[21600001] |When it comes to buying and selling shares, Westridge Capital Management Inc. takes a back seat to no one.

[21600002] |Every dollar's worth of stock in the Los Angeles money manager's portfolio is traded seven or eight times a year, the firm estimates.
[21600003] |That makes it the most active trader among all the nation's investment advisers, according to Securities and Exchange Commission filings.

[21600004] |But wait a second.
[21600005] |Westridge Capital is an index fund -- the type of stolid long-term investor whose goal is to be nothing more than average.

[21600006] |Westridge Capital's frenetic trading reflects the changes sweeping through the previously sleepy world of indexing.
[21600007] |Indexing for the most part has involved simply buying and then holding stocks in the correct mix to mirror a stock market barometer, such as Standard & Poor's 500-stock index, and match its performance.

[21600008] |Institutional investors have poured $210 billion into stock and bond indexing as a cheap and easy form of investment management that promises to post average market returns.
[21600009] |These big investors have flocked to indexing because relatively few "active" stock pickers have been able to consistently match the returns of the S&P 500 or other bellwethers, much less beat it.

[21600010] |And the fees investors pay for indexing run a few pennies for each $100 of assets -- a fraction of the cost of active managers.
[21600011] |That's because computers do most of the work, and low trading activity keeps a lid on commission costs.

[21600012] |But today, indexing is moving from a passive investment strategy to an increasingly active one.
[21600013] |Because index-fund managers are no longer satisfied with merely being average, they have developed "enhanced" indexing strategies that are intended to outperform the market as much as three percentage points.

[21600014] |"Indexing has been the most single successful investment concept in the last decade, but the index money has been just sort of sitting there," says Seth M. Lynn, president of Axe Core Investors Inc., an indexer based in Tarrytown, N.Y.
[21600015] |"Now the interest is in what else can I do with that money."
[21600016] |Among the souped-up indexing strategies: Indexed portfolios can be built around thousands of stocks, or just a few dozen, rather than being restricted to the S&P 500 companies.
[21600017] |They can ignore the S&P 500 stocks altogether and focus on particular types of stocks, such as smaller companies, those paying high dividends or companies in a particular industry, state or country.

[21600018] |With today's computer-driven program trading techniques, index funds can trade back and forth between stock-index futures and the actual stocks making up indexes such as the S&P 500.
[21600019] |Futures and options also make it possible to build "synthetic" index funds that don't actually own a single share of stock, but can produce returns that match or exceed the broad stock market.

[21600020] |One reason for these hybrids is that indexing's rapid growth is slowing, particularly for those "plain vanilla" funds that mirror the S&P 500.
[21600021] |"There isn't a boatload {of big investors} out there still waiting to get into indexing," says P. James Kartalia, vice president of ANB Investment Management Co., Chicago, which offers both indexing and active management services.
[21600022] |(After tripling in size in the past five years, index funds now hold about 20% of the stock owned by pension funds.)

[21600023] |A further problem is razor-thin profits.
[21600024] |Plain-vanilla funds have become so commonplace that fees they can charge have plunged to almost nothing, and in some cases are just that.
[21600025] |To land customers for their well-paying stock custodial business, big banks sometimes will throw in basic indexing services for free.
[21600026] |"It's like getting a free toaster when you open an account," says Axe Core's Mr. Lynn.

[21600027] |As a result, indexers have been looking for ways to give investors something more than the average for their money.
[21600028] |And many have been successful, as in the case of the index fund operated by hyper-trader Westridge Capital.

[21600029] |Westridge Capital has used enhanced indexing techniques to beat the S&P 500's returns by 2.5 to 3 percentage points over the past four years, with the same risk level as holding the S&P 500 stocks, according to James Carder, the firm's president.

[21600030] |Strategies vary for Westridge Capital, which has $300 million under management.
[21600031] |The firm sometimes buys S&P 500 futures when they are selling at a discount to the actual stocks, and will switch back and forth between stocks and stock-index futures to take advantages of any momentary price discrepencies.

[21600032] |Mr. Carder also goes through periods when he buys stocks in conjunction with options to boost returns and protect against declines.

[21600033] |And in some months, he buys stock-index futures and not stocks at all.
[21600034] |"By their nature, our trades are very short-term and are going to create high turnover," Mr. Carder adds.
[21600035] |"The more turnover, the better for our clients."

[21600036] |Big indexer Bankers Trust Co. also uses futures in a strategy that on average has added one percentage point to its enhanced fund's returns.
[21600037] |J. Thomas Allen, president of Pittsburgh-based Advanced Investment Management Inc., agrees it's a good idea to jump between the S&P 500 stocks and futures.
[21600038] |"You're buying the S&P, and you always want to hold the cheapest form of it," he says.

[21600039] |But some indexers make little or no use of futures, saying that these instruments present added risks for investors.
[21600040] |"If the futures markets have a problem, then those products could have a problem," says John Zumbrunn, managing director of Prudential Insurance Co. of America's Investment Index Technologies Inc. unit.

[21600041] |Prudential currently is seeking approval to offer a new fund offering a return equal to the S&P 500 index plus 5/100 of a percentage point.
[21600042] |An added feature is that the slighty improved return would be guaranteed by Prudential.

[21600043] |There are many other strategies to bolster the returns of index funds.
[21600044] |They include:

[21600045] |LIMITED RISK FUNDS:
[21600046] |These guarantee protection against stock market declines while still passing along most gains.
[21600047] |Here a fund may promise to pay back, say, $95 of every $100 invested for a year, even if the market goes much lower.
[21600048] |The fund could invest $87 for one year in Treasury bills yielding 8% to return the guaranteed $95.
[21600049] |That leaves $13, which could be used to buy S&P 500 options that will nearly match any gain in the S&P index.

[21600050] |MANAGER REPLICATION FUNDS:
[21600051] |Say a big investor is interested in growth stocks.
[21600052] |Instead of hiring one of the many active managers specializing in growth stocks, indexers can design a portfolio around the same stocks; the portfolio will be maintained by computer, reducing both fees and, in theory, risk (because of the large number of stocks).
[21600053] |"We see a lot of interest in those kind of things," says Frank Salerno, a vice president of Bankers Trust.
[21600054] |"People comfortable with the passive approach are using them for other strategies."

[21600055] |TILT FUNDS:
[21600056] |This is an index fund with a bet.
[21600057] |Instead of replicating the S&P 500 or some other index exactly, some stocks are overweighted or underweighted in the portfolio.
[21600058] |One simple approach is to exclude S&P 500 companies considered bankruptcy candidates; this can avoid weak sisters, but also can hurt when a company like Chrysler Corp. rebounds.
[21600059] |Another approach: An investor with $100 million might use $75 million to buy the S&P 500 index and spend the other $25 million on a favorite group of stocks.

[21600060] |SPECIALIZED FUNDS:
[21600061] |Indexes can be constructed to serve social goals, such as eliminating the stocks of companies doing business in South Africa.
[21600062] |Other funds have been designed to concentrate on stocks in a geographic area in order to encourage local investment.
[21600063] |Pennsylvania State Employees Retirement System, for example, has about $130 million invested in a fund of 244 companies that are either Pennsylvania-based or have 25% of their work forces in the state.

[21601001] |Short interest on the New York Stock Exchange declined for the second consecutive month, this time 4.2%, while the American Stock Exchange reported its third consecutive record month of short interest.

[21601002] |The Big Board reported that short interest dropped to 523,920,214 shares as of Oct. 13 from 547,347,585 shares in mid-September.
[21601003] |Amex short interest climbed 3% to 53,496,665 shares from 51,911,566 shares.

[21601004] |For the year-earlier month, the Big Board reported 461,539,056 shares, indicating a 13.5% year-to-year rise, while the Amex reported 36,015,194 shares, a 48% leap.

[21601005] |Amex short interest has been heading upward since mid-December, with increases in each month since then except at mid-July.

[21601006] |Traders who sell short borrow stock and sell it, betting that the stock's price will decline and that they can buy the shares back later at a lower price for return to the lender.

[21601007] |Short interest is the number of shares that haven't yet been purchased for return to lenders.
[21601008] |Although a substantial short position reflects heavy speculation that a stock's price will decline, some investors consider an increase in short interest bullish because the borrowed shares eventually must be bought back.

[21601009] |Fluctuation in short interest of certain stocks also may be caused partly by arbitraging.
[21601010] |The figures occasionally include incomplete transactions in restricted stock.

[21601011] |The level of negative sentiment measured by the Big Board short interest ratio slipped to 3.36 from last month's 3.38.
[21601012] |The ratio is the number of trading days, at the exchange's average trading volume, that would be required to convert the total short interest position.

[21601013] |Some analysts suggest, however, that the ratio has weakened in value as an indicator because options and other products can be used to hedge short positions.

[21601014] |Varity Corp. led the Big Board list of largest short volumes with 12,822,563 shares.
[21601015] |Varity has proposed to acquire K-H Corp., consisting of the auto parts division and some debt of Fruehauf Corp., for $577.3 million of cash and securities.

[21601016] |Chemical Waste Management posted the biggest increase in short volume on the New York exchange, up 3,383,477 shares to 5,267,238.
[21601017] |Bristol-Myers Squibb Co., the entity formed from the recent acquisition of Squibb Corp. by Bristol-Myers Co., logged the largest volume decline, 7,592,988 shares, to 12,017,724.

[21601018] |Short interest in International Business Machines Corp. plunged to 1,425,035 shares from 2,387,226 shares a month earlier.
[21601019] |Also closely watched is Exxon Corp., where short interest slid to 4,469,167 shares from 5,088,774.

[21601020] |On a percentage basis, Germany Fund Inc. led the gainers, leaping to 67,972 shares from three shares.

[21601021] |TransCanada PipeLines Ltd. led the percentage decliners, dropping to 59 shares from 183,467.

[21601022] |The Amex short interest volume leader again was Texas Air Corp., rising to 3,820,634 shares from 3,363,949.
[21601023] |Bolar Pharmaceutical Co. posted the largest volume increase, 552,302 shares, to 2,157,656.
[21601024] |The company is under an investigation concerning procedures to gain Food and Drug Administration approval of generic drugs.
[21601025] |Bolar has denied any wrongdoing.

[21601026] |The largest volume drop -- down 445,645 shares to 141,903 -- came in shares represented by B.A.T Industries PLC's American depositary receipts.
[21601027] |The company is facing a takeover proposal from the financier Sir James Goldsmith.

[21601028] |First Iberian Fund led the percentage increases, rising to 73,100 shares from 184.
[21601029] |Nelson Holdings International Ltd. dropped the most on a percentage basis, to 1,000 shares from 255,923.

[21601030] |The adjacent tables show the Big Board and Amex issues in which a short interest position of at least 100,000 shares existed as of mid-October or in which there was a short position change of at least 50,000 shares since mid-September.

[21602001] |Your Oct. 12 editorial "Pitiful, Helpless Presidency?" correctly states that I was critical of the Bush administration's failure to have any plan in place to respond in a timely fashion to the opportunities to oust Manuel Noriega presented by the attempted military coup on Oct. 3.

[21602002] |You are absolutely wrong, however, in opining that this position is some kind of "flip-flop," something newly arrived at as a result of reading the opinion polls.
[21602003] |My position is one founded on both the facts and the law.

[21602004] |Although you may have forgotten, public opinion about Gen. Noriega is where it is in large measure because of my investigation of his years of involvement in narcotics smuggling (and simultaneous work as a U.S. operative).
[21602005] |The public made up its mind about Gen. Noriega largely as a result of the hearings I chaired in the Subcommittee on Terrorism and Narcotics of the Foreign Relations Committee on Feb. 8, 9, 10 and 11, 1988, and again on April 4, 1988.
[21602006] |It was during those hearings that the nation first learned the breadth and depth of Gen. Noriega's criminality, and of his enduring relationships with a variety of U.S. government agencies.

