WSJ_24.words

The
economy
's
temperature
will
be
taken
from
several
vantage
points
this
week
,
with
readings
on
trade
,
output
,
housing
and
inflation
.

The
most
troublesome
report
may
be
the
August
merchandise
trade
deficit
due
out
tomorrow
.

The
trade
gap
is
expected
to
widen
to
about
$
9
billion
from
July
's
$
7.6
billion
,
according
to
a
survey
by
MMS
International
,
a
unit
of
McGraw-Hill
Inc.
,
New
York
.

Thursday
's
report
on
the
September
consumer
price
index
is
expected
to
rise
,
although
not
as
sharply
as
the
0.9
%
gain
reported
Friday
in
the
producer
price
index
.

That
gain
was
being
cited
as
a
reason
the
stock
market
was
down
early
in
Friday
's
session
,
before
it
got
started
on
its
reckless
190-point
plunge
.

Economists
are
divided
as
to
how
much
manufacturing
strength
they
expect
to
see
in
September
reports
on
industrial
production
and
capacity
utilization
,
also
due
tomorrow
.

Meanwhile
,
September
housing
starts
,
due
Wednesday
,
are
thought
to
have
inched
upward
.

``
There
's
a
possibility
of
a
surprise
''
in
the
trade
report
,
said
Michael
Englund
,
director
of
research
at
MMS
.

A
widening
of
the
deficit
,
if
it
were
combined
with
a
stubbornly
strong
dollar
,
would
exacerbate
trade
problems
--
but
the
dollar
weakened
Friday
as
stocks
plummeted
.

In
any
event
,
Mr.
Englund
and
many
others
say
that
the
easy
gains
in
narrowing
the
trade
gap
have
already
been
made
.

``
Trade
is
definitely
going
to
be
more
politically
sensitive
over
the
next
six
or
seven
months
as
improvement
begins
to
slow
,
''
he
said
.

Exports
are
thought
to
have
risen
strongly
in
August
,
but
probably
not
enough
to
offset
the
jump
in
imports
,
economists
said
.

Views
on
manufacturing
strength
are
split
between
economists
who
read
September
's
low
level
of
factory
job
growth
as
a
sign
of
a
slowdown
and
those
who
use
the
somewhat
more
comforting
total
employment
figures
in
their
calculations
.

The
wide
range
of
estimates
for
the
industrial
output
number
underscores
the
differences
:
The
forecasts
run
from
a
drop
of
0.5
%
to
an
increase
of
0.4
%
,
according
to
MMS
.

A
rebound
in
energy
prices
,
which
helped
push
up
the
producer
price
index
,
is
expected
to
do
the
same
in
the
consumer
price
report
.

The
consensus
view
expects
a
0.4
%
increase
in
the
September
CPI
after
a
flat
reading
in
August
.

Robert
H.
Chandross
,
an
economist
for
Lloyd
's
Bank
in
New
York
,
is
among
those
expecting
a
more
moderate
gain
in
the
CPI
than
in
prices
at
the
producer
level
.

``
Auto
prices
had
a
big
effect
in
the
PPI
,
and
at
the
CPI
level
they
wo
n't
,
''
he
said
.

Food
prices
are
expected
to
be
unchanged
,
but
energy
costs
jumped
as
much
as
4
%
,
said
Gary
Ciminero
,
economist
at
Fleet\/Norstar
Financial
Group
.

He
also
says
he
thinks
``
core
inflation
,
''
which
excludes
the
volatile
food
and
energy
prices
,
was
strong
last
month
.

He
expects
a
gain
of
as
much
as
0.5
%
in
core
inflation
after
a
summer
of
far
smaller
increases
.

Housing
starts
are
expected
to
quicken
a
bit
from
August
's
annual
pace
of
1,350,000
units
.

Economists
say
an
August
rebound
in
permits
for
multifamily
units
signaled
an
increase
in
September
starts
,
though
activity
remains
fairly
modest
by
historical
standards
.

Two-Way
Street

If
the
sixty-day
plant-closing
law
's
fair
,
Why
should
we
not
then
amend
the
writ
To
require
that
all
employees
give
Similar
notice
before
they
quit
?

--
Rollin
S.
Trexler
.

Candid
Comment

When
research
projects
are
curtailed
due
to
government
funding
cuts
,
are
we
``
caught
with
our
grants
down
''
?

--
C.E.
Friedman
.

Assuming
the
stock
market
does
n't
crash
again
and
completely
discredit
yuppies
and
trading
rooms
,
American
television
audiences
in
a
few
months
may
be
seeing
Britain
's
concept
of
both
.

``
Capital
City
''
is
a
weekly
series
that
premiered
here
three
weeks
ago
amid
unprecedented
hype
by
its
producer
,
Thames
Television
.

The
early
episodes
make
you
long
for
a
rerun
of
the
crash
of
1987
.

Let
's
make
that
1929
,
just
to
be
sure
.

According
to
the
program
's
publicity
prospectus
,
``
Capital
City
,
''
set
at
Shane
Longman
,
a
fictional
mid-sized
securities
firm
with
#
500
million
capital
,
``
follows
the
fortunes
of
a
close-knit
team
of
young
,
high-flying
dealers
,
hired
for
their
particular
blend
of
style
,
genius
and
energy
.

But
with
all
the
money
and
glamour
of
high
finance
come
the
relentless
pressures
to
do
well
;
pressure
to
pull
off
another
million
before
lunch
;
pressure
to
anticipate
the
market
by
a
fraction
of
a
second
...
''

You
need
n't
be
a
high-powered
securities
lawyer
to
realize
the
prospectus
is
guilty
of
less
than
full
disclosure
.

The
slickly
produced
series
has
been
criticized
by
London
's
financial
cognoscenti
as
inaccurate
in
detail
,
but
its
major
weakness
is
its
unrealistic
depiction
of
the
characters
'
professional
and
private
lives
.

Turned
loose
in
Shane
Longman
's
trading
room
,
the
yuppie
dealers
do
little
right
.

Judging
by
the
money
lost
and
mistakes
made
in
the
early
episodes
,
Shane
Longman
's
capital
should
be
just
about
exhausted
by
the
final
13th
week
.

In
the
opening
episode
we
learn
that
Michelle
,
a
junior
bond
trader
,
has
indeed
pulled
off
another
million
before
lunch
.

Trouble
is
,
she
has
lost
it
just
as
quickly
.

Rather
than
keep
the
loss
a
secret
from
the
outside
world
,
Michelle
blabs
about
it
to
a
sandwich
man
while
ordering
lunch
over
the
phone
.

Little
chance
that
Shane
Longman
is
going
to
recoup
today
.

Traders
spend
the
morning
frantically
selling
bonds
,
in
the
belief
that
the
U.S.
monthly
trade
figures
will
look
lousy
.

Ah
,
perfidious
Columbia
!

The
trade
figures
turn
out
well
,
and
all
those
recently
unloaded
bonds
spurt
in
price
.

So
much
for
anticipating
the
market
by
a
fraction
of
a
second
.

And
a
large
slice
of
the
first
episode
is
devoted
to
efforts
to
get
rid
of
some
nearly
worthless
Japanese
bonds
(
since
when
is
anything
Japanese
nearly
worthless
nowadays
?
)
.

Surprisingly
,
Shane
Longman
survives
the
week
,
only
to
have
a
senior
executive
innocently
bumble
his
way
into
becoming
the
target
of
a
criminal
insider
trading
investigation
.

Instead
of
closing
ranks
to
protect
the
firm
's
reputation
,
the
executive
's
internal
rivals
,
led
by
a
loutish
American
,
demand
his
resignation
.

The
plot
is
thwarted
when
the
firm
's
major
stockholder
,
kelp
farming
on
the
other
side
of
the
globe
,
hurries
home
to
support
the
executive
.

But
the
investigation
continues
.

If
you
can
swallow
the
premise
that
the
rewards
for
such
ineptitude
are
six-figure
salaries
,
you
still
are
left
puzzled
,
because
few
of
the
yuppies
consume
very
conspicuously
.

In
fact
,
few
consume
much
of
anything
.

Two
share
a
house
almost
devoid
of
furniture
.

Michelle
lives
in
a
hotel
room
,
and
although
she
drives
a
canary-colored
Porsche
,
she
has
n't
time
to
clean
or
repair
it
;
the
beat-up
vehicle
can
be
started
only
with
a
huge
pair
of
pliers
because
the
ignition
key
has
broken
off
in
the
lock
.

And
it
takes
Declan
,
the
obligatory
ladies
'
man
of
the
cast
,
until
the
third
episode
to
get
past
first
base
with
any
of
his
prey
.

Perhaps
the
explanation
for
these
anomalies
is
that
class-conscious
Britain
is
n't
ready
to
come
to
terms
with
the
wealth
created
by
the
Thatcherian
free-enterprise
regime
.

After
all
,
this
is
n't
old
money
,
but
new
money
,
and
in
many
cases
,
young
money
.

This
attitude
is
clearly
illustrated
in
the
treatment
of
Max
,
the
trading
room
's
most
flamboyant
character
.

Yuppily
enough
,
he
lives
in
a
lavishly
furnished
converted
church
,
wears
designer
clothes
and
drives
an
antique
car
.

But
apparently
to
make
him
palatable
,
even
lovable
,
to
the
masses
,
the
script
inflates
pony-tailed
Max
into
an
eccentric
genius
,
master
of
11
Chinese
dialects
.

He
takes
his
wash
to
the
laundromat
,
where
he
meets
a
punky
French
girl
who
dupes
him
into
providing
a
home
for
her
pet
piranha
and
then
promptly
steals
his
car
and
dumps
it
in
Dieppe
.

In
producing
and
promoting
``
Capital
City
,
''
Thames
has
spent
about
as
much
as
Shane
Longman
loses
on
a
good
day
.

The
production
costs
are
a
not
inconsiderable
#
8
million
(
$
12.4
million
)
,
and
would
have
been
much
higher
had
not
the
cost
of
the
trading
floor
set
been
absorbed
in
the
budget
of
``
Dealers
,
''
an
earlier
made-for-TV
movie
.

Another
half
million
quid
went
for
a
volley
of
full-page
advertisements
in
six
major
British
newspapers
and
for
huge
posters
in
the
London
subway
.

These
expenses
create
a
special
incentive
for
``
Capital
City
's
''
producers
to
flog
it
,
or
a
Yank-oriented
version
of
it
,
in
America
.

Thames
's
U.S.
marketing
agent
,
Donald
Taffner
,
is
preparing
to
do
just
that
.

He
is
discreetly
hopeful
,
citing
three
U.S.
comedy
series
--
``
Three
's
Company
,
''
``
Too
Close
for
Comfort
''
and
``
Check
It
Out
''
--
that
had
British
antecedents
.

Perhaps
without
realizing
it
,
Mr.
Taffner
simultaneously
has
put
his
finger
on
the
problem
and
an
ideal
solution
:
``
Capital
City
''
should
have
been
a
comedy
,
a
worthy
sequel
to
the
screwball
British
``
Carry
On
''
movies
of
the
1960s
.

The
seeds
already
are
in
the
script
.

The
first
episode
concluded
with
a
marvelously
cute
scene
in
which
the
trading-room
crew
minded
a
baby
,
the
casualty
of
a
broken
marriage
at
the
firm
.

And
many
in
the
young
cast
bear
striking
resemblances
to
American
TV
and
movie
personalities
known
for
light
roles
.

Joanna
Kanska
looks
like
a
young
Zsa
Zsa
Gabor
;
William
Armstrong
,
who
plays
Max
,
could
pass
for
Hans
Conreid
,
and
Douglas
Hodge
(
Declan
)
for
James
Farentino
;
Rolf
Saxon
is
a
passable
Tommy
Noonan
and
Dorian
Healy
could
easily
double
for
Huntz
Hall
,
the
blank-faced
foil
of
the
Bowery
Boys
comedies
.

So
,
OK
kids
,
everybody
on
stage
for
``
Carry
On
Trading
''
:
The
cast
is
frantically
searching
the
office
for
misplaced
Japanese
bonds
that
suddenly
have
soared
in
value
because
Dai-Ichi
Kangyo
Bank
has
just
bought
the
White
House
.

The
pressure
is
too
much
for
Zsa
Zsa
,
who
slaps
a
security
guard
.

He
backflips
into
a
desktop
computer
terminal
,
which
explodes
,
covering
Huntz
Hall
's
face
with
microchips
.

And
all
the
while
,
the
bonds
are
in
the
baby
's
diaper
.

It
should
run
forever
.

Mr.
Rustin
is
senior
correspondent
in
the
Journal
's
London
bureau
.

Axa-Midi
Assurances
of
France
gave
details
of
its
financing
plans
for
its
proposed
$
4.5
billion
acquisition
of
Farmers
Group
Inc.
,
in
amended
filings
with
insurance
regulators
in
the
nine
U.S.
states
where
Farmers
operates
.

The
proposed
acquisition
is
part
of
Sir
James
Goldsmith
's
unfriendly
takeover
attempt
for
B.A.T
Industries
PLC
,
the
British
tobacco
,
retailing
,
paper
and
financial
services
concern
that
is
parent
of
Los
Angeles-based
Farmers
.

In
an
attempt
to
appease
U.S.
regulators
'
concern
over
a
Goldsmith
acquisition
of
Farmers
,
Sir
James
in
August
agreed
to
sell
Farmers
to
Axa
if
he
is
successful
in
acquiring
B.A.T
.

As
part
of
the
agreement
,
Axa
agreed
to
invest
$
1
billion
in
Hoylake
Investments
Ltd.
,
Sir
James
's
acquisition
vehicle
.

Of
the
total
$
5.5
billion
to
be
paid
to
Hoylake
by
Axa
,
about
$
1
billion
will
come
from
available
resources
of
Axa
's
parent
,
Axa-Midi
Group
,
$
2.25
billion
will
be
in
the
form
of
notes
issued
by
Axa
,
and
the
remaining
$
2.25
billion
will
be
in
long-term
bank
loans
.

In
an
interview
Thursday
,
Claude
Bebear
,
chairman
and
chief
executive
officer
of
Axa
,
said
his
group
has
already
obtained
assurances
from
a
group
of
banks
led
by
Cie
.
Financiere
de
Paribas
that
they
can
provide
the
loan
portion
of
the
financing
.

The
other
banking
companies
in
the
group
are
Credit
Lyonnais
,
Societe
Generale
,
BankAmerica
Corp.
and
Citicorp
,
he
said
.

Mr.
Bebear
said
Axa-Midi
Group
has
``
more
than
$
2.5
billion
of
non-strategic
assets
that
we
can
and
will
sell
''
to
help
pay
off
debt
from
the
acquisition
.

He
said
the
assets
to
be
sold
would
be
``
non-insurance
''
assets
,
including
a
beer
company
and
a
real
estate
firm
,
and
would
n't
include
any
pieces
of
Farmers
.

``
We
wo
n't
put
any
burden
on
Farmers
,
''
he
said
.

The
amended
filings
also
point
out
that
under
a
new
agreement
,
Hoylake
has
an
absolute
obligation
to
sell
Farmers
to
Axa
upon
an
acquisition
of
B.A.T
.

``
We
hope
that
with
what
we
did
,
the
regulators
will
not
need
to
evaluate
Hoylake
,
and
they
can
directly
look
at
the
agreement
with
us
,
because
Hoylake
wo
n't
be
an
owner
of
Farmers
at
anytime
,
''
Mr.
Bebear
said
.

Any
change
of
control
in
Farmers
needs
approval
of
the
insurance
commissioners
in
the
nine
states
where
Farmers
and
its
related
companies
are
incorporated
.

The
amended
filings
were
required
because
of
the
new
agreement
between
Axa
and
Hoylake
,
and
to
reflect
the
extension
that
Sir
James
received
last
month
under
British
takeover
rules
to
complete
his
proposed
acquisition
.

Hoylake
dropped
its
initial
#
13.35
billion
(
$
20.71
billion
)
takeover
bid
after
it
received
the
extension
,
but
said
it
would
launch
a
new
bid
if
and
when
the
propsed
sale
of
Farmers
to
Axa
receives
regulatory
approval
.

A
spokesman
for
B.A.T
said
of
the
amended
filings
that
,
``
It
would
appear
that
nothing
substantive
has
changed
.

The
new
financing
structure
is
still
a
very-highly
leveraged
one
,
and
Axa
still
plans
to
take
out
75
%
of
Farmers
'
earnings
as
dividends
to
service
their
debt
.
''

That
dividend
is
almost
double
the
35
%
currently
taken
out
of
Farmers
by
B.A.T
,
the
spokesman
added
.

``
It
would
have
severe
implications
for
Farmers
'
policy
holders
.
''

To
fend
off
Sir
James
's
advances
,
B.A.T
has
proposed
a
sweeping
restructuring
that
would
pare
it
to
a
tobacco
and
financial
services
concern
.

Dismal
sales
at
General
Motors
Corp.
dragged
the
U.S.
car
and
truck
market
down
below
year-ago
levels
in
early
October
,
the
first
sales
period
of
the
1990
model
year
.

The
eight
major
domestic
auto
makers
sold
160,510
North
American-made
cars
in
the
first
10
days
of
October
,
a
12.6
%
drop
from
a
year
earlier
.

Domestically
built
truck
sales
were
down
10.4
%
to
86,555
pickups
,
vans
and
sport
utility
vehicles
.

The
heavy
use
of
incentives
to
clear
out
1989
models
appears
to
have
taken
the
steam
,
at
least
initially
,
out
of
1990
model
sales
,
which
began
officially
Oct.
1
.

This
appears
particularly
true
at
GM
,
which
had
strong
sales
in
August
and
September
but
saw
its
early
October
car
and
truck
results
fall
26.3
%
from
last
year
's
unusually
high
level
.

Overall
,
sales
of
all
domestic-made
vehicles
fell
11.9
%
from
a
year
ago
.

Without
GM
,
overall
sales
for
the
other
U.S.
automakers
were
roughly
flat
with
1989
results
.

Some
of
the
U.S.
auto
makers
have
already
adopted
incentives
on
many
1990
models
,
but
they
may
have
to
broaden
their
programs
to
keep
sales
up
.

``
We
've
created
a
condition
where
,
without
incentives
,
it
's
a
tough
market
,
''
said
Tom
Kelly
,
sales
manager
for
Bill
Wink
Chevrolet
in
Dearborn
,
Mich
.

Car
sales
fell
to
a
seasonally
adjusted
annual
selling
rate
of
5.8
million
vehicles
,
the
lowest
since
October
1987
.

The
poor
performance
contrasts
with
a
robust
selling
rate
of
almost
eight
million
last
month
.

Furthermore
,
dealers
contacted
late
last
week
said
they
could
n't
see
any
immediate
impact
on
sales
of
Friday
's
steep
market
decline
.

GM
's
domestic
car
sales
dropped
24.3
%
and
its
domestic
trucks
were
down
an
even
steeper
28.7
%
from
the
same
period
a
year
ago
.

All
of
the
GM
divisions
except
Cadillac
showed
big
declines
.

Cadillac
posted
a
3.2
%
increase
despite
new
competition
from
Lexus
,
the
fledging
luxury-car
division
of
Toyota
Motor
Corp
.

Lexus
sales
were
n't
available
;
the
cars
are
imported
and
Toyota
reports
their
sales
only
at
month-end
.

The
sales
drop
for
the
No.
1
car
maker
may
have
been
caused
in
part
by
the
end
in
September
of
dealer
incentives
that
GM
offered
in
addition
to
consumer
rebates
and
low-interest
financing
,
a
company
spokesman
said
.

Last
year
,
GM
had
a
different
program
in
place
that
continued
rewarding
dealers
until
all
the
1989
models
had
been
sold
.

Aside
from
GM
,
other
car
makers
posted
generally
mixed
results
.

Ford
Motor
Co.
had
a
1.8
%
drop
in
domestic
car
sales
but
a
2.4
%
increase
in
domestic
truck
sales
.

Chrysler
Corp.
had
a
7.5
%
drop
in
car
sales
,
echoing
its
generally
slow
performance
all
year
.

However
,
sales
of
trucks
,
including
the
company
's
popular
minivans
,
rose
4.3
%
.

Honda
Motor
Co.
's
sales
of
domestically
built
vehicles
plunged
21.7
%
from
a
year
earlier
.

Honda
's
plant
in
Marysville
,
Ohio
,
was
gearing
up
to
build
1990
model
Accords
,
a
Honda
spokesman
said
.

``
We
're
really
confident
everything
will
bounce
back
to
normal
,
''
he
added
.

Separately
,
Chrysler
said
firm
prices
on
its
1990-model
domestic
cars
and
minivans
will
rise
an
average
of
5
%
over
comparably
equipped
1989
models
.

Firm
prices
were
generally
in
line
with
the
tentative
prices
announced
earlier
this
fall
.

At
that
time
,
Chrysler
said
base
prices
,
which
are
n't
adjusted
for
equipment
changes
,
would
rise
between
4
%
and
9
%
on
most
vehicle
.

a
-
Totals
include
only
vehicle
sales
reported
in
period
.

c
-
Domestic
car

d
-
Percentage
change
is
greater
than
999
%
.

x
-
There
were
8
selling
days
in
the
most
recent
period
and
8
a
year
earlier
.

Percentage
differences
based
on
daily
sales
rate
rather
than
sales
volume
.

Antonio
L.
Savoca
,
66
years
old
,
was
named
president
and
chief
executive
officer
of
the
Atlantic
Research
Corp.
subsidiary
.

Mr.
Savoca
had
been
a
consultant
to
the
subsidiary
's
rocket-propulsion
operations
.

Mr.
Savoca
succeeds
William
H.
Borten
,
who
resigned
to
pursue
personal
interests
.

Sequa
makes
and
repairs
jet
engines
.

It
also
has
interests
in
military
electronics
and
electro-optics
,
marine
transportation
and
machinery
used
to
make
food
and
beverage
cans
.

It
was
n't
so
long
ago
that
a
radio
network
funded
by
the
U.S.
Congress
--
and
originally
by
the
Central
Intelligence
Agency
--
was
accused
by
officials
here
of
employing
propagandists
,
imperialists
and
spies
.

Now
,
the
network
has
opened
a
news
bureau
in
the
Hungarian
capital
.

Employees
held
an
open
house
to
celebrate
and
even
hung
out
a
sign
:
``
Szabad
Europa
Radio
''
--
Radio
Free
Europe
.

``
I
think
this
is
a
victory
for
the
radio
,
''
says
Barnabas
de
Bueky
,
a
55-year-old
former
Hungarian
refugee
who
works
in
the
Munich
,
West
Germany
,
headquarters
as
deputy
director
of
the
Hungarian
service
.

In
fact
,
the
network
hopes
to
set
up
offices
in
Warsaw
and
anywhere
else
in
the
East
Bloc
that
will
have
it
.

But
the
rapid
changes
brought
on
by
glasnost
and
open
borders
are
altering
the
network
's
life
in
more
ways
than
one
.

In
fact
,
Radio
Free
Europe
is
in
danger
of
suffering
from
its
success
.

While
the
network
currently
can
operate
freely
in
Budapest
,
so
can
others
.

In
addition
,
competition
for
listeners
is
getting
tougher
in
many
ways
than
when
broadcasting
here
was
strictly
controlled
.

Instead
of
being
denounced
as
an
evil
agent
of
imperialism
,
Radio
Free
Europe
is
more
likely
to
draw
the
criticism
that
its
programs
are
too
tame
,
even
boring
.

``
They
have
a
lot
to
do
these
days
to
compete
with
Hungarian
radio
,
''
says
Andrew
Deak
,
a
computer-science
student
at
the
Technical
University
in
Budapest
.

``
The
Hungarian
{
radio
}
reporters
seem
better
informed
and
more
critical
about
about
what
's
going
on
here
.
''

Indeed
,
Hungary
is
in
the
midst
of
a
media
explosion
.

Boys
on
busy
street
corners
peddle
newspapers
of
every
political
stripe
.

Newsstands
are
packed
with
a
colorful
array
of
magazines
.

Radio
and
television
are
getting
livelier
and
bolder
.

The
British
Broadcasting
Corp.
and
the
U.S.
State
Department
's
Voice
of
America
broadcast
over
Hungarian
airwaves
,
though
only
a
few
hours
a
day
each
in
Hungarian
.

Australian
press
magnate
Rupert
Murdoch
has
bought
50
%
stakes
in
two
popular
and
gossipy
Hungarian
newspapers
,
while
Britain
's
Robert
Maxwell
has
let
it
be
known
here
that
he
is
thinking
about
similar
moves
.

But
Radio
Free
Europe
does
n't
plan
to
fade
away
.

With
its
mission
for
free
speech
and
the
capitalist
way
,
the
network
's
staff
says
it
still
has
plenty
to
do
--
in
Hungary
and
in
the
``
Great
Eastern
Beyond
.
''

Radio
Free
Europe
and
its
sister
station
for
the
Soviet
Union
,
Radio
Liberty
,
say
they
wo
n't
cut
back
their
more
than
19
hours
of
daily
broadcasts
.

They
are
still
an
important
source
of
news
for
60
million
listeners
in
23
exotic
tongues
:
from
Bulgarian
and
Belorussian
to
Kazakh
and
Kirghiz
.

The
establishment
of
its
first
bureau
in
Warsaw
Pact
territory
shows
the
depth
of
some
of
the
changes
in
Eastern
Europe
.

Months
before
the
decision
by
the
Hungarian
Communist
Party
to
rename
itself
Socialist
and
try
to
look
more
appealing
to
voters
,
the
country
's
rulers
were
trying
to
look
more
hospitable
.

It
proved
a
perfect
time
for
Radio
Free
Europe
to
ask
for
permission
to
set
up
office
.

Not
only
did
the
Hungarian
Ministry
of
Foreign
Affairs
approve
Radio
Free
Europe
's
new
location
,
but
the
Ministry
of
Telecommunications
did
something
even
more
amazing
:
``
They
found
us
four
phone
lines
in
central
Budapest
,
''
says
Geza
Szocs
,
a
Radio
Free
Europe
correspondent
who
helped
organize
the
Budapest
location
.

``
That
is
a
miracle
.
''

It
's
a
far
cry
from
the
previous
treatment
of
the
network
,
which
had
to
overcome
jamming
of
its
frequencies
and
intimidation
of
local
correspondents
(
who
filed
reports
to
the
network
by
phone
,
secret
messengers
or
letters
)
.

In
fact
,
some
of
the
network
's
Hungarian
listeners
say
they
owe
Radio
Free
Europe
loyalty
because
it
was
responsible
in
many
ways
for
keeping
hope
alive
through
what
one
writer
here
calls
the
``
Dark
Ages
of
the
20th
Century
.
''

``
During
the
past
four
years
,
many
of
us
have
sat
up
until
late
at
night
listening
to
our
radios
,
''
says
the
writer
.

``
There
were
some
very
brave
broadcasts
.
''

The
listeners
,
too
,
had
to
be
brave
.

Through
much
of
the
post-World
War
II
period
,
listening
to
Western
broadcasts
was
a
crime
in
Hungary
.

``
When
we
listen
to
the
Europe
station
,
my
mother
still
gets
nervous
,
''
says
a
Budapest
translator
.

``
She
wants
to
turn
down
the
volume
and
close
the
curtains
.
''

Now
,
the
toughest
competition
for
Radio
Free
Europe
comes
during
the
late-night
slot
.

