided a chilling demonstration last week of how vicious the nation's outlaws can be -- and also how foolish. In one case, the father of basketball star Michael Jordan was shot dead. He was picked at random, the police said, by two armed 18-year-olds who were simply looking for someone to rob and found him taking a nap on the edge of a highway in his expensive car. The other case ended triumphantly as detectives pulled Harvey Weinstein, the scrappy 68-year-old owner of a Queens tuxedo factory, from the muddy crypt where he had been buried alive for 12 days by kidnappers.

IT was 25 years ago that Robert and Fanny Ungemack found their piece of heaven while sailing in the Thimble Islands, the rocky remnants from the Ice Age situated within view of the Stony Creek area of Branford. To someone without a vision, the couple's stretch of solid granite extending into Long Island Sound from the southwest end of Governors Island might have held little promise. But to the Ungemacks -- he, a landscape architect by profession and a house builder by avocation, and she, a former fashion designer and self-taught architect -- the property was raw material for their imaginations. It was also their entry into the isolated world of the Thimbles, a rocky archipelago with 23 inhabited islands scattered east of New Haven that have attracted the curious and the committed for centuries.

In the 20 months since she was named the chief of M.I.5, Britain's domestic security service, Stella Rimington has rung up several firsts: She is the first woman to head one of Britain's secret agencies, the first M.I.5 director to appear before cameras at a news conference, the first British intelligence chief to publish a booklet disclosing the organization's goals and staffing, and the first person from the secret world ever to have her photograph appear in a gossip magazine. The photograph appeared this summer, when Hello!, a breathless weekly filled with glossy celebrity pictures and tattle, showed the 58-year-old Mrs. Rimington sipping white wine at the Royal Academy, a photographic indiscretion that did not sit well with some Government ministers.

Scott Kamieniecki might want to send a memo to George Steinbrenner concerning this business about the Yankees possibly leaving the Bronx. Bad idea, big guy, Kamieniecki might utter. Parking problems can be alleviated, the New Jersey Yankees sounds silly and the tradition of baseball's most storied franchise would be severely tarnished, he might continue. Finally, Kamieniecki might beg the owner: Please don't move the team, I never lose at Yankee Stadium. Never. Well, Kamieniecki has lost in the Bronx, but not for 54 weeks. The extraordinary home streak for the previously ordinary pitcher continued yesterday when he halted the Royals on five hits in eight innings and carried the Yankees to a 3-2 victory at the Stadium. He has now won his last 12 decisions at the Stadium and is only the second Yankee in the last 25 years to fashion such a nifty stretch. The other is Ron Guidry, who did it twice. Two months ago, it would have been laughable to include the two pitchers in the same paragraph. Not anymore.

The house that Bobby Bowden rebuilt is a work in progress. Giant brick facades and majestic archways have begun to obscure the Erector Set architecture of Doak Campbell Stadium, making the home of the Florida State Seminoles suddenly appear stately enough that Red Grange could have played there in the days when the school was a college for women and the business of high-stakes football was conducted elsewhere.

A growing number of one-family homes illegally converted to single-room occupancy here has prompted city officials and neighborhood organizations to form a task force to increase inspections and investigate other methods to combat the problem. Conversions are illegal when they take place in an area zoned for one- and two-family homes. Inspections regularly uncover other violations such as fire and safety hazards and health concerns such as inadequate sanitation.

When 657 smuggled immigrants were sent back to China from three crowded ships off Mexico last month without formal hearings, the United States authorities brought just one man ashore to plead his case for asylum, a 22-year-old teacher named Liu Jiang. Mr. Liu, dressed in bright orange prison clothing, now waits in an immigration detention center here, smiling and bewildered at his luck, a reminder of the complexities of immigration issues and the difficulty of tightening border controls without sacrificing human rights.

Vincent W. Foster Jr. was in the middle of another oppressive White House workday on Thursday, July 15, when a friend from Little Rock, Ark., stopped by and explained how the people back home pictured his Washington life. "They think all you folks up here sit at the right hand of the President," said the friend, Skip Rutherford, a former Clinton campaign aide. He told Mr. Foster they imagined him having lunch at the mess with the President each day, adjourning at 5 for cocktails on the Truman balcony, and spending weekends cruising the Potomac or relaxing at Camp David, Md.

Mayor David N. Dinkins had a bad week. He's also had a bad month. In fact, he's had a pretty bad year, and even his friends agree that he badly needs a couple of weeks of favorable breaks -- and soon -- if he is to avoid the worst break of all: defeat on Nov. 2. By last week Mr. Dinkins's problems had accumulated to such a degree that a consensus, building among the city's politicians for months, seemed to have crystallized: that the race for mayor might well be Rudolph W. Giuliani's to lose. Problems and a Paradox But paradoxically, the Mayor's supporters and opponents agreed, that very consensus could be an asset for Mr. Dinkins, by changing the dynamics of the campaign and intensifying the focus not only on his fitness to be mayor, but on Mr. Giuliani's.

The Flood of '93 Remapped America's Broken Heartland Every major flood is a cartographer, and this year's deluge, the worst in recorded history, remapped broad expanses of the Upper Mississippi Valley as it wiped out the bridges, roads and railroad tracks that stitch the region together. Page 24. Tough Choices on Bosnia A proposed peace accord gives Bosnia's Muslims two distasteful choices, but it also poses tricky problems for the West. News Analysis, page 14. Racial Tension in Zimbabwe Zimbabwe's leader has taken to berating whites. Some see the attacks as an election ploy but others fear they will harm the economy. Page 3. A Town's 2 Heartbreaks The residents of tiny Savona, N.Y., rallied when a 4-year-old was slain. But they were stunned by the confessed killer: a 13-year-old. Page 33.