[21602007] |Those hearings also highlighted how Gen. Noriega was able to use his relationships with these agencies to delay U.S. action against him, and to exploit the administration's obsession with overthrowing the Sandinistas to protect his own drug-dealing.
[21602008] |As former Ambassador to Costa Rica Francis J. McNeil testified before the subcommittee, the Reagan administration knew that Gen. Noriega was involved with narcotics, but made a decision in the summer of 1986 "to put Gen. Noriega on the shelf until Nicaragua was settled."

[21602009] |As the report issued by the subcommittee concluded, "Our government did nothing regarding Gen. Noriega's drug business and substantial criminal involvement because the first priority was the Contra war.
[21602010] |This decision resulted in at least some drugs entering the United States as a hidden cost of the war."

[21602011] |Unfortunately, this problem continued even after Gen. Noriega's indictment.
[21602012] |Throughout 1988 and this year, I and others in Congress have pressed the U.S. to develop a plan for pushing this "narcokleptocrat" out of Panama.
[21602013] |Regrettably, two administrations in a row have been unwilling and unable to develop any plan, military or economic, for supporting the Panamanian people in their attempts to restore democracy.

[21602014] |Sen. John Kerry (D., Mass.)

[21603001] |For Vietnamese, these are tricky, often treacherous, times.
[21603002] |After years of hesitation, economic and political reform was embraced at the end of 1986, but ringing declarations have yet to be translated into much action.

[21603003] |Vietnam is finding that turning a stagnant socialist order into a dynamic free market doesn't come easy.
[21603004] |Here is how three Vietnamese are coping with change:

[21603005] |The Tire King

[21603006] |Nguyen Van Chan is living proof that old ways die hard.

[21603007] |Mr. Chan used to be an oddity in Hanoi: a private entrepreneur.
[21603008] |His business success made him an official target in pre-reform days.
[21603009] |Mr. Chan, now 64 years old, invented a fountain pen he and his family produced from plastic waste.
[21603010] |Later, he marketed glue.
[21603011] |Both products were immensely popular.
[21603012] |For his troubles, Mr. Chan was jailed three times between 1960 and 1974.
[21603013] |Though his operation was registered and used only scrap, he was accused of conducting illegal business and possessing illegal materials.
[21603014] |Once he was held for three months without being charged.

[21603015] |Things were supposed to change when Vietnam's economic reforms gathered pace, and for awhile they did.
[21603016] |After years of experimenting, Mr. Chan produced a heavy-duty bicycle tire that outlasted its state-produced rival.
[21603017] |By 1982, he was selling thousands of tires.
[21603018] |Newspapers published articles about him, and he was hailed as "the tire king."
[21603019] |His efforts earned a gold medal at a national exhibition -- and attracted renewed attention from local authorities.

[21603020] |District police in 1983 descended on his suburban home, which he and his large family used as both residence and factory, and demanded proof the house and equipment were his.
[21603021] |He produced it.
[21603022] |"That was the first time they lost and I won," he says.
[21603023] |He was further questioned to determine if he was "a real working man or an exploiter."
[21603024] |Says Mr. Chan: "When I showed it was from my own brain, they lost for the second time."

[21603025] |But a few days later the police accused him of stealing electricity, acquiring rubber without permission and buying stolen property.
[21603026] |Warned he was to be jailed again, he fled to the countryside.
[21603027] |His family was given three hours to leave before the house and contents were confiscated.
[21603028] |With only the clothes they were wearing, family members moved to a home owned by one of Mr. Chan's sons.

[21603029] |After six months on the run, Mr. Chan learned the order for his arrest had been canceled.
[21603030] |He rejoined his family in January 1984 and began the long struggle for justice, pressing everyone from Hanoi municipal officials to National Assembly deputies for restoration of his rights.
[21603031] |He and his family kept afloat by repairing bicycles, selling fruit and doing odd jobs.

[21603032] |Mr. Chan achieved a breakthrough in 1987 -- and became a minor celebrity again -- when his story was published in a weekly newspaper.

[21603033] |In 1988, 18 months after the sixth congress formally endorsed family-run private enterprise, district authorities allowed Mr. Chan to resume work.
[21603034] |By late last year he was invited back as "the tire king" to display his products at a national exhibition.
[21603035] |National leaders stopped by his stand to commend his achievements.

[21603036] |Mr. Chan now produces 1,000 bicycle and motorbike tires a month and 1,000 tins of tire-patching glue in the son's small house.
[21603037] |Eighteen people pack the house's two rooms -- the Chans, four of their 10 children with spouses, and eight of 22 grandchildren.
[21603038] |Most sleep on the floor.

[21603039] |Come daybreak, eight family members and two other workers unroll a sheet of raw rubber that covers the floor of the house and spills out onto the street.
[21603040] |The primitive operations also burst out the back door into a small courtyard, where an ancient press squeezes rubber solution into a flat strip and newly made tires are cooled in a bathtub filled with water.

[21603041] |Mr. Chan talks optimistically of expanding, maybe even moving into the import-export field.
[21603042] |First, however, he has unfinished business.
[21603043] |When district authorities allowed him to resume manufacturing, they released only one of his machines.
[21603044] |They didn't return the rubber stocks that represent his capital.
[21603045] |Nor did they return his house and contents, which he values at about $44,000.
[21603046] |He wants to recover more than just his property, though.

[21603047] |"I want my dignity back," he says.

[21603048] |The Editor

[21603049] |Nguyen Ngoc seemed an obvious choice when the Vietnamese Writers Association was looking for a new editor to reform its weekly newspaper, Van Nghe.

[21603050] |After the sixth congress, journalists seized the opportunity provided by the liberalization to probe previously taboo subjects.
[21603051] |Mr. Ngoc, 57 years old, had solid reformist credentials: He had lost his official position in the association in he early 1980s because he questioned the intrusion of politics into literature.
[21603052] |Appointed editor in chief in July 1987, Mr. Ngoc rapidly turned the staid Van Nghe into Vietnam's hottest paper.

[21603053] |Circulation soared as the weekly went way beyond standard literary themes to cover Vietnamese society and its ills.
[21603054] |Readers were electrified by the paper's audacity and appalled by the dark side of life it uncovered.

[21603055] |One article recounted a decade-long struggle by a wounded soldier to prove, officially, he was alive.
[21603056] |Another described how tax-collection officials in Thanh Hoa province one night stormed through homes and confiscated rice from starving villagers.
[21603057] |The newspaper also ran a series of controversial short stories by Nguyen Huy Thiep, a former history teacher, who stirred debate over his interpretation of Vietnamese culture and took a thinly veiled swipe at writers who had blocked his entry into their official association.

[21603058] |Van Nghe quickly made influential enemies.
[21603059] |"Those who manage ideology and a large number of writers reacted badly" to the restyled paper, says Lai Nguyen An, a literary critic.
[21603060] |After months of internal rumblings, Mr. Ngoc was fired last December.
[21603061] |His dismissal triggered a furor among intellectuals that continues today.

[21603062] |"Under Mr. Ngoc, Van Nghe protected the people instead of the government," says Nguyen Duy, a poet who is the paper's bureau chief for southern Vietnam.
[21603063] |"The paper reflected the truth.
[21603064] |For the leadership, that was too painful to bear."

[21603065] |The `Billionaire'

[21603066] |Nguyen Thi Thi is Vietnam's entrepreneur of the 1980s.
[21603067] |Her challenge is to keep her fledgling empire on top in the 1990s.

[21603068] |Mrs. Thi didn't wait for the reforms to get her start.
[21603069] |She charged ahead of the government and the law to establish Hochiminh City Food Co. as the biggest rice dealer in the country.
[21603070] |Her success, which included alleviating an urban food shortage in the early 1980s, helped persuade Hanoi to take the reform path.
[21603071] |Her story is becoming part of local folklore.

[21603072] |A lifelong revolutionary with little education who fought both the French and the U.S.-backed Saigon regime, she switched effortlessly to commerce after the war.
[21603073] |Her instincts were capitalistic, despite her background.
[21603074] |As she rode over regulations, only her friendship with party leaders, including Nguyen Van Linh, then Ho Chi Minh City party secretary, kept her out of jail.

[21603075] |Following Mr. Linh's appointment as secretary-general of the party at the sixth congress, Mrs. Thi has become the darling of "doi moi", the Vietnamese version of perestroika.
[21603076] |The authorities have steered foreign reporters to her office to see an example of "the new way of thinking."

[21603077] |Foreign publications have responded with articles declaring her Vietnam's richest woman.
[21603078] |"Some people call me the communist billionaire," she has told visitors.

[21603079] |Actually, 67-year-old Mrs. Thi is about as poor as almost everyone else in this impoverished land.
[21603080] |She has indeed turned Hochiminh City Food into a budding conglomerate, but the company itself remains state-owned.
[21603081] |She manages it with the title of general-director.

[21603082] |The heart of the business is the purchase of rice and other commodities, such as corn and coffee, from farmers in the south, paying with fertilizer, farm tools and other items.
[21603083] |Last year, Hochiminh City Food says it bought two million metric tons of unhusked rice, more than 10% of the country's output.

[21603084] |The company operates a fleet of trucks and boats to transport the commodities to its warehouses.
[21603085] |A subsidiary company processes commodities into foods such as instant noodles that are sold with the rice through a vast retail network.

[21603086] |In recent years, Mrs. Thi has started to diversify the company, taking a 20% stake in newly established, partly private Industrial and Commercial Bank, and setting up Saigon Petro, which owns and operates Vietnam's first oil refinery.

[21603087] |Mrs. Thi says Hochiminh City Food last year increased pretax profit 60% to the equivalent of about $2.7 million on sales of $150 million.
[21603088] |She expects both revenue and profit to gain this year.

[21603089] |She is almost cavalier about the possibility Vietnam's reforms will create rivals on her home turf.
[21603090] |"I don't mind the competition inside the country," she says.
[21603091] |"I am only afraid that with Vietnam's poor-quality products we can't compete with neighboring countries.

[21604001] |The earthquake that hit the San Francisco Bay area isn't likely to result in wholesale downgrading of bond ratings, officials at the two major rating agencies said.

[21604002] |Standard & Poor's Corp. is reviewing debt issued by 12 California counties, and "there are potential isolated problems," said Hyman Grossman, a managing director.
[21604003] |The agency is preparing a report, to be issued today, on the earthquake's impact on the property- and casualty-insurance industry.

[21604004] |The only securities so far to be singled out are those issued by Bay View Federal Savings & Loan.
[21604005] |Moody's Investors Service Inc. said it is reviewing, with an eye toward a possible downgrade, the ratings on Bay View Federal bonds, long-term deposits and the preferred-stock rating of its parent company, Bay View Capital Corp.

[21604006] |As for property and casualty insurers, Moody's said "preliminary estimates suggest that losses should not have a significant impact on most insurers' financial condition," but it "raises concerns about potentially substantial risks" longer-term.

[21604007] |"Losses from the earthquake are expected to be of similar magnitude to those of Hurricane Hugo," according to Moody's.

[21605001] |Your Oct. 5 editorial "A Democratic Tax Cut" contained an error.
[21605002] |In the third paragraph it referred to the senators seeking loophole suggestions from lobbyists for various sectors of the economy.
[21605003] |Among them, "banana farmers."

[21605004] |The only significant commercial banana farmers in the U.S. are in Hawaii.
[21605005] |The Hawaii Banana Industry Association, to which nearly all of them belong, has no lobbyist.

[21605006] |Thomas V. Reese Sr. Maui Banana Co.

[21606001] |Western Digital Corp. reported a net loss of $2.7 million, or nine cents a share, for its first quarter ended Sept. 30, citing factors as varied as hurricane damage, an advance in graphics technology and the strengthening dollar.

[21606002] |In the year-ago period, the company earned $12.9 million, or 45 cents a share, on sales of $247 million.
[21606003] |Sales for the just-ended period fell to about $225 million, the maker of computer parts said.

[21606004] |Nonetheless, Chairman Roger W. Johnson said he expects the company to be profitable in the current quarter.
[21606005] |"We are positioned to come through," he said, noting that the company's backlog was up from the previous quarter.
[21606006] |In its second quarter last year, Western Digital earned $12.7 million, or 44 cents a share, on sales of $258.4 million.