Hungarian
radio
often
saves
its
most
politically
outspoken
broadcasts
for
around
midnight
.

Television
,
which
most
of
the
time
is
considered
rather
tame
,
has
entered
the
running
with
a
new
program
,
``
The
End
of
the
Day
,
''
which
comes
on
after
11
p.m
.

It
is
a
talk
show
with
opposition
leaders
and
political
experts
who
discuss
Hungary
's
domestic
problems
as
well
as
foreign
affairs
.

Those
who
want
to
hear
even
more
radical
views
have
to
get
up
at
five
on
Sunday
morning
for
``
Sunday
Journal
,
''
on
Hungarian
Radio
.

The
competitive
spirit
is
clearly
influencing
Radio
Free
Europe
,
which
is
trying
to
beef
up
programs
.

The
Budapest
office
plans
to
hire
free-lance
reporters
to
cover
the
latest
happenings
in
Hungarian
country
towns
from
Nagykanizsa
in
the
west
to
Nyiregyhaza
in
the
east
.

The
Hungarian
service
has
a
daily
40-minute
news
show
called
Newsreel
,
with
international
and
domestic
news
,
plus
a
daily
news
review
of
opinions
from
around
the
world
.

There
's
also
a
host
of
new
programs
,
trying
to
lighten
up
on
the
traditional
diet
of
politics
.

A
daily
35-minute
program
called
``
The
March
of
Time
''
tries
to
find
interesting
tidbits
of
lighthearted
news
and
gossip
from
around
the
world
.

There
's
a
program
for
women
and
a
science
show
.

And
to
attract
younger
listeners
,
Radio
Free
Europe
intersperses
the
latest
in
Western
rock
groups
.

The
Pet
Shop
Boys
are
big
this
year
in
Budapest
.

``
We
are
starving
for
all
the
news
,
''
says
Mr.
Deak
,
the
student
.

``
Every
moment
we
want
to
know
everything
about
the
world
.

Proposals
for
government-operated
``
national
service
,
''
like
influenza
,
flare
up
from
time
to
time
,
depress
the
resistance
of
the
body
politic
,
run
their
course
,
and
seem
to
disappear
,
only
to
mutate
and
afflict
public
life
anew
.

The
disease
metaphor
comes
to
mind
,
of
course
,
not
as
an
aspersion
on
the
advocates
of
national
service
.

Rather
,
it
is
born
of
frustration
with
having
to
combat
constantly
changing
strains
of
a
statist
idea
that
one
thought
had
been
eliminated
in
the
early
1970s
,
along
with
smallpox
.

It
is
back
with
us
again
,
in
the
form
of
legislation
to
pay
volunteers
under
a
``
National
and
Community
Service
Act
,
''
a
proposal
with
a
serious
shot
at
congressional
passage
this
fall
.

Why
does
the
national-service
virus
keep
coming
back
?

Perhaps
it
is
because
utopian
nostalgia
evokes
both
military
experience
and
the
social
gospel
.

If
only
we
could
get
America
's
wastrel
youth
into
at
least
a
psychic
uniform
we
might
be
able
to
teach
self-discipline
again
and
revive
the
spirit
of
giving
.

A
quarter
of
a
century
ago
national
service
was
promoted
as
a
way
of
curing
the
manifest
inequities
of
the
draft
--
by
,
of
all
things
,
expanding
the
draft
.

Those
of
us
who
resisted
the
idea
then
suspect
today
that
an
obligation
of
government
service
for
all
young
people
is
still
the
true
long-term
aim
of
many
national-service
backers
,
despite
their
protests
that
present
plans
contain
no
coercion
.

Choice
of
the
volunteer
military
in
the
1970s
seemed
to
doom
national
service
as
much
as
the
draft
.

But
the
virus
was
kept
alive
in
sociology
departments
until
a
couple
of
years
ago
,
when
it
again
was
let
loose
.

This
time
it
attempted
to
invade
two
connected
problems
,
the
rising
cost
of
higher
education
and
the
rising
expense
to
the
federal
government
of
educational
grants
and
loans
.

Why
not
keep
and
even
expand
the
loans
and
grants
,
the
advocates
reasoned
,
but
require
some
form
of
service
from
each
recipient
?

Military
service
,
moreover
,
could
be
a
national-service
option
.

Thus
,
undoubtedly
it
was
hoped
that
the
new
strain
of
national
service
would
prove
contagious
,
infecting
patriotic
conservatives
,
pay-as-you-go
moderates
,
and
idealistic
liberals
.

The
Democratic
Leadership
Council
,
a
centrist
group
sponsoring
the
plan
,
surely
thought
it
might
help
the
party
to
attract
support
,
especially
among
college
students
and
their
parents
.

A
provision
allowing
grants
to
be
applied
to
first-home
purchases
was
added
to
appeal
to
those
who
had
had
enough
of
schooling
.

The
DLC
plan
envisaged
``
volunteers
''
planting
trees
,
emptying
bedpans
,
tutoring
children
,
and
assisting
librarians
for
$
100
a
week
,
tax
free
,
plus
medical
care
.

With
a
tax-free
$
10,000
voucher
payment
at
the
end
of
each
year
,
the
volunteers
would
be
making
a
wage
comparable
to
$
17,500
a
year
.

Mind
you
,
most
of
``
the
volunteers
''
would
be
unskilled
17
-
to
18-year-olds
,
some
not
even
high
school
graduates
,
and
many
saving
money
by
living
at
home
.

They
would
be
doing
better
financially
under
national
service
than
many
taxpayers
working
at
the
same
kinds
of
jobs
and
perhaps
supporting
families
.

As
it
happened
,
political
resistance
developed
among
educational
and
minority
interests
that
count
on
the
present
education
grant
system
,
so
the
national-service
devotees
decided
to
abandon
the
supposedly
crucial
principle
of
``
give
in
order
to
get
.
''

Opposition
to
national
service
from
the
Pentagon
,
which
wants
to
protect
its
own
recruitment
process
,
also
led
to
the
military-service
option
being
dropped
.

Clearly
,
a
new
rationale
for
national
service
had
to
be
cooked
up
.

What
better
place
to
turn
than
Sen.
Edward
Kennedy
's
Labor
Committee
,
that
great
stove
of
government
expansionism
,
where
many
a
stagnant
pot
of
porridge
is
kept
on
the
back
burner
until
it
can
be
brought
forward
and
presented
as
nouvelle
cuisine
?

In
this
case
,
the
new
recipe
for
national
service
called
for
throwing
many
assorted
legislative
leftovers
into
one
kettle
:
a
demonstration
project
for
educational
aid
(
particularly
satisfying
to
the
DLC
and
Sen.
Sam
Nunn
)
,
a
similar
demonstration
program
for
youth
conservation
(
a
la
Sen.
Chris
Dodd
)
,
a
competitive
grants
program
to
states
to
spark
youth
and
senior
citizen
volunteer
projects
(
a
Kennedy
specialty
)
,
a
community
service
work-study
program
for
students
(
pleasing
to
the
palate
of
Sen.
Dale
Bumpers
,
among
others
)
,
plus
engorgement
of
the
VISTA
volunteer
program
and
the
Retired
Senior
Volunteer
,
Foster
Grandparent
,
and
Senior
Companion
programs
.

Before
the
menu
is
printed
,
the
House
may
add
more
ingredients
,
also
changing
the
initial
price
,
now
posted
at
some
$
330
million
.

It
is
widely
known
that
``
too
many
cooks
spoil
the
broth
,
''
but
that
wisdom
does
not
necessarily
reflect
the
view
of
the
cooks
,
especially
if
they
are
senators
.

The
``
omnibus
''
bill
coming
out
of
Congress
may
be
unwholesome
glop
,
but
the
assorted
chefs
are
happy
and
the
restaurant
is
pushing
the
dish
very
hard
.

The
aroma
of
patronage
is
in
the
air
.

Is
the
voluntary
sector
so
weak
that
it
needs
such
unsolicited
assistance
?

On
the
contrary
,
it
is
as
robust
as
ever
.

According
to
the
Gallup
Poll
,
American
adults
contribute
an
average
of
two
hours
a
week
of
service
,
while
financial
contributions
to
charity
in
the
1980s
have
risen
30
%
(
adjusted
for
inflation
)
.

Even
if
government
does
see
various
``
unmet
needs
,
''
national
service
is
not
the
way
to
meet
them
.

If
we
want
to
support
students
,
we
might
adopt
the
idea
used
in
other
countries
of
offering
more
scholarships
based
on
something
called
``
scholarship
,
''
rather
than
on
the
government
's
idea
of
``
service
.
''

Or
we
might
provide
a
tax
credit
for
working
students
.

What
we
do
not
need
to
do
is
start
a
war
,
and
then
try
to
justify
it
by
creating
a
GI
Bill
.

To
the
extent
we
lack
manpower
to
staff
menial
jobs
in
hospitals
,
for
example
,
we
should
raise
pay
,
pursue
labor-saving
technology
,
or
allow
more
legal
immigration
,
rather
than
overpay
high
school
graduates
as
short-term
workers
and
cause
resentment
among
permanent
workers
paid
lesser
amounts
to
do
the
same
jobs
.

Will
national
service
,
in
the
current
highly
politicized
and
opportunistic
form
exert
enough
appeal
to
get
adopted
?

Not
necessarily
.

Polls
show
wide
,
generalized
support
for
some
vague
concept
of
service
,
but
the
bill
now
under
discussion
lacks
any
passionate
public
backing
.

Nonetheless
,
Senate
Democrats
are
organizing
a
roll
of
supporting
``
associations
,
''
``
societies
''
and
``
councils
,
''
some
of
which
may
hope
to
receive
the
paid
``
volunteers
.
''

So
far
,
the
president
seems
ill-disposed
to
substitute
any
of
the
omnibus
for
his
own
free-standing
proposal
to
endow
a
``
Points
of
Light
''
foundation
with
$
25
million
to
inform
citizens
of
all
ages
and
exhort
them
to
genuine
volunteerism
.

However
,
even
this
admirable
plan
could
become
objectionable
if
the
White
House
gives
in
to
congressional
Democratic
pressure
to
add
to
the
scope
of
the
president
's
initiative
or
to
involve
the
independent
foundation
in
``
brokering
''
federal
funds
for
volunteer
projects
.

There
's
no
need
for
such
concessions
.

The
omnibus
can
be
defeated
,
the
virus
controlled
,
and
real
service
protected
.

National
service
,
the
utopian
idea
,
still
wo
n't
go
away
then
,
of
course
,
but
the
millions
of
knee-socked
youth
performing
works
of
``
civic
content
''
will
be
mobilized
only
in
the
imagination
of
their
progenitors
.

Mr.
Chapman
is
a
fellow
at
the
Indianapolis-based
Hudson
Institute
.

This
article
is
adapted
from
remarks
at
a
Hoover
Institution
conference
on
national
service
,
in
which
Mr.
Szanton
also
participated
.

Drug
Emporium
Inc.
said
Gary
Wilber
,
39
years
old
,
who
had
been
president
and
chief
operating
officer
for
the
past
year
,
was
named
chief
executive
officer
of
this
drugstore
chain
.

He
succeeds
his
father
,
Philip
T.
Wilber
,
who
founded
the
company
and
remains
chairman
.

Robert
E.
Lyons
III
,
39
,
who
headed
the
company
's
Philadelphia
region
,
was
appointed
president
and
chief
operating
officer
,
succeeding
Gary
Wilber
.

American
Physicians
Service
Group
Inc.
said
it
purchased
about
42
%
of
Prime
Medical
Services
Inc.
for
about
$
5
million
from
Texas
American
Energy
Corp
.

American
Physicians
said
it
also
replaced
four
Texas
American
representatives
on
Prime
's
five-member
board
.

American
provides
a
variety
of
financial
services
to
doctors
and
hospitals
.

Prime
,
based
in
Bedminster
,
N.J.
,
provides
management
services
to
cardiac
rehabilitation
clinics
and
diagnostic
imaging
centers
.

For
the
year
ended
June
30
,
Prime
had
a
net
loss
of
$
3
million
on
sales
of
$
13.8
million
.

The
inflation-adjusted
growth
rate
for
France
's
gross
domestic
product
for
the
second
quarter
was
revised
upward
to
0.8
%
from
the
previous
three
months
from
the
initial
estimate
of
0.7
%
,
the
National
Statistics
Institute
said
.

The
state
agency
said
the
latest
revision
left
the
growth
rate
for
the
first-quarter
compared
with
the
previous
three
months
unchanged
at
1.3
%
.

If
the
economy
continues
to
expand
by
0.8
%
a
quarter
for
the
rest
of
the
year
,
it
would
leave
GDP
growth
for
all
of
1989
at
3
%
,
the
institute
said
.

That
would
be
down
from
the
3.8
%
rise
posted
in
1988
.

The
Canadian
government
announced
a
new
,
12-year
Canada
Savings
Bond
issue
that
will
yield
investors
10.5
%
in
the
first
year
.

The
annual
interest
rate
for
each
of
the
next
11
years
will
be
set
each
fall
,
when
details
of
a
new
series
are
released
.

Canada
Savings
Bonds
are
major
government
instruments
for
meeting
its
financial
requirements
.

The
government
has
about
41.4
billion
Canadian
dollars
(
US$
35.2
billion
)
of
such
bonds
currently
outstanding
.

Only
Canadian
residents
are
permitted
to
buy
Canada
Savings
Bonds
,
which
may
be
redeemed
any
time
at
face
value
.

The
bonds
go
on
sale
Oct.
19
.

The
debate
over
National
Service
has
begun
again
.

After
a
decade
in
which
more
than
50
localities
established
their
own
service
or
conservation
corps
and
dozens
of
school
systems
made
community
service
a
prerequisite
to
high-school
graduation
,
the
focus
has
shifted
to
Washington
.

At
least
10
bills
proposing
one
or
another
national
program
were
introduced
in
Congress
this
spring
.

One
,
co-sponsored
by
Sen.
Sam
Nunn
(
D.
,
Ga
.
)
and
Rep.
Dave
McCurdy
(
D.
,
Okla.
)
,
would
have
restricted
federal
college
subsidies
to
students
who
had
served
.

An
omnibus
bill
assembled
by
Sen.
Edward
Kennedy
(
D.
,
Mass.
)
,
and
including
some
diluted
Nunn-McCurdy
provisions
along
with
proposals
by
fellow
Democratic
Sens.
Claiborne
Pell
,
Barbara
Mikulski
and
Christopher
Dodd
,
has
been
reported
out
of
the
Senate
Labor
Committee
.

It
might
well
win
Senate
passage
.

President
Bush
has
outlined
his
own
Youth
Entering
Service
(
YES
)
plan
,
though
its
details
remain
to
be
specified
.

What
is
one
to
think
of
all
this
?

Doctrine
and
special
interests
govern
some
responses
.

People
eager
to
have
youth
``
pay
their
dues
to
society
''
favor
service
proposals
--
preferably
mandatory
ones
.

So
do
those
who
seek
a
``
re-energized
concept
of
citizenship
,
''
a
concept
imposing
stern
obligations
as
well
as
conferring
rights
.

Then
there
are
instinctive
opponents
.

To
libertarians
,
mandatory
service
is
an
abomination
and
voluntary
systems
are
illegitimate
uses
of
tax
money
.

Devotees
of
the
market
question
the
value
of
the
work
national
service
would
perform
:

If
the
market
wo
n't
pay
for
it
,
they
argue
,
it
ca
n't
be
worth
its
cost
.

Elements
of
the
left
are
also
reflexively
opposed
;
they
see
service
as
a
cover
for
the
draft
,
or
fear
the
regimentation
of
youth
,
or
want
to
see
rights
enlarged
,
not
obligations
.

But
what
about
those
of
us
whose
views
are
not
predetermined
by
formula
or
ideology
?

How
should
we
think
about
national
service
?

Let
's
begin
by
recognizing
a
main
source
of
confusion
--
``
national
service
''
has
no
agreed
meaning
.

Would
service
be
voluntary
or
compulsory
?

Short
or
long
?

Part-time
or
full-time
?

Paid
or
unpaid
?

Would
participants
live
at
home
and
work
nearby
or
live
in
barracks
and
work
on
public
lands
?

What
kinds
of
work
would
they
do
?

What
does
``
national
''
mean
?

Would
the
program
be
run
by
the
federal
government
,
by
local
governments
,
or
by
private
voluntary
organizations
?

And
who
would
serve
?

Only
males
,
as
with
the
draft
,
or
both
sexes
?

Youth
only
or
all
ages
?

Middle-class
people
,
or
poor
people
,
or
a
genuine
cross-section
?

Many
or
few
?

Those
are
not
trivial
questions
,
and
the
label
``
national
service
''
answers
none
of
them
.

Then
how
should
we
think
about
national
service
?

As
a
starting
point
,
here
are
five
propositions
:
1
.
Consider
the
ingredients
,
not
the
name
.

Ignore
``
national
service
''
in
the
abstract
;
consider
specific
proposals
.

They
will
differ
in
crucial
ways
.

2
.
``
Service
''
should
be
service
.

As
commonly
understood
,
service
implies
sacrifice
.

It
involves
accepting
risk
,
or
giving
up
income
,
or
deferring
a
career
.

It
follows
that
proposals
like
Nunn-McCurdy
,
whose
benefits
to
enrollees
are
worth
some
$
17,500
a
year
,
do
not
qualify
.

There
is
a
rationale
for
such
bills
:
Federal
subsidies
to
college
students
amount
to
``
a
GI
Bill
without
the
GI
''
;
arguably
those
benefits
should
be
earned
,
not
given
.

But
the
earnings
exceed
by
20
%
the
average
income
of
young
high-school
graduates
with
full-time
jobs
.

Why
call
that
service
?

3
.
Encouragement
is
fine
;
compulsion
is
not
.

Compelled
service
is
unconstitutional
.

It
is
also
unwise
and
unenforceable
.

(
Who
will
throw
several
hundred
thousand
refusers
in
jail
each
year
?
)

But
through
tax
policy
and
in
other
ways
the
federal
government
encourages
many
kinds
of
behavior
.

It
should
also
encourage
service
--
preferably
by
all
classes
and
all
ages
.

Its
encouragement
should
strengthen
and
not
undercut
the
strong
tradition
of
volunteering
in
the
U.S.
,
should
build
on
the
service
programs
already
in
existence
,
and
should
honor
local
convictions
about
which
tasks
most
need
doing
.

4
.
Good
programs
are
not
cheap
.

Enthusiasts
assume
that
national
service
would
get
important
work
done
cheaply
:
forest
fires
fought
,
housing
rehabilitated
,
students
tutored
,
day-care
centers
staffed
.

There
is
important
work
to
be
done
,
and
existing
service
and
conservation
corps
have
shown
that
even
youths
who
start
with
few
skills
can
do
much
of
it
well
--
but
not
cheaply
.

Good
service
programs
require
recruitment
,
screening
,
training
and
supervision
--
all
of
high
quality
.

They
involve
stipends
to
participants
.

Full-time
residential
programs
also
require
housing
and
full-time
supervision
;
they
are
particularly
expensive
--
more
per
participant
than
a
year
at
Stanford
or
Yale
.

Non-residential
programs
are
cheaper
,
but
good
ones
still
come
to
some
$
10,000
a
year
.

Are
they
worth
that
?

Evaluations
suggest
that
good
ones
are
--
especially
so
if
the
effects
on
participants
are
counted
.

But
the
calculations
are
challengeable
.

5
.
Underclass
youth
are
a
special
concern
.

Are
such
expenditures
worthwhile
,
then
?

Yes
,
if
targeted
.

People
of
all
ages
and
all
classes
should
be
encouraged
to
serve
,
but
there
are
many
ways
for
middle-class
kids
,
and
their
elders
,
to
serve
at
little
public
cost
.

They
can
volunteer
at
any
of
thousands
of
non-profit
institutions
,
or
participate
in
service
programs
required
by
high
schools
or
encouraged
by
colleges
or
employers
.

Underclass
youth
do
n't
have
those
opportunities
.

They
are
not
enrolled
in
high
school
or
college
.

They
are
unlikely
to
be
employed
.

And
they
have
grown
up
in
unprecedentedly
grim
circumstances
,
among
family
structures
breaking
down
,
surrounded
by
self-destructive
behaviors
and
bleak
prospects
.

But
many
of
them
can
be
quite
profoundly
reoriented
by
productive
and
disciplined
service
.

Some
wo
n't
accept
the
discipline
;
others
drop
out
for
other
reasons
.

But
some
whom
nothing
else
is
reaching
are
transformed
.

Learning
skills
,
producing
something
cooperatively
,
feeling
useful
,
they
are
no
longer
dependent
--
others
now
depend
on
them
.

Even
if
it
is
cheaper
to
build
playgrounds
or
paint
apartments
or
plant
dune-grass
with
paid
professionals
,
the
effects
on
the
young
people
providing
those
services
alter
the
calculation
.

Strictly
speaking
,
these
youth
are
not
performing
service
.

They
are
giving
up
no
income
,
deferring
no
careers
,
incurring
no
risk
.

But
they
believe
themselves
to
be
serving
,
and
they
begin
to
respect
themselves
(
and
others
)
,
to
take
control
of
their
lives
,
to
think
of
the
future
.

That
is
a
service
to
the
nation
.

It
is
what
federal
support
should
try
hardest
to
achieve
.

Mr.
Szanton
,
a
Carter
administration
budget
official
,
heads
his
own
Washington-based
strategic
planning
firm
.

He
is
a
co-author
of
``
National
Service
:
What
Would
It
Mean
?
''

(
Lexington
Books
,
1986
)
.

Government
officials
here
and
in
other
countries
laid
plans
through
the
weekend
to
head
off
a
Monday
market
meltdown
--
but
went
out
of
their
way
to
keep
their
moves
quiet
.

Federal
Reserve
Chairman
Alan
Greenspan
was
on
the
telephones
,
making
it
clear
to
officials
in
the
U.S.
and
abroad
that
the
Fed
was
prepared
to
inject
massive
amounts
of
money
into
the
banking
system
,
as
it
did
in
October
1987
,
if
the
action
were
needed
to
prevent
a
financial
crisis
.

And
at
the
Treasury
,
Secretary
Nicholas
Brady
talked
with
friends
and
associates
on
Wall
Street
while
Assistant
Secretary
David
Mullins
carefully
analyzed
data
on
the
Friday
market
plunge
.

But
the
officials
feared
that
any
public
announcements
would
only
increase
market
jitters
.

In
addition
,
officials
at
the
Fed
and
in
the
Bush
administration
decided
that
avoiding
overt
actions
and
statements
over
the
weekend
would
give
them
more
strength
and
flexibility
should
Friday
's
market
drop
turn
into
this
morning
's
rout
.

``
The
disadvantage
at
this
point
is
that
anything
you
do
that
looks
like
you
are
doing
too
much
tends
to
reinforce
a
sense
of
crisis
,
''
said
one
government
official
,
insisting
on
anonymity
.

The
Fed
's
efforts
at
secrecy
were
partly
foiled
Sunday
morning
,
when
both
the
New
York
Times
and
the
Washington
Post
carried
stories
quoting
a
senior
Fed
official
saying
the
central
bank
was
prepared
to
pour
cash
into
the
banking
system
Monday
morning
.

Fed
Chairman
Greenspan
was
surprised
by
both
stories
,
according
to
knowledgeable
sources
,
and
insisted
he
had
n't
authorized
any
public
comment
.

Nevertheless
,
Fed
officials
acknowledged
the
stories
were
reasonably
accurate
portrayals
of
the
central
bank
's
game
plan
.

It
is
prepared
to
assume
the
same
role
it
played
in
October
1987
,
providing
money
to
the
markets
if
necessary
to
keep
the
financial
system
afloat
.

The
Fed
provides
money
to
the
banking
system
by
buying
government
securities
from
financial
institutions
.

The
reticence
of
federal
officials
was
evident
in
the
appearance
Sunday
of
Budget
Director
Richard
Darman
on
ABC
's
``
This
Week
.
''

``
Secretary
of
the
Treasury
Brady
and
Chairman
Greenspan
and
the
chairman
of
the
SEC
and
others
have
been
in
close
contact
.

I
'm
sure
they
'll
do
what
's
right
,
what
's
prudent
,
what
's
sensible
,
''
he
said
.

When
it
was
suggested
his
comment
was
a
``
non-answer
,
''
Mr.
Darman
replied
:
``
It
is
a
non-answer
.

But
,
in
this
context
,
that
's
the
smart
thing
to
do
.
''

At
the
Treasury
,
Secretary
Brady
issued
a
statement
minimizing
the
stock
market
's
drop
.

``
Today
's
stock
market
decline
does
n't
signal
any
fundamental
change
in
the
condition
of
the
economy
,
''
he
said
.

``
The
economy
remains
well-balanced
,
and
the
outlook
is
for
continued
moderate
growth
.
''

But
administration
officials
conceded
that
Friday
's
drop
carried
the
chance
of
further
declines
this
week
.

``
One
possibility
is
that
this
is
a
surgical
setback
,
reasonably
limited
in
its
breadth
,
and
not
a
major
problem
,
''
said
one
senior
administration
official
,
who
also
asked
that
he
not
be
named
.

``
The
other
is
that
we
see
another
major
disaster
,
like
two
years
ago
.

I
think
that
's
less
likely
.
''

Nevertheless
,
Fed
Chairman
Greenspan
and
Vice
Chairman
Manuel
Johnson
were
in
their
offices
Sunday
evening
,
monitoring
events
as
they
unfolded
in
markets
around
the
world
.

The
action
was
expected
to
begin
with
the
opening
of
the
New
Zealand
foreign
exchange
markets
at
5
p.m.
EST
--
when
stocks
there
plunged
--
and
to
continue
as
the
trading
day
began
later
in
the
evening
in
Tokyo
and
through
early
this
morning
in
Europe
.

Both
the
Treasury
and
the
Fed
planned
to
keep
market
rooms
operating
throughout
the
night
to
monitor
the
developments
.

In
Tokyo
,
share
prices
dropped
sharply
by
1.7
%
in
early
Monday
morning
trading
.

After
the
initial
slide
,
the
market
appeared
to
be
turning
around
but
by
early
afternoon
was
headed
lower
.

In
the
Bush
administration
,
the
lead
is
being
taken
by
Treasury
Secretary
Brady
,
Undersecretary
Robert
Glauber
and
Assistant
Secretary
Mullins
.

The
three
men
worked
together
on
the
so-called
Brady
Commission
,
headed
by
Mr.
Brady
,
which
was
established
after
the
1987
crash
to
examine
the
market
's
collapse
.

As
a
result
they
have
extensive
knowledge
in
financial
markets
,
and
financial
market
crises
.

Mr.
Brady
was
at
the
White
House
Friday
afternoon
when
the
stock
market
's
decline
began
.

He
was
quickly
on
the
phone
with
Mr.
Mullins
,
who
in
turn
was
talking
with
the
chairmen
of
the
New
York
and
Chicago
exchanges
.

Later
,
Mr.
Brady
phoned
Mr.
Greenspan
,
SEC
Chairman
Richard
Breeden
and
numerous
contacts
in
New
York
and
overseas
.

Aides
say
he
continued
to
work
the
phones
through
the
weekend
.

Administration
officials
say
President
Bush
was
briefed
throughout
Friday
afternoon
and
evening
,
even
after
leaving
for
Camp
David
.

He
had
frequent
telephone
consultations
with
Mr.
Brady
and
Michael
Boskin
,
chairman
of
the
counsel
of
economic
advisers
.

Government
officials
tried
throughout
the
weekend
to
render
a
business-as-usual
appearance
in
order
to
avoid
any
sense
of
panic
.

Treasury
Undersecretary
David
Mulford
,
for
instance
,
was
at
a
meeting
of
the
Business
Council
in
Hot
Springs
,
Va.
,
when
the
stock
market
fell
,
and
remained
there
through
the
following
day
.

And
as
of
last
night
,
Fed
Chairman
Greenspan
had
n't
canceled
his
plans
to
address
the
American
Bankers
Association
convention
in
Washington
at
10
a.m.
this
morning
.

Ironically
,
Mr.
Greenspan
was
scheduled
to
address
the
same
convention
in
Dallas
on
Oct.
20
,
1987
.

He
flew
to
Dallas
on
Oct.
19
,
when
the
market
plummeted
508
points
,
but
then
turned
around
the
next
morning
and
returned
to
Washington
without
delivering
his
speech
.

Following
is
a
weekly
listing
of
unadited
net
asset
values
of
publicly
traded
investment
fund
shares
,
reported
by
the
companies
as
of
Friday
's
close
.

Also
shown
is
the
closing
listed
market
price
or
a
dealer-to-dealer
asked
price
of
each
fund
's
shares
,
with
the
percentage
of
difference
.

b
-
As
of
Thursday
's
close
.

c
-
Translated
at
Commercial
Rand
exchange
rate
.

e
-
In
Canadian
dollars
.

f
-
As
of
Wednesday
's
close
.

g
-
10.06.89
NAV:22.15
.

z
-
Not
available
.

Put
down
that
phone
.

Walk
around
the
room
;
take
two
deep
breaths
.

Resist
the
urge
to
call
your
broker
and
sell
all
your
stocks
.

That
's
the
advice
of
most
investment
professionals
after
Friday
's
190-point
drop
in
the
Dow
Jones
Industrial
Average
.

No
one
can
say
for
sure
what
will
happen
today
.

And
investment
pros
are
divided
on
whether
stocks
will
perform
well
or
badly
in
the
next
six
months
.

But
they
're
nearly
unanimous
on
one
point
:
Do
n't
sell
into
a
panic
.

Investors
who
sold
everything
after
the
crash
of
1987
lived
to
regret
it
.

Even
after
Friday
's
plunge
,
the
Dow
Jones
Industrial
Average
was
48
%
above
where
it
landed
on
Oct.
19
two
years
ago
.

Panic
selling
also
was
unwise
during
other
big
declines
in
the
past
.

The
crash
of
1929
was
followed
by
a
substantial
recovery
before
the
great
Depression
and
awful
bear
market
of
the
1930s
began
.

The
``
October
massacres
''
of
1978
and
1979
were
scary
,
but
did
n't
lead
to
severe
or
sustained
downturns
.

Indeed
,
some
pros
see
Friday
's
plunge
,
plus
any
further
damage
that
might
occur
early
this
week
,
as
a
chance
for
bargain
hunting
.

``
There
has
been
a
lot
of
emotional
selling
that
presents
a
nice
buying
opportunity
if
you
've
got
the
cash
,
''
says
Stephen
B.
Timbers
,
chief
investment
officer
of
Chicago-based
Kemper
Financial
Services
Inc
.

But
most
advisers
think
the
immediate
course
for
individual
investors
should
be
to
stand
pat
.

``
When
you
see
a
runaway
train
,
''
says
Steve
Janachowski
,
partner
in
the
San
Francisco
investment
advisory
firm
Brouwer
&
Janachowski
,
``
you
wait
for
the
train
to
stop
.
''

Even
for
people
who
expect
a
bear
market
in
coming
months
--
and
a
sizable
number
of
money
managers
and
market
pundits
do
--
the
advice
is
:
Wait
for
the
market
to
bounce
back
,
and
sell
shares
gradually
during
rallies
.

The
best
thing
individual
investors
can
do
is
``
just
sit
tight
,
''
says
Marshall
B.
Front
,
executive
vice
president
and
head
of
investment
counseling
at
Stein
Roe
&
Farnham
Inc.
,
a
Chicago-based
investment
counseling
firm
that
manages
about
$
18
billion
.

On
the
one
hand
,
Mr.
Front
says
,
it
would
be
misguided
to
sell
into
``
a
classic
panic
.
''

On
the
other
hand
,
it
's
not
necessarily
a
good
time
to
jump
in
and
buy
.

``
This
is
all
emotion
right
now
,
and
when
emotion
starts
to
run
,
it
can
run
further
than
anyone
anticipates
,
''
he
said
.

``
So
it
's
more
prudent
to
wait
and
see
how
things
stabilize
.
''

Roger
Ibbotson
,
professor
of
finance
at
Yale
University
and
head
of
the
market
information
firm
Ibbotson
Associates
Inc.
,
says
,
``
My
real
advice
would
be
to
just
ride
through
it
.

Generally
,
it
is
n't
wise
to
be
in
and
out
''
of
the
stock
market
.

Mr.
Ibbotson
thinks
that
this
week
is
``
going
to
be
a
roller-coaster
week
.
''

But
he
also
thinks
it
is
``
a
good
week
to
consider
buying
.
''

John
Snyder
,
former
president
of
the
Los
Angeles
chapter
of
the
National
Association
of
Investors
Corp.
,
an
organization
of
investment
clubs
and
individual
investors
,
says
his
fellow
club
members
did
n't
sell
in
the
crash
of
1987
,
and
see
no
reason
to
sell
now
.

``
We
're
dedicated
long-term
investors
,
not
traders
,
''
he
says
.

``
We
understand
panics
and
euphoria
.

And
we
hope
to
take
advantage
of
panics
and
buy
stocks
when
they
plunge
.
''

One
camp
of
investment
pros
sees
what
happened
Friday
as
an
opportunity
.

Over
the
next
days
and
weeks
,
they
say
,
investors
should
look
for
stocks
to
buy
.

Friday
's
action
``
was
an
old-fashioned
panic
,
''
says
Alfred
Goldman
,
director
of
technical
market
analysis
for
A.G.
Edwards
&
Sons
in
St.
Louis
.

``
Stocks
were
being
thrown
out
of
windows
at
any
price
.
''

His
advice
:
``
You
ought
to
be
there
with
a
basket
catching
them
.
''

James
Craig
,
portfolio
manager
for
the
Denver-based
Janus
Fund
,
which
has
one
of
the
industry
's
better
track
records
,
started
his
buying
during
Friday
's
plunge
.

Stocks
such
as
Hershey
Foods
Corp.
,
Wal-Mart
Stores
Inc.
,
American
International
Group
Inc.
and
Federal
National
Mortgage
Association
became
such
bargains
that
he
could
n't
resist
them
,
he
says
.

And
Mr.
Craig
expects
to
pick
up
more
shares
today
.

``
It
will
be
chaotic
at
first
,
but
I
would
not
be
buying
if
I
thought
we
were
headed
for
real
trouble
,
''
he
says
.

He
argues
that
stocks
are
reasonably
valued
now
,
and
that
interest
rates
are
lower
now
than
in
the
fall
of
1987
.

Mr.
Front
of
Stein
Roe
suggests
that
any
buying
should
``
concentrate
in
stocks
that
have
lagged
the
market
on
the
up
side
,
or
stocks
that
have
been
beaten
down
a
lot
more
than
the
market
in
this
correction
.
''

His
firm
favors
selected
computer
,
drug
and
pollution-control
stocks
.

Other
investment
pros
are
more
pessimistic
.

They
say
investors
should
sell
stocks
--
but
not
necessarily
right
away
.

Many
of
them
stress
that
the
selling
can
be
orderly
,
gradual
,
and
done
when
stock
prices
are
rallying
.

On
Thursday
,
William
Fleckenstein
,
a
Seattle
money
manager
,
used
futures
contracts
in
his
personal
account
to
place
a
bet
that
the
broad
market
averages
would
decline
.

He
thinks
the
underlying
inflation
rate
is
around
5
%
to
6
%
,
far
higher
than
most
people
suppose
.

In
the
pension
accounts
he
manages
,
Mr.
Fleckenstein
has
raised
cash
positions
and
invested
in
gold
and
natural
gas
stocks
,
partly
as
an
inflation
hedge
.

He
thinks
government
officials
are
terrified
to
let
a
recession
start
when
government
,
corporate
and
personal
debt
levels
are
so
high
.

So
he
thinks
the
government
will
err
on
the
side
of
rekindled
inflation
.

As
a
result
,
Mr.
Fleckenstein
says
,
``
I
think
the
ball
game
's
over
,
''
and
investors
are
about
to
face
a
bear
market
.

David
M.
Jones
,
vice
president
at
Aubrey
G.
Lanston
&
Co.
,
recommends
Treasury
securities
(
of
up
to
five
years
'
maturity
)
.

He
says
the
Oct.
6
employment
report
,
showing
slower
economic
growth
and
a
severe
weakening
in
the
manufacturing
sector
,
is
a
warning
sign
to
investors
.

One
strategy
for
investors
who
want
to
stay
in
but
hedge
their
bets
is
to
buy
``
put
''
options
,
either
on
the
individual
stocks
they
own
or
on
a
broad
market
index
.

A
put
option
gives
its
holder
the
right
(
but
not
the
obligation
)
to
sell
a
stock
(
or
stock
index
)
for
a
specified
price
(
the
strike
price
)
until
the
option
expires
.

Whether
this
insurance
is
worthwhile
depends
on
the
cost
of
an
option
.

The
cost
,
or
premium
,
tends
to
get
fat
in
times
of
crisis
.

Thus
,
buying
puts
after
a
big
market
slide
can
be
an
expensive
way
to
hedge
against
risk
.

The
prices
of
puts
generally
did
n't
soar
Friday
.

For
example
,
the
premium
as
a
percentage
of
the
stock
price
for
certain
puts
on
Eli
Lilly
&
Co.
moved
up
from
3
%
at
Thursday
's
close
to
only
3.3
%
at
Friday
's
close
,
even
though
the
shares
dropped
more
than
$
5.50
.

But
put-option
prices
may
zoom
when
trading
resumes
today
.

It
's
hard
to
generalize
about
a
reasonable
price
for
puts
.

But
investors
should
keep
in
mind
,
before
paying
too
much
,
that
the
average
annual
return
for
stock
holdings
,
long-term
,
is
9
%
to
10
%
a
year
;
a
return
of
15
%
is
considered
praiseworthy
.

Paying
,
say
,
10
%
for
insurance
against
losses
takes
a
deep
bite
out
of
the
return
.

James
A.
White
and
Tom
Herman
contributed
to
this
article
.

Coldwell
Banker
Commercial
Group
said
it
sold
$
47
million
of
common
stock
to
its
employees
at
$
10
a
share
,
giving
them
a
total
stake
of
more
than
40
%
in
the
commercial
real
estate
brokerage
firm
.

The
firm
,
which
was
acquired
in
April
from
Sears
,
Roebuck
&
Co.
in
a
management-led
buy-out
,
had
planned
to
sell
up
to
$
56.4
million
of
stock
,
or
a
50
%
stake
in
the
company
,
to
its
5,000
employees
.

Though
the
offering
did
n't
sell
out
,
James
J.
Didion
,
chairman
and
chief
executive
officer
,
said
,
``
We
're
pretty
proud
of
the
employees
'
response
.
''

He
noted
that
unlike
an
employee
stock
ownership
plan
,
where
a
company
usually
borrows
money
from
third
party
lenders
to
buy
stock
that
it
sets
aside
to
award
employees
over
time
,
here
employees
had
to
fork
out
their
own
cash
for
the
stock
.

``
They
came
up
with
their
own
money
instead
of
borrowed
money
,
''
Mr.
Didion
said
.

``
It
's
totally
different
.
''

He
said
the
offering
was
designed
to
create
long-term
incentives
for
employees
.

``
We
're
in
a
service
business
,
and
in
that
context
,
it
's
vital
to
have
your
employees
involved
in
the
ownership
so
they
have
a
stake
in
the
success
.
''

The
brokerage
firm
wo
n't
pay
a
dividend
on
the
stock
.

Employees
have
the
right
to
trade
stock
among
themselves
,
and
the
company
will
establish
an
internal
clearing
house
for
these
transactions
.

They
may
also
eventually
sell
the
shares
to
third
parties
,
but
the
outside
investors
who
own
the
remaining
60
%
of
Coldwell
Banker
have
the
right
to
first
refusal
.

Those
outside
investors
in
Coldwell
Banker
include
Carlyle
Group
,
a
closely
held
Washington
,
D.C.
,
merchant
banking
firm
whose
co-chairman
is
Frank
Carlucci
,
former
secretary
of
defense
;
Frederic
V.
Malek
,
senior
adviser
to
Carlyle
Group
;
Mellon
Family
Trust
of
Pittsburgh
;
Westinghouse
Credit
Corp.
,
the
financial
services
unit
of
Westinghouse
Electric
Corp.
;
Bankers
Trust
Co.
,
a
unit
of
Bankers
Trust
New
York
Corp.
;
and
a
group
of
Japanese
investors
represented
by
the
investment
banking
unit
of
Tokyo-based
Sumitomo
Bank
.

Bankers
Trust
and
Sumitomo
financed
the
$
300
million
acquisition
from
Sears
Roebuck
.

Coldwell
Banker
also
named
three
outside
director
nominees
for
its
17
member
board
.

The
nominees
are
Gary
Wilson
,
chief
financial
officer
of
Walt
Disney
Co.
;
James
Montgomery
,
chief
executive
officer
of
Great
Western
Financial
Corp.
;
and
Peter
Ubberroth
,
former
commissioner
of
baseball
and
now
a
private
investor
.

The
first
major
event
this
morning
in
U.S.
stock
and
futures
trading
may
be
a
pause
at
the
Chicago
Mercantile
Exchange
.

Under
a
reform
arising
from
the
1987
crash
,
trading
in
the
Merc
's
stock-index
futures
will
break
for
10
minutes
if
the
contract
opens
and
stays
five
points
from
Friday
's
close
,
a
move
equal
to
40
points
on
the
Dow
Jones
Industrial
Average
.

The
aim
of
the
interruption
would
be
to
ease
the
opening
of
the
New
York
Stock
Exchange
,
which
would
be
hammered
by
such
a
volatile
move
on
the
Merc
.

That
early-morning
breather
is
just
one
of
a
number
of
safeguards
adopted
after
the
1987
crash
.

The
Big
Board
also
added
computer
capacity
to
handle
huge
surges
in
trading
volume
.

Several
of
those
post-crash
changes
kicked
in
during
Friday
's
one-hour
collapse
and
worked
as
expected
,
even
though
they
did
n't
prevent
a
stunning
plunge
.

But
the
major
``
circuit
breakers
''
have
yet
to
be
evaluated
.

A
deeper
market
plunge
today
could
give
them
their
first
test
.

A
further
slide
also
would
resurrect
debate
over
a
host
of
other
,
more
sweeping
changes
proposed
--
but
not
implemented
--
after
the
last
crash
.

Most
notably
,
several
of
the
regulatory
steps
recommended
by
the
Brady
Task
Force
,
which
analyzed
the
1987
crash
,
would
be
revived
--
especially
because
that
group
's
chairman
is
now
the
Treasury
secretary
.

The
most
controversial
of
the
Brady
recommendations
involved
establishing
a
single
overarching
regulator
to
handle
crucial
cross-market
questions
,
such
as
setting
consistent
margin
requirements
for
the
stock
and
futures
markets
.

But
for
the
moment
,
attention
focuses
on
the
reforms
that
were
put
into
place
,
and
market
regulators
and
participants
said
the
circuit
breakers
worked
as
intended
.

Big
Board
and
Merc
officials
expressed
satisfaction
with
the
results
of
two
limits
imposed
on
of
the
Merc
's
Standard
&
Poor
's
500
contract
,
as
well
as
``
hot-line
''
communications
among
exchanges
.

Those
pauses
--
from
2:07
p.m.
to
2:30
p.m.
CDT
and
from
2:45
p.m.
until
the
close
of
trading
a
half-hour
later
--
forced
traders
to
buy
and
sell
contracts
at
prices
at
or
higher
than
their
frozen
levels
.

During
the
first
halt
,
after
the
S&P
index
had
fallen
12
points
,
the
Big
Board
's
``
Sidecar
''
computer
program
automatically
was
triggered
.

That
system
is
designed
to
separate
computer-generated
program
trades
from
all
other
trades
to
help
exchange
officials
resolve
order
imbalances
in
individual
stocks
.

One
Merc
broker
compared
the
action
in
the
S&P
pit
during
the
two
freezes
to
a
fire
at
a
well-drilled
school
.

``
You
do
n't
want
the
fire
but
you
know
what
to
do
,
''
said
Howard
Dubnow
,
an
independent
floor
broker
and
a
Merc
governor
.

``
There
was
no
panic
.

The
system
worked
the
way
we
devised
it
to
work
.
''

After
reopening
for
about
15
minutes
,
the
S&P
index
tumbled
to
its
30-point
limit
and
the
second
freeze
went
into
effect
.

Traders
then
spent
the
last
half-hour
``
watching
to
see
if
the
Dow
would
drop
250
points
,
''
Mr.
Dubnow
added
,
referring
to
the
level
at
which
the
stock
market
itself
would
have
closed
for
an
hour
.

One
observer
estimated
that
80
%
to
90
%
of
the
S&P
traders
``
were
just
standing
around
watching
.
''

But
the
250-point
circuit
breaker
never
had
to
kick
in
,
and
freezes
on
the
Chicago
Board
of
Trade
's
Major
Market
Index
also
were
n't
triggered
.

The
MMI
and
the
S&P
500
are
the
two
major
indexes
used
by
program
traders
to
run
their
computerized
trading
strategies
.

The
programs
are
considered
by
many
to
be
a
major
cause
of
the
1987
crash
.

The
process
of
post-crash
reforms
began
with
calls
to
remake
the
markets
and
wound
up
a
year
later
with
a
series
of
rather
technical
adjustments
.

In
October
1987
,
just
after
the
market
drop
,
Washington
was
awash
in
talk
of
sweeping
changes
in
the
way
the
financial
markets
are
structured
and
regulated
.

Over
the
next
year
that
grand
agenda
was
whittled
down
to
a
series
of
steps
to
soften
big
stock
drops
by
interrupting
trading
to
give
market
players
time
to
pause
and
reconsider
positions
.

In
addition
,
limits
were
placed
on
computer-driven
trading
,
and
steps
were
taken
to
better
link
the
stock
and
futures
markets
.

Few
changes
were
made
in
the
way
the
markets
are
regulated
.

At
the
outset
the
prime
target
was
program
trading
,
which
was
much
discussed
but
little
understood
on
Capitol
Hill
.

There
were
also
calls
to
strip
the
stock
markets
of
``
derivative
''
products
,
such
as
stock-index
futures
and
options
,
which
Federal
Judge
Stanley
Sporkin
,
for
example
,
likened
to
``
barnacles
attached
to
the
basic
market
.
''

And
there
was
much
criticism
of
the
New
York
Stock
Exchange
's
system
of
having
stock
trades
flow
through
specialists
,
or
market
makers
.

When
the
Brady
Task
Force
's
powerful
analysis
of
the
crash
was
released
in
January
1988
,
it
immediately
reshaped
the
reformers
'
agenda
.

Arguing
that
the
separate
financial
marketplaces
acted
as
one
,
and
concluding
that
the
crash
had
``
raised
the
possibility
of
a
full-scale
financial
system
breakdown
,
''
the
presidential
task
force
called
for
establishing
a
super-regulator
to
oversee
the
markets
,
to
make
margins
consistent
across
markets
,
to
unify
clearing
systems
and
to
install
circuit
breakers
.

Only
the
last
of
those
recommendations
ever
was
implemented
.

The
Reagan
White
House
held
the
Brady
recommendations
at
arm
's
length
and
named
a
second
panel
--
the
Working
Group
on
the
Financial
Markets
--
to
review
its
analysis
and
those
of
other
crash
studies
.

In
May
1988
,
the
Working
Group
,
made
up
of
representatives
from
the
Federal
Reserve
,
the
Treasury
,
the
Securities
and
Exchange
Commission
,
and
the
Commodity
Futures
Trading
Commission
,
finally
endorsed
only
circuit
breakers
.

After
several
more
months
of
arguments
among
various
stock
exchanges
and
futures
markets
,
circuit
breakers
were
set
in
place
,
with
the
most
notable
suspending
trading
after
250
and
400
point
drops
in
the
Dow
Jones
Industrial
Average
.

Privately
,
some
free
marketeers
dismissed
such
mechanisms
as
sops
to
interventionists
.

After
all
,
this
free-market
argument
went
,
the
Dow
only
dropped
more
than
250
points
once
this
century
.

``
Circuit
breakers
''
set
to
soften
big
drops
:

--
If
S&P
futures
fall
5
points
at
opening
,
contract
trading
pauses
for
10
minutes
.

--
If
Dow
Industrials
fall
25
points
at
opening
,
contract
trading
pauses
for
10
minutes
.

--
If
S&P
futures
fall
12
points
(
equivalent
to
about
100
points
on
DJIA
)
,
trading
is
frozen
for
half
hour
to
that
price
or
higher
.

On
NYSE
program
trades
are
diverted
into
a
separate
computer
file
to
determine
buy
and
sell
orders
.

--
If
S&P
futures
fall
30
points
,
trading
is
restricted
for
an
hour
to
that
price
or
higher
.

--
If
Dow
Industrials
fall
250
points
,
trading
on
the
Big
Board
halts
for
an
hour
.

S&P
and
MMI
contracts
also
halt
.

--
If
DJIA
drops
400
points
,
Big
Board
halts
trading
for
two
hours
.

Trading
in
MMI
and
S&P
futures
also
halted
.

Brady
Task
Force
recommendations
(
Jan.
1988
)
:

--
Establish
an
overarching
regulator
for
financial
markets

--
Unify
trade-clearing
systems

--
Make
margins
consistent
across
stock
and
futures
markets

SEC
proposals
(
May
1988
)
:

--
Require
prompt
reports
of
large
securities
trades
.

--
Give
SEC
authority
to
monitor
risk-taking
by
affiliates
of
brokerage
firms
.

--
Transfer
jurisdiction
over
stock-related
futures
to
SEC
from
CFTC
.

(
Opposed
by
new
SEC
chairman
)

--
Give
SEC
authority
to
halt
securities
trading
,
(
also
opposed
by
new
SEC
chairman
)
.

Congressional
proposal
:

--
Create
a
task
force
to
review
current
state
of
the
securities
markets
and
securities
laws
.

Breaking
the
Soviet
government
's
television
monopoly
,
an
independent
company
has
gained
rights
to
show
world
programming
,
including
American
films
.

``
There
must
not
be
a
monopoly
,
there
must
be
freedom
of
choice
for
both
journalists
and
viewers
,
''
Nikolai
I.
Lutsenko
,
the
president
of
the
Nika
TV
company
,
told
the
weekly
newspaper
Nedelya
.

The
company
is
already
working
on
its
own
programming
in
several
provincial
cities
and
hopes
to
be
on
the
air
regularly
in
about
a
year
,
the
newspaper
said
.

Mr.
Lutsenko
told
Nedelya
that
he
recently
had
been
to
the
U.S.
to
pick
up
the
rights
to
show
5,000
U.S.
films
in
the
Soviet
Union
.

Nedelya
's
article
was
accompanied
by
a
picture
of
Mr.
Lutsenko
interviewing
singer
John
Denver
in
Colorado
.

Even
though
it
will
be
independent
of
official
television
,
Nika
will
have
an
oversight
board
that
will
include
members
of
the
Communist
youth
league
.

South
Africa
's
National
Union
of
Mineworkers
said
that
about
10,000
diamond
miners
struck
for
higher
wages
at
De
Beers
Consolidated
Mines
Ltd.

De
Beers
said
that
workers
at
five
of
the
group
's
mines
were
on
strike
,
which
it
said
was
peaceful
,
with
orderly
picketing
occurring
at
one
of
the
mines
.

The
deadlock
in
negotiations
occurred
with
De
Beers
offering
a
17
%
increase
in
the
minimum-wage
category
while
the
union
demanded
a
37.6
%
increase
in
the
minimum
wage
.

Japan
's
opposition
Socialist
Party
denied
that
its
legislators
had
been
bribed
by
pinball-parlor
owners
.

The
allegation
had
been
raised
in
Parliament
by
the
governing
Liberal
Democratic
Party
following
magazine
reports
suggesting
that
money
from
Japanese-style
pinball
,
called
pachinko
,
had
infiltrated
politics
.

Tsuruo
Yamaguchi
,
secretary
general
of
the
Socialist
Party
,
acknowledged
that
nine
party
lawmakers
had
received
donations
from
the
pachinko
association
totaling
8
million
yen
(
about
$
55,000
)
but
said
the
donations
were
legal
and
none
of
its
members
acted
to
favor
the
industry
.

The
World
Wide
Fund
for
Nature
said
that
Spain
,
Argentina
,
Thailand
and
Indonesia
were
doing
too
little
to
prevent
illegal
trade
in
endangered
wildlife
across
their
borders
.

A
report
by
the
conservation
group
presented
at
the
U.N.-sponsored
Convention
on
International
Trade
in
Endangered
Species
in
Lausanne
accused
the
four
of
trading
protected
species
ranging
from
parakeets
to
orchids
.

Fund
official
Simon
Lyster
said
world
trade
in
wildlife
was
estimated
to
total
$
5
billion
of
business
annually
.

A
NATO
project
to
build
a
frigate
for
the
1990s
was
torpedoed
by
the
pull-out
of
three
of
its
eight
participating
nations
.

Britain
,
France
and
Italy
announced
technical
reasons
for
withdrawing
,
but
some
officials
pointed
to
growing
reluctance
among
the
allies
to
commit
themselves
to
big
defense
spending
while
East-West
disarmament
talks
show
signs
of
success
.

Small
wonder
that
Britain
's
Labor
Party
wants
credit
controls
.

A
few
hours
after
the
party
launched
its
own
affinity
credit
card
earlier
this
month
,
the
Tories
raised
the
nation
's
base
interest
rate
.

Labor
's
Visa
card
is
believed
to
be
the
first
linked
to
a
British
political
party
.

Labor
gets
25
pence
(
39
cents
)
for
every
100
(
about
$
155
)
that
a
user
charges
to
the
card
.

As
with
other
plastic
in
Britain
's
high-interest-rate
environment
,
the
Labor
card
,
administered
by
Co-operative
Bank
,
carries
a
stiff
(
in
this
case
,
29.8
%
)
annual
rate
on
the
unpaid
balance
.

China
's
year-long
austerity
program
has
achieved
some
successes
in
harnessing
runaway
economic
growth
and
stabilizing
prices
but
has
failed
to
eliminate
serious
defects
in
state
planning
and
an
alarming
drain
on
state
budgets
.

The
official
China
Daily
said
retail
prices
of
non-staple
foods
have
n't
risen
since
last
December
but
acknowledged
that
huge
government
subsidies
were
a
main
factor
in
keeping
prices
down
.