[21606007] |Mr. Johnson said Western Digital's plant in Puerto Rico was affected by Hurricane Hugo, losing three days' production because of the storm, which wrecked much of the Caribbean island's infrastructure.
[21606008] |Although the plant itself wasn't damaged, Mr. Johnson said millions of dollars in first-quarter revenue were lost.
[21606009] |The revenue will be regained in the current period, he added.

[21606010] |There are no plans to initiate a common stock dividend, Mr. Johnson said, explaining that the board continues to believe shareholders are best served by reinvesting excess cash.

[21606011] |Mr. Johnson said the first-quarter loss also heavily reflected a rapid change in graphics technology that left reseller channels with too many of the old computer graphics boards and too few new monitors compatible with the new graphics boards.
[21606012] |Western Digital doesn't make the monitors.

[21606013] |An accelerating move by personal computer manufacturers' to include advanced graphics capabilities as standard equipment further dampened reseller purchases of Western Digital's equipment.

[21606014] |"The other areas of the business -- storage and microcomputers -- were very good," Mr. Johnson said.
[21606015] |He said Western Digital has reacted swiftly to the movement to video graphics array, VGA, graphics technology from the old enhanced graphics adapter, EGA, which has a lower resolution standard, technology and now is one of the leading producers of these newer units.
[21606016] |Other makers of video controller equipment also were caught in the EGA-VGA shift, he said, "but we were able to respond much more quickly."

[21606017] |Still, Mr. Johnson said, "our stock is grossly undervalued."
[21606018] |He said the company has cut operating expenses by about 10% over the last few quarters, while maintaining research and development at about 8% to 9% of sales.

[21606019] |As part of its reorganization this week, Western Digital has divided its business into two segments -- storage products, including controllers and disk drives; and microcomputer products, which include graphics, communications and peripheral control chips.

[21606020] |Graphics, communications and peripheral control chips were combined because, increasingly, multiple functions are being governed by a single chip.

[21606021] |Storage, which includes computer controllers and 3.5-inch disk drives, represents nearly two-thirds of the company's business.
[21606022] |Disk drives, which allow a computer to access its memory, generated 38% more revenue in the most recent period compared with the fiscal first quarter a year earlier.

[21606023] |Computer parts are getting ever smaller, Mr. Johnson said, a shrinking that has propelled laptops into position as the fastest-growing segment of the computer business.
[21606024] |As smaller and more powerful computers continue to be the focus of the industry, he said, Western Digital is strengthening development of laptop parts.

[21606025] |Next year Western Digital plans to consolidate its operations from 11 buildings in Irvine into two buildings in the same citya new headquarters and, a block away, a modern $100 million silicon wafer fabrication plant.
[21606026] |The plan will help the company in its existing joint manufacturing agreement with AT&T.

[21606027] |About half of Western Digital's business is overseas, and Mr. Johnson expects that proportion to continue.
[21606028] |Plans to dissolve many of the trade barriers within Europe in 1992 creates significant opportunities for the company, he said, particularly since Western Digital already manufactures there.
[21606029] |Capitalizing on that presence, Western Digital is launching a major effort to develop the embryonic reseller market in Europe.

[21607001] |Directors of state-owned Banca Nazionale del Lavoro approved a two-step capital-boosting transaction and a change in the bank's rules that will help it operate more like a private-sector institution.

[21607002] |Until now, BNL's top managers and its directors have been appointed by a Treasury decree.
[21607003] |But under the bank's proposed statutes, an assembly of shareholders must approve board members.
[21607004] |The bank's chairman and director general, who also sit on the board, still would be appointed by the Treasury.

[21607005] |BNL, which is controlled by the Italian Treasury, was rocked by the disclosure last month that its Atlanta branch extended more than $3 billion in unauthorized credits to Iraq.
[21607006] |The ensuing scandal, in which the bank's management resigned, has helped renew calls for privatization, or at least an overhaul, of Italy's banking system, which is about 80% state-controlled.

[21607007] |In a related move, the bank also proposed that board representation be linked more closely to the bank's new shareholding structure.
[21607008] |BNL called a shareholders' assembly meeting in December to vote on the proposals.

[21607009] |BNL has about 75,000 nonvoting shares that are listed on the Milan Stock Exchange.
[21607010] |The shares were suspended from trading following disclosure of the Atlanta scandal; Consob, the stock exchange regulatory body, reportedly will decide soon whether to end the trading suspension.

[21608001] |Switzerland's wholesale price index increased 0.3% in September from August, and was up 3.9% from a year ago, marking the first time this year that the index has fallen below 4% on a year-to-year basis, the government reported.

[21608002] |The government attributed the 0.3% month-to-month rise in the index largely to higher energy prices.

[21608003] |In August, the index was up 0.2% from the previous month, and was up 4.5% on a year-to-year basis.

[21608004] |The wholesale price index, based on 1963 as 100, was 180.9 in September.

[21609001] |American Express Co. posted a 21% increase in third quarter net income despite a sharp rise in reserves for Third World loans at its banking unit.

[21609002] |Aided by a sharp gain in its travel business, American Express said net rose to $331.8 million, or 77 cents a share, from $273.9 million, or 64 cents a share.

[21609003] |The year-earlier figures included $9.9 million, or three cents a share, in income from discontinued operations.
[21609004] |Income from continuing operations was up 26%.
[21609005] |Revenue rose 24% to $6.5 billion from $5.23 billion.

[21609006] |The travel, investment services, insurance and banking concern added $110 million to reserves for credit losses at its American Express Bank unit, boosting the reserve to $507 million as of Sept. 30.
[21609007] |The bank's Third World debt portfolio totals $560 million, down from $2.2 billion at the end of 1986.
[21609008] |The bank charged off $53 million in loans during the quarter.

[21609009] |At the American Express Travel Related Services Co. unit, net rose 17% to a record $240.8 million on a 19% revenue increase.
[21609010] |The figures exclude businesses now organized as American Express Information Services Co.
[21609011] |American Express card charge volume rose 12%.
[21609012] |Travel sales rose 11%, led by gains in the U.S.

[21609013] |At IDS Financial Services, the financial planning and mutual fund unit, net rose 19% to a record $47.6 million on a 33% revenue gain.
[21609014] |Assets owned or managed rose 20% to $45 billion, and mutual fund sales rose 45% in the quarter to $923 million.

[21609015] |American Express Bank earnings fell 50% to $21.3 million from $42.5 million despite a 29% revenue gain.
[21609016] |The results include $106 million of tax benefits associated with previous years' Third World loan activity, compared with $15 million a year earlier.

[21609017] |Profit rose 38% at American Express Information Services to $21.6 million.
[21609018] |Shearson Lehman Hutton Holdings Inc., as previously reported, had net of $65.9 million, reversing a $3.5 million loss a year earlier; its latest results include a $37 million gain from the sale of an institutional money management business.
[21609019] |American Express's share of Shearson's earnings was $41 million, after preferred stock dividends; it owns about 68% of Shearson's common.

[21609020] |For the nine months, American Express said net rose 11% to $899.8 million, or $2.09 a share, from $807.5 million, or $1.89 a share.
[21609021] |Revenue rose 24% to $18.73 billion from $15.09 billion.

[21610001] |Textron Inc., hampered by a slowdown in its defense sales, reported an 8% decline in per-share earnings on nearly flat revenue for its third quarter.

[21610002] |The aerospace and financial services concern said net income fell 5% to $59.5 million from $62.8 million.
[21610003] |Revenue of $1.73 billion was almost unchanged from last year's $1.72 billion.
[21610004] |Per-share net of 66 cents, down from 72 cents, fell by more than overall net because of more shares outstanding.

[21610005] |The company said that improved results in its financial-services sector were negated by increased costs in its government contract business, lower operating earnings in its commercial-products sector and soft automotive markets.
[21610006] |Net was aided by a lower income tax rate.
[21610007] |Profit before taxes fell 17% to $84.4 million from $101.4 million.

[21610008] |For the nine months, Textron reported net of $182.1 million, or $2.06 a share, on revenue of $5.41 billion.
[21610009] |A year ago, net was $170.4 million, or $1.93 a share, on revenue of $5.3 billion.
[21610010] |The nine-month results included a $9.5 million special charge in 1989 for an arbitration settlement related to past export sales, and $29.7 million in extraordinary charges in 1988 related to a former line of business and early redemption of debt.

[21610011] |Textron said that nine-months' results don't include earnings of Avdel PLC, a British maker of industrial fasteners, but do include interest costs of $16.4 million on borrowings related to the proposed purchase of Avdel.
[21610012] |A federal judge has issued a preliminary injunction against the purchase because of Federal Trade Commission concerns that the transaction would reduce competition in the production of two kinds of rivets.

[21610013] |For the quarter, Textron said aerospace revenue, including Bell helicopter and jet-engine manufacture, declined 9.8% to $755.9 million from $838.3 million, an indication of slowing government defense work.

[21611001] |As the Hunt brothers' personal bankruptcy cases sputter into their second year, Minpeco S.A. has proposed a deal to settle its huge claim against the troubled Texas oil men.
[21611002] |But the plan only threatens to heighten the tension and confusion already surrounding the cases that were filed in September 1988.

[21611003] |The Peruvian mineral concern's $251 million claim stems from 1988 jury award in a case stemming from the brothers' alleged attempts to corner the 1979-80 silver market.
[21611004] |Minpeco now says it is willing to settle for up to $65.7 million from each brother, although the actual amount would probably be much less.

[21611005] |Although the proposal must be approved by federal Judge Harold C. Abramson, W. Herbert Hunt has agreed to the Peruvian mineral concern's proposal.
[21611006] |Nelson Bunker Hunt is considering it, although his attorney says he won't do it if the proposal jeopardizes a tentative settlement he has reached with the Internal Revenue Service, which claims the brothers owe $1 billion in back taxes and is by far the biggest creditor in both cases.

[21611007] |The tentative agreement between the IRS and Nelson Bunker Hunt is awaiting U.S. Justice Department approval.
[21611008] |Under it, the former billionaire's assets would be liquidated with the IRS getting 80% of the proceeds and the rest being divided among other creditors, including Minpeco and Manufacturers Hanover Trust Co., which is seeking repayment of a $36 million loan.

[21611009] |A similiar proposal has been made in the W. Herbert Hunt case although he and the IRS are at odds over the size of the non-dischargable debt he would have to pay to the government from future earnings.

[21611010] |In both cases, Minpeco and Manufacturers Hanover have been fighting ferociously over their shares of the pie.
[21611011] |With support from the IRS, Manufacturers Hanover has filed suit asking Judge Abramson to subordinate Minpeco's claim to those of Manufacturer Hanover and the IRS.
[21611012] |Minpeco has threatened a "volcano" of litigation if the Manufacturers Hanover Corp. unit attempts to force such a plan through the court.

[21611013] |Minpeco said it wouldn't pursue such litigation if its settlement plan in the W. Herbert Hunt case is approved by Judge Abramson, who will consider the proposal at a hearing next week.

[21611014] |Minpeco attorney Thomas Gorman decribed the plan as one step toward an overall settlement of the W. Herbert Hunt case but Hugh Ray, attorney for Manufacturers Hanover, called it "silly" and said he would fight it in court.

[21611015] |"The thing is so fluid right now that there's really no way to say what will happen," says Justice Department attorney Grover Hartt III, who represents the IRS in the case.
[21611016] |"Developments like this are hard to predict.

[21612001] |Banc One Corp. said it agreed in principle to buy five branch offices from Trustcorp Inc., Toledo, Ohio, following the planned merger of Trustcorp into Society Corp., Cleveland.

[21612002] |The five offices in Erie and Ottawa counties in northern Ohio have total assets of about $88 million, Banc One said.
[21612003] |The purchase price will be established after Banc One has an opportunity to study the quality of the assets, Banc One said.

[21612004] |Society Corp. already has branches in the area, and selling the Trustcorp offices could avoid a problem with regulators over excessive concentration of banking in the two counties after the merger of Trustcorp into Society, according to industry sources.
[21612005] |The merger is scheduled to take place in the 1990 first quarter.