The
State
Statistical
Bureau
found
that
more
than
1
billion
yuan
(
$
270
million
)
was
spent
in
the
first
half
of
the
year
for
pork
subsidies
.

The
newspaper
quoted
experts
as
saying
the
subsidies
would
cause
the
difference
between
prices
and
real
values
of
commodities
to
``
become
very
unreasonable
''
and
reduce
needed
funds
for
investment
in
the
``
already
difficult
state
budget
.
''

The
aim
of
the
austerity
measures
was
to
slice
economic
growth
,
which
soared
to
20.7
%
last
year
,
to
8
%
in
1990
.

Economists
now
predict
the
growth
rate
will
be
about
11.5
%
for
the
year
.

In
a
sign
of
growing
official
tolerance
for
religion
,
Russian
Orthodox
priests
were
allowed
to
celebrate
the
400th
anniversary
of
the
Moscow
patriarchate
in
the
Kremlin
's
15th-century
Uspensky
Cathedral
,
where
czars
were
crowned
...
.

A
34-foot-tall
,
$
7.7
million
statue
of
Buddha
was
completed
on
a
hill
outside
Hong
Kong
,
facing
China
.

The
statue
is
the
brainchild
of
Sik
Chi
Wan
,
director
of
the
Po
Lin
Monastery
,
who
said
:
``
Hong
Kong
is
such
a
prosperous
place
,
we
also
need
some
kind
of
religious
symbol
.

It
all
seemed
innocent
enough
:
Last
April
,
one
Steven
B.
Iken
visited
Justin
Products
Inc.
here
,
identified
himself
as
a
potential
customer
and
got
the
word
on
the
little
company
's
new
cassette
players
for
children
.

``
It
is
almost
identical
to
the
Sony
product
,
''
Mr.
Iken
remarked
,
after
seeing
prototypes
and
pictures
.

Replied
a
Justin
salesman
:
``
Exactly
.
''

The
Justin
merchandise
carried
wholesale
prices
some
40
%
below
those
of
Sony
Corp.
of
Japan
's
``
My
First
Sony
''
line
.

The
visitor
waxed
enthusiastic
and
promised
to
return
.

But
instead
of
a
new
customer
--
part
of
a
hoped-for
bonanza
from
underselling
Sony
--
Justin
got
a
costly
legal
morass
.

Mr.
Iken
,
it
turned
out
,
was
a
private
detective
using
a
hidden
tape
recorder
to
gather
information
for
Sony
.

His
recording
later
turned
up
as
a
court
exhibit
.

Seeking
to
keep
Justin
's
``
My
Own
''
product
line
off
the
U.S.
market
,
Sony
last
May
filed
a
suit
in
Manhattan
federal
court
accusing
the
upstart
of
trademark
infringement
,
unfair
competition
and
other
violations
of
business
law
.

Since
then
,
life
has
changed
a
lot
for
61-year-old
Leonard
Kaye
,
Justin
's
owner
.

``
I
have
n't
been
able
to
get
a
decent
night
's
sleep
since
this
has
been
going
on
,
''
he
says
.

``
It
's
the
most
distracting
thing
in
my
life
--
I
ca
n't
even
attend
to
my
business
.
''

His
company
(
annual
sales
:
about
$
25
million
)
may
suffer
a
costly
blow
--
losing
an
estimated
10
%
of
total
sales
--
if
Sony
(
annual
sales
:
about
$
16
billion
)
prevails
.

Justin
's
plight
shows
what
can
happen
when
a
tiny
company
suddenly
faces
the
full
legal
might
of
a
wrathful
multinational
.

With
considerable
irony
,
the
case
also
shows
how
completely
Japan
has
turned
the
tables
on
U.S.
business
.

Americans
used
to
complain
bitterly
about
being
undersold
by
look-alike
products
from
Japan
.

Now
Sony
,
whose
innovative
,
premium-priced
products
are
among
the
most
admired
in
consumer
electronics
,
is
bitterly
complaining
about
a
little
U.S.
firm
with
a
cheap
look-alike
produced
in
China
.

``
The
gist
of
this
is
that
Justin
knocked
off
the
Sony
line
and
Sony
wants
to
stop
it
,
''
says
Lewis
H.
Eslinger
,
Sony
's
attorney
,
who
previously
guarded
Rubik
's
Cube
.

(
Sony
itself
declines
to
comment
.
)

If
Sony
wins
,
Mr.
Eslinger
says
,
its
little
rival
will
have
to
try
to
sell
the
products
overseas
.

At
worst
,
he
adds
,
``
They
'd
have
to
grind
them
all
up
and
throw
them
away
.
''

Mr.
Kaye
denies
the
suit
's
charges
and
says
his
only
mistake
was
taking
on
Sony
in
the
marketplace
.

``
I
made
a
similar
line
and
I
produced
it
cheaper
,
''
he
says
.

Today
,
U.S.
Judge
John
E.
Sprizzo
is
expected
to
rule
on
Sony
's
renewed
request
for
a
pre-trial
order
blocking
sale
of
the
disputed
products
,
on
which
deliveries
began
in
July
.

The
judge
turned
down
an
earlier
Sony
request
for
such
an
order
--
a
decision
upheld
on
appeal
--
but
Sony
returned
with
additional
evidence
and
arguments
.

Though
hoping
to
settle
the
case
,
Justin
vows
to
fight
on
,
if
necessary
.

But
the
battle
is
more
than
Justin
bargained
for
.

``
I
had
no
idea
I
was
getting
in
so
deep
,
''
says
Mr.
Kaye
,
who
founded
Justin
in
1982
.

Mr.
Kaye
had
sold
Capetronic
Inc.
,
a
Taiwan
electronics
maker
,
and
retired
,
only
to
find
he
was
bored
.

With
Justin
,
he
began
selling
toys
and
electronics
made
mostly
in
Hong
Kong
,
beginning
with
Mickey
Mouse
radios
.

The
company
has
grown
--
to
about
40
employees
,
from
four
initially
,
Mr.
Kaye
says
.

Justin
has
been
profitable
since
1986
,
adds
the
official
,
who
shares
his
office
with
numerous
teddy
bears
,
all
samples
from
his
line
of
plush
toys
.

Like
many
others
,
Mr.
Kaye
took
notice
in
1987
when
Sony
,
in
a
classic
example
of
market
segmentation
,
changed
the
plastic
skin
and
buttons
on
the
famous
Walkman
line
of
portable
audio
equipment
and
created
the
My
First
Sony
line
for
children
.

The
brightly
colored
new
products
looked
more
like
toys
than
the
adult
models
.

(
In
court
papers
,
Sony
says
it
has
spent
more
than
$
3
million
to
promote
the
line
,
with
resulting
sales
of
over
a
million
units
.
)

Sony
found
a
new
market
niche
,
but
Mr.
Kaye
figured
that
its
prices
left
plenty
of
room
for
a
lower-priced
competitor
.

His
products
are
n't
exact
copies
of
Sony
's
but
strongly
resemble
them
in
size
,
shape
and
,
especially
,
color
.

Sony
uses
mostly
red
and
blue
,
with
traces
of
yellow
--
and
so
does
Justin
,
on
the
theory
that
kids
prefer
these
colors
.

(
``
To
be
successful
,
a
product
can
be
any
color
whatsoever
,
as
long
as
it
is
fire-engine
red
,
''
says
Charles
E.
Baxley
,
Justin
's
attorney
.
)

By
last
winter
,
Justin
was
showing
prototypes
at
toy
fairs
in
Hong
Kong
and
New
York
--
and
Sony
noticed
.

Indeed
,
concerned
that
Sony
sales
personnel
were
threatening
legal
action
or
other
retaliation
--
such
as
withholding
desirable
Sony
products
--
against
Justin
's
customers
,
Mr.
Baxley
fired
off
a
letter
to
Sony
in
April
.

He
himself
threatened
to
take
the
matter
to
the
Federal
Trade
Commission
or
U.S.
Justice
Department
.

But
Justin
has
n't
pursued
those
charges
(
which
were
without
merit
,
according
to
Mr.
Eslinger
,
the
Sony
attorney
)
.

Recalls
Mr.
Baxley
:
``
Our
purpose
was
to
influence
them
to
leave
us
alone
.

We
never
intended
taking
on
Sony
--
we
do
n't
have
the
resources
.
''

Sony
answered
the
empty
threat
with
its
real
suit
.

Off
and
on
since
then
,
the
companies
have
skirmished
in
court
.

And
Justin
,
in
a
news
release
,
says
,
``
Once
competitive
,
Sony
now
resorts
to
strong-arm
tactics
in
American
courtrooms
to
carve
out
and
protect
niche
markets
.
''

Sony
's
lawyer
insists
that
the
company
's
tactics
--
including
the
use
of
a
private
detective
posing
as
a
buyer
--
are
routine
in
such
matters
.

He
also
insists
that
Sony
,
no
less
than
others
,
has
a
legal
right
to
protect
its
``
trade
dress
,
''
in
this
case
,
mostly
the
colors
that
it
claims
make
My
First
Sony
products
distinctive
.

(
Justin
claims
it
began
using
the
same
colors
on
electronic
goods
for
children
long
before
Sony
entered
the
children
's
market
.
)

Whatever
its
merits
,
Sony
's
aggressive
defense
is
debilitating
for
Justin
.

It
's
also
costly
.

Mr.
Kaye
says
he
has
paid
more
than
$
70,000
in
legal
fees
so
far
.

Of
Sony
,
Mr.
Kaye
says
:
``
They
know
there
's
no
way
for
them
to
lose
.

They
just
keep
digging
me
in
deeper
until
I
reach
the
point
where
I
give
up
and
go
away
.
''

For
now
,
though
,
he
vows
to
hang
in
.

@
Charles
H.
Tenney
II
,
chairman
of
Unitil
Corp.
,
purchased
34,602
shares
,
or
4.9
%
,
of
Unitil
's
common
,
according
to
a
filing
with
the
Securities
and
Exchange
Commission
.

The
stock
was
bought
on
Thursday
in
a
privately
negotiated
transaction
,
the
filing
said
.

As
previously
reported
,
Unitil
,
Exeter
,
N.H.
,
and
Fitchburg
Gas
&
Electric
Co.
,
Fitchburg
,
Mass.
,
are
targets
of
unsolicited
tender
offers
from
Boston-based
Eastern
Utilities
Associates
.

Eastern
Utilities
has
offered
$
40
a
share
for
Unitil
and
$
36
a
share
for
Fitchburg
Gas
and
has
extended
both
offers
to
Dec.
4
.

Both
companies
rejected
the
offers
.

Dresdner
Bank
AG
of
West
Germany
has
announced
a
friendly
tender
offer
for
control
of
Banque
Internationale
de
Placements
,
a
French
bank
whose
main
shareholder
is
France
's
Societe
Generale
,
the
Societe
de
Bourses
Francaises
said
.

The
tender
offer
by
West
Germany
's
second-biggest
commercial
bank
is
in
two
stages
.

Dresdner
is
offering
to
acquire
32.99
%
of
BIP
's
capital
for
1,015
francs
(
$
156.82
)
a
share
.

The
terms
of
the
offer
put
a
value
of
528
million
francs
(
$
81.6
million
)
on
the
32.99
%
shareholding
.

The
Societe
Generale
banking
group
controls
18.2
%
of
the
shareholding
,
while
Societe
Generale
de
Belgique
S.A.
owns
9.69
%
and
Financiere
Tradition
,
a
holding
company
,
owns
5.1
%
.

Mexican
investor
Joel
Rocha
Garza
said
he
sold
a
block
of
600,000
shares
of
Smith
Laboratories
Inc.
common
stock
to
companies
affiliated
with
him
.

In
a
filing
with
the
Securities
and
Exchange
Commission
,
Mr.
Rocha
Garza
said
Biscayne
Syndicate
Inc.
,
Lahus
II
Inc.
,
and
Lahus
III
Inc.
bought
the
600,000
shares
on
Oct.
11
for
$
1.4
million
,
or
$
2.375
a
share
.

Mr.
Rocha
Garza
said
that
he
,
Clarendon
Group
Ltd.
,
Biscayne
,
Lahus
II
,
and
Lahus
III
are
all
affiliated
and
hold
a
combined
stake
of
1,234,100
shares
,
or
9.33
%
.

Mr.
Rocha
Garza
has
said
he
wants
to
purchase
more
shares
.

In
San
Diego
,
Smith
Laboratories
President
Timothy
Wollaeger
said
the
transfer
of
the
shares
is
n't
significant
.

Investcorp
,
New
York
,
said
it
and
the
management
of
Sports
&
Recreation
Inc.
bought
the
operator
of
the
10-store
Sports
Unlimited
chain
for
some
$
40
million
.

The
investment
bank
becomes
majority
shareholder
in
Sports
&
Recreation
,
a
10-year-old
sporting
goods
retailer
,
said
Oliver
E.
Richardson
,
a
member
of
Investcorp
's
management
committee
and
a
director
of
the
chain
.

Sports
Unlimited
,
Tampa
,
Fla.
,
posted
revenue
of
$
59
million
for
the
year
ended
July
31
.

The
company
is
``
very
profitable
''
on
an
operating
basis
,
Mr.
Richardson
said
,
but
he
declined
to
specify
numbers
.

In
1982
,
Sports
&
Recreation
's
managers
and
certain
passive
investors
purchased
the
company
from
Brunswick
Corp.
of
Skokie
,
Ill
.

In
the
latest
transaction
,
management
bought
out
the
passive
investors
'
holding
,
Mr.
Richardson
said
.

Hammond
Co.
,
Newport
Beach
,
Calif.
,
said
Fidelity
National
Financial
Inc.
extended
its
previous
agreement
,
under
which
it
wo
n't
purchase
any
more
of
the
mortgage
banker
's
common
stock
,
through
Oct.
31
.

The
previous
agreement
expired
Thursday
.

Hammond
said
that
its
discussions
with
Fidelity
,
an
Irvine
,
Calif.
,
title-insurance
underwriter
,
are
continuing
,
but
that
prospects
for
a
longer-term
standstill
agreement
are
uncertain
.

Fidelity
has
increased
its
stake
in
Hammond
to
23.57
%
in
recent
months
.

Statements
made
in
Securities
and
Exchange
Commission
filings
led
Hammond
to
request
a
standstill
agreement
.

Giant
Group
Ltd.
said
it
terminated
negotiations
for
the
purchase
of
Aspen
Airways
,
a
Denver-based
regional
carrier
that
operates
the
United
Express
connector
service
under
contract
to
UAL
Corp.
's
United
Airlines
.

Giant
,
a
Beverly
Hills
,
Calif.
,
collection
of
companies
that
is
controlled
by
Hollywood
producer
Burt
Sugarman
,
did
n't
give
a
reason
for
halting
its
plan
to
acquire
the
airline
,
and
Aspen
officials
could
n't
be
reached
for
comment
.

Giant
agreed
last
month
to
purchase
the
carrier
.

Giant
has
n't
ever
disclosed
the
proposed
price
,
although
Avmark
Inc.
,
an
Arlington
,
Va.-based
aircraft
consulting
concern
,
has
valued
Aspen
's
fleet
at
about
$
46
million
.

The
airline
would
have
become
the
latest
in
a
peculiar
blend
of
Giant
companies
,
which
are
involved
in
making
cement
,
recycling
newsprint
and
operating
fast-food
restaurants
.

The
state-controlled
insurer
Assurances
Generales
de
France
said
it
has
obtained
regulatory
approval
to
increase
its
stake
in
the
financial
holding
company
Cie.
de
Navigation
Mixte
above
10
%
from
the
current
level
of
about
8
%
.

Friday
's
approval
was
needed
to
conform
with
Bourse
rules
regarding
companies
with
bank
interests
and
follows
a
similar
approval
given
Wednesday
to
Cie
.
Financiere
de
Paribas
.

Both
Paribas
and
AGF
have
been
increasing
their
stakes
in
Navigation
Mixte
recently
for
what
they
have
termed
``
investment
purposes
,
''
although
the
issue
has
been
surrounded
by
takeover
speculation
in
recent
weeks
.

AGF
did
n't
comment
officially
on
its
reasons
for
seeking
the
approval
,
but
people
close
to
the
group
said
it
was
done
to
make
sure
the
group
would
have
the
flexibility
to
increase
its
stake
in
the
future
,
should
interesting
price
opportunities
arise
.

An
AGF
official
did
specify
,
however
,
that
there
was
no
foundation
to
recent
rumors
the
group
might
be
acting
in
concert
with
Paribas
.

Lockheed
Aeronautical
Systems
Co.
,
a
unit
of
Lockheed
Corp.
,
said
it
agreed
to
join
with
Aermacchi
S.p
.
A.
of
Varese
,
Italy
,
to
propose
a
new
generation
of
jet
trainers
for
the
U.S.
Air
Force
.

The
Air
Force
is
looking
to
buy
540
new
primary
jet
trainers
,
with
a
total
value
of
$
1.5
billion
to
$
2
billion
,
between
1994
and
2004
.

The
aircraft
would
replace
the
T-37
,
made
by
the
Cessna
Aircraft
Co.
unit
of
General
Dynamics
Corp.
,
which
the
Air
Force
uses
to
train
jet
pilots
.

Lockheed
said
the
U.S.
Navy
may
also
buy
an
additional
340
trainer
aircraft
to
replace
its
T34C
trainers
made
by
the
Beech
Aircraft
Corp.
unit
of
Raytheon
Corp
.

Under
the
agreement
with
Lockheed
,
Aermacchi
will
license
Lockheed
to
build
the
Aermacchi
MB-339
jet
tandem-trainer
and
will
supply
certain
structures
.

Lockheed
will
build
additional
structures
and
perform
final
assembly
of
the
tandem-seat
trainer
at
its
Marietta
,
Ga.
,
plant
should
the
Air
Force
order
the
craft
.

A
Lockheed
spokesman
in
Burbank
,
Calif.
,
said
he
was
n't
aware
of
which
other
companies
would
be
competing
for
the
Air
Force
contract
.

Striking
auto
workers
ended
their
19-day
occupation
of
a
metal
shop
at
a
Peugeot
S.A.
factory
in
eastern
France
Friday
as
pay
talks
got
under
way
in
the
capital
.

But
the
Peugeot
breakthrough
came
as
a
nationwide
dispute
by
Finance
Ministry
employees
disrupted
border
checkpoints
and
threatened
the
government
's
ability
to
pay
its
bills
.

The
Peugeot
metalworkers
began
filing
out
of
the
shop
,
which
makes
auto
parts
,
at
the
plant
in
Mulhouse
after
voting
589
to
193
to
abandon
the
occupation
.

Their
withdrawal
was
based
on
promises
by
Peugeot
to
open
negotiations
in
Paris
at
the
same
time
the
last
man
left
the
premises
.

The
strike
by
customs
officers
,
tax
collectors
,
treasury
workers
and
other
civil
servants
attached
to
the
Ministry
of
Finance
may
pose
a
more
serious
challenge
to
the
government
and
the
average
Frenchman
.

Ministry
employees
complain
that
they
are
poorly
paid
because
of
a
complex
job-rating
system
they
say
fails
to
take
into
account
their
education
and
level
of
technical
expertise
.

The
market
for
$
200
billion
of
high-risk
junk
bonds
,
battered
by
a
succession
of
defaults
and
huge
price
declines
this
year
,
practically
vanished
Friday
.

Trading
ground
to
a
halt
as
investors
rushed
to
sell
bonds
,
only
to
find
themselves
deserted
by
potential
buyers
.

Stunned
,
they
watched
brokerage
houses
mark
down
price
quotations
on
their
junk
holdings
while
being
able
to
execute
very
few
actual
trades
.

``
The
junk
bond
market
is
in
a
state
of
gridlock
now
--
there
are
no
bids
,
only
offers
,
''
says
independent
investor
Martin
D.
Sass
,
who
manages
nearly
$
4
billion
and
who
recently
decided
to
buy
distressed
securities
for
a
new
fund
.

This
calamity
is
``
far
from
over
,
''
he
says
.

Junk
's
collapse
helped
stoke
the
panicky
selling
of
stocks
that
produced
the
deepest
one-day
dive
in
the
Dow
Jones
Industrial
Average
since
the
Oct.
19
,
1987
,
crash
.

Simultaneously
,
it
also
helped
trigger
this
year
's
biggest
rally
in
the
U.S.
government
bond
market
as
investors
rushed
to
move
capital
into
the
highest-quality
securities
they
could
find
.

But
``
an
eerie
silence
pervaded
''
the
junk
market
Friday
as
prices
tumbled
on
hundreds
of
high-yield
bonds
despite
``
no
active
trading
,
''
says
John
Lonski
,
an
economist
at
Moody
's
Investors
Service
Inc
.

For
example
,
the
price
of
Southland
Corp.
's
$
500
million
of
16
3\/4
%
bonds
due
2002
--
sold
less
than
two
years
ago
by
Goldman
,
Sachs
&
Co.
--
plummeted
25
%
to
just
30
cents
on
the
dollar
.

But
not
even
Goldman
would
make
a
market
in
the
securities
of
Southland
,
the
owner
of
the
nationwide
chain
of
7-11
convenience
stores
that
is
strapped
for
cash
.

Goldman
officials
declined
to
comment
.

Junk
bonds
,
which
mushroomed
from
less
than
$
2
billion
at
the
start
of
this
decade
,
have
been
declining
for
months
as
issuer
after
issuer
sank
beneath
the
weight
of
hefty
interest
payments
.

The
shaky
market
received
its
biggest
jolt
last
month
from
Campeau
Corp.
,
which
created
its
U.S.
retailing
empire
with
junk
financing
.

Campeau
developed
a
cash
squeeze
that
caused
it
to
be
tardy
on
some
interest
payments
and
to
put
its
prestigious
Bloomingdales
department-store
chain
up
for
sale
.

Now
,
dozens
of
corporations
,
including
Ethan
Allen
,
TW
Services
and
York
International
,
that
are
counting
on
at
least
$
7
billion
of
scheduled
new
junk
financings
to
keep
their
highly
leveraged
takeovers
and
buy-outs
afloat
,
may
never
get
the
money
.

``
The
music
has
stopped
playing
,
''
says
Michael
Harkins
,
a
principal
in
the
investment
firm
of
Levy
Harkins
.

``
You
've
either
got
a
chair
or
you
do
n't
.
''

In
Friday
's
aftermath
,
says
R.
Douglas
Carleton
,
a
director
of
high-yield
finance
at
First
Boston
Corp.
,
``
much
of
the
$
7
billion
forward
calendar
could
be
deferred
,
depending
on
the
hysteria
.
''

In
August
,
First
Boston
withdrew
a
$
475
million
junk
offering
of
Ohio
Mattress
bonds
because
potential
buyers
were
``
very
skittish
.
''

The
outlook
``
looks
shaky
because
we
're
still
waiting
''
for
mutual
funds
,
in
particular
,
to
dump
some
of
their
junk
bond
holdings
to
pay
off
redemptions
by
individual
investors
,
says
King
Penniman
,
senior
vice
president
at
McCarthy
,
Crisanti
&
Maffei
,
an
investment
arm
of
Xerox
Financial
Services
.

Indeed
,
a
Moody
's
index
that
tracks
the
net
asset
values
of
24
high-yield
mutual
funds
declined
for
the
17th
consecutive
day
Friday
.

In
a
stark
contrast
,
the
benchmark
30-year
Treasury
bond
climbed
more
than
2
1\/2
points
,
or
about
$
25
for
each
$
1,000
face
amount
,
to
103
12\/32
,
its
biggest
gain
of
the
year
.

The
bond
's
yield
dropped
to
7.82
%
,
the
lowest
since
March
31
,
1987
,
according
to
Technical
Data
Global
Markets
Group
.

The
yield
on
three-month
Treasury
bills
,
considered
the
safest
of
all
investments
,
plummeted
about
0.7
percentage
point
to
7.16
%
,
the
largest
one-day
decline
since
1982
.

The
main
catalyst
for
government
bond
market
rally
was
the
190.58-point
drop
in
the
Dow
Jones
Industrial
Average
.

``
When
you
get
panic
in
one
market
,
you
get
flight
to
quality
in
the
other
,
''
said
Maria
Ramirez
,
money
market
economist
at
Drexel
Burnham
Lambert
Inc
.

Nevertheless
,
the
problems
of
the
junk
market
could
prompt
the
Federal
Reserve
to
ease
credit
in
the
months
ahead
.

``
This
marks
a
significant
shift
in
the
interest
rate
outlook
,
''
says
William
Sullivan
,
director
of
money
market
research
at
Dean
Witter
Reynolds
Inc.
,
New
York
.

Any
sustained
credit-easing
could
be
a
lift
for
junk
bonds
as
well
as
other
securities
.

Robert
Dow
,
a
partner
and
portfolio
manager
at
Lord
,
Abbett
&
Co.
,
which
manages
$
4
billion
of
high-yield
bonds
,
says
he
does
n't
``
think
there
is
any
fundamental
economic
rationale
{
for
the
junk
bond
rout
}
.

It
was
herd
instinct
.
''

He
adds
:
``
The
junk
market
has
witnessed
some
trouble
and
now
some
people
think
that
if
the
equity
market
gets
creamed
that
means
the
economy
will
be
terrible
and
that
's
bad
for
junk
.

I
do
n't
believe
that
's
the
case
,
but
I
believe
that
people
are
running
scared
.

There
is
a
flight
to
quality
,
and
the
quality
is
not
in
equities
and
not
in
junk
--
it
's
in
Treasurys
.
''

Even
as
trading
in
high-yield
issues
dried
up
over
the
past
month
,
corporations
sold
more
than
$
2
billion
of
new
junk
bonds
.

For
example
,
a
recent
$
375
million
offering
of
Petrolane
Gas
Services
L.P.
bonds
sold
by
First
Boston
was
three
times
oversubscribed
.

A
$
550
million
offering
of
Turner
Broadcasting
System
Inc
.
high-yield
securities
sold
last
week
by
Drexel
was
increased
$
50
million
because
of
strong
demand
.

First
Boston
estimates
that
in
November
and
December
alone
,
junk
bond
investors
will
receive
$
4.8
billion
of
coupon
interest
payments
.

``
That
's
a
clear
indication
that
there
is
and
will
be
an
undercurrent
of
basic
business
going
on
,
''
says
Mr.
Carleton
of
First
Boston
.

``
I
do
n't
know
how
people
can
say
the
junk
bond
market
disappeared
when
there
were
$
1.5
billion
of
orders
for
$
550
million
of
junk
bonds
sold
last
week
by
Turner
,
''
says
Raymond
Minella
,
co-head
of
merchant
banking
at
Merrill
Lynch
&
Co
.

``
When
the
rally
comes
,
insurance
companies
will
be
leading
it
because
they
have
billions
to
invest
and
invest
they
will
.

There
is
plenty
of
money
available
from
people
who
want
to
buy
well-structured
deals
;
it
's
the
stuff
that
's
financed
on
a
shoestring
that
people
are
wary
of
.
''

But
such
highly
leveraged
transactions
seemed
to
have
multiplied
this
year
,
casting
a
pall
over
much
of
the
junk
market
.

Michael
McNamara
,
director
of
fixed-income
research
at
Kemper
Financial
Services
,
says
the
quality
of
junk
issues
has
been
getting
poorer
,
contributing
to
the
slide
in
prices
.

``
Last
year
we
probably
bought
one
out
of
every
three
new
deals
,
''
he
says
.

``
This
year
,
at
best
,
it
's
in
one
in
every
five
or
six
.

And
our
credit
standards
have
n't
changed
one
iota
.
''

However
,
Mr.
McNamara
said
the
slide
in
junk
is
creating
``
one
hell
of
a
buying
opportunity
''
for
selective
buyers
.

For
the
moment
,
investors
seem
more
preoccupied
with
the
``
bad
''
junk
than
the
``
good
''
junk
.

``
The
market
has
been
weak
since
''
the
announcement
of
the
Campeau
cash
squeeze
and
the
company
's
subsequent
bailout
by
Olympia
&
York
,
says
Mr.
Minella
of
Merrill
Lynch
.

``
That
really
affected
the
market
in
that
people
started
to
ask
`
What
else
is
in
trouble
?
'
''

Well
before
Campeau
,
though
,
there
were
signs
that
the
junk
market
was
stumbling
through
one
of
its
worst
years
ever
.

Despite
the
relatively
strong
economy
,
junk
bond
prices
did
nothing
except
go
down
,
hammered
by
a
seemingly
endless
trail
of
bad
news
:

--
In
June
,
two
months
before
it
would
default
on
interest
payments
covering
some
of
its
$
1.2
billion
of
speculative
debt
securities
,
New
York-based
Integrated
Resources
Inc.
said
it
ran
out
of
borrowed
money
.

--
In
July
,
Southmark
Corp.
,
the
Dallas-based
real
estate
and
financial
services
company
with
about
$
1.3
billion
of
junk
bonds
,
voluntarily
filed
for
protection
under
U.S.
bankruptcy
law
.

--
By
the
end
of
July
,
the
difference
in
yield
between
an
index
of
junk
bonds
and
seven-year
Treasury
notes
widened
to
more
than
5.5
percentage
points
.

--
In
August
,
Resorts
International
Inc.
,
which
sold
more
than
$
500
million
of
junk
bonds
,
suspended
interest
payments
.

--
In
September
,
just
as
the
cash
squeeze
hit
Campeau
,
Lomas
Financial
Corp.
defaulted
on
$
145
million
of
notes
and
appeared
unlikely
to
pay
interest
on
a
total
of
$
1.2
billion
of
debt
securities
.

Meantime
,
regulators
are
becoming
increasingly
worried
as
the
rush
to
leverage
shows
no
signs
of
abating
.

Moody
's
says
the
frequency
of
corporate
credit
downgrades
is
the
highest
this
year
since
1982
.

In
addition
,
there
are
six
times
as
many
troubled
banks
as
there
were
in
the
recession
of
1981
,
according
to
the
Federal
Deposit
Insurance
Corp
.

``
The
era
of
the
1980s
is
about
compound
interest
and
the
reaching
for
it
,
''
says
James
Grant
,
editor
of
Grant
's
Interest
Rate
Observer
,
an
early
critic
of
the
junk
bond
market
.

``
What
we
've
begun
to
see
is
the
damage
to
businesses
of
paying
exorbitant
compound
interest
.

Businesses
were
borrowing
at
interest
rates
higher
than
their
own
earnings
.

What
we
're
seeing
now
is
the
wrenching
readjustment
of
asset
values
to
a
future
when
speculative-grade
debt
will
be
hard
to
obtain
rather
than
easy
.
''

Friday
's
Market
Activity

Prices
of
Treasury
bonds
surged
in
the
biggest
rally
of
the
year
as
investors
fled
a
plummeting
stock
market
.

The
benchmark
30-year
Treasury
bond
was
quoted
6
p.m.
EDT
at
103
12\/32
,
compared
with
100
27\/32
Thursday
,
up
2
1\/2
points
.

The
yield
on
the
benchmark
fell
to
7.82
%
,
the
lowest
since
March
31
,
1987
,
according
to
Technical
Data
Global
Markets
Group
.

The
``
flight
to
quality
''
began
late
in
the
day
and
followed
a
precipitous
fall
in
the
stock
market
.

Treasurys
opened
lower
,
reacting
negatively
to
news
that
the
producer
price
index
--
a
measure
of
inflation
on
the
wholesale
level
--
accelerated
in
September
.

Bond
prices
barely
budged
until
midday
.

Many
bond
market
participants
will
be
closely
eying
the
action
of
the
Federal
Reserve
,
which
might
repeat
its
October
1987
injection
of
huge
amounts
of
liquidity
to
buoy
the
financial
markets
and
keep
the
economy
from
slowing
into
a
recession
.

Prices
of
municipals
,
investment-grade
corporates
and
mortgage-backed
bonds
also
rose
,
but
lagged
behind
their
Treasury
counterparts
.

Mortgage
securities
rose
in
hectic
trading
,
with
most
of
the
activity
concentrated
in
Government
National
Mortgage
Association
9
%
coupon
securities
,
the
most
liquid
mortgage
issue
.

The
Ginnie
Mae
November
9
%
issue
ended
at
98
25\/32
,
up
7\/8
point
on
the
day
,
to
yield
about
9.28
%
to
a
12-year
average
life
assumption
.

Investment-grade
corporate
bonds
were
up
about
1\/2
to
3\/4
point
.

But
the
yield
spread
between
lower-quality
,
investment-grade
issues
and
higher-quality
bonds
widened
.

And
the
yields
on
telephone
and
utility
issues
rose
relative
to
other
investment-grade
bonds
in
anticipation
of
this
week
's
$
3
billion
bond
offering
by
the
Tennessee
Valley
Authority
.

Despite
rumors
that
the
TVA
's
long-awaited
offering
would
be
postponed
because
of
the
debacle
in
the
equity
markets
,
sources
in
the
underwriting
syndicate
said
they
expect
the
issue
will
be
priced
as
scheduled
.

One
of
the
sources
said
the
smaller
portions
of
$
750
million
each
of
five-year
and
10-year
bonds
have
already
been
``
substantially
oversubscribed
.
''

Municipal
bonds
rose
as
much
as
3\/4
point
.

Roger
Lowenstein
contributed
to
this
article
.

Friday
's
190-point
plunge
in
stocks
does
not
come
atop
the
climate
of
anxiety
that
dominated
financial
markets
just
prior
to
their
1987
October
crash
,
and
mechanisms
have
been
put
in
place
to
keep
markets
more
orderly
.

Still
,
the
lesson
is
about
the
same
:
On
Friday
the
13th
,
the
market
was
spooked
by
Washington
.

The
consensus
along
the
street
seems
to
be
that
the
plunge
was
triggered
by
the
financing
problems
of
the
UAL
takeover
,
and
it
's
certainly
true
the
rout
began
immediately
after
the
UAL
trading
halt
.

Still
,
the
consensus
seems
almost
as
wide
that
one
faltering
bid
is
no
reason
to
write
down
the
value
of
all
U.S.
business
.

This
observation
leads
us
to
another
piece
of
news
moving
on
the
Dow
Jones
ticker
shortly
before
the
downturn
:
the
success
of
Senate
Democrats
in
stalling
the
capital
gains
tax
cut
.

The
real
value
of
all
shares
,
after
all
,
is
directly
impacted
by
the
tax
on
any
profits
(
all
the
more
so
given
the
limits
on
deductions
for
losses
that
show
gains
are
not
``
ordinary
income
''
)
.

And
market
expectations
clearly
have
been
raised
by
the
capital
gains
victory
in
the
House
last
month
.

An
hour
before
Friday
's
plunge
,
that
provision
was
stripped
from
the
tax
bill
,
leaving
it
with
$
5.4
billion
in
tax
increases
without
a
capital
gains
cut
.

There
is
a
great
deal
to
be
said
,
to
be
sure
,
for
stripping
the
garbage
out
of
the
reconciliation
bill
.

It
would
be
a
good
thing
if
Congress
started
to
decide
issues
one-by-one
on
their
individual
merits
without
trickery
.

For
one
thing
,
no
one
doubts
that
the
capital
gains
cut
would
pass
on
an
up-or-down
vote
.

Since
Senate
leaders
have
so
far
fogged
it
up
with
procedural
smokescreens
,
promises
of
a
cleaner
bill
are
suspect
.

Especially
so
since
President
Bush
has
been
weakened
by
the
Panama
fiasco
.

To
the
extent
that
the
UAL
troubles
contributed
to
the
plunge
,
they
are
another
instance
of
Washington
's
sticky
fingers
.

As
the
best
opportunities
for
corporate
restructurings
are
exhausted
of
course
,
at
some
point
the
market
will
start
to
reject
them
.

But
the
airlines
are
scarcely
a
clear
case
,
given
anti-takeover
mischief
by
Secretary
of
Transportation
Skinner
,
who
professes
to
believe
safety
will
be
compromised
if
KLM
and
British
Airways
own
interests
in
companies
that
fly
airplanes
.

Worse
,
Congress
has
started
to
jump
on
the
Skinner
bandwagon
.

James
Oberstar
,
the
Minnesota
Democrat
who
chairs
the
Public
Works
and
Transportation
Committee
's
aviation
subcommittee
,
has
put
an
anti-airline
takeover
bill
on
supersonic
speed
so
that
it
would
be
passed
in
time
to
affect
the
American
and
United
Air
Lines
bids
.

It
would
give
Mr.
Skinner
up
to
50
days
to
``
review
''
any
bid
for
15
%
or
more
of
the
voting
stock
of
any
U.S.
carrier
with
revenues
of
$
1
billion
or
more
.

So
the
UAL
deal
has
problems
,
and
the
market
loses
190
points
.

Congratulations
,
Mr.
Secretary
and
Mr.
Congressman
.

In
the
1987
crash
,
remember
,
the
market
was
shaken
by
a
Danny
Rostenkowski
proposal
to
tax
takeovers
out
of
existance
.

Even
more
important
,
in
our
view
,
was
the
Treasury
's
threat
to
thrash
the
dollar
.

The
Treasury
is
doing
the
same
thing
today
;
thankfully
,
the
dollar
is
not
under
1987-style
pressure
.

Also
,
traders
are
in
better
shape
today
than
in
1987
to
survive
selling
binges
.

They
are
better
capitalized
.

They
are
in
less
danger
of
losing
liquidity
simply
because
of
tape
lags
and
clearing
and
settlement
delays
.

The
Fed
promises
any
needed
liquidity
.

The
Big
Board
's
liaison
with
the
Chicago
Board
of
Trade
has
improved
;
it
will
be
interesting
to
learn
if
``
circuit
breakers
''
prove
to
be
a
good
idea
.

In
any
event
,
some
traders
see
stocks
as
underpriced
today
,
unlike
1987
.

There
is
nothing
wrong
with
the
market
that
ca
n't
be
cured
by
a
little
coherence
and
common
sense
in
Washington
.

But
on
the
bearish
side
,
that
may
be
too
much
to
expect
.

First
Chicago
Corp.
posted
a
third-quarter
loss
of
$
23.3
million
after
joining
other
big
banks
in
further
adding
to
its
reserves
for
losses
on
foreign
loans
.

The
parent
company
of
First
National
Bank
of
Chicago
,
with
$
48
billion
in
assets
,
said
it
set
aside
$
200
million
to
absorb
losses
on
loans
and
investments
in
financially
troubled
countries
.

The
addition
,
on
top
of
two
big
1987
additions
to
foreign-loan
reserves
,
brings
the
reserve
to
a
level
equaling
79
%
of
medium-term
and
long-term
loans
outstanding
to
troubled
nations
.

First
Chicago
since
1987
has
reduced
its
loans
to
such
nations
to
$
1.7
billion
from
$
3
billion
.

Despite
this
loss
,
First
Chicago
said
it
does
n't
need
to
sell
stock
to
raise
capital
.

During
the
quarter
,
the
company
realized
a
pretax
gain
of
$
60.4
million
from
the
sale
of
its
First
Chicago
Investment
Advisors
unit
.

Combined
foreign
exchange
and
bond
trading
profits
dipped
24
%
against
last
year
's
third
quarter
,
to
$
38.2
million
from
$
50.5
million
.

Gains
from
First
Chicago
's
venture
capital
unit
,
a
big
leveraged
buy-out
investor
,
rose
32
%
to
$
34
million
from
$
25.7
million
a
year
ago
.

Interest
income
and
most
fee
income
was
strong
.

Greece
's
second
bout
of
general
elections
this
year
is
slated
for
Nov.
5
.

For
those
hoping
to
see
a
modicum
of
political
normalcy
restored
--
in
view
of
Greece
's
eight-year
misadventure
under
autocratic
pseudosocialism
and
subsequent
three-month
hitch
with
a
conservative-communist
coalition
government
--
there
is
but
one
bright
sign
:
The
scandals
still
encircling
former
Prime
Minister
Andreas
Papandreou
and
his
fallen
socialist
government
are
like
flies
buzzing
around
a
rotting
carcass
.

In
the
mid-June
round
of
voting
,
Greeks
gave
no
clear
mandate
to
any
single
political
party
.

The
ad
interim
coalition
government
that
emerged
from
post-electoral
hagglings
was
,
in
essence
,
little
more
than
the
ill-conceived
offspring
of
ideological
miscegenation
:
On
one
side
,
the
center-right
New
Democracy
Party
,
headed
by
Constantine
Mitsotakis
.

On
the
other
,
the
so-called
Coalition
of
the
Left
and
Progress
--
a
quaint
and
rather
deceptive
title
for
a
merger
of
the
pro-Soviet
Communist
Party
of
Greece
and
its
Euro-Communist
cousin
,
the
Hellenic
Left
.

The
unifying
bond
for
this
left-right
mismatch
was
plain
:
PASOK
(
Mr.
Papandreou
's
party
)
as
common
political
enemy
.

The
ostensible
goal
was
a
mop-up
of
government
corruption
,
purportedly
at
all
levels
,
but
the
main
marks
were
Mr.
Papandreou
and
his
closest
associates
.

In
point
of
fact
,
this
catharsis
was
overdue
by
decades
.

When
reduced
to
buzzword
status
in
ex
parte
pledges
,
however
,
the
notion
transmogrified
into
a
promised
assault
,
with
targets
primarily
for
political
gains
,
not
justice
.

With
regard
to
Greece
's
long-bubbling
bank-looting
scandal
,
Mr.
Papandreou
's
principal
accuser
remains
George
Koskotas
,
former
owner
of
the
Bank
of
Crete
and
self-confessed
embezzler
,
now
residing
in
a
jail
cell
in
Salem
,
Mass.
,
from
where
he
is
fighting
extradition
proceedings
that
would
return
him
to
Greece
.

Mr.
Koskotas
's
credibility
is
,
at
best
,
problematic
.

He
has
ample
motive
to
shift
the
blame
,
and
his
testimony
has
also
been
found
less
than
forthright
on
numerous
points
.

Nevertheless
,
the
New
Democracy
and
Communist
parties
herald
his
assertions
as
proof
of
PASOK
complicity
.

Among
unanswered
questions
are
whether
Mr.
Papandreou
received
$
23
million
of
stolen
Bank
of
Crete
funds
and
an
additional
$
734,000
in
bribes
,
as
contended
;
whether
the
prime
minister
ordered
state
agencies
to
deposit
some
$
57
million
in
Mr.
Koskotas
's
bank
and
then
skim
off
the
interest
;
and
,
what
PASOK
's
cut
was
from
the
$
210
million
Mr.
Koskotas
pinched
.

Two
former
ministers
were
so
heavily
implicated
in
the
Koskotas
affair
that
PASOK
members
of
Parliament
voted
to
refer
them
to
the
special
court
.

But
eluding
parliamentary
probe
was
the
case
of
millions
of
drachmas
Mr.
Koskotas
funneled
into
New
Democracy
coffers
.

In
the
end
,
the
investigation
produced
only
circumstantial
evidence
and
``
indications
''
that
point
to
PASOK
,
not
clinching
proof
.

On
another
issue
,
Greeks
were
told
how
their
national
intelligence
agency
,
the
EYP
,
regularly
monitored
the
telephone
conversations
of
prominent
figures
,
including
key
opposition
politicians
,
journalists
and
PASOK
cabinet
members
.

Despite
convincing
arguments
,
it
was
never
established
that
Mr.
Papandreou
personally
ordered
or
directed
the
wiretaps
.

The
central
weakness
of
the
``
scandals
''
debates
was
pointed
up
especially
well
when
discussions
focused
on
arms
deals
and
kickbacks
.

The
coalition
government
tried
to
show
that
PASOK
ministers
had
received
hefty
sums
for
OKing
the
purchase
of
F-16
Fighting
Falcon
and
Mirage
2000
combat
aircraft
,
produced
by
the
U.S.based
General
Dynamics
Corp.
and
France
's
Avions
Marcel
Dassault
,
respectively
.

Naturally
,
neither
General
Dynamics
nor
Dassault
could
be
expected
to
hamper
its
prospective
future
dealings
by
making
disclosures
of
sums
paid
(
or
not
)
to
various
Greek
officials
for
services
rendered
.

So
it
seems
that
Mr.
Mitsotakis
and
his
communist
chums
may
have
unwittingly
served
Mr.
Papandreou
a
moral
victory
on
a
platter
:
PASOK
,
whether
guilty
or
not
,
can
now
traipse
the
countryside
condemning
the
whole
affair
as
a
witch
hunt
at
Mr.
Papandreou
's
expense
.

But
while
verbal
high
jinks
alone
wo
n't
help
PASOK
regain
power
,
Mr.
Papandreou
should
never
be
underestimated
.

First
came
his
predictable
fusillade
:
He
charged
the
Coalition
of
the
Left
and
Progress
had
sold
out
its
leftist
tenets
by
collaborating
in
a
right-wing
plot
aimed
at
ousting
PASOK
and
thwarting
the
course
of
socialism
in
Greece
.

Then
,
to
buttress
his
credibility
with
the
left
,
he
enticed
some
smaller
leftist
parties
to
stand
for
election
under
the
PASOK
banner
.

Next
,
he
continued
to
court
the
communists
--
many
of
whom
feel
betrayed
by
the
left-right
coalition
's
birth
--
by
bringing
into
PASOK
a
well-respected
Communist
Party
candidate
.

For
balance
,
and
in
hopes
of
gaining
some
disaffected
centrist
votes
,
he
managed
to
attract
a
former
New
Democracy
Party
representative
and
known
political
enemy
of
Mr.
Mitsotakis
.

Thus
PASOK
heads
for
the
polls
not
only
with
diminished
scandal-stench
,
but
also
with
``
seals
of
approval
''
from
representatives
of
its
harshest
accusers
.

Crucial
as
these
elections
are
for
Greece
,
pressing
issues
of
state
are
getting
lost
in
the
shuffle
.

The
country
's
future
NATO
participation
remains
unsure
,
for
instance
.

Greece
also
must
revamp
major
pieces
of
legislation
in
preparation
for
the
1992
targets
of
heightened
Common
Market
cooperation
.

Greece
's
bilateral
relations
with
the
U.S.
need
attention
soon
as
well
.

For
one
,
the
current
accord
concerning
U.S.
military
bases
in
Greece
lapses
in
May
1990
.

Negotiations
for
a
new
agreement
were
frozen
before
the
June
elections
,
but
the
clock
is
running
.

Another
matter
of
concern
is
the
extradition
of
Mohammed
Rashid
,
a
Palestinian
terrorist
who
is
wanted
in
the
U.S.
for
the
1982
bombing
of
a
Pan
American
Airways
flight
.

The
Greek
courts
have
decided
in
favor
of
extradition
in
the
Rashid
case
,
but
the
matter
awaits
final
approval
from
Greece
's
next
justice
minister
.

The
Greeks
seem
barely
aware
of
the
importance
of
the
case
as
a
litmus
test
of
whether
Greece
will
be
counted
in
or
out
for
international
efforts
to
combat
terrorism
.

That
PASOK
could
win
the
elections
outright
is
improbable
;
the
Greek
press
,
previously
eager
to
palm
off
PASOK
's
line
,
has
turned
on
Mr.
Papandreou
with
a
wild-eyed
vengeance
.

Yet
the
possibility
of
another
lash-up
government
is
all
too
real
.

If
Mr.
Papandreou
becomes
the
major
opposition
leader
,
he
could
hamstring
a
conservative-led
coalition
.

Also
,
he
could
force
new
elections
early
next
year
by
frustrating
the
procedures
for
the
election
of
the
president
of
the
republic
in
March
.

New
Democracy
has
once
again
glaringly
underestimated
the
opponent
and
linked
its
own
prospects
to
negative
reaction
against
PASOK
,
forgetting
to
tend
to
either
program
clarity
or
the
rectification
of
internal
squabbles
.

As
for
Mr.
Papandreou
?

He
's
not
exactly
sitting
pretty
at
this
stage
.

But
since
he
is
undoubtedly
one
of
the
most
proficient
bull
slingers
who
ever
raked
muck
,
it
seems
far
wiser
to
view
him
as
sidelined
,
but
certainly
not
yet
eliminated
.

Mr.
Carpenter
,
a
regional
correspondent
for
National
Review
,
has
lived
in
Athens
since
1981
.

U.S.
OFFICIALS
MOVED
to
head
off
any
repeat
of
Black
Monday
today
following
Friday
's
plunge
in
stock
prices
.

Fed
Chairman
Greenspan
signaled
that
the
central
bank
was
prepared
to
inject
massive
amounts
of
money
into
the
banking
system
to
prevent
a
financial
crisis
.

Other
U.S.
and
foreign
officials
also
mapped
out
plans
,
though
they
kept
their
moves
quiet
to
avoid
making
the
financial
markets
more
jittery
.

Friday
's
sell-off
was
triggered
by
the
collapse
of
UAL
's
buy-out
plan
and
a
big
rise
in
producer
prices
.

The
Dow
Jones
industrials
skidded
190.58
,
to
2569.26
.

The
junk
bond
market
came
to
a
standstill
,
while
Treasury
bonds
soared
and
the
dollar
fell
.

Japanese
stocks
dropped
early
Monday
,
but
by
late
morning
were
turning
around
.

The
dollar
was
trading
sharply
lower
in
Tokyo
.

Prospects
for
a
new
UAL
buy-out
proposal
appear
bleak
.

Many
banks
refused
to
back
the
$
6.79
billion
transaction
,
but
bankers
said
it
was
not
from
any
unwillingness
to
finance
takeovers
.

The
decision
was
based
solely
on
problems
with
the
UAL
management-pilot
plan
,
they
said
.

The
surge
in
producer
prices
in
September
followed
three
months
of
declines
,
but
analysts
were
divided
on
whether
the
0.9
%
jump
signaled
a
severe
worsening
of
inflation
.

Also
,
retail
sales
grew
0.5
%
last
month
.

A
capital-gains
tax
cut
was
removed
from
the
Senate
's
deficit
reduction
bill
,
but
proponents
still
hope
to
enact
the
cut
this
year
.

Bush
wo
n't
press
for
a
capital-gains
provision
in
the
final
deficit
bill
when
House-Senate
conferees
meet
later
this
week
.

General
Motors
signaled
that
up
to
five
North
American
assembly
plants
may
close
by
the
mid-1990s
as
it
tries
to
cut
excess
capacity
.

U.S.
car
and
truck
sales
fell
12.6
%
in
early
October
,
the
first
sales
period
of
the
1990-model
year
,
dragged
down
by
a
sharp
decline
in
GM
sales
.

Warner
and
Sony
are
entangled
in
a
legal
battle
over
movie
producers
Peter
Gruber
and
Jon
Peters
.

The
fight
could
set
back
Sony
's
plans
to
enter
the
U.S.
movie
business
.

Hooker
's
U.S.
unit
received
a
$
409
million
bid
for
most
of
its
real-estate
and
shopping-center
assets
from
an
investor
group
.

The
offer
does
n't
include
Bonwit
Teller
or
B.
Altman
.

The
Boeing
strike
is
starting
to
affect
airlines
.

America
West
said
Friday
it
will
postpone
its
new
service
out
of
Houston
because
of
delays
in
receiving
aircraft
from
Boeing
.

Saatchi
&
Saatchi
would
launch
a
management
buy-out
if
a
hostile
suitor
emerged
,
an
official
said
.

British
Aerospace
and
France
's
Thomson-CSF
are
nearing
a
pact
to
merge
guided-missile
divisions
.

New
U.S.
steel-import
quotas
will
give
a
bigger
share
to
developing
nations
that
have
relatively
unsubsidized
steel
industries
.

Japan
's
steel
quota
will
be
cut
significantly
.

Four
ailing
S&Ls
were
sold
off
by
government
regulators
,
but
low
bids
prevented
the
sale
of
a
fifth
.

Markets
--

Stocks
:
Volume
251,170,000
shares
.

Dow
Jones
industrials
2569.26
,
off
190.58
;
transportation
1406.29
,
off
78.06
;
utilities
211.96
,
off
7.29
.

Bonds
:
Shearson
Lehman
Hutton
Treasury
index
3421.29
,
up

Commodities
:
Dow
Jones
futures
index
129.87
,
up
0.01
;
spot
index
129.25
,
up
0.28
.

Dollar
:
142.10
yen
,
off
2.07
;
1.8740
marks
,
off
0.0343
.

A
federal
appeals
court
in
San
Francisco
ruled
that
shareholders
ca
n't
hold
corporate
officials
liable
for
false
sales
projections
on
new
products
if
the
news
media
concurrently
revealed
substantial
information
about
the
product
's
flaws
.

The
ruling
stems
from
a
1984
suit
filed
by
shareholders
of
Apple
Computer
Inc.
,
claiming
that
company
officials
misled
investors
about
the
expected
success
of
the
Lisa
computer
,
introduced
in
1983
.

Lawyers
specializing
in
shareholder
suits
said
they
are
concerned
that
use
of
the
``
press
defense
''
by
corporations
may
become
popular
as
a
result
of
the
ruling
.

According
to
the
suit
,
Apple
officials
created
public
excitement
by
touting
Lisa
as
an
office
computer
that
would
revolutionize
the
workplace
and
be
extremely
successful
in
its
first
year
.

The
plaintiffs
also
alleged
that
prior
to
the
fanfare
,
the
company
circulated
internal
memos
indicating
problems
with
Lisa
.

The
suit
claimed
Apple
's
stock
climbed
to
a
high
of
$
63.50
a
share
on
the
basis
of
the
company
's
optimistic
forecasts
.

But
when
the
company
revealed
Lisa
's
poor
sales
late
in
1983
,
the
stock
plummeted
to
a
low
of
$
17.37
a
share
,
according
to
the
suit
.

The
shareholders
claimed
more
than
$
150
million
in
losses
.

In
1987
,
the
San
Francisco
district
court
dismissed
the
case
largely
because
newspaper
reports
had
sufficiently
counterbalanced
the
company
's
statements
by
alerting
consumers
to
Lisa
's
problems
.

Late
last
month
,
the
appeals
court
agreed
that
most
of
the
case
should
be
dismissed
.

However
,
it
gave
the
shareholders
the
right
to
pursue
a
small
portion
of
their
claim
that
pertains
to
Lisa
's
disk
drive
,
known
as
Twiggy
.

The
court
ruled
that
the
news
media
did
n't
reveal
Twiggy
's
problems
at
the
time
.