[21613001] |Stock-market fears and relatively more attractive interest rates pushed money-market mutual fund assets up $6.07 billion in the latest week, the sharpest increase in almost two years.

[21613002] |The 473 funds tracked by the Investment Company Institute, a Washington-based trade group, rose to $356.1 billion, a record.
[21613003] |The $6.07 billion increase was the strongest weekly inflow since January 1988.

[21613004] |The increase was spread fairly evenly among all three types of funds.
[21613005] |Individual investors, represented in the general-purpose and broker-dealer fund categories, pulled money from the stock market after its big drop last Friday and put the money into funds, said Jacob Dreyer, vice president and chief economist of the Institute.

[21613006] |"Insitutional investors, on the other hand, reacted to the steep decline in yields on direct money-market instruments following the stock-market decline last Friday," Mr. Dreyer said.

[21613007] |Yields on money funds dropped in the week ended Tuesday, according to Donoghue's Money Fund Report, a Holliston, Mass., newsletter.
[21613008] |The average seven-day compounded yield fell to 8.55% from 8.60% the week earlier, Donoghue's said.

[21613009] |At the auction of six-month U.S. Treasury bills on Monday, the average yield fell to 7.61% from 7.82%.
[21613010] |Likewise, certificates of deposit on average posted lower yields in the week ended Tuesday.

[21613011] |The 142 institutional-type money funds rose $2.23 billion to $85.49 billion.
[21613012] |The 235 general-purpose funds increased $2.53 billion to $116.56 billion, while 96 broker-dealer funds increased $1.3 billion to $154.05 billion.

[21614001] |Domestic lending for real estate and property development was the source of Bank Bumiputra Malaysia Bhd.'s most recent spate of financial troubles, the institution's executive chairman, Mohamed Basir Ismail, said.

[21614002] |Speaking to reporters this week after Bank Bumiputra's shareholders approved a rescue plan, Tan Sri Basir said heavy lending to the property sector rocked the bank when property prices in Malaysia plummeted in 1984-85.

[21614003] |He said the bank couldn't wait any longer for prices to recover and for borrowers to service their loans.
[21614004] |So the bank's board decided to make 1.23 billion Malaysian dollars (US$457 million) in provisions for interest payments from loans previously recorded as revenue but never actually received by the bank, and to submit a bailout package to replenish the bank's paid-up capital.

[21614005] |The predicament, he added, was similar to the Hong Kong 1982-83 property-price collapse, which exposed the involvement of Bank Bumiputra's former subsidiary in the colony in the largest banking scandal in Malaysia's history.
[21614006] |The subsidiary, Bumiputra Malaysia Finance Ltd., was left with M$2.26 billion in bad loans made to Hong Kong property speculators.

[21614007] |Both episodes wiped out Bank Bumiputra's shareholders' funds.
[21614008] |Each time, the bank's 90% shareholder -- Petroliam Nasional Bhd., or Petronas, the national oil company -- has been called upon to rescue the institution.
[21614009] |In five years, Petronas, which became the dominant shareholder in a 1984 rescue exercise, has spent about M$3.5 billion to prop up the troubled bank.

[21614010] |Tan Sri Basir said the capital restructuring plan has been approved by Malaysia's Capital Issues Committee and central bank.
[21614011] |Malaysia's High Court is expected to approve the plan.

[21614012] |Once the plan is approved, Tan Sri Basir said, most of Bank Bumiputra's nonperforming loans will have been fully provided for and the bank will be on track to report a pretax profit of between M$160 million and M$170 million for the fiscal year ending March 31.
[21614013] |For the previous financial year, the bank would have reported a pretax profit of M$168 million if it hadn't made provisions for the nonperforming loans, he said.

[21614014] |Malaysia's Banking Secrecy Act prohibited the bank from identifying delinquent borrowers, said Tan Sri Basir.
[21614015] |But public documents indicate 10% or more of the bank's provisions were made for foregone interest on a M$200 million loan to Malaysia's dominant political party, the United Malays National Organization, to build its convention and headquarters complex in Kuala Lumpur.
[21614016] |The loan to UMNO was made in September 1983.

[21614017] |"We lent a lot of money all over the place," said Tan Sri Basir, who refused to discuss the bank's outstanding loans to

[21614018] |As well as the M$1.23 billion in provisions announced on Oct. 6, the restructuring package covers an additional M$450 million in provisions made in earlier years but never reflected in a reduction of the bank's paid-up capital.
[21614019] |At the end of the exercise, the cash injection from Petronas will increase the bank's paid-up capital to M$1.15 billion after virtually being wiped out by the new provisions.

[21615001] |Heidi Ehman might have stepped from a recruiting poster for young Republicans.
[21615002] |White, 24 years old, a singer in her church choir, she symbolizes a generation that gave its heart and its vote to Ronald Reagan.
[21615003] |"I felt kind of safe," she says.

[21615004] |No longer.
[21615005] |When the Supreme Court opened the door this year to new restrictions on abortion, Ms. Ehman opened her mind to Democratic politics.
[21615006] |Then a political novice, she stepped into a whirl of "pro-choice" marches, house parties and fund-raisers.
[21615007] |Now she leads a grassroots abortion-rights campaign in Passaic County for pro-choice Democratic gubernatorial candidate James Florio.

[21615008] |"This is one where I cross party lines," she says, rejecting the anti-abortion stance of Rep. Florio's opponent, Reagan-Republican Rep. James Courter.
[21615009] |"People my age thought it wasn't going to be an issue.
[21615010] |Now it has -- especially for people my age."

[21615011] |Polls bear out this warning, but after a decade of increased Republican influence here, the new politics of abortion have contributed to a world turned upside down for Mr. Courter.
[21615012] |Unless he closes the gap, Republicans risk losing not only the governorship but also the assembly next month.
[21615013] |Going into the 1990s, the GOP is paying a price for the same conservative social agenda that it used to torment Democrats in the past.

[21615014] |This change comes less from a shift in public opinion, which hasn't changed much on abortion over the past decade, than in the boundaries of the debate.
[21615015] |New Jersey's own highest court remains a liberal bulwark against major restrictions on abortion, but the U.S. Supreme Court ruling, Webster vs. Missouri, has engaged voters across the nation who had been insulated from the issue.

[21615016] |Before July, pro-choice voters could safely make political decisions without focusing narrowly on abortion.
[21615017] |Now, the threat of further restrictions adds a new dimension, bringing an upsurge in political activity by abortion-rights forces.
[21615018] |A recent pro-choice rally in Trenton drew thousands, and in a major reversal, Congress is defying a presidential veto and demanding that Medicaid abortions be permitted in cases of rape and incest.

[21615019] |"If Webster hadn't happened, you wouldn't be here," Linda Bowker tells a reporter in the Trenton office of the National Organization for Women.
[21615020] |"We could have shouted from the rooftops about Courter . . . and no one would have heard us."

[21615021] |New Jersey is a proving ground for this aggressive women's-rights movement this year.
[21615022] |The infusion of activists can bring a clash of cultures.
[21615023] |In Cherry Hill, the National Abortion Rights Action League, whose goal is to sign up 50,000 pro-choice voters, targets a union breakfast to build labor support for its cause.
[21615024] |The league organizers seem more a fit with a convention next door of young aerobics instructors in leotards than the beefy union leaders; "I wish I could go work out," says a slim activist.
[21615025] |A labor chief speaks sardonically of having to "man and woman" Election Day phones.

[21615026] |No age group is more sensitive than younger voters, like Ms. Ehman.
[21615027] |A year ago this fall, New Jersey voters under 30 favored George Bush by 56% to 39% over Michael Dukakis, according to a survey then by Rutgers University's Eagleton Institute.
[21615028] |A matching Eagleton-Newark Star Ledger poll last month showed a complete reversal.
[21615029] |Voters in the same age group backed Democrat Florio 55% to 29% over Republican Courter.

[21615030] |Abortion alone can't explain this shift, but New Jersey is a model of how so personal an issue can become a baseline of sorts in judging a candidate.
[21615031] |By a 2-to-1 ratio, voters appear more at ease with Mr. Florio's stance on abortion, and polls indicate his lead widens when the candidates are specifically linked to the issue.

[21615032] |"The times are my times," says Mr. Florio.
[21615033] |The Camden County congressman still carries himself with a trademark "I'm-coming-down-your-throat" intensity, but at a pause in Newark's Columbus Day parade recently, he was dancing with his wife in the middle of the avenue in the city's old Italian-American ward.
[21615034] |After losing by fewer than 1,800 votes in the 1981 governor's race, he has prepared himself methodically for this moment, including deciding in recent years he could no longer support curbs on federal funding for Medicaid abortions.

[21615035] |"If you're going to be consistent and say it is a constitutionally protected right," he asks, "how are you going to say an upscale woman who can drive to the hospital or clinic in a nice car has a constitutional right and someone who is not in great shape financially does not?"

[21615036] |Mr. Courter, by comparison, seems a shadow of the confident hawk who defended Oliver North before national cameras at Iran-Contra hearings two years ago.
[21615037] |Looking back, he says he erred by stating his "personal" opposition to abortion instead of assuring voters that he wouldn't impose his views on "policy" as governor.
[21615038] |It is a distinction that satisfies neither side in the debate.

[21615039] |"He doesn't know himself," Kathy Stanwick of the Abortion Rights League says of Mr. Courter's position.
[21615040] |Even abortion opponents, however angry with Mr. Florio, can't hide their frustration with the Republican's ambivalence.
[21615041] |"He doesn't want to lead the people," says Richard Traynor, president of New Jersey Right to Life.

[21615042] |Moreover, by stepping outside the state's pro-choice tradition, Mr. Courter aggravates fears that he is too conservative as well on more pressing concerns such as auto insurance rates and the environment.
[21615043] |He hurt himself further this summer by bringing homosexual issues into the debate; and by wavering on this issue and abortion, he has weakened his credibility in what is already a mean-spirited campaign on both sides.

[21615044] |Elected to Congress in 1978, the 48-year-old Mr. Courter is part of a generation of young conservatives who were once very much in the lead of the rightward shift under Mr. Reagan.
[21615045] |Like many of his colleagues, he didn't serve in Vietnam in the 1960s yet embraced a hawkish defense and foreign policy -- even voting against a 1984 resolution critical of the U.S. mining of Nicaraguan harbors.

[21615046] |Jack Kemp and the writers Irving Kristol and George Gilder were influences, and Mr. Courter's own conservative credentials proved useful to the current New Jersey GOP governor, Thomas Kean, in the 1981 Republican primary here.

[21615047] |The same partnership is now crucial to Mr. Courter's fortunes, but the abortion issue is only a reminder of the gap between his record and that of the more moderate, pro-choice Gov. Kean.
[21615048] |While the Warren County congressman pursued an anti-government, anti-tax agenda in Washington, Gov. Kean was approving increased income and sales taxes at home and overseeing a near doubling in the size of New Jersey's budget in his eight years in office.

[21615049] |Kean forces play down any differences with Mr. Courter, but this history makes it harder for the conservative to run against government.
[21615050] |Mr. Courter's free-market plan to bring down auto insurance rates met criticism from Gov. Kean's own insurance commissioner.
[21615051] |Mr. Courter is further hobbled by a record of votes opposed to government regulation on behalf of consumers.

[21615052] |Fluent in Spanish from his days in the Peace Corps, Mr. Courter actively courts minority voters but seems oddly over his head.
[21615053] |He is warm and polished before a Puerto Rican Congress in Asbury Park.
[21615054] |Yet minutes after promising to appoint Hispanics to high posts in state government, he is unable to say whether he has ever employed any in his congressional office.
[21615055] |"I don't think we do now," he says.
[21615056] |"I think we did."

[21615057] |Asked the same question after his appearance, Democrat Florio identifies a staff member by name and explains her whereabouts today.
[21615058] |When he is presented with a poster celebrating the organization's 20th anniversary, he recognizes a photograph of one of the founders and recalls time spent together in Camden.