Lawyers
are
worried
about
the
ruling
's
implication
in
other
shareholder
suits
but
pointed
out
that
the
court
stressed
that
the
ruling
should
be
regarded
as
very
specific
to
the
Apple
case
.

``
The
court
was
careful
to
say
that
the
adverse
information
appeared
in
the
very
same
articles
and
received
the
same
attention
as
the
company
's
statements
,
''
said
Patrick
Grannon
,
a
Los
Angeles
lawyer
at
the
firm
of
Greenfield
&
Chimicles
,
which
was
n't
involved
in
the
case
.

``
The
court
is
saying
that
the
adverse
facts
have
to
be
transferred
to
the
market
with
equal
intensity
and
credibility
as
the
statements
of
corporate
insiders
.
''

Shareholders
'
attorneys
at
the
New
York
firm
of
Milberg
,
Weiss
,
Bershad
,
Specthrie
&
Lerach
last
week
petitioned
for
a
rehearing
of
the
case
.

They
wrote
:
``
The
opinion
establishes
a
new
rule
of
immunity
--
that
if
a
wide
variety
of
opinions
on
a
company
's
business
are
publicly
reported
,
the
company
can
say
anything
without
fear
of
securities
liability
.
''

NFL
ORDERED
to
pay
$
5.5
million
in
legal
fees
to
defunct

The
National
Football
League
is
considering
appealing
the
ruling
stemming
from
the
U.S.
Football
League
's
largely
unsuccessful
antitrust
suit
against
the
NFL
.

A
jury
in
1986
agreed
with
the
USFL
's
claims
that
the
NFL
monopolized
major
league
football
.

But
the
jury
awarded
the
USFL
only
$
1
in
damages
,
trebled
because
of
the
antitrust
claims
.

Last
week
,
the
U.S.
Court
of
Appeals
in
New
York
upheld
a
$
5.5
million
award
of
attorneys
fees
to
the
defunct
league
.

Harvey
D.
Myerson
,
of
Myerson
&
Kuhn
,
then
of
Finley
,
Kumble
,
Wagner
,
Heine
,
Underberg
,
Manley
,
Myerson
&
Casey
,
was
the
lead
trial
lawyer
,
and
his
new
firm
pursued
the
application
appeal
.

Douglas
R.
Pappas
of
Myerson
&
Kuhn
says
about
$
5.3
million
of
the
award
goes
directly
to
the
USFL
to
reimburse
it
for
fees
already
paid
.

Myerson
&
Kuhn
will
get
about
$
260,000
for
the
costs
of
pressing
the
application
.

The
federal
appeals
court
held
that
the
nominal
damages
and
the
failure
to
prove
all
claims
did
n't
exclude
the
USFL
from
being
reimbursed
.

Antitrust
laws
provide
that
injured
parties
may
be
reimbursed
for
lawyers
'
fees
.

But
Shepard
Goldfein
,
an
attorney
for
the
NFL
,
says
his
client
will
consider
asking
for
another
hearing
or
appealing
to
the
U.S.
Supreme
Court
.

Mr.
Goldfein
,
of
Skadden
,
Arps
,
Slate
,
Meagher
&
Flom
in
New
York
,
says
the
ruling
is
wrong
and
the
fee
award
is
excessive
because
the
USFL
lost
its
major
claims
,
including
its
contention
that
the
NFL
restrained
trade
through
television
contracts
.

``
The
USFL
was
not
the
prevailing
party
,
''
Mr.
Goldfein
insists
.

HOUSTON-CALGARY
ALLIANCE
:

Fulbright
&
Jaworski
of
Houston
and
Fenerty
,
Robertson
,
Fraser
&
Hatch
of
Calgary
,
Alberta
,
are
affiliating
to
help
serve
their
energy-industry
clients
.

The
affiliation
is
believed
to
be
the
first
such
cross-border
arrangement
among
major
law
firms
.

The
firms
are
n't
required
to
refer
work
exclusively
to
each
other
and
remain
separate
organizations
.

But
they
will
work
together
on
energy
-
,
environmental
-
and
fair-trade-related
issues
and
conduct
seminars
on
topics
of
mutual
interest
,
said
Gibson
Gayle
Jr.
of
585-lawyer
Fulbright
&
Jaworski
.

In
addition
,
Fulbright
&
Jaworski
's
Washington
,
D.C.
,
office
will
play
a
key
role
as
the
firms
work
together
on
regulatory
issues
,
particularly
natural-gas
exports
,
for
their
clients
.

The
arrangement
,
reached
after
about
eight
months
of
negotiations
,
grew
out
of
80-lawyer
Fenerty
Robertson
's
desire
to
develop
ties
with
a
U.S.
firm
in
light
of
relaxed
trade
barriers
between
the
U.S.
and
Canada
,
said
Francis
M.
Saville
of
Fenerty
Robertson
.

IN
WHAT
MAY
SIGNAL
a
turnaround
for
asbestos
manufacturers
,
W.R.
Grace
&
Co.
won
a
3
1\/2-week
trial
in
Pittsburgh
over
whether
it
should
be
required
to
remove
asbestos
fireproofing
from
a
local
high
school
.

Mount
Lebanon
High
School
,
near
Pittsburgh
,
sought
$
21
million
in
compensatory
damages
from
Grace
,
arguing
that
the
asbestos
,
which
can
cause
respiratory
diseases
and
lung
cancer
,
posed
a
risk
to
students
.

Grace
successfully
contended
that
removing
the
fire
retardant
would
pose
a
greater
health
risk
than
leaving
it
alone
.

A
spokesman
for
the
company
said
the
verdict
is
thought
to
be
the
first
in
favor
of
an
asbestos
manufacturer
where
the
plaintiff
was
a
school
and
the
asbestos
in
question
was
used
for
fireproofing
.

FCC
COUNSEL
JOINS
FIRM
:

Diane
S.
Killory
will
join
500-lawyer
Morrison
&
Foerster
as
a
partner
in
its
Washington
,
D.C.
,
office
in
mid-November
.

She
will
help
develop
the
mass-media
practice
of
the
San
Francisco-based
firm
's
communications
group
.

Ms.
Killory
,
35
years
old
,
resigned
as
Federal
Communications
Commission
general
counsel
early
this
month
after
nearly
three
years
in
that
post
.

She
was
the
first
woman
to
be
appointed
FCC
general
counsel
.

RICHARD
P.
MAGURNO
,
formerly
Eastern
Airlines
'
top
lawyer
,
joined
the
New
York
law
firm
of
Lord
Day
&
Lord
,
Barrett
Smith
as
a
partner
.

Mr.
Magurno
,
45
,
spent
17
years
at
the
Miami
airline
unit
of
Houston-based
Texas
Air
Corp.
and
was
named
general
counsel
in
1984
.

He
left
the
company
in
1987
.

Mr.
Magurno
said
he
will
split
his
time
between
the
200-lawyer
firm
's
offices
in
Washington
,
D.C.
,
and
New
York
,
with
specialties
in
aviation
and
labor
law
.

Apple
Computer
Inc.
said
it
will
offer
cash
rebates
on
several
of
its
machines
from
Oct.
14
to
Dec.
31.
,
as
part
of
a
holiday-season
sales
promotion
.

Apple
will
offer
a
$
150
rebate
on
its
Apple
IIGS
with
any
Apple
Monitor
and
disk
drive
;
$
200
on
the
basic
Macintosh
Plus
central
processing
unit
;
$
250
on
the
Macintosh
SE
central
processing
unit
;
$
250
on
the
Macintosh
SE\/30
cpu
,
and
$
300
on
a
Macintosh
IIcx
with
any
Apple
video
card
and
Apple
monitor
.

The
rebates
,
as
a
percentage
of
the
retail
cost
of
the
cpu
of
each
system
,
amount
to
6
%
to
13
%
.

The
company
is
also
offering
a
free
trial
of
its
computers
to
consumers
who
qualify
for
its
credit
cards
or
leases
.

Matsushita
Electric
Industrial
Co.
of
Japan
and
Siemens
AG
of
West
Germany
announced
they
have
completed
a
100
million-mark
(
$
52.2
million
)
joint
venture
to
produce
electronics
parts
.

In
the
venture
's
first
fiscal
year
,
Siemens
will
hold
74.9
%
of
the
venture
and
a
Matsushita
subsidiary
,
Matsushita
Electronic
Components
Co.
,
25.1
%
.

A
basic
agreement
between
the
two
companies
was
announced
in
June
.

The
new
company
is
to
be
called
Siemens
Matsushita
Components
G.m.b
.
H
.

It
will
have
its
headquarters
in
Munich
.

Matsushita
's
share
in
the
venture
will
rise
to
35
%
Oct.
1
,
1990
,
and
to
50
%
the
following
Oct.
1
.

Siemens
will
retain
majority
voting
rights
.

The
parent
companies
forecast
sales
for
the
venture
of
around
750
million
marks
for
its
first
fiscal
year
,
Matsushita
said
.

Sales
are
expected
to
rise
to
one
billion
marks
after
four
years
.

The
company
will
have
production
facilities
in
West
Germany
,
Austria
,
France
and
Spain
.

Roger
Rosenblatt
,
editor
of
U.S.
News
&
World
Report
,
resigned
Friday
from
the
weekly
news
magazine
.

Mr.
Rosenblatt
said
he
resigned
because
of
difficulties
with
commuting
between
his
home
in
New
York
and
the
magazine
's
editorial
offices
in
Washington
.

``
Frankly
,
I
missed
my
family
,
''
said
Mr.
Rosenblatt
.

In
Mr.
Rosenblatt
's
tenure
,
the
magazine
's
advertising
pages
and
circulation
have
grown
significantly
.

But
at
2.3
million
weekly
paid
circulation
,
U.S.
News
still
ranks
third
behind
Time
Warner
Inc.
's
Time
magazine
,
with
4.4
million
circulation
,
and
Washington
Post
Co.
's
Newsweek
,
with
3.3
million
circulation
.

Mortimer
B.
Zuckerman
,
chairman
and
editor
in
chief
,
said
Mr.
Rosenblatt
would
be
succeeded
starting
today
by
Michael
Ruby
,
the
magazine
's
executive
editor
,
and
Merrill
McLoughlin
,
a
senior
writer
.

Mr.
Ruby
and
Ms.
McLoughlin
are
married
to
each
other
.

Mr.
Zuckerman
said
his
magazine
would
maintain
its
editorial
format
,
which
is
a
mix
of
analysis
and
trend
stories
with
service-oriented
,
how-to
articles
.

Mr.
Rosenblatt
,
a
senior
writer
at
Time
magazine
before
joining
U.S.
News
&
World
Report
,
said
he
had
numerous
job
offers
from
other
magazines
while
he
was
editor
.

The
offers
were
to
work
as
a
writer
,
not
an
editor
.

He
said
he
will
now
consider
those
offers
.

Avions
Marcel
Dassault-Breguet
Aviation
S.A.
said
group
profit
before
taxes
and
contributions
to
employee
profit-sharing
soared
97
%
to
839
million
francs
(
$
129.6
million
)
in
the
first
half
of
1989
from
425
million
francs
a
year
earlier
.

The
French
aircraft
group
pointed
out
,
however
,
that
financial
results
from
its
sector
of
industry
are
frequently
erratic
because
of
irregular
cash
flow
from
large
contracts
.

It
noted
,
for
example
,
that
group
revenue
for
the
first
half
was
8.734
billion
francs
,
down
about
12
%
from
9.934
billion
francs
a
year
earlier
.

Still
,
it
said
it
expects
sales
for
all
of
1989
to
be
on
the
order
of
20
billion
francs
,
reflecting
anticipated
billings
for
two
large
contracts
in
the
second
half
of
the
year
.

For
all
of
1988
,
Dassault
had
group
profit
of
428
million
francs
on
revenue
of
18.819
billion
francs
.

The
group
has
n't
yet
released
earnings
figures
for
the
first
half
of
1989
,
nor
has
it
made
a
detailed
forecast
of
its
full-year
earnings
.

Keystone
Consolidated
Industries
Inc.
expects
to
report
earnings
before
extraordinary
tax
benefits
of
about
$
1.5
million
,
or
about
41
cents
a
share
,
for
the
third
quarter
,
compared
with
a
loss
last
year
,
said
Glenn
R.
Simmons
,
chairman
and
chief
executive
officer
.

After
a
tax
benefit
of
about
$
780,000
,
Keystone
expects
to
report
net
income
of
$
2.3
million
,
or
about
62
cents
a
share
,
Mr.
Simmons
said
.

For
third
quarter
last
year
,
Keystone
reported
a
$
1
million
loss
from
continuing
operations
and
a
$
200,000
loss
from
discontinued
operations
,
for
a
net
loss
of
$
1.2
million
.

Revenue
for
the
latest
third
quarter
was
about
$
70.5
million
,
up
10
%
from
$
63.6
million
last
year
,
he
said
.

Mr.
Simmons
said
the
results
signal
a
turnaround
for
the
maker
of
wire
and
wire
products
,
which
has
struggled
to
remain
competitive
in
the
face
of
lower-priced
,
imported
steel
.

A
new
$
46
million
steel
rod
minimill
,
which
got
off
to
a
rocky
start
in
early
1988
,
now
is
running
efficiently
and
a
new
management
team
is
more
heavily
marketing
Keystone
's
products
,
Mr.
Simmons
said
.

As
a
result
,
the
company
hopes
to
report
net
income
for
the
year
of
about
$
11.6
million
,
or
about
$
3.10
to
$
3.15
a
share
,
compared
with
a
net
loss
of
$
24.4
million
last
year
,
after
a
loss
from
discontinued
operations
of
$
18.4
million
.

Revenue
for
1989
is
expected
to
be
about
$
300
million
,
up
about
21
%
from
$
247.3
million
in
1988
.

For
the
nine
months
ended
Sept.
30
,
Keystone
expects
to
report
net
income
of
$
9.3
milion
,
or
about
$
2.53
a
share
,
after
an
extraordinary
gain
from
$
3.2
million
in
tax
benefits
.

Last
year
,
the
company
had
a
net
loss
of
$
6.5
million
,
including
a
$
6.1
million
loss
from
continuing
operations
and
a
$
400,000
loss
from
discontinued
operations
.

Revenue
for
the
nine
months
is
expected
to
be
about
$
230.5
million
,
up
about
21
%
from
$
190.4
million
last
year
.

Mr.
Simmons
said
Keystone
's
new
mill
is
expected
to
produce
about
585,000
tons
of
steel
rods
this
year
,
up
from
413,000
tons
in
1988
.

Production
at
the
mill
has
exceeded
the
ability
of
Keystone
's
casting
operation
to
supply
it
,
he
said
,
which
will
force
Keystone
to
purchase
billet
,
or
unfinished
steel
bars
,
from
outside
the
company
during
the
fourth
quarter
and
next
year
.

Keystone
will
have
to
consider
expanding
its
casting
operation
,
at
an
estimated
cost
of
$
8
million
to
$
10
million
,
within
the
next
18
to
24
months
,
Mr.
Simmons
said
.

Under
Robert
W.
Singer
,
who
was
named
president
and
chief
operating
officer
last
year
,
Keystone
has
expanded
its
sales
force
to
about
20
people
from
about
15
and
hopes
to
expand
its
sales
from
the
middle
portion
of
the
country
toward
the
East
and
West
coasts
.

``
Prior
to
a
year
ago
,
Keystone
was
an
order-taker
.

Now
I
think
we
have
a
group
of
marketing
people
who
are
out
selling
to
retailers
and
wholesalers
,
''
Mr.
Simmons
said
.

Still
,
he
said
,
the
100-year-old
company
plans
to
continue
its
premium-priced
strategy
for
its
distinctive
brand
of
red-tipped
wire
fencing
and
other
products
.

The
company
claims
a
40
%
share
of
the
U.S.
field
fence
business
,
a
35
%
share
of
poultry
netting
sales
and
a
30
%
share
of
barbed
wire
sales
.

Freeport-McMoRan
Inc.
said
a
temporary
cessation
of
operations
at
its
Sunshine
Bridge
uranium-recovery
facility
in
Donaldsonville
,
La.
,
will
result
in
slight
earnings
improvement
to
both
the
company
and
its
Freeport-McMoRan
Resource
Partners
Limited
Partnership
unit
.

The
company
did
n't
elaborate
.

The
diversified
energy
and
minerals
concern
said
that
a
depressed
uranium
market
is
responsible
for
the
temporary
mothballing
of
the
plant
,
but
that
the
plant
can
be
reactivated
quickly
when
the
market
improves
.

More
than
400,000
pounds
of
uranium
a
year
have
been
produced
at
the
facility
during
the
past
seven
years
.

A
second
uranium-recovery
plant
at
Uncle
Sam
,
La.
,
that
produces
more
than
700,000
pounds
of
uranium
annually
,
will
continue
to
operate
.

Freeport-McMoRan
said
the
shutdown
wo
n't
affect
sales
volumes
under
long-term
sales
contracts
of
its
Freeport
Uranium
Recovery
Co.
unit
,
but
will
reduce
the
amount
of
product
sold
on
the
spot
market
.

Freeport-McMoRan
Resource
Partners
,
as
owner
of
the
uranium-recovery
technology
,
receives
royalty
payments
.

Business
Week
subscribers
may
hear
this
week
's
issue
talking
back
to
them
.

A
four-page
ad
from
Texas
Instruments
Inc.
,
running
in
approximately
140,000
issues
of
the
Oct.
20
``
Corporate
Elite
''
issue
of
the
McGraw-Hill
Inc.
publication
,
contains
a
speech
synthesizer
laminated
between
two
of
the
pages
.

Readers
who
pull
off
a
piece
of
tape
and
press
a
switch
will
hear
a
tiny
--
but
distinctly
human-sounding
--
voice
announce
,
``
I
am
the
talking
chip
,
''
as
it
launches
into
a
15-second
discourse
on
its
own
attributes
.

The
talking
chip
is
n't
cheap
--
the
per-ad
cost
to
Texas
Instruments
is
about
$
4
,
and
that
's
without
adding
in
Business
Week
's
charge
--
but
Texas
Instruments
believes
it
is
a
first
.

Previous
efforts
have
included
musical
ads
,
featuring
simple
tone-generating
chips
that
play
a
tune
,
but
the
voice
synthesizer
in
this
effort
is
much
more
sophisticated
,
with
none
of
the
robotic
flatness
that
one
hears
,
for
example
,
when
calling
telephone
directory
services
.

And
for
those
who
miss
the
message
the
first
time
around
,
not
to
worry
:
Three
tiny
batteries
provide
enough
juice
for
as
many
as
650
replays
.

Lomas
Financial
Corp.
,
Dallas
,
said
it
will
ask
a
U.S.
bankruptcy
court
to
allow
it
to
hire
Lazard
Freres
&
Co.
to
help
it
sell
its
leasing
unit
.

Lomas
,
assisted
by
Merrill
Lynch
Capital
Markets
,
has
been
trying
to
sell
its
Equitable
Lomas
Leasing
Co.
for
several
months
,
apparently
without
success
.

The
real
estate
and
mortgage
banking
concern
had
hoped
to
use
proceeds
from
the
sale
to
reduce
its
debt
.

Without
cash
from
asset
sales
and
unable
to
reach
a
new
bank-credit
agreement
,
Lomas
defaulted
on
$
145
million
in
notes
that
became
due
Sept.
1
.

It
filed
for
protection
from
creditors
under
Chapter
11
of
the
federal
Bankruptcy
Code
Sept.
24
to
give
it
additional
time
to
work
on
a
plan
to
restructure
its
$
1.45
billion
in
senior
debt
.

Lomas
said
Merrill
Lynch
,
which
owns
bonds
and
equity
in
Lomas
,
could
n't
continue
as
Lomas
's
investment
banker
because
it
is
also
a
creditor
.

It
said
it
chose
Lazard
in
part
because
of
Lazard
's
offices
in
Europe
and
Japan
,
where
investors
might
be
interested
in
a
U.S.
leasing
company
.

Canadian
Imperial
Bank
of
Commerce
said
it
will
increase
its
loan-loss
provisions
to
cover
all
its
loans
to
lesser
developed
countries
,
except
Mexico
,
resulting
in
an
after-tax
charge
to
1989
earnings
of
300
million
Canadian
dollars
(
US$
255
million
)
.

Don
Bowder
,
senior
vice
president
and
chief
accountant
,
said
the
bank
's
strong
earnings
enable
it
to
be
the
first
major
Canadian
bank
to
set
aside
provisions
covering
all
its
C$
1.17
billion
in
non-Mexican
LDC
debt
.

``
It
eliminates
the
continuing
uncertainty
with
respect
to
the
ultimate
value
of
the
loans
,
''
he
said
.

The
bank
said
about
C$
525
million
will
be
added
to
its
existing
LDC
and
general
loss
provisions
in
its
fourth
quarter
,
ending
Oct.
31
.

Mr.
Bowder
said
the
C$
300
million
charge
to
earnings
would
amount
to
about
C$
1.34
a
share
.

The
bank
's
net
income
for
the
nine
months
ended
July
31
was
C$
577
million
,
or
C$
3.10
a
share
.

Mr.
Bowder
said
the
bank
will
restructure
its
C$
604
million
of
Mexican
debt
,
of
which
C$
255
million
is
in
Mexican
notes
secured
by
U.S.
government
bonds
.

The
bank
has
a
45
%
reserve
against
the
remaining
C$
349
million
of
Mexican
debt
and
expects
to
swap
that
for
other
Mexican
notes
supported
by
U.S.
Treasury
zero-coupon
bonds
.

Mr.
Bowder
said
the
bank
's
experience
with
LDC
debt
has
been
``
painful
''
and
this
latest
move
represents
the
final
phase
of
a
program
begun
seven
years
ago
to
reduce
its
exposure
through
provisioning
,
debt
sales
and
debt
swaps
.

He
said
the
bank
will
no
longer
participate
in
LDC
sovereign
lending
,
but
will
support
trade
financing
and
other
transactions
that
meet
the
bank
's
standards
.

The
carnage
among
takeover
stocks
Friday
does
n't
mean
the
end
of
mega-mergers
but
simply
marks
the
start
of
a
less
ambitious
game
,
Wall
Street
's
big-time
deal
makers
say
.

Suitors
from
now
on
are
more
likely
to
be
expansion-minded
companies
,
rather
than
raiders
or
debt-happy
financiers
.

And
they
will
be
launching
lower-priced
and
perhaps
fewer
deals
,
now
that
it
's
tougher
to
finance
them
.

This
is
an
ominous
sign
for
a
stock
market
that
lately
has
been
fueled
by
takeover
speculation
and
bidding
wars
for
companies
that
put
themselves
up
for
sale
.

Whenever
the
1980s
merger
boom
seems
to
be
stalling
,
shock
waves
ripple
through
the
stock
market
.

``
The
market
is
overvalued
,
not
cheap
,
''
says
Alan
Gaines
of
the
New
York
money-management
firm
Gaines
Berland
.

He
recently
began
increasing
his
cash
position
to
45
%
of
his
portfolio
.

``
I
look
at
where
deals
can
get
done
,
''
he
says
,
``
and
they
're
not
getting
done
''
at
current
prices
.

Lenders
are
growing
increasingly
nervous
about
debt-financed
takeovers
,
investment
bankers
say
.

``
You
had
a
week
of
a
deteriorating
junk-bond
market
that
ran
smack
into
the
news
on
Friday
about
what
appeared
to
be
happening
to
the
bank
debt
market
,
''
says
Steven
Rattner
,
a
partner
and
merger
specialist
with
Lazard
Freres
&
Co
.

Trading
dried
up
Friday
in
the
market
for
high-yield
junk
bonds
,
often
used
to
finance
takeovers
.

It
was
the
latest
in
a
series
of
setbacks
for
the
junk
bond
market
,
where
prices
began
weakening
last
month
after
Campeau
hit
a
cash
crunch
.

And
banks
appear
to
be
taking
an
increasingly
skeptical
view
of
requests
for
high-risk
takeover
loans
.

The
group
trying
to
buy
UAL
announced
Friday
that
it
could
n't
arrange
the
$
7.2
billion
in
bank
loans
it
needs
to
buy
the
parent
of
United
Airlines
for
$
300
a
share
.

Takeover-stock
traders
today
will
be
scrambling
to
learn
of
any
UAL
developments
,
and
other
takeover
stocks
are
likely
to
trade
in
sympathy
.

Investment
bankers
representing
the
buy-out
group
and
UAL
's
board
spent
a
frantic
weekend
trying
to
hammer
out
new
terms
that
would
be
more
acceptable
to
the
banks
.

After
UAL
,
the
stock
viewed
as
most
vulnerable
is
American
Airlines
'
parent
AMR
,
the
target
of
a
$
120-a-share
takeover
proposal
from
New
York
real
estate
developer
Donald
Trump
.

Trading
in
AMR
shares
was
suspended
shortly
after
3
p.m.
EDT
Friday
and
did
n't
resume
.

Before
the
halt
,
AMR
last
traded
at
98
5\/8
.

Late
Friday
night
,
the
London
office
of
Jefferies
&
Co.
,
a
Los
Angeles
securities
firm
,
traded
AMR
shares
at
prices
as
low
as
80
.

Similarly
,
Delta
Air
Lines
and
USAir
Group
dropped
10.1
%
and
8.5
%
,
respectively
,
on
Friday
and
could
weaken
further
.

Over
the
weeked
,
however
,
two
developments
in
other
deals
indicated
that
commerical
banks
and
Wall
Street
firms
still
are
willing
to
commit
billions
of
dollars
to
finance
takeover
bids
launched
by
major
companies
.

Vitro
S.A.
,
a
major
Mexican
glass
maker
,
said
yesterday
that
it
agreed
to
buy
Anchor
Glass
Container
in
a
tender
offer
for
$
21.25
a
share
,
sweetened
from
the
original
$
20-a-share
offer
Vitro
launched
two
months
ago
.

On
Friday
,
Anchor
shares
fell
1
1\/4
to
close
at
18
1\/2
.

For
the
broader
market
,
the
greatest
significance
of
the
Vitro-Anchor
deal
may
be
that
it
was
put
together
late
Friday
night
--
after
the
market
rout
--
and
involves
a
$
155
million
temporary
``
bridge
''
loan
from
Donaldson
,
Lufkin
&
Jenrette
Securities
and
a
$
139
million
loan
from
Security
Pacific
National
Bank
.

Moreover
,
to
complete
the
entire
Anchor
Glass
purchase
and
refinance
existing
debt
,
Donaldson
said
it
is
``
highly
confident
''
that
it
will
be
able
to
sell
$
400
million
of
junk
bonds
for
Vitro
,
despite
the
current
disarray
in
the
junk
bond
market
.

Donaldson
's
statement
is
n't
merely
an
idle
boast
,
because
those
bonds
will
have
to
be
sold
before
Donaldson
's
bridge
loan
can
be
paid
back
.

Security
Pacific
,
meanwhile
,
said
it
expects
to
arrange
$
430
million
in
bank
loans
for
Vitro
.

In
another
takeover
battle
,
a
spokesman
for
McCaw
Cellular
Communications
said
yesterday
that
McCaw
has
been
advised
by
three
commercial
banks
that
they
remain
``
highly
confident
''
they
can
arrange
$
4.5
billion
of
bank
loans
for
McCaw
's
tender
offer
for
about
45
%
of
LIN
Broadcasting
,
``
notwithstanding
recent
events
.
''

McCaw
is
offering
$
125
a
share
for
22
million
LIN
shares
,
thereby
challenging
LIN
's
proposal
to
spin
off
its
television
properties
,
pay
shareholders
a
$
20-a-share
special
dividend
and
combine
its
cellular-telephone
operations
with
BellSouth
's
cellular
business
.

On
Friday
,
LIN
shares
were
among
the
few
takeover
issues
that
did
n't
fall
much
,
dropping
5
1\/2
,
or
4.9
%
,
to
close
at
107
1\/2
.

Traders
and
investment
bankers
said
LIN
shares
were
n't
hurt
much
because
BellSouth
is
viewed
as
a
well-financed
corporate
buyer
unlikely
to
be
affected
by
skittishness
among
bankers
or
bond
buyers
.

Investment
bankers
interviewed
over
the
weekend
see
a
silver
lining
for
the
merger
business
in
the
stock-market
drop
.

Potential
bidders
for
companies
``
were
saying
that
things
were
beginning
to
look
expensive
,
''
says
Mr.
Rattner
of
Lazard
.

``
Nothing
makes
things
look
cheaper
than
a
200-point
drop
in
the
Dow
,
''
Mr.
Rattner
says
.

``
Just
as
there
are
people
waiting
to
become
bargain
hunters
in
the
stock
market
,
there
are
people
waiting
to
become
bargain
hunters
in
the
deal
market
.
''

Investment
bankers
expect
most
of
those
bargain
hunters
to
be
well-heeled
corporations
.

``
In
the
past
,
corporate
buyers
were
often
discouraged
from
making
bids
because
of
competition
from
LBO
firms
,
which
were
often
prepared
to
outbid
''
the
corporations
,
says
J.
Tomilson
Hill
,
head
of
mergers
and
acquisitions
at
Shearson
Lehman
Hutton
.

Now
,
``
corporate
buyers
should
be
willing
to
re-enter
the
acquisition
market
because
the
competition
from
junkbond-financed
buyers
has
been
reduced
.
''

Many
takeover
stocks
plunged
Friday
,
as
speculators
retained
their
confidence
in
corporate
buyers
but
fled
from
the
socalled
whisper
stocks
,
the
targets
of
rumored
deals
.

Columbia
Pictures
Entertainment
,
which
has
agreed
to
a
friendly
$
27-a-share
bid
from
Sony
of
Japan
,
fell
only
1\/8
to
close
at
26
5\/8
.

But
several
stocks
long
rumored
to
be
ripe
for
a
takeover
or
restructuring
fell
10
%
or
more
.

They
include
USX
,
down
11.7
%
;
Upjohn
,
down
11.1
%
;
Campbell
Soup
,
down
11
%
;
Paramount
Communications
,
off
10.3
%
;
Woolworth
,
down
10.2
%
;
Delta
Air
Lines
,
down
10.1
%
,
and
MCA
,
down
9.7
%
.

The
market
--
and
investment
bankers
--
are
even
less
sanguine
about
companies
that
have
had
at
least
one
bid
,
merger
agreement
or
restructuring
plan
fall
through
already
.

Given
the
weakness
in
both
the
junk
bond
market
and
the
stock
market
,
traders
fear
that
these
transactions
may
be
revised
yet
again
.

Examples
include
Kollmorgen
,
whose
agreement
to
be
acquired
for
$
25
a
share
by
Vernitron
collapsed
last
month
.

Kollmorgen
shares
fell
nearly
20
%
on
Friday
to
close
at
12
7\/8
.

Ramada
,
which
first
delayed
and
then
shelved
a
$
400
million
junk
bond
sale
that
was
designed
to
help
finance
a
restructuring
,
fell
15.6
%
to
close
at
9
1\/2
.

Ramada
has
said
it
hopes
to
propose
a
new
restructuring
plan
but
has
n't
indicated
when
it
will
do
so
.

Shares
of
American
Medical
International
,
which
agreed
last
week
to
accept
a
lower
price
from
a
buy-out
group
that
includes
First
Boston
Corp.
and
the
Pritzker
family
of
Chicago
,
fell
15.8
%
on
Friday
to
close
at
20
.

The
buy-out
group
is
offering
$
26.50
a
share
for
63
million
American
Medical
shares
,
down
from
its
offer
in
July
of
$
28
a
share
for
68.8
million
shares
.

But
investment
bankers
say
the
market
may
have
oversold
some
takeover-related
stocks
.

Hilton
Hotels
,
for
example
,
was
among
the
worst-hit
issues
,
falling
20.2
%
to
close
at
85
,
down
21
1\/2
on
Friday
.

Hilton
currently
is
soliciting
bids
for
a
sale
of
part
or
all
of
its
hotel
and
casino
businesses
.

People
familiar
with
Hilton
said
over
the
weekend
that
the
depth
of
the
sell-off
in
Hilton
shares
was
unwarranted
because
none
of
the
likely
buyers
would
be
dependent
on
junk-bond
financing
.

However
,
they
conceded
that
some
potential
bidders
would
rely
on
bank
loans
and
would
be
hurt
if
the
troubles
of
the
UAL
buy-out
group
signified
a
general
unwillingness
among
banks
to
provide
credit
for
debt-financed
takeovers
.

Hilton
officials
said
they
were
n't
worried
about
the
drop
in
the
company
's
stock
.

William
Lebo
,
Hilton
's
general
counsel
,
said
plans
to
consider
a
sale
of
the
company
or
some
of
its
assets
are
``
on
track
''
for
what
has
been
described
previously
as
``
a
slow
and
deliberate
process
.
''

``
I
ca
n't
believe
that
any
potential
buyer
for
Hilton
would
be
affected
by
one
day
's
trading
,
''
Mr.
Lebo
said
.

But
the
stock
market
as
a
whole
,
bolstered
as
it
is
by
takeover
speculation
,
remains
vulnerable
to
any
further
pullback
by
takeover
financiers
,
both
in
the
junkbond
market
and
among
commercial
banks
.

For
debt-ridden
suitors
,
``
the
takeover
game
has
been
over
for
some
time
,
''
says
New
York
money
manager
Neil
Weisman
of
Chilmark
Capital
,
who
has
been
keeping
85
%
of
his
portfolio
in
cash
.

``
The
market
is
just
waking
up
to
that
point
.
''

Pauline
Yoshihashi
in
Los
Angeles
contributed
to
this
column
.

Of
all
the
one-time
expenses
incurred
by
a
corporation
or
professional
firm
,
few
are
larger
or
longer
term
than
the
purchase
of
real
estate
or
the
signing
of
a
commercial
lease
.

To
take
full
advantage
of
the
financial
opportunities
in
this
commitment
,
however
,
the
corporation
or
professional
firm
must
do
more
than
negotiate
the
best
purchase
price
or
lease
terms
.

It
must
also
evaluate
the
real-estate
market
in
the
chosen
location
from
a
new
perspective
.

Specifically
,
it
must
understand
how
real-estate
markets
overreact
to
shifts
in
regional
economies
and
then
take
advantage
of
these
opportunities
.

When
a
regional
economy
catches
cold
,
the
local
real-estate
market
gets
pneumonia
.

In
other
words
,
real-estate
market
indicators
,
such
as
building
permits
and
leasing
activity
,
plummet
much
further
than
a
local
economy
in
recession
.

This
was
seen
in
the
late
1960s
in
Los
Angeles
and
the
mid-1970s
in
New
York
.

But
the
reverse
is
also
true
:
When
a
region
's
economy
rebounds
from
a
slowdown
,
these
real-estate
indicators
will
rebound
far
faster
than
the
improving
economy
.

Why
do
local
real-estate
markets
overreact
to
regional
economic
cycles
?

Because
real-estate
purchases
and
leases
are
such
major
long-term
commitments
that
most
companies
and
individuals
make
these
decisions
only
when
confident
of
future
economic
stability
and
growth
.

Metropolitan
Detroit
was
written
off
economically
during
the
early
1980s
,
as
the
domestic
auto
industry
suffered
a
serious
sales
depression
and
adjustment
.

Area
employment
dropped
by
13
%
from
its
1979
peak
and
retail
sales
were
down
14
%
.

However
,
the
real-estate
market
was
hurt
even
more
.

For
example
,
residential
building
permits
in
the
trough
year
of
1982
were
off
76
%
from
the
1979
peak
level
.

Once
metropolitan
Detroit
's
economy
rallied
in
the
mid-1980s
,
real
estate
rebounded
.

Building
permits
,
for
example
,
soared
a
staggering
400
%
between
1982
and
the
peak
year
of
1986
.

Where
,
savvy
corporations
and
professional
firms
are
now
asking
,
are
today
's
opportunities
?

Look
no
further
than
metropolitan
Houston
and
Denver
,
two
of
the
most
depressed
,
overbuilt
and
potentially
undervalued
real-estate
markets
in
the
nation
.

Of
course
,
some
observers
have
touted
Houston
and
Denver
for
the
past
five
years
as
a
counter-cyclical
play
.

But
now
appears
to
be
the
time
to
act
.

Metropolitan
Houston
's
economy
did
drop
and
then
flatten
in
the
years
after
its
1982
peak
.

In
the
mid-1980s
,
employment
was
down
as
much
as
5
%
from
the
1982
peak
and
retail
sales
were
off
13
%
.

The
real-estate
market
suffered
even
more
severe
setbacks
.

Office
construction
dropped
97
%
.

The
vacancy
rate
soared
more
than
20
%
in
nearly
every
product
category
,
and
more
than
30
%
of
office
space
was
vacant
.

To
some
observers
,
the
empty
office
buildings
of
Houston
's
``
see-through
skyline
''
were
indicative
of
a
very
troubled
economy
.

As
usual
,
the
real-estate
market
had
overreacted
.

Actually
,
the
region
's
economy
retained
a
firm
foundation
.

Metropolitan
Houston
's
population
has
held
steady
over
the
past
six
years
.

And
personal
income
,
after
slumping
in
the
mid-1980s
,
has
returned
to
its
1982
level
in
real
dollar
terms
.

Today
,
metropolitan
Houston
's
real-estate
market
is
poised
for
a
significant
turnaround
.

More
than
42,000
jobs
were
added
in
metro
Houston
last
year
,
primarily
in
biotechnology
,
petrochemical
processing
,
and
the
computer
industry
.

This
growth
puts
Houston
in
the
top
five
metro
areas
in
the
nation
last
year
.

And
forecasts
project
a
2.5
%
to
3
%
growth
rate
in
jobs
over
the
next
few
years
--
nearly
twice
the
national
average
.

Denver
is
another
metropolitan
area
where
the
commercial
real-estate
market
has
overreacted
to
the
region
's
economic
trends
,
although
Denver
has
not
experienced
as
severe
an
economic
downturn
as
Houston
.

By
some
measures
,
metropolitan
Denver
's
economy
has
actually
improved
in
the
past
four
years
.

Its
population
has
continued
to
increase
since
1983
,
the
peak
year
of
the
economic
cycle
.

Employment
is
now
4
%
higher
than
in
1983
.

Buying
income
in
real
dollars
actually
increased
15
%
between
1983
and
1987
(
the
most
recent
year
available
)
.

The
rates
of
increase
,
however
,
are
less
than
the
rapid
growth
of
the
boom
years
,
and
this
has
resulted
in
a
loss
of
confidence
in
the
economy
.

In
a
self-fulfilling
prophecy
,
therefore
,
the
region
's
real-estate
market
all
but
collapsed
in
recent
years
.

Housing
building
permits
are
down
more
than
75
%
from
their
1983
peaks
.

Although
no
one
can
predict
when
metropolitan
Denver
's
real-estate
market
will
rebound
,
major
public
works
projects
costing
several
billion
dollars
are
under
way
or
planned
--
such
as
a
new
convention
center
,
a
major
beltway
encircling
the
metropolitan
area
,
and
a
new
regional
airport
.

When
Denver
's
regional
economy
begins
to
grow
faster
--
such
a
recovery
could
occur
as
early
as
next
year
--
business
and
consumer
confidence
will
return
,
and
the
resulting
explosion
of
real-estate
activity
will
dwarf
the
general
economic
rebound
.

What
real-estate
strategy
should
one
follow
in
a
metropolitan
area
whose
economic
health
is
not
as
easy
to
determine
as
Houston
's
or
Denver
's
?

Generally
,
overcapacity
in
commercial
real
estate
is
dropping
from
its
mid-1980s
peak
,
even
in
such
economically
healthy
metropolitan
areas
as
Washington
,
New
York
and
Los
Angeles
.

Vacancy
rates
in
the
15
%
to
19
%
range
today
may
easily
rise
to
the
low
to
mid-20
%
range
in
a
couple
of
years
.

Under
these
conditions
,
even
a
flattening
out
of
economic
growth
--
``
catching
cold
''
--
in
the
healthy
metropolitan
areas
will
create
significant
opportunities
for
corporations
and
professional
service
firms
looking
for
bargains
as
the
realestate
industry
catches
pneumonia
.

Those
looking
for
real-estate
bargains
in
distressed
metropolitan
areas
should
lock
in
leases
or
buy
now
;
those
looking
in
healthy
metropolitan
areas
should
take
a
short-term
(
three-year
)
lease
and
wait
for
the
bargains
ahead
.

Mr.
Leinberger
is
managing
partner
of
a
real-estate
advisory
firm
based
in
Beverly
Hills
,
Calif
.

Kysor
Industrial
Corp.
said
it
expects
its
third-quarter
net
earnings
to
be
between
two
cents
and
four
cents
a
share
,
compared
with
61
cents
a
share
a
year
ago
.

Analysts
had
been
projecting
that
the
company
's
earnings
would
be
between
25
cents
and
30
cents
a
share
.

The
year-earlier
third-quarter
earnings
amounted
to
$
4.1
million
.

The
company
said
a
drop
in
activity
in
the
powerboat
industry
reduced
sales
volume
at
its
two
marine-related
operations
.

Also
,
the
company
said
its
commercial
products
operation
failed
to
meet
forecasts
.

Kysor
,
a
maker
of
heavy-duty
truck
and
commercial
refrigeration
equipment
,
said
it
expects
its
fourth-quarter
earnings
to
be
more
closely
in
line
with
usual
levels
,
which
are
between
30
cents
and
50
cents
a
share
.

Common
Cause
asked
both
the
Senate
Ethics
Committee
and
the
Justice
Department
to
investigate
$
1
million
in
political
gifts
by
Arizona
businessman
Charles
Keating
to
five
U.S.
senators
who
interceded
with
thrift-industry
regulators
for
him
.

Mr.
Keating
is
currently
the
subject
of
a
$
1.1
billion
federal
anti-racketeering
lawsuit
accusing
him
of
bleeding
off
assets
of
a
California
thrift
he
controlled
,
Lincoln
Savings
&
Loan
Association
,
and
driving
it
into
insolvency
.

Fred
Wertheimer
--
president
of
Common
Cause
,
the
self-styled
citizens
lobby
--
said
Mr.
Keating
already
has
conceded
attempting
to
buy
influence
with
the
lawmakers
--
Democratic
Sens.
Dennis
DeConcini
of
Arizona
,
Alan
Cranston
of
California
,
John
Glenn
of
Ohio
and
Donald
Riegle
of
Michigan
;
and
GOP
Sen.
John
McCain
of
Arizona
.

Mr.
Wertheimer
based
this
on
a
statement
by
Mr.
Keating
that
was
quoted
in
a
Wall
Street
Journal
story
in
April
:
``
One
question
...
had
to
do
with
whether
my
financial
support
in
any
way
influenced
several
political
figures
to
take
up
my
cause
.

I
want
to
say
in
the
most
forceful
way
I
can
:
I
certainly
hope
so
.
''

In
a
highly
unusual
meeting
in
Sen.
DeConcini
's
office
in
April
1987
,
the
five
senators
asked
federal
regulators
to
ease
up
on
Lincoln
.

According
to
notes
taken
by
one
of
the
participants
at
the
meeting
,
the
regulators
said
Lincoln
was
gambling
dangerously
with
depositors
'
federally
insured
money
and
was
``
a
ticking
time
bomb
.
''

Mr.
Keating
had
complained
that
the
regulators
were
being
too
zealous
.

The
notes
show
that
Sen.
DeConcini
called
the
Federal
Home
Loan
Bank
Board
's
regulations
``
grossly
unfair
,
''
and
that
Sen.
Glenn
insisted
that
Mr.
Keating
's
thrift
was
``
viable
and
profitable
.
''

For
the
next
two
years
,
the
Bank
Board
,
which
at
the
time
was
the
agency
responsible
for
regulating
thrifts
,
failed
to
act
--
even
after
federal
auditors
warned
in
May
1987
that
Mr.
Keating
had
caused
Lincoln
to
become
insolvent
.

Lincoln
's
parent
company
,
American
Continental
Corp.
,
entered
bankruptcy-law
proceedings
this
April
13
,
and
regulators
seized
the
thrift
the
next
day
.

The
newly
formed
Resolution
Trust
Corp.
,
successor
to
the
Bank
Board
,
filed
suit
against
Mr.
Keating
and
several
others
on
Sept.
15
.

Mr.
Keating
has
filed
his
own
suit
,
alleging
that
his
property
was
taken
illegally
.

The
cost
to
taxpayers
of
Lincoln
's
collapse
has
been
estimated
at
as
much
as
$
2.5
billion
.

Details
of
the
affair
have
become
public
gradually
over
the
past
two
years
,
mostly
as
a
result
of
reporting
by
several
newspapers
.

In
the
midst
of
his
1988
re-election
campaign
,
Sen.
Riegle
,
chairman
of
the
Senate
Banking
Committee
,
returned
$
76,000
in
contributions
after
a
Detroit
newspaper
said
that
Mr.
Keating
had
gathered
the
money
for
him
about
two
weeks
before
the
meeting
with
regulators
.

Sen.
DeConcini
,
after
months
of
fending
off
intense
press
criticism
,
returned
$
48,000
only
last
month
,
shortly
after
the
government
formally
accused
Mr.
Keating
of
defrauding
Lincoln
.

In
addition
,
Sen.
McCain
last
week
disclosed
that
he
belatedly
had
paid
$
13,433
to
American
Continental
as
reimbursement
for
trips
he
and
his
family
took
aboard
the
corporate
jet
to
Mr.
Keating
's
vacation
home
at
Cat
Cay
,
the
Bahamas
,
from
1984
through
1986
.

Sen.
McCain
said
he
had
meant
to
pay
for
the
trips
at
the
time
but
that
the
matter
``
fell
between
the
cracks
.
''

Mr.
Keating
,
his
family
members
and
associates
also
donated
$
112,000
to
Sen.
McCain
's
congressional
campaigns
over
the
years
,
according
to
press
accounts
.

But
Sen.
McCain
says
Mr.
Keating
broke
off
their
friendship
abruptly
in
1987
,
because
the
senator
refused
to
press
the
thrift
executive
's
case
as
vigorously
as
Mr.
Keating
wanted
.

``
He
became
very
angry
at
that
,
left
my
office
and
told
a
number
of
people
that
I
was
a
wimp
,
''
Sen.
McCain
recalls
.

In
July
,
California
newspapers
disclosed
that
Mr.
Keating
gave
$
850,000
in
corporate
funds
to
three
tax-exempt
voter
registration
organizations
in
1987
and
1988
at
the
behest
of
Sen.
Cranston
,
who
conceded
that
soliciting
the
money
was
``
a
pretty
stupid
thing
to
do
politically
.
''

In
addition
,
Sen.
Cranston
received
$
47,000
in
campaign
donations
through
Mr.
Keating
,
and
the
California
Democratic
party
received
$
85,000
in
corporate
donations
for
a
1986
get-out-the-vote
drive
that
benefited
the
senator
's
re-election
campaign
that
year
.

Also
in
July
,
Ohio
newspapers
disclosed
$
200,000
in
corporate
donations
by
Mr.
Keating
to
the
National
Council
on
Public
Policy
,
a
political
committee
controlled
by
Sen.
Glenn
.

That
was
in
addition
to
$
34,000
in
direct
campaign
donations
arranged
by
Mr.
Keating
to
the
Ohio
senator
.

Mr.
Wertheimer
said
the
Senate
Ethics
Committee
should
hire
a
special
outside
counsel
to
conduct
an
investigation
,
as
was
done
in
the
case
of
former
House
Speaker
James
Wright
.

Wilson
Abney
,
staff
director
of
the
ethics
panel
,
would
n't
comment
.

Sen.
Riegle
said
he
would
cooperate
with
any
inquiry
,
but
that
his
conduct
had
been
``
entirely
proper
.
''

Sen.
McCain
said
he
had
been
``
deeply
concerned
''
at
the
time
of
the
meeting
that
it
might
seem
to
be
improper
,
but
decided
it
was
``
entirely
appropriate
''
for
him
to
seek
fair
treatment
for
a
constituent
.

Sen.
Glenn
said
he
had
already
made
a
complete
disclosure
of
his
role
in
the
affair
and
``
I
am
completely
satisfied
to
let
this
matter
rest
in
the
hands
of
the
Senate
Ethics
Committee
.
''

Sen.
DeConcini
said
,
``
When
all
is
said
and
done
,
I
expect
to
be
fully
exonerated
.
''

Sen.
Cranston
,
who
had
already
volunteered
his
help
to
the
Federal
Bureau
of
Investigation
in
any
investigation
of
Mr.
Keating
,
portrayed
his
role
in
1987
as
prodding
regulators
to
act
.

``
Why
did
n't
the
Bank
Board
act
sooner
?
''
he
said
.

``
That
is
what
Common
Cause
should
ask
be
investigated
.

Trinity
Industries
Inc.
said
it
reached
a
preliminary
agreement
to
manufacture
1,000
coal
rail
cars
for
Norfolk
Southern
Corp
.

Trinity
estimated
the
value
of
the
pact
at
more
than
$
40
million
.

Trinity
said
it
plans
to
begin
delivery
of
the
rail
cars
in
the
first
quarter
of
1990
.

It
said
the
1,000
rail
cars
are
in
addition
to
the
1,450
coal
rail
cars
presently
being
produced
for
Norfolk
Southern
,
a
Norfolk
,
Va.-based
railroad
concern
.

When
China
opened
its
doors
to
foreign
investors
in
1979
,
toy
makers
from
Hong
Kong
were
among
the
first
to
march
in
.

Today
,
with
about
75
%
of
the
companies
'
products
being
made
in
China
,
the
chairman
of
the
Hong
Kong
Toys
Council
,
Dennis
Ting
,
has
suggested
a
new
sourcing
label
:
``
Made
in
China
by
Hong
Kong
Companies
.
''

The
toy
makers
were
pushed
across
the
border
by
rising
labor
and
land
costs
in
the
British
colony
.

But
in
the
wake
of
the
shootings
in
Beijing
on
June
4
,
the
Hong
Kong
toy
industry
is
worrying
about
its
strong
dependence
on
China
.

Although
the
manufacturers
stress
that
production
has
n't
been
affected
by
China
's
political
turmoil
,
they
are
looking
for
additional
sites
.

The
toy
makers
,
and
their
foreign
buyers
,
cite
uncertainty
about
China
's
economic
and
political
policies
.

``
Nobody
wants
to
have
all
his
eggs
in
one
basket
,
''
says
David
Yeh
,
chairman
and
chief
executive
officer
of
International
Matchbox
Group
Ltd
.

Indeed
,
Matchbox
and
other
leading
Hong
Kong
toy
makers
were
setting
up
factories
in
Southeast
Asia
,
especially
in
Thailand
,
long
before
the
massacre
.

Their
steps
were
partly
prompted
by
concern
over
a
deterioration
of
business
conditions
in
southern
China
.

By
diversifying
supply
sources
,
the
toy
makers
do
n't
intend
to
withdraw
from
China
,
manufacturers
and
foreign
buyers
say
.

It
would
n't
be
easy
to
duplicate
quickly
the
manufacturing
capacity
built
up
in
southern
China
during
the
past
decade
.

A
supply
of
cheap
labor
and
the
access
to
Hong
Kong
's
port
,
airport
,
banks
and
support
industries
,
such
as
printing
companies
,
have
made
China
's
Guangdong
province
a
premier
manufacturing
site
.

``
South
China
is
the
most
competitive
source
of
toys
in
the
world
,
''
says
Henry
Hu
,
executive
director
of
Wah
Shing
Toys
Consolidated
Ltd
.

Hong
Kong
trade
figures
illustrate
the
toy
makers
'
reliance
on
factories
across
the
border
.

In
1988
,
exports
of
domestically
produced
toys
and
games
fell
19
%
from
1987
,
to
HK$
10.05
billion
(
US$
1.29
billion
)
.

But
re-exports
,
mainly
from
China
,
jumped
75
%
,
to
HK$
15.92
billion
.

In
1989
's
first
seven
months
,
domestic
exports
fell
29
%
,
to
HK$
3.87
billion
,
while
re-exports
rose
56
%
,
to
HK$
11.28
billion
.

Manufacturers
say
there
is
no
immediate
substitute
for
southern
China
,
where
an
estimated
120,000
people
are
employed
by
the
toy
industry
.

``
For
the
next
few
years
,
like
it
or
not
,
China
is
going
to
be
the
main
supplier
,
''
says
Edmund
Young
,
vice
president
of
Perfecta
Enterprises
Ltd.
,
one
of
the
first
big
Hong
Kong
toy
makers
to
move
across
the
border
.

In
the
meantime
,
as
manufacturers
and
buyers
seek
new
sites
,
they
are
focusing
mainly
on
Southeast
Asia
.

Several
big
companies
have
established
manufacturing
joint
ventures
in
Thailand
,
including
Matchbox
,
Wah
Shing
and
Kader
Industrial
Co.
,
the
toy
manufacturer
headed
by
Mr.
Ting
.

Malaysia
,
the
Philippines
and
Indonesia
also
are
being
studied
.

With
the
European
Community
set
to
remove
its
internal
trade
barriers
in
1992
,
several
Hong
Kong
companies
are
beginning
to
consider
Spain
,
Portugal
and
Greece
as
possible
manufacturing
sites
.

Worries
about
China
came
just
as
Hong
Kong
's
toy
industry
was
recovering
from
a
1987
sales
slump
and
bankruptcy
filings
by
two
major
U.S.
companies
,
Worlds
of
Wonder
Inc.
and
Coleco
Industries
Inc
.

Hong
Kong
manufacturers
say
large
debt
writeoffs
and
other
financial
problems
resulting
from
the
1987
difficulties
chastened
the
local
industry
,
causing
it
to
tighten
credit
policies
and
financial
management
.

The
industry
regards
last
year
and
this
year
as
a
period
of
recovery
that
will
lead
to
improved
results
.

Still
,
they
long
for
a
``
mega-hit
''
toy
to
excite
retail
sales
in
the
U.S.
,
Hong
Kong
's
biggest
market
for
toys
and
games
.

The
closest
thing
the
colony
's
companies
have
to
a
U.S.
mega-hit
this
year
is
the
Teenage
Mutant
Ninja
Turtles
series
of
action
figures
manufactured
by
Playmates
Holdings
Ltd
.

Introduced
in
mid-1988
,
the
15-centimeter-tall
plastic
turtles
are
based
on
an
American
comic
book
and
television
series
.