[21615059] |Details and Camden are essential Florio.
[21615060] |Elected to Congress as a "Watergate baby" in 1974, he ran for governor three years later.
[21615061] |In the opinion of many, he hasn't stopped running since, even though he declined a rematch with Gov. Kean in 1985.
[21615062] |His base in South Jersey and on the House Energy and Commerce Committee helped him sustain a network of political-action committees to preserve his edge.
[21615063] |With limited budgets for television in a high-priced market, Mr. Florio's higher recognition than his rival is a major advantage.

[21615064] |More than ever, his pro-consumer and pro-environment record is in sync with the state.
[21615065] |Auto insurance rates are soaring.
[21615066] |A toxic-waste-dump fire destroyed part of an interstate highway this summer.
[21615067] |In Monmouth, an important swing area, Republican freeholders now run on a slogan promising to keep the county "clean and green."

[21615068] |Mr. Florio savors this vindication, but at age 52, the congressman is also a product of his times and losses.
[21615069] |He speaks for the death penalty as if reading from Exodus 21; to increase state revenue he focuses not on "taxes" but on "audits" to cut waste.
[21615070] |Hard-hitting consultants match ads with Mr. Courter's team, and Mr. Florio retools himself as the lean, mean Democratic fighting machine of the 1990s.
[21615071] |Appealing to a young audience, he scraps an old reference to Ozzie and Harriet and instead quotes the Grateful Dead.
[21615072] |The lyric chosen -- "long strange night" -- may be an apt footnote to television spots by both candidates intended to portray each other as a liar.

[21615073] |The Democratic lawmaker fits a pattern of younger reformers arising out of old machines, but his ties to Camden remain a sore point because of the county's past corruption.
[21615074] |His campaign hierarchy is chosen from elsewhere in the state, and faced with criticism of a sweetheart bank investment, he has so far blunted the issue by donating the bulk of his profits to his alma mater, Trenton State College.

[21615075] |Mr. Florio's forcefulness on the abortion issue after the Webster ruling divides some of his old constituency.
[21615076] |Pasquale Pignatelli, an unlikely but enthusiastic pipe major in an Essex County Irish bagpipe band, speaks sadly of Mr. Florio.
[21615077] |"I am a devout Catholic," says Mr. Pignatelli, a 40-year-old health officer.
[21615078] |"I can't support him because of abortion."

[21615079] |Bill Wames Sr., 72, is Catholic too, but unfazed by Mr. Florio's stand on abortion.
[21615080] |A security guard at a cargo terminal, he wears a Sons of Italy jacket and cap celebrating "The US 1 Band."
[21615081] |"I still think the woman has the right to do with her body as she pleases," he says.
[21615082] |"If you want more opinions ask my wife.
[21615083] |She has lots of opinions.

[21616001] |Consumer prices rose a surprisingly moderate 0.2% in September, pushed up mostly by a jump in clothing costs, the Labor Department reported.

[21616002] |Energy costs, which drove wholesale prices up sharply during the month, continued to decline at the retail level, pulling down transportation and helping to ease housing costs.

[21616003] |The report was the brightest news the financial markets had seen since before the stock market plunged more than 190 points last Friday.
[21616004] |The Dow Jones Industrial Average rallied on the news, closing 39.55 points higher at 2683.20.
[21616005] |Bond prices also jumped as traders appeared to read the data as a sign that interest rates may fall.

[21616006] |But many economists were not nearly as jubilant.
[21616007] |The climb in wholesale energy prices is certain to push up retail energy prices in the next few months, they warned.
[21616008] |They also said the dollar is leveling off after a rise this summer that helped to reduce the prices of imported goods.

[21616009] |"I think inflation is going to pick up through the fall," said Joel Popkin, a specialist on inflation who runs an economic consulting firm here.
[21616010] |"It has been in what I would describe as a lull for the past several months."

[21616011] |"We've had whopping declines in consumer energy prices in each of the past three months, and at the wholesale level those are fully behind us now," said Jay Woodworth, chief domestic economist at Bankers Trust Co. in New York.

[21616012] |Because wholesale energy prices shot up by a steep 6.5% last month, many analysts expected energy prices to rise at the consumer level too.
[21616013] |As a result, many economists were expecting the consumer price index to increase significantly more than it did.

[21616014] |But retail energy prices declined 0.9% in September.
[21616015] |Though analysts say competition will probably hold down increases in retail energy prices, many expect some of the wholesale rise to be passed along to the consumer before the end of the year.

[21616016] |Still, some analysts insisted that the worst of the inflation is behind.
[21616017] |"It increasingly appears that 1987-88 was a temporary inflation blip and not the beginning of a cyclical inflation problem," argued Edward Yardeni, chief economist at Prudential-Bache Securities Inc. in New York.

[21616018] |In both 1987 and 1988, consumer prices rose 4.4%.
[21616019] |A run-up in world oil prices last winter sent consumer prices soaring at a 6.7% annual rate in the first five months of this year, but the subsequent decline in energy prices has pulled the annual rate back down to 4.4%.

[21616020] |Mr. Yardeni predicted that world business competition will continue to restrain prices.
[21616021] |"The bottom line is, it seems to me that the economic environment has become very, very competitve for a lot of businesses," he said.
[21616022] |"Back in 1987-88, business was operating at fairly tight capacity, so businesses felt they could raise prices."
[21616023] |Now, he said, a slowdown in economic activity has slackened demand.

[21616024] |The mild inflation figures renewed investors' hopes that the Federal Reserve will ease its interest-rate stance.
[21616025] |The steep climb in producer prices reported last Friday fostered pessimism about lower interest rates and contributed to the stock market's 6.9% plunge that day.
[21616026] |In the past several days, however, the U.S.'s central bank has allowed a key interest rate to fall slightly to try to stabilize the markets.
[21616027] |Analysts say Fed policy makers have been wary of relaxing credit too much because they were still uncertain about the level of inflation in the economy.

[21616028] |Excluding the volatile categories of energy and food -- leaving what some economists call the core inflation rate -- consumer prices still rose only 0.2% in September.
[21616029] |Transportation costs actually fell 0.5%, and housing costs gained only 0.1%.
[21616030] |Apparel prices rocketed up 1.7%, but that was after three months of declines.
[21616031] |Medical costs continued their steep ascent, rising 0.8% after four consecutive months of 0.7% increases.

[21616032] |Car prices, another area that contributed to the steep rise in the wholesale index last month, still showed declines at the consumer level.
[21616033] |They dropped 0.4% as dealers continued to offer rebates to attract customers.

[21616034] |Food prices rose 0.2% for the second month in a row, far slower than the monthly rises earlier in the year.

[21616035] |Separately, the Labor Department reported that average weekly earnings rose 0.3% in September, after adjusting for inflation, following a 0.7% decline in August.

[21616036] |All the numbers are adjusted for seasonal fluctuations.

[21616037] |Here are the seasonally adjusted changes in the components of the Labor Department's consumer price index for September.

[21617001] |After watching interest in the sport plummet for years, the ski industry is trying to give itself a lift.

[21617002] |Across the country, resorts are using everything from fireworks to classical-music concerts to attract new customers.
[21617003] |Some have built health spas, business centers and shopping villages so visitors have more to do than ski.
[21617004] |And this week, the industry's efforts will go national for the first time when it unveils a $7 million advertising campaign.

[21617005] |Such efforts -- unheard of only a few years ago -- are the latest attempts to revive the sagging $1.76 billion U.S. ski industry.
[21617006] |Since the start of the decade, lift-ticket sales have grown only 3% a year on average, compared with 16% annual growth rates in the '60s and '70s.
[21617007] |Last season, lift-ticket sales fell for the first time in seven years.
[21617008] |By some estimates, nearly a fourth of all U.S. ski areas have been forced to shut down since the early '80s.

[21617009] |Competition and mounting insurance and equipment costs have been the undoing of many resorts.
[21617010] |But another big problem has been the aging of baby boomers.
[21617011] |Skiing, after all, has mainly been for the young and daring and many baby boomers have outgrown skiing or have too many family responsibilities to stick with the sport.

[21617012] |In its new ad campaign, created by D'Arcy Masius Benton & Bowles Inc., Chicago, the ski industry is trying to change its image as a sport primarily for young white people.
[21617013] |One 60-second TV spot features a diverse group of skiers gracefully gliding down sun-drenched slopes: senior citizens, minorities, families with children -- even a blind skier.
[21617014] |"Ski school is great," cries out a tot, bundled in a snowsuit as he plows down a bunny slope.
[21617015] |"You'll never know 'til you try," says a black skier.

[21617016] |"We used to show some hot-dog skier in his twenties or thirties going over the edge of a cliff," says Kathe Dillmann, a spokeswoman for the United Ski Industries Association, the trade group sponsoring the campaign.

[21617017] |Ski promotions have traditionally avoided the touchy issue of safety.
[21617018] |But the new commercials deal with it indirectly by showing a woman smiling as she tries to get up from a fall.
[21617019] |"We wanted to show it's okay if you fall," says Ms. Dillmann.
[21617020] |"Most people think if you slip, you'll wind up in a body cast."

[21617021] |The ad campaign represents an unusual spirit of cooperation among resorts and ski equipment makers; normally, they only run ads hyping their own products and facilities.
[21617022] |But in these crunch times for the ski industry, some resorts, such as the Angel Fire, Red River and Taos ski areas in New Mexico, have even started shuttle-busing skiers to each other's slopes and next year plan to sell tickets good for all local lifts.

[21617023] |Many resorts also are focusing more on the service side of their business.
[21617024] |Since 40% of skiers are parents, many slopes are building nurseries, expanding ski schools and adding entertainment for kids.
[21617025] |Vail, Colo., now has a playland that looks like an old mining town; kids can ski through and pan for fool's gold.
[21617026] |For $15, they can enjoy their own nightly entertainment, with dinner, without mom and dad.

[21617027] |A few years ago, parents usually had to hire a sitter or take turns skiing while one spouse stayed with the children.
[21617028] |"Most parents who had to go through that never came back," says Michael Shannon, president of Vail Associates Inc., which owns and operates the Vail and nearby Beaver Creek resorts.

[21617029] |To make skiing more convenient for time-strapped visitors, several resorts are buying or starting their own travel agencies.
[21617030] |In one phone call, ski buffs can make hotel and restaurant reservations, buy lift tickets, rent ski equipment and sign up for lessons.
[21617031] |And resorts are adding other amenities, such as pricey restaurants, health spas and vacation packages with a twist.
[21617032] |During Winter Carnival week, for example, visitors at Sunday River in Maine can take a hot-air balloon ride.

[21617033] |"People these days want something else to do besides ski and sit in the bar," says Don Borgeson, executive director of Angel Fire, N.M.'s Chamber of Commerce.

[21617034] |The ski industry hopes to increase the number of skiers by 3.5 million to about 21.7 million in the next five years with its latest ads and promotions.
[21617035] |But some think that's being overly optimistic.

[21617036] |For one thing, it may be tough to attract people because skiing is still expensive: a lift ticket can cost up to $35 a day and equipment prices are rising.
[21617037] |And most vacationers still prefer a warm climate for their winter excursions.
[21617038] |An American Express Co. survey of its travel agents revealed that only 34% believe their clients will pick a trip this winter based on the availability of winter sports, as opposed to 69% who think that warm-weather sports will be the deciding factor.

[21617039] |"Even if they could bring in that many new skiers, I don't know if {the industry} could handle that kind of an increase," says I. William Berry, editor and publisher of the Ski Industry Letter in Katonah, N.Y.
[21617040] |"Most people will come on the weekend, the slopes will be overcrowded and then these {new skiers} won't come back.

[21618001] |They didn't play the third game of the World Series on Tuesday night as scheduled, and they didn't play it on Wednesday or Thursday either.
[21618002] |But you knew that, didn't you?

[21618003] |They are supposed to play the game next Tuesday, in Candlestick Park here.
[21618004] |The theory is that the stadium, damaged by Tuesday's earthquake, will be repaired by then, and that people will be able to get there.
[21618005] |Like just about everything else, that remains to be seen.
[21618006] |Aftershocks could intervene.
[21618007] |But, at least, the law of averages should have swung to the favorable side.

[21618008] |It may seem trivial to worry about the World Series amid the destruction to the Bay Area wrought by Tuesday's quake, but the name of this column is "On Sports," so I feel obliged to do so.
[21618009] |You might be interested to know that baseball, not survival, appeared to be the first thought of most of the crowd of 60,000-odd that had gathered at Candlestick at 5:04 p.m. Tuesday, a half-hour before game time, when the quake struck.
[21618010] |As soon as the tremor passed, many people spontaneously arose and cheered, as though it had been a novel kind of pre-game show.

[21618011] |One fan, seated several rows in front of the open, upper-deck auxiliary press section where I was stationed, faced the assembled newsies and laughingly shouted, "We arranged that just for you guys!"
[21618012] |I thought and, I'm sure, others did: "You shouldn't have bothered."

[21618013] |I'd slept through my only previous brush with natural disaster, a tornado 15 or so summers ago near Traverse City, Mich., so I was unprepared for one reaction to such things: the urge to talk about them.
[21618014] |Perhaps primed by the daily diet of radio and TV reporters thrusting microphones into people's faces and asking how they "feel" about one calamity or another, fellow reporters and civilians who spied my press credential were eager to chat.

[21618015] |"It felt like I was on a station platform and a train went by," said one man, describing my own reaction.
[21618016] |A women said she saw the park's light standards sway.
[21618017] |A man said he saw the upper rim undulate.
[21618018] |I saw neither.

[21618019] |Dictates of good sense to the contrary not withstanding, the general inclination was to believe that the disturbance would be brief and that ball would be played.
[21618020] |"I was near the top of the stadium, and saw a steel girder bow six feet from where I sat, but I stayed put for 10 or 15 minutes," confessed a friend.
[21618021] |"I guess I thought, `This is the World Series and I'm not gonna wimp out!'"

[21618022] |Here in the Global Village, though, folks do not stay uninformed for long.
[21618023] |Electrical power was out in still-daylighted Candlestick Park, but battery-operated radios and television sets were plentiful.
[21618024] |Within a few minutes, the true extent of the catastrophe was becoming clear.
[21618025] |Its Richter Scale measurement was reported as 6.5, then 6.9, then 7.0.
[21618026] |A section of the Bay Bridge had collapsed, as had a part of Interstate Highway 880 in Oakland.
[21618027] |People had died.

[21618028] |At 5:40 p.m., scheduled game time having passed, some fans chanted "Let's Play Ball."
[21618029] |No longer innocent, they qualified as fools.
[21618030] |The stadium was ordered evacuated soon afterward; the announcement, made over police bullhorns, cited the power outage, but it later was revealed that there also had been damage of the sort reported by my friend.
[21618031] |Outside, I spotted two young men lugging blocks of concrete.
[21618032] |"Pieces of Candlestick," they said.

[21618033] |The crowd remained good natured, even bemused.
[21618034] |TV reporters interviewed fans in the parking lots while, a few feet away, others watched the interviews on their portable TVs.
[21618035] |The only frenzy I saw was commercial: Booths selling World Series commemorative stamps and dated postmarks were besieged by fledgling speculators who saw future profit in the items.

[21618036] |The traffic jam out of the park was monumental.
[21618037] |It took me a half-hour to move 10 feet from my parking spot in an outer lot to an aisle, and an additional hour to reach an inner roadway a half-block away.
[21618038] |The six-mile trip to my airport hotel that had taken 20 minutes earlier in the day took more than three hours.

[21618039] |At my hotel, the Westin, power was out, some interior plaster had broken loose and there had been water damage, but little else.
[21618040] |With Garpian randomness, a hotel across the street, the Amfac, had been hit harder: A large sheet of its concrete facade and several window balconies were torn away.

[21618041] |The Westin staff had, kindly, set out lighted candles in the ballroom, prepared a cold-cuts buffet and passed around pillows and blankets.
[21618042] |I fell asleep on the lobby floor, next to a man wearing a Chicago Cubs jacket.
[21618043] |I expected him to say, "I told you so," but he already was snoring.

[21618044] |The journalistic consensus was that the earthquake made the World Series seem unimportant.
[21618045] |My response was that sports rarely are important, only diverting, and the quake merely highlighted that fact.

[21618046] |Should the rest of the Series be played at all?
[21618047] |Sure.
[21618048] |The quake and baseball weren't related, unlike the massacre of athletes that attended the 1972 Olympics.
[21618049] |That heavily politicized event learned nothing from the horrifying experience, and seems doomed to repeat it.

[21618050] |Two ironies intrude.
[21618051] |This has been widely dubbed the BART Series, after the local subway line, and the Bay Bridge Series.
[21618052] |Flags fly at half-staff for the death of Bart Giamatti, the late baseball commissioner, and now the Bay Bridge lies in ruins.
[21618053] |A Series that was shaping up as the dullest since the one-sided Detroit-over-San Diego go of 1984 has become memorable in the least fortunate way.
[21618054] |Still, its edge is lost.
[21618055] |It now will be played mostly for the record, and should be wrapped up as quickly as possible, without "off" days.

[21618056] |And I will never again complain about a rainout.

[21619001] |The disarray in the junk-bond market that began last month with a credit crunch at Campeau Corp. has offered commercial banks a golden opportunity to play a greater role in financing billion-dollar takeovers.

[21619002] |But two big New York banks seem to have kicked those chances away, for the moment, with the embarrassing failure of Citicorp and Chase Manhattan Corp. to deliver $7.2 billion in bank financing for a leveraged buy-out of United Airlines parent UAL Corp.

[21619003] |For more than a decade, banks have been pressing Congress and banking regulators for expanded powers to act like securities firms in playing Wall Street's lucrative takeover game, from giving mergers advice all the way to selling and trading high-yield junk bonds.

[21619004] |Those expanded powers reached their zenith in July when Bankers Trust New York Corp. provided mergers advice, an equity investment and bank loans for the $3.65 billion leveraged buy-out of Northwest Airlines parent NWA Inc.

[21619005] |One of the major selling points used by Los Angeles financier Alfred Checchi in getting the takeover approved was that the deal didn't include any junk bonds.
[21619006] |That was seen as an advantage in lobbying airline employees and Washington regulators for approval of the contested takeover.
[21619007] |All $3.35 billion in debt for the deal was supplied by banks.

[21619008] |Charles Nathan, co-head of mergers and acquisitions at Salomon Brothers Inc., says it is natural for banks to try to expand beyond their bread-and-butter business of providing senior debt for buy-outs.
[21619009] |But the UAL collapse, he says, "may tell you it's not going to work that easily."

[21619010] |David Batchelder, a mergers adviser in La Jolla, Calif., who aided Los Angeles investor Marvin Davis on the bids which put both UAL and NWA in play as takeover candidates this year, says that banks have been "preparing to play a larger and larger role in acquisition financing."

[21619011] |Mr. Batchelder says that in the past, banks would normally have loaned 65% of a total buy-out price, with the loans secured by the target company's assets.
[21619012] |Another 20% of the borrowed funds would come from the sale to investors of junk bonds, which offer less security and typically carry higher yields than bank loans.
[21619013] |Mr. Checchi's purchase of NWA, Mr. Batchelder notes, "was probably the most aggressive to date," with bank debt at 85% of the purchase price.

[21619014] |But Mr. Batchelder says that Citicorp's "failure to deliver" on its promise to raise the UAL bank debt for a labor-management buy-out group "is very distressing to potential users of a `highly-confident' letter from commercial banks."
[21619015] |His client, Mr. Davis, used just such a letter from Citicorp in pursuing UAL; Citicorp later agreed to work with a competing UAL buy-out group.

[21619016] |Executives of Citicorp and Chase Manhattan declined to comment on either the UAL situation, or on the changing nature of banks' role in financing takeovers.

[21619017] |In the wake of Campeau's problems, prices of junk bonds tumbled, throwing into doubt the ability of corporate acquirers to finance large takeovers with the help of junk bond sales.

[21619018] |Mark Solow, senior managing director at Manufacturers Hanover Trust Co., says the falloff in junk bonds may yet open new business opportunities to banks in structuring takeovers.
[21619019] |But he warns that banks will have "to have enough discipline" not to make loans that are too risky.

[21619020] |In fact, Manufacturers Hanover said in its third-quarter earnings report that fees from syndicating loans to other banks dropped 48%, to $21 million.
[21619021] |"We didn't take part in a lot of deals because their credit quality was poor," says a bank spokesman.

[21619022] |James B. Lee, head of syndications and private placements at Chemical Banking Corp., said he believes banks can still make a credible offer of one-stop shopping for takeover finance.
[21619023] |As evidence, he cites yesterday's arrangement for the final financing of a $3 billion bid for American Medical International Inc. in which Chemical served as both the lead bank and an equity investor.

[21619024] |Beyond the current weakness in the junk bond market, banks have another advantage over investment banks in financing contested takeovers.
[21619025] |Arthur Fleischer Jr., a takeover lawyer at Fried Frank Harris Shriver & Jacobson, notes that "a political and emotional bias" has developed against junk bonds.

[21619026] |One hostile bidder who deliberately avoided using junk bonds was Paramount Communications Inc. in its initial offer to acquire Time Inc. for $10.7 billion, or $175 a share.
[21619027] |A Paramount spokesman says that decision was based on the financial, not political, drawbacks of junk bonds.

[21619028] |But some observers believe Paramount Chairman Martin Davis wanted to avoid the possible taint of being perceived as a corporate raider in his controversial bid for Time.
[21619029] |In the end, Mr. Davis used junk bonds so that he could raise Paramount's bid to $200 a share.
[21619030] |Some Monday-morning quarterbacks said the initial lower bid, without junk bonds, was a factor in his losing the company.
[21619031] |Time eluded Paramount by acquiring Warner Communications Inc.

[21619032] |The success of the NWA financing, and the failure of the UAL deal, also seem to highlight the important new role in takeover financing being played by Japanese banks.

[21619033] |Japanese banks accounted for 50% of the NWA bank debt, according to a report by Transportation Secretary Samuel Skinner.
[21619034] |But it was broad-scale rejection by Japanese banks that helped seal the fate of the attempt to buy UAL.
[21619035] |Citicorp and Chase are attempting to put together a new, lower bid.

[21619036] |Takanori Mizuno, chief economist of the Institute for Financial Affairs Inc., a Tokyo research center on finance and economics, says, "The junk bond market became very jittery, and there's a fear of a coming recession and the possible bankruptcy of LBO companies.

[21620001] |Harley-Davidson Inc. filed suit in federal court here, alleging that a group that holds 6.2% of its stock made "false, deceptive and misleading" statements in recent regulatory filings and public announcements.

[21620002] |Harley-Davidson's complaint claims that the group, led by investor Malcolm I. Glazer, violated securities laws by failing to disclose plans to purchase 15% of the company's shares outstanding and that when the required Hart-Scott-Rodino filing eventually was made, it didn't disclose the group's alleged earlier violation of the so-called prior-notice requirements of the law.

[21620003] |Mr. Glazer couldn't immediately be reached to comment.
[21620004] |But when Harley last week publicly questioned the legality of the group's filing procedures, the Rochester, N.Y., investor said "we complied with every law," and he denied any wrongdoing.

[21620005] |The Glazer group said in a Securities and Exchange Commission filing in early October that it may seek a controlling interest in Harley-Davidson, or seek representation on the company's board.
[21620006] |Harley has said it doesn't intend to be acquired by the Glazer group or any other party.

[21621001] |Inland Steel Industries Inc., battered by lower volume and higher costs, posted a 75% drop in third-quarter earnings.

[21621002] |The nation's fourth-largest steelmaker earned $18.3 million, or 43 cents a share, compared with $61 million, or $1.70 a share, a year earlier, when the industry was enjoying peak demand and strong pricing.
[21621003] |Sales fell to $981.2 million from $1.02 billion.

[21621004] |The earnings also mark a significant drop from the second quarter's $45.3 million or $1.25 a share.
[21621005] |Moreover, the earnings were well below analysts' expectations of about $1.16 a share.