Paul
Kwan
,
managing
director
of
Playmates
,
says
10
million
Ninja
Turtles
have
been
sold
,
placing
the
reptilian
warriors
among
the
10
biggest-selling
toys
in
the
U.S.
.

Should
sales
continue
to
be
strong
through
the
Christmas
season
,
which
accounts
for
about
60
%
of
U.S.
retail
toy
sales
,
Mr.
Kwan
said
the
Ninja
Turtles
could
make
1989
a
record
sales
year
for
Playmates
.

Other
Hong
Kong
manufacturers
expect
their
results
to
improve
only
slightly
this
year
from
1988
.

Besides
the
lack
of
a
fast-selling
product
,
they
cite
the
continued
dominance
of
the
U.S.
market
by
Nintendo
Entertainment
System
,
an
expensive
video
game
made
by
Nintendo
Co.
of
Japan
.

Nintendo
buyers
have
little
money
left
to
spend
on
other
products
.

Many
of
the
toy
makers
'
problems
started
well
before
June
4
as
a
result
of
overstrained
infrastructure
and
Beijing
's
austerity
programs
launched
late
last
year
.

Toy
makers
complain
that
electricity
in
Guangdong
has
been
provided
only
three
days
a
week
in
recent
months
,
down
from
five
days
a
week
,
as
the
province
's
rapid
industrialization
has
outstripped
its
generating
capacity
.

Manufacturers
are
upgrading
standby
power
plants
.

Bank
credit
for
China
investments
all
but
dried
up
following
June
4
.

Also
,
concern
exists
that
the
harder-line
Beijing
leadership
will
tighten
its
control
of
Guangdong
,
which
has
been
the
main
laboratory
for
the
open-door
policy
and
economic
reforms
.

But
,
toy
manufacturers
and
other
industrialists
say
Beijing
will
be
restrained
from
tightening
controls
on
export-oriented
southern
China
.

They
say
China
's
trade
deficit
is
widening
and
the
country
is
too
short
of
foreign
exchange
for
it
to
hamper
production
in
Guangdong
.

``
The
Chinese
leaders
have
to
decide
whether
they
want
control
or
whether
the
want
exports
,
''
says
Mr.
Kwan
of
Playmates
.

The
Bush
administration
,
urging
the
Supreme
Court
to
give
states
more
leeway
to
restrict
abortions
,
said
minors
have
n't
any
right
to
abortion
without
the
consent
of
their
parents
.

Solicitor
General
Kenneth
Starr
argued
that
the
1973
Supreme
Court
decision
,
Roe
vs.
Wade
,
recognizing
a
constitutional
right
to
abortion
,
was
incorrect
.

He
also
argued
that
the
high
court
was
wrong
in
1976
to
rule
that
minors
have
a
right
to
abortion
that
ca
n't
be
absolutely
vetoed
by
their
parents
.

The
administration
's
position
was
outlined
in
a
friend-of-the-court
brief
filed
in
one
of
three
abortion
cases
the
Supreme
Court
will
hear
argued
and
will
decide
this
term
.

The
administration
filed
the
brief
in
an
appeal
involving
a
Minnesota
law
that
requires
that
both
parents
of
a
minor
be
notified
before
she
may
have
an
abortion
.

The
administration
urged
the
justices
to
adopt
a
legal
standard
suggested
by
Chief
Justice
William
Rehnquist
last
July
when
the
high
court
upheld
Missouri
's
abortion
restrictions
.

Under
that
standard
,
which
garnered
the
votes
of
only
three
of
the
nine
justices
,
a
state
restriction
of
abortion
is
constitutional
if
the
state
has
a
``
reasonable
''
justification
for
adopting
it
.

That
is
a
much
easier
standard
for
a
state
to
satisfy
than
the
Supreme
Court
's
test
since
1973
,
which
requires
a
state
to
have
a
``
compelling
''
reason
for
restricting
abortion
.

On
the
provisions
of
the
Minnesota
law
,
the
Bush
administration
said
that
requiring
that
both
parents
be
notified
is
a
reasonable
regulation
,
and
that
there
is
no
need
to
have
an
alternative
that
allows
minors
to
go
to
court
for
a
judge
's
permission
instead
.

The
case
,
Hodgson
vs.
Minnesota
,
will
be
argued
Nov.
29
.

Aluminum
Co.
of
America
,
hit
hard
by
the
strength
of
the
dollar
overseas
,
said
net
income
for
the
third
quarter
dropped
3.2
%
to
$
219
million
,
or
$
2.46
a
share
.

The
nation
's
No.
1
aluminum
maker
earned
$
226.3
million
,
or
$
2.56
a
share
,
a
year
earlier
.

Revenue
rose
11
%
to
$
2.83
billion
from
$
2.56
billion
.

Analysts
,
who
were
expecting
Alcoa
to
post
around
$
2.70
to
$
3
a
share
,
were
surprised
at
the
lackluster
third-quarter
results
.

``
It
's
disappointing
,
''
said
William
Siedenburg
,
an
analyst
with
Smith
Barney
,
Harris
Upham
&
Co
.

Much
of
the
earnings
decline
was
led
by
currency-exchange
rate
adjustments
,
which
affected
the
bottom
line
by
$
15.3
million
,
or
17
cents
a
share
,
compared
with
$
3.6
million
,
or
four
cents
a
share
,
the
previous
year
.

Lower
prices
for
aluminum
ingots
and
certain
alloy
products
and
a
shift
in
the
product
mix
also
contributed
to
lower
earnings
,
the
company
said
.

``
In
addition
,
costs
were
higher
partly
due
to
scheduled
plant
outages
for
modernization
work
,
''
the
company
said
.

Excluding
the
higher
tax
rate
,
which
rose
two
percentage
points
to
38
%
,
and
the
negative
exchange
rate
adjustment
,
the
company
would
have
met
analysts
'
expectations
,
said
R.
Wayne
Atwell
,
an
analyst
with
Goldman
,
Sachs
&
Co
.

Noting
that
the
third
quarter
is
usually
the
aluminum
industry
's
slowest
,
Mr.
Atwell
added
,
``
the
third
quarter
is
never
a
bang
up
period
for
them
anyway
.
''

Nevertheless
,
the
company
said
shipments
were
up
slightly
to
679,000
metric
tons
from
671,000
,
buffing
the
impact
of
the
unexpected
earning
decline
.

The
results
were
announced
after
the
stock
market
closed
.

In
New
York
Stock
Exchange
composite
trading
Friday
,
Alcoa
closed
at
$
72
a
share
,
down
$
4.75
,
in
a
sharply
lower
market
.

For
20
years
,
federal
rules
have
barred
the
three
major
television
networks
from
sharing
in
one
of
the
most
lucrative
and
fastest-growing
parts
of
the
television
business
.

And
for
six
years
,
NBC
,
ABC
and
CBS
have
negotiated
with
Hollywood
studios
in
a
futile
attempt
to
change
that
.

But
with
foreign
companies
snapping
up
U.S.
movie
studios
,
the
networks
are
pressing
their
fight
harder
than
ever
.

They
hope
the
foreign
deals
will
divide
the
Hollywood
opposition
and
prod
Congress
to
push
for
ending
federal
rules
that
prohibit
the
networks
from
grabbing
a
piece
of
rerun
sales
and
owning
part
of
the
shows
they
put
on
the
air
.

Even
network
executives
,
however
,
admit
privately
that
victory
--
either
in
Congress
or
in
talks
with
the
studios
--
is
highly
doubtful
any
time
soon
.

And
so
the
networks
also
are
pushing
for
new
ways
to
sidestep
the
``
fin-syn
''
provisions
,
known
formally
as
the
Financial
Interest
and
Syndication
Rules
.

That
became
clear
last
week
with
the
disclosure
that
National
Broadcasting
Co.
,
backed
by
the
deep
pockets
of
parent
General
Electric
Co.
,
had
tried
to
help
fund
Qintex
Australia
Ltd.
's
now-scuttled
$
1.5
billion
bid
for
MGM\/UA
Communications
Co
.

NBC
's
interest
may
revive
the
deal
,
which
MGM\/UA
killed
last
week
when
the
Australian
concern
had
trouble
raising
cash
.

Even
if
that
deal
is
n't
revived
,
NBC
hopes
to
find
another
.

``
Our
doors
are
open
,
''
an
NBC
spokesman
says
.

NBC
may
yet
find
a
way
to
take
a
passive
,
minority
interest
in
a
program-maker
without
violating
the
rules
.

And
any
NBC
effort
could
prompt
CBS
Inc.
and
ABC
's
parent
,
Capital
Cities\/ABC
Inc.
,
to
look
for
ways
of
skirting
the
fin-syn
regulations
.

But
the
networks
'
push
may
only
aggravate
an
increasingly
bitter
rift
between
them
and
Hollywood
studios
.

Both
sides
are
to
sit
down
next
month
for
yet
another
meeting
on
how
they
might
agree
on
reducing
fin-syn
restraints
.

Few
people
privy
to
the
talks
expect
the
studios
to
budge
.

The
networks
still
are
``
uninhibited
in
their
authority
''
over
what
shows
get
on
the
air
,
charges
Motion
Picture
Association
President
Jack
Valenti
,
the
most
vociferous
opponent
of
rescinding
the
rules
.

Studios
are
``
powerless
''
to
get
shows
in
prime-time
lineups
and
keep
them
there
long
enough
to
go
into
lucrative
rerun
sales
,
he
contends
.

And
that
's
why
the
rules
,
for
the
most
part
,
must
stay
in
place
,
he
says
.

Studio
executives
in
on
the
talks
-
including
officials
at
Paramount
Communications
Inc.
,
Fries
Entertainment
Inc.
,
Warner
Communications
Inc.
and
MCA
Inc.
--
declined
to
be
interviewed
.

But
Mr.
Valenti
,
who
represents
the
studios
,
asserts
:
``
The
whole
production
industry
,
to
a
man
,
is
on
the
side
of
preserving
''
the
rules
.

Such
proclamations
leave
network
officials
all
the
more
doubtful
that
the
studios
will
bend
.

``
They
do
n't
seem
to
have
an
incentive
to
negotiate
,
''
says
one
network
executive
.

``
And
there
's
no
indication
that
Washington
is
prepared
to
address
the
rules
.

That
's
the
problem
,
is
n't
it
?
''

Indeed
it
is
.

Congress
has
said
repeatedly
it
wants
no
part
of
the
mess
,
urging
the
studios
and
the
networks
,
which
license
rights
to
air
shows
made
by
the
studios
,
to
work
out
their
own
compromise
.

But
recent
developments
have
made
the
networks
--
and
NBC
President
Robert
Wright
,
in
particular
--
ever
more
adamant
that
the
networks
must
be
unshackled
to
survive
.

The
latest
provocation
:
Sony
Corp.
's
plan
to
acquire
Columbia
Pictures
Entertainment
Inc.
for
$
3.4
billion
,
and
to
buy
independent
producer
Guber
Peters
Entertainment
Co.
for
$
200
million
.

``
I
wonder
what
Walter
Cronkite
will
think
of
the
Sony\/Columbia
Broadcast
System
Trinitron
Evening
News
with
Dan
Rather
broadcast
exclusively
from
Tokyo
,
''
wrote
J.B.
Holston
,
an
NBC
vice
president
,
in
a
commentary
in
last
week
's
issue
of
Broadcasting
magazine
.

In
his
article
,
Mr.
Holston
,
who
was
in
Europe
last
week
and
unavailable
,
complained
that
the
``
archaic
restraints
''
in
fin-syn
rules
have
``
contributed
directly
to
the
acquisition
of
the
studios
by
non-U.S.
enterprises
.

''
(
He
did
n't
mention
that
NBC
,
in
the
meantime
,
was
hoping
to
assist
Australia
's
Qintex
in
buying

An
NBC
spokesman
counters
that
Mr.
Holston
's
lament
was
``
entirely
consistent
''
with
NBC
plans
because
the
U.S.
rules
would
limit
NBC
's
involvement
in
the
Qintex
deal
so
severely
as
to
be
``
light
years
away
from
the
type
of
unrestrained
deals
available
to
Sony
--
and
everyone
else
except
the
three
networks
.
''

The
Big
Three
's
drumbeat
for
deregulation
began
intensifying
in
the
summer
when
the
former
Time
Inc.
went
ahead
with
plans
to
acquire
Warner
.

Although
Time
already
had
a
long-term
contract
to
buy
movies
from
Warner
,
the
merger
will
let
Time
's
largely
unregulated
pay-cable
channel
,
Home
Box
Office
,
own
the
Warner
movies
aired
on
HBO
--
a
vertical
integration
that
is
effectively
blocked
by
fin-syn
regulations
.

NBC
's
Mr.
Wright
led
the
way
in
decrying
the
networks
'
inability
to
match
a
Time-Warner
combination
.

He
spoke
up
again
when
the
Sony
bid
for
Columbia
was
announced
.

Since
NBC
's
interest
in
the
Qintex
bid
for
MGM\/UA
was
disclosed
,
Mr.
Wright
has
n't
been
available
for
comment
.

With
a
Qintex
deal
,
NBC
would
move
into
uncharted
territory
--
possibly
raising
hackles
at
the
studios
and
in
Washington
.

``
It
's
never
really
been
tested
,
''
says
William
Lilley
III
,
who
as
a
top
CBS
executive
spent
years
lobbying
to
have
the
rules
lifted
.

He
now
runs
Policy
Communications
in
Washington
,
consulting
to
media
companies
.

Fin-syn
rules
do
n't
explicitly
block
a
network
from
buying
a
passive
,
small
stake
in
a
company
that
profits
from
the
rerun
syndication
networks
ca
n't
enjoy
.

Hence
,
NBC
might
be
able
to
take
,
say
,
a
5
%
stake
in
a
company
such
as
MGM\/UA
.

If
the
transaction
raised
objections
,
the
studio
's
syndication
operations
could
be
spun
off
into
a
separate
firm
in
which
the
network
does
n't
have
a
direct
stake
.

But
such
convolutions
would
still
block
the
networks
from
grabbing
a
big
chunk
of
the
riches
of
syndication
.

Under
current
rules
,
even
when
a
network
fares
well
with
a
100%-owned
series
--
ABC
,
for
example
,
made
a
killing
in
broadcasting
its
popular
crime\/comedy
``
Moonlighting
''
--
it
is
n't
allowed
to
share
in
the
continuing
proceeds
when
the
reruns
are
sold
to
local
stations
.

Instead
,
ABC
will
have
to
sell
off
the
rights
for
a
one-time
fee
.

The
networks
admit
that
the
chances
of
getting
the
relief
they
want
are
slim
--
for
several
years
at
the
least
.

Six
years
ago
they
were
tantalizingly
close
.

The
Reagan-era
Federal
Communications
Commission
had
ruled
in
favor
of
killing
most
of
the
rules
.

Various
evidence
,
including
a
Brookings
Institution
study
of
some
800
series
that
the
networks
had
aired
and
had
partly
owned
in
the
1960s
,
showed
the
networks
did
n't
wield
undue
control
over
the
studios
as
had
been
alleged
.

But
just
eight
days
before
the
rules
were
to
die
,
former
President
Ronald
Reagan
,
a
one-time
actor
,
intervened
on
behalf
of
Hollywood
.

The
FCC
effort
collapsed
.

The
networks
and
studios
have
bickered
ever
since
.

Network
officials
involved
in
the
studio
talks
may
hope
the
foreign
influx
builds
more
support
in
Washington
,
but
that
seems
unlikely
.

In
Congress
,
the
issue
falters
:
It
's
about
money
,
not
program
quality
,
and
Hollywood
has
lots
of
clout
given
its
fund
raising
for
senators
and
representatives
overseeing
the
issue
.

A
spokesman
for
Rep.
Edward
J.
Markey
(
D-Mass.
)
,
who
heads
a
subcommittee
that
oversees
the
FCC
,
says
Mr.
Markey
feels
``
the
world
has
been
forever
changed
by
the
Sony-Columbia
deal
.
''

But
he
said
Mr.
Markey
hopes
this
pushes
the
networks
and
studios
to
work
it
out
on
their
own
.

And
at
the
FCC
,
meanwhile
,
new
Chairman
Alfred
C.
Sikes
has
said
he
wants
the
two
sides
to
hammer
out
their
own
plan
.

Recognition
Equipment
Inc.
said
it
settled
a
civil
action
filed
against
it
by
the
federal
government
on
behalf
of
the
U.S.
Postal
Service
.

The
government
sued
the
company
in
April
,
seeking
$
23,000
and
other
unspecified
damages
related
to
an
alleged
contract-steering
scheme
.

The
suit
named
the
company
,
former
chief
executive
officer
William
G.
Moore
Jr.
,
former
vice
president
Robert
W.
Reedy
and
five
defendants
who
were
n't
part
of
the
company
.

The
suit
charged
the
defendants
with
causing
Peter
E.
Voss
,
an
ex-member
of
the
Postal
Service
board
of
governors
,
to
accept
$
23,000
in
bribes
,
kickbacks
and
gratuities
.

Mr.
Voss
was
previously
sentenced
to
four
years
in
prison
and
fined
$
11,000
for
his
role
in
the
scheme
.

In
the
agreement
,
Recognition
agreed
to
pay
the
government
$
20,000
in
return
for
the
release
of
all
claims
against
the
company
,
Mr.
Moore
and
Mr.
Reedy
.

The
five
additional
defendants
were
n't
parties
to
the
settlement
.

A
trial
on
criminal
allegations
against
the
company
and
the
same
two
former
executives
began
Sept.
27
in
federal
court
for
the
District
of
Columbia
.

They
were
indicted
last
October
on
charges
of
fraud
,
theft
and
conspiracy
related
to
an
effort
to
win
$
400
million
in
Postal
Service
equipment
contracts
by
the
maker
of
data
management
equipment
.

The
company
and
its
executives
deny
the
charges
.

In
a
related
development
,
Recognition
Equipment
said
the
Postal
Service
has
barred
the
company
from
bidding
on
postal
contracts
for
an
additional
120
days
.

The
Postal
Service
originally
suspended
the
company
Oct.
7
,
1988
,
and
has
been
renewing
the
ban
ever
since
.

The
company
said
it
will
continue
to
pursue
a
lifting
of
the
suspension
.

Intel
Corp.
reported
a
50
%
drop
in
third-quarter
net
income
,
partly
because
of
a
one-time
charge
for
discontinued
operations
.

The
big
semiconductor
and
computer
maker
,
said
it
had
net
of
$
72
million
,
or
38
cents
,
down
50
%
from
$
142.7
million
,
or
78
cents
a
share
.

The
lower
net
included
a
charge
of
$
35
million
,
equal
to
12
cents
a
share
on
an
after-tax
basis
,
for
the
cost
of
abandoning
a
computer-systems
joint
venture
with
Siemens
AG
of
West
Germany
.

Earning
also
fell
from
the
year-ago
period
because
of
slowing
microchip
demand
.

Sales
amounted
to
$
771.4
million
,
down
1.7
%
from
$
784.9
million
.

Intel
's
stock
rose
in
early
over-the-counter
trading
Friday
,
as
investors
appeared
relieved
that
the
company
's
income
from
continuing
operations
was
only
slightly
below
the
second
quarter
's
earnings
of
$
99.3
million
,
or
53
cents
a
share
,
and
that
sales
actually
exceeded
the
$
747.3
million
for
the
second
period
.

But
Intel
later
succumbed
to
the
stock
market
's
plunge
,
closing
at
$
31.75
,
down
$
2.125
.

In
August
,
Intel
warned
that
third-quarter
earnings
might
be
``
flat
to
down
''
from
the
previous
period
's
because
of
slowing
sales
growth
of
its
80386
microprocessor
,
start-up
costs
associated
with
a
line
of
computers
and
costs
of
preparing
for
mass
shipments
of
the
company
's
new
80486
chip
in
the
current
quarter
.

On
Friday
,
Andrew
S.Grove
,
Intel
president
and
chief
executive
officer
,
said
``
Intel
's
business
is
strong
.

Our
bookings
improved
as
the
quarter
progressed
and
September
was
especially
good
.

For
the
full
quarter
,
our
bookings
were
higher
than
the
previous
quarter
,
and
our
book-to-bill
ratio
exceeded
1.0
.
''

For
the
nine-month
period
,
Intel
reported
net
of
$
268.3
million
,
or
$
1.43
a
share
,
down
27
%
from
$
367.1
million
,
or
$
2.05
a
share
.

Revenue
amounted
to
$
2.23
billion
,
up
slightly
from
$
2.15
billion
.

Walter
Sisulu
and
the
African
National
Congress
came
home
yesterday
.

After
26
years
in
prison
,
Mr.
Sisulu
,
the
77-year-old
former
secretary-general
of
the
liberation
movement
,
was
dropped
off
at
his
house
by
a
prison
services
'
van
just
as
the
sun
was
coming
up
.

At
the
same
time
,
six
ANC
colleagues
,
five
of
whom
were
arrested
with
him
in
1963
and
sentenced
to
life
imprisonment
,
were
reunited
with
their
families
at
various
places
around
the
country
.

And
as
the
graying
men
returned
to
their
homes
,
the
ANC
,
outlawed
in
South
Africa
since
1960
and
still
considered
to
be
the
chief
public
enemy
by
the
white
government
,
defiantly
returned
to
the
streets
of
the
country
's
black
townships
.

A
huge
ANC
flag
,
with
black
,
green
and
gold
stripes
,
was
hoisted
over
the
rickety
gate
at
Mr.
Sisulu
's
modest
house
,
while
on
the
street
out
front
,
boys
displayed
the
ANC
colors
on
their
shirts
,
caps
and
scarves
.

At
the
small
four-room
home
of
Elias
Motsoaledi
,
a
leading
ANC
unionist
and
a
former
commander
in
the
group
's
armed
wing
,
Umkhonto
we
Sizwe
,
well-wishers
stuck
little
ANC
flags
in
their
hair
and
a
man
tooted
on
an
antelope
horn
wrapped
in
ANC
ribbons
.

``
I
am
happy
to
see
the
spirit
of
the
people
,
''
said
Mr.
Sisulu
,
looking
dapper
in
a
new
gray
suit
.

As
the
crowd
outside
his
home
shouted
``
ANC
,
ANC
,
''
the
old
man
shot
his
fists
into
the
air
.

``
I
'm
inspired
by
the
mood
of
the
people
.
''

Under
the
laws
of
the
land
,
the
ANC
remains
an
illegal
organization
,
and
its
headquarters
are
still
in
Lusaka
,
Zambia
.

But
the
unconditional
release
of
the
seven
leaders
,
who
once
formed
the
intellectual
and
organizational
core
of
the
ANC
,
is
a
de
facto
unbanning
of
the
movement
and
the
rebirth
of
its
internal
wing
.

``
The
government
can
never
put
the
ANC
back
into
the
bottle
again
,
''
said
Cassim
Saloojee
,
a
veteran
anti-apartheid
activist
on
hand
to
welcome
Mr.
Sisulu
.

``
Things
have
gone
too
far
for
the
government
to
stop
them
now
.

There
's
no
turning
back
.
''

There
was
certainly
no
stopping
the
tide
of
ANC
emotion
last
night
,
when
hundreds
of
people
jammed
into
the
Holy
Cross
Anglican
Church
in
Soweto
for
what
became
the
first
ANC
rally
in
the
country
in
30
years
.

Deafening
chants
of
``
ANC
''
and
``
Umkhonto
we
Sizwe
''
shook
the
church
as
the
seven
aging
men
vowed
that
the
ANC
would
continue
its
fight
against
the
government
and
the
policies
of
racial
segregation
on
all
fronts
,
including
the
armed
struggle
.

And
they
called
on
the
government
to
release
Nelson
Mandela
,
the
ANC
's
leading
figure
,
who
was
jailed
with
them
and
remains
in
prison
.

Without
him
,
said
Mr.
Sisulu
,
the
freeing
of
the
others
``
is
only
a
half-measure
.
''

President
F.W.
de
Klerk
released
the
ANC
men
--
along
with
one
of
the
founding
members
of
the
Pan
Africanist
Congress
,
a
rival
liberation
group
--
as
part
of
his
efforts
to
create
a
climate
of
trust
and
peace
in
which
his
government
can
begin
negotiations
with
black
leaders
over
a
new
constitution
aimed
at
giving
blacks
a
voice
in
national
government
.

But
Pretoria
may
instead
be
creating
a
climate
for
more
turmoil
and
uncertainty
in
this
racially
divided
country
.

As
other
repressive
governments
,
particularly
Poland
and
the
Soviet
Union
,
have
recently
discovered
,
initial
steps
to
open
up
society
can
create
a
momentum
for
radical
change
that
becomes
difficult
,
if
not
impossible
,
to
control
.

As
the
days
go
by
,
the
South
African
government
will
be
ever
more
hard
pressed
to
justify
the
continued
imprisonment
of
Mr.
Mandela
as
well
as
the
continued
banning
of
the
ANC
and
enforcement
of
the
state
of
emergency
.

If
it
does
n't
yield
on
these
matters
,
and
eventually
begin
talking
directly
to
the
ANC
,
the
expectations
and
promise
raised
by
yesterday
's
releases
will
turn
to
disillusionment
and
unrest
.

If
it
does
,
the
large
number
of
right-wing
whites
,
who
oppose
any
concessions
to
the
black
majority
,
will
step
up
their
agitation
and
threats
to
take
matters
into
their
own
hands
.

The
newly
released
ANC
leaders
also
will
be
under
enormous
pressure
.

The
government
is
watching
closely
to
see
if
their
presence
in
the
townships
leads
to
increased
anti-government
protests
and
violence
;
if
it
does
,
Pretoria
will
use
this
as
a
reason
to
keep
Mr.
Mandela
behind
bars
.

Pretoria
has
n't
forgotten
why
they
were
all
sentenced
to
life
imprisonment
in
the
first
place
:
for
sabotage
and
conspiracy
to
overthrow
the
government
.

In
addition
,
the
government
is
figuring
that
the
releases
could
create
a
split
between
the
internal
and
external
wings
of
the
ANC
and
between
the
newly
freed
leaders
and
those
activists
who
have
emerged
as
leaders
inside
the
country
during
their
imprisonment
.

In
order
to
head
off
any
divisions
,
Mr.
Mandela
,
in
a
meeting
with
his
colleagues
before
they
were
released
,
instructed
them
to
report
to
the
ANC
headquarters
in
Lusaka
as
soon
as
possible
.

The
men
also
will
be
faced
with
bridging
the
generation
gap
between
themselves
and
the
country
's
many
militant
black
youths
,
the
so-called
young
lions
who
are
anxious
to
see
the
old
lions
in
action
.

Says
Peter
Mokaba
,
president
of
the
South
African
Youth
Congress
:
``
We
will
be
expecting
them
to
act
like
leaders
of
the
ANC
.
''

They
never
considered
themselves
to
be
anything
else
.

At
last
night
's
rally
,
they
called
on
their
followers
to
be
firm
,
yet
disciplined
,
in
their
opposition
to
apartheid
.

``
We
emphasize
discipline
because
we
know
that
the
government
is
very
,
very
sensitive
,
''
said
Andrew
Mlangeni
,
another
early
Umkhonto
leader
who
is
now
63
.

``
We
want
to
see
Nelson
Mandela
and
all
our
comrades
out
of
prison
,
and
if
we
are
n't
disciplined
we
may
not
see
them
here
with
us
.