[21621006] |In composite trading on the New York Stock Exchange, Inland closed yesterday at $35.875 a share, down $1.

[21621007] |The company attributed the earnings drop to lower volume related to seasonal demand and the soft consumer durable market, especially in the automotive sector.
[21621008] |However, the company also lost orders because of prolonged labor talks in the second quarter.
[21621009] |Third-quarter shipments slipped 7% from the year-ago period, and 17% from this year's second quarter.

[21621010] |Profit of steel shipped for the company's steel segment slid to $26 a ton, from $66 a ton a year earlier and $57 a ton a quarter earlier.

[21621011] |Analysts noted that the disappointing results don't reflect lower prices for steel products.
[21621012] |Charles Bradford, an analyst with Merrill Lynch Capital Markets, said higher prices for galvanized and cold-rolled products offset lower prices for bar, hot-rolled and structural steel.
[21621013] |Structural steel, which primarily serves the construction market, was especially hurt by a 15% price drop, Mr. Bradford said.

[21621014] |The company said its integrated steel sector was also hurt by higher raw material, repair and maintenance, and labor costs.
[21621015] |The increased labor costs became effective Aug. 1 under terms of the four-year labor agreement with the United Steelworkers union.
[21621016] |Meanwhile, the company's service center segment, which saw operating profit drop to $11.5 million from $30.7 million a year ago, experienced much of the same demand and cost problems, as well as start-up costs associated with a coil processing facility in Chicago and an upgraded computer information system.

[21621017] |Inland Chairman Frank W. Luerssen said the company's short-term outlook is "clouded by uncertainties in the economy and financial markets."
[21621018] |However, he noted that steel mill bookings are up from early summer levels, and that he expects the company to improve its cost performance in the fourth quarter.

[21621019] |In the first nine months, profit was $113 million, or $3.04 a share, on sales of $3.19 billion, compared with $204.5 million, or $5.76 a share, on sales of $3.03 billion, a year earlier.

[21622001] |The "seismic" activity of a financial market bears a resemblance to the seismic activity of the earth.
[21622002] |When things are quiet (low volatility), the structures on which markets stand can be relatively inefficient and still perform their functions adequately.
[21622003] |However, when powerful forces start shaking the market's structure, the more "earthquake-resistant" it is, the better its chance for survival.

[21622004] |America's financial markets do not yet have all the required modern features required to make them fully "aftershock-resistant."
[21622005] |Investors lack equal access to the markets' trading arena and its information.

[21622006] |That structural lack is crucial because investors are the only source of market liquidity.
[21622007] |And liquidity is what markets need to damp quakes and aftershocks.
[21622008] |In today's markets, specialists (on the New York Stock Exchange) and "upstairs" market makers (in the over-the-counter market) are the only market participants allowed to play a direct role in the price-determination process.
[21622009] |When they halt trading, all market liquidity is gone.
[21622010] |And when any component of the market -- cash, futures or options -- loses liquidity, the price discovery system (the way prices are determined) becomes flawed or is lost entirely for a time.

[21622011] |Last Friday the 13th (as well as two years ago this week) the markets became unlinked.
[21622012] |When that happened, "seismic" tremors of fear -- much like the shock waves created by an earthquake -- coursed through the market and increased the market's volatility.
[21622013] |Lack of important, needed information can cause fear.
[21622014] |Fear is the father of panic.
[21622015] |Panic frequently results in irrational behavior.
[21622016] |And in financial markets, irrational behavior is sometimes translated into catastrophe.

[21622017] |When market tremors start, it is crucial that as much information about transaction prices and the supply-demand curve (buy and sell orders at various prices) be made available to all, not just to market makers.
[21622018] |Because of a lack of information and access, many investors -- including the very ones whose buying power could restore stability and damp volatility -- are forced to stand on the sidelines when they are most needed, because of their ignorance of important market information.
[21622019] |To add aftershock-damping power to America's markets, a modern, electronic trading system should be implemented that permits equal access to the trading arena (and the information that would automatically accompany such access) by investors -- particularly institutional investors.

[21622020] |Contrary to some opinions, the trading activities of specialists and other market makers do not provide liquidity to the market as a whole.
[21622021] |What market makers provide is immediacy, a very valuable service.
[21622022] |Liquidity is not a service.
[21622023] |It is a market attribute -- the ability to absorb selling orders without causing significant price changes in the absence of news.

[21622024] |Market makers buy what investors wish to sell; their business is reselling these unwanted positions as quickly as possible to other investors, and at a profit.
[21622025] |As a result, while any one customer may purchase immediacy by selling to a market maker (which is micro-liquidity for the investor), the market as a whole remains in the same circumstances it was before the transaction: The unwanted position is still an unwanted position; only the identity of the seller has changed.
[21622026] |In fact it can be argued that increasing capital commitments by market makers (a result of some post-1987 crash studies) also increases market volatility, since the more securities are held by market makers at any given time, the more selling pressure is overhanging the market.

[21622027] |In an open electronic system, any investor wishing to pay for real-time access to the trading arena through a registered broker-dealer would be able to see the entire supply-demand curve (buy and sell orders at each price) entered by dealers and investors alike, and to enter and execute orders.
[21622028] |Current quotations would reflect the combined financial judgment of all market participants -- not just those of intermediaries who become extremely risk-averse during times of crisis.

[21622029] |Investors and professionals alike would compete on the level playing field Congress sought and called a "national market system" (not yet achieved) almost 15 years ago when it passed the Securities Reform Act of 1975.

[21622030] |Last Friday's market gyrations did not result in severe "aftershocks."
[21622031] |Were we smart or just lucky?
[21622032] |I'm not certain.
[21622033] |But I am sure we need to maximize our "earthquake" protection by making certain that our market structures let investors add their mighty shock-damping power to our nation's markets.

[21622034] |Mr. Peake is chairman of his own consulting company in Englewood, N.J.

[21623001] |NOW YOU SEE IT, now you don't.

[21623002] |The recession, that is.
[21623003] |The economy's stutter steps leave investors wondering whether things are slowing down or speeding up.
[21623004] |So often are government statistics revised that they seem to resemble a spinning weather vane.

[21623005] |For the past seven years, investors have had the wind at their backs, in the form of a generally growing economy.
[21623006] |Some may have forgotten -- and some younger ones may never have experienced -- what it's like to invest during a recession.
[21623007] |Different tactics are called for, as losing money becomes easier and making money becomes tougher.

[21623008] |For those investors who believe -- or fear -- that 1990 will be a recession year, many economists and money managers agree on steps that can be taken to lower the risks in a portfolio.

[21623009] |In a nutshell, pros advise investors who expect a slowdown to hold fewer stocks than usual and to favor shares of big companies in "defensive" industries.
[21623010] |A heavy dose of cash is prescribed, along with a heavier-than-usual allotment to bonds -- preferably government bonds.

[21623011] |It's tempting to think these defensive steps can be delayed until a recession is clearly at hand.
[21623012] |But that may not be possible, because recessions often take investors by surprise.
[21623013] |"They always seem to come a bit later than you expect.
[21623014] |When they do hit, they hit fast," says David A. Wyss, chief financial economist at the Data Resources division of McGraw-Hill Inc.

[21623015] |Though he himself doesn't expect a recession soon, Mr. Wyss advises people who do that "the best thing to be in is long that is, 20-year to 30-year Treasury bonds."

[21623016] |The reason is simple, Mr. Wyss says: "Interest rates almost always decline during recession."
[21623017] |As surely as a seesaw tilts, falling interest rates force up the price of previously issued bonds.
[21623018] |They are worth more because they pay higher interest than newly issued bonds do.

[21623019] |That effect holds true for both short-term and long-term bonds.
[21623020] |But short-term bonds can't rise too much, because everyone knows they will be redeemed at a preset price fairly soon.
[21623021] |Long-term bonds, with many years left before maturity, swing more widely in price.

[21623022] |But not just any bonds will do.
[21623023] |Corporate bonds "are usually not a good bet in a recession," Mr. Wyss says.
[21623024] |As times get tougher, investors fret about whether companies will have enough money to pay their debts.
[21623025] |This hurts the price of corporate bonds.
[21623026] |Also, he notes, "most corporate bonds are callable."

[21623027] |That means that a corporation, after a specified amount of time has passed, can buy back its bonds by paying investors the face value (plus, in some cases, a sweetener).
[21623028] |When interest rates have dropped, it makes sense for corporations to do just that; they then save on interest costs.
[21623029] |But the investors are left stranded with money to reinvest at a time when interest rates are puny.

[21623030] |If corporate bonds are bad in recessions, junk bonds are likely to be the worst of all.
[21623031] |It's an "absolute necessity" to get out of junk bonds when a recession is in the offing, says Avner Arbel, professor of finance at Cornell University.
[21623032] |"Such bonds are very sensitive to the downside, and this could be a disaster."

[21623033] |Municipal bonds are generally a bit safer than corporate bonds in a recession, but not as safe as bonds issued by the federal government.
[21623034] |During an economic slump, local tax revenues often go down, raising the risks associated with at least some municipals.
[21623035] |And, like corporates, many municipal bonds are callable.

[21623036] |But a few experts, going against the consensus, don't think bonds would help investors even if a recession is in the offing.
[21623037] |One of these is Jeffrey L. Beach, director of research for Underwood Neuhaus & Co., a brokerage house in Houston, who thinks that "we're either in a recession or about to go into one."
[21623038] |What's more, he thinks this could be a nastier recession than usual: "Once the downturn comes, it's going to be very hard to reverse."

[21623039] |Investors, he advises, "should be cautious," holding fewer stocks than usual and also shunning bonds.
[21623040] |Because he sees a "5% to 6% base rate of inflation in the economy," he doubts that interest rates will fall much any time soon.

[21623041] |Instead, Mr. Beach says, investors "probably should be carrying a very high level of cash," by which he means such so-called cash equivalents as money-market funds and Treasury bills.
[21623042] |Greg Confair, president of Sigma Financial Inc. in Allentown, Pa., also recommends that investors go heavily for cash.
[21623043] |He isn't sure a recession is coming, but says the other likely alternative -- reignited inflation -- is just as bad.

[21623044] |"This late in an expansion," the economy tends to veer off either into damaging inflation or into a recession, Mr. Confair says.
[21623045] |The Federal Reserve Board's plan for a "soft landing," he says, requires the Fed to navigate "an ever-narrowing corridor."

[21623046] |A soft landing isn't something that can be achieved once and for all, Mr. Confair adds.
[21623047] |It has to be engineered over and over again, month after month.
[21623048] |He believes that the task facing Fed Chairman Alan Greenspan is so difficult that it resembles "juggling a double-bladed ax and a buzz saw."

[21623049] |And, in a sense, that's the kind of task individuals face in deciding what to do about stocks -- the mainstay of most serious investors' portfolios.
[21623050] |It comes down to a question of whether to try to "time" the market.

[21623051] |For people who can ride out market waves through good times and bad, stocks have been rewarding long-term investments.
[21623052] |Most studies show that buy-and-hold investors historically have earned an annual return from stocks of 9% to 10%, including both dividends and price appreciation.
[21623053] |That's well above what bonds or bank certificates have paid.

[21623054] |Moreover, because no one knows for sure just when a recession is coming, some analysts think investors shouldn't even worry too much about timing.
[21623055] |"Trying to time the economy is a mistake," says David Katz, chief investment officer of Value Matrix Management Inc. in New York.
[21623056] |Mr. Katz notes that some economists have been predicting a recession for at least two years.
[21623057] |Investors who listened, and lightened up on stocks, "have just hurt themselves," he says.

[21623058] |Mr. Katz adds that people who jump in and out of the stock market need to be right about 70% of the time to beat a buy-and-hold strategy.
[21623059] |Frequent trading runs up high commission costs.
[21623060] |And the in-and-outer might miss the sudden spurts that account for much of the stock market's gains over time.

[21623061] |Still, few investors are able to sit tight when they are convinced a recession is coming.
[21623062] |After all, in all five recessions since 1960, stocks declined.
[21623063] |According to Ned Davis, president of Ned Davis Research Inc. in Nokomis, Fla., the average drop in the Dow Jones Industrial Average was about 21%, and the decrease began an average of six months before a recession officially started.

[21623064] |By the time a recession is "official" (two consecutive quarters of declining gross national product), much of the damage to stocks has already been done-and, in the typical case, the recession is already half over.
[21623065] |About six months before a recession ends, stocks typically begin to rise again, as investors anticipate a recovery.

[21623066] |The average recession lasts about a year.
[21623067] |Unfortunately, though, recessions vary enough in length so that the average can't reliably be used to guide investors in timing stock sales or purchases.

[21623068] |But whatever their advice about timing, none of these experts recommend jettisoning stocks entirely during a recession.
[21623069] |For the portion of an investor's portfolio that stays in stocks, professionals have a number of suggestions.
[21623070] |Mr. Katz advocates issues with low price-earnings ratios -- that is, low prices in relation to the company's earnings per share.
[21623071] |"Low P-E" stocks, he says, vastly outperform others "during a recession or bear market."
[21623072] |In good times, he says, they lag a bit, but overall they provide superior performance.

[21623073] |Prof. Arbel urges investors to discard stocks in small companies.
[21623074] |Small-company shares typically fall more than big-company stocks in a recession, he says.
[21623075] |And in any case, he argues, stocks of small companies are "almost as overpriced as they were Sept. 30, 1987, just before the crash."

[21623076] |For example, Mr. Arbel says, stocks of small companies are selling for about 19 times cash flow.
[21623077] |(Cash flow, basically earnings plus depreciation, is one common gauge of a company's financial health.)
[21623078] |That ratio is dangerously close to the ratio of 19.7 that prevailed before the 1987 stock-market crash, Mr. Arbel says.
[21623079] |And it's way above the ratio (7.5 times cash flow) that bigger companies are selling for.

[21623080] |Another major trick in making a portfolio recession-resistant is choosing stocks in "defensive" industries.
[21623081] |Food, tobacco, drugs and utilities are the classic examples.
[21623082] |Recession or not, people still eat, smoke, and take medicine when they're sick.

[21623083] |George Putnam III, editor of Turnaround Letter in Boston, offers one final tip for recession-wary investors.
[21623084] |"Keep some money available for opportunities," he says.
[21623085] |"If the recession does hit, there will be some great investment opportunities just when things seem the blackest."

[21623086] |Mr. Dorfman covers investing issues from The Wall Street Journal's New York bureau.

[21623087] |Some industry groups consistently weather the storm better than others.
[21623088] |The following shows the number of times these industries outperformed the Standard & Poor's 500-Stock Index during the first six months of the past seven recessions.

[21624001] |Bond prices posted strong gains as investors went on a bargain hunt.

[21624002] |But while the overall market improved, the new-issue junk-bond market continued to count casualties, even as junk-bond prices rose.

[21624003] |Yesterday, Prudential-Bache Securities Inc. said it postponed a $220 million senior subordinated debenture offering by York International Corp.

[21624004] |And Donaldson, Lufkin & Jenrette Securities Corp. scrambled to restructure and improve the potential returns on a $475 million debenture offering by Chicago & North Western Acquisition Corp. that was still being negotiated late last night.

[21624005] |The issue by Chicago & North Western is one of the so-called good junk-bond offerings on the new-issue calendar.
[21624006] |Some analysts said the restructuring of the railroad concern's issue shows how tough it is for underwriters to sell even the junk bonds of a company considered to be a relatively good credit risk.

[21624007] |Since last week's junk-bond market debacle, many new issues of high-yield, high-risk corporate bonds have either been scaled back, delayed or dropped.
[21624008] |On Wednesday, Drexel Burnham Lambert Inc. had to slash the size of Continental Airlines' junk-bond offering to $71 million from $150 million.
[21624009] |Salomon Brothers Inc. has delayed Grand Union Co.'s $1.16 billion junk-bond offering while it restructures the transaction.
[21624010] |Last week, the Grand Union offering was sweetened to include warrants that allow bondholders to acquire common stock.
[21624011] |Prudential-Bache said the York issue was delayed because of market conditions.

[21624012] |"Everything is going through firehoops right now, and {Chicago & North Western} is no exception," said Mariel Clemensen, vice president, high-yield research, at Citicorp.

[21624013] |Portfolio managers say sweeteners like equity kickers and stricter protective covenants may increasingly be required to sell junk-bond deals.

[21624014] |Dan Baldwin, managing director of high-yield investments at Chancellor Capital Management, said the Chicago & North Western offering was restructured in part because "several large insurance buyers right now are demanding equity as part of the package.
[21624015] |If you're going to take the risk in this market, you want something extra."

[21624016] |Mr. Baldwin likes the offering.
[21624017] |But several mutual-fund managers, nervous about the deteriorating quality of their junk-bond portfolios and shy about buying new issues, said they're staying away from any junk security that isn't considered first rate for its class.
[21624018] |While they consider the Chicago & North Western issue to be good, they don't view it as the best.

[21624019] |To lure buyers to the Chicago & North Western bonds, portfolio managers said Donaldson Lufkin sweetened the transaction by offering the bonds with a resettable interest rate and a 10% equity kicker.
[21624020] |The bonds are expected to have a 14 1/2% coupon rate.
[21624021] |The equity arrangement apparently would allow bondholders to buy a total of 10% of the stock of CNW Corp., Chicago & North Western's parent company.
[21624022] |Donaldson Lufkin declined to comment on the restructuring.

[21624023] |According to some analysts familiar with the negotiations, the 10% of equity would come directly from Donaldson Lufkin and a fund affiliated with the investment bank Blackstone Group, which would reduce their CNW equity holdings by 5% each.
[21624024] |That would leave the Blackstone fund with a 60% stake and Donaldson Lufkin with 15%.

[21624025] |Despite the problems with new issues, high-yield bonds showed gains in the secondary, or resell, market.
[21624026] |Junk bonds ended about one-half point higher with so-called high-quality issues from RJR Capital Holdings Corp. and Petrolane Gas Service Limited Partnership rising one point.

[21624027] |In the Treasury market, the benchmark 30-year bond rose seven-eighths point, or $8.75 for each $1,000 face amount.
[21624028] |The gain reflects fresh economic evidence that inflation is moderating while the economy slows.
[21624029] |That raised hopes that interest rates will continue to move lower.
[21624030] |The Labor Department reported that consumer prices rose just 0.2% last month, slightly lower than some economists had expected.

[21624031] |But there were also rumors yesterday that several Japanese institutional investors were shifting their portfolios and buying long-term bonds while selling shorter-term Treasurys.

[21624032] |Short-term Treasury securities ended narrowly mixed, with two-year notes posting slight declines while three-year notes were slightly higher.

[21624033] |Yesterday, the Fed executed four-day matched sales, a technical trading operation designed to drain reserves from the banking system.
[21624034] |The move was interpreted by some economists as a sign that the Fed doesn't want the federal funds rate to move any lower than the 8 3/4% at which it has been hovering around during the past week.
[21624035] |The closely watched funds rate is what banks charge each other on overnight loans.
[21624036] |It is considered an early signal of Fed credit policy changes.

[21624037] |"The fact that they did four-day matched sales means they are not in a mood to ease aggressively.
[21624038] |They are telling us that {8 3/4%} is as low as they want to see the fed funds rate," said Robert Chandross at Lloyds Bank PLC.

[21624039] |Treasury Securities

[21624040] |The benchmark 30-year bond was quoted late at a price of 101 25/32 to yield 7.955%, compared with 100 29/32 to yield 8.032% Wednesday.
[21624041] |The latest 10-year notes were quoted late at 100 9/32 to yield 7.937%, compared with 99 26/32 to yield 8.007%.

[21624042] |Short-term rates rose yesterday.
[21624043] |The discount rate on three-month Treasury bills rose to 7.56% from 7.51% Wednesday, while the rate on six-month bills rose to 7.57% from 7.53%.

[21624044] |Meanwhile, the Treasury sold $9.75 billion of 52-week bills yesterday.
[21624045] |The average yield on the bills was 7.35%, down from 7.61% at the previous 52-week bill auction Sept. 21.
[21624046] |Yesterday's yield was the lowest since 7.22% on July 27.

[21624047] |Here are details of the auction:

[21624048] |Rates are determined by the difference between the purchase price and face value.
[21624049] |Thus, higher bidding narrows the investor's return while lower bidding widens it.
[21624050] |The percentage rates are calculated on a 360-day year, while the coupon-equivalent yield is based on a 365-day year.

[21624051] |Corporate Issues

[21624052] |Junk bond price climbed yesterday despite skittishness in the new-issue market for high-yield securities.

[21624053] |Dealers said junk bond issues on average were up by 1/4 to 1/2 point with so-called quality issues from RJR Capital Holdings Corp. and Petrolane Gas Service Limited Partnership posting one-point gains.

[21624054] |Petrolane Gas Service's 13 1/4% debentures traded at 102, after trading around par earlier this week, and RJR's 13 1/2% subordinated debentures of 2001 were at 101 5/8 after trading at below par earlier this week.

[21624055] |Investment-grade bonds were unchanged.
[21624056] |Municipals

[21624057] |Activity was brisk in the high-grade general obligation market, as a series of sell lists hit the Street and capped upward price movement in the sector.

[21624058] |Traders estimated that more than $140 million of high-grade bonds was put up for sale via bid-wanted lists circulated by a handful of major brokers.
[21624059] |There was speculation that the supply was coming from a commercial bank's portfolios.

[21624060] |According to market participants, the bonds were met with decent bids, but the volume of paper left high grades in the 10-year and under maturity range unchanged to 0.05 percentage point higher in yield.

[21624061] |Away from the general obligation sector, activity was modest.
[21624062] |Long dollar bonds were flat to up 3/8 point.

[21624063] |New Jersey Turnpike Authority's 7.20% issue of 2018 was up 3/8 at 98 3/8 bid to yield about 7.32%, down 0.03 percentage point.

[21624064] |The debt of some California issuers pulled off lows reached after Tuesday's massive earthquake, although traders said market participants remained cautious.

[21624065] |California expects to rely on federal emergency funds and its $1.06 billion in general fund reserves to meet the estimated $500 million to $1 billion in damages resulting from the quake, according to a state official.

[21624066] |It's also unclear precisely how the state will rebuild its reserve, said Cindy Katz, assistant director of California's department of finance, although she noted that a bond offering for that purpose isn't anticipated.

[21624067] |Meanwhile, new issuance was slow.

[21624068] |The largest sale in the competitive arena was a $55.7 million issue of school financing bonds from the Virginia Public School Authority.
[21624069] |A balance of $25.8 million remained in late order-taking, according to the lead manager.

[21624070] |Mortgage-Backed Securities

[21624071] |Mortgage securities generally ended 6/32 to 9/32 point higher, but lagged gains in the Treasury market because of a shift in the shape of the Treasury yield curve and rumored mortgage sales by thrifts.

[21624072] |Premium Government National Mortgage Association securities with coupon rates of 13% and higher actually declined amid concerns about increased prepayments because of a plan being considered by Congress to speed the refinancing of government-subsidized mortgages.

[21624073] |Ginnie Mae 13% securities were down about 1/4 at 109 30/32.

[21624074] |If the refinancing plan clears Congress, there could be fairly heavy prepayments on the premium securities, hurting any investor paying much above par for them.

[21624075] |In the current-coupon sector, a shift in the Treasury yield curve resulting from the better performance of long-dated issues over short-dated securities hurt major coupons because it will become more difficult to structure new derivative securities offerings.
[21624076] |Ginnie Mae 9% securities ended at 98 6/32, up 9/32, and Federal Home Loan Mortgage Corp. 9% securities were at 97 10/32, up 6/32.
[21624077] |The Ginnie Mae 9% issue was yielding 9.42% to a 12-year average life assumption, as the spread above the Treasury 10-year note widened 0.03 percentage point to 1.48.

[21624078] |While Remic issuance may slow in the coming days because of the shift in the Treasury yield curve, underwriters continued to crank out new real estate mortgage investment conduits structured when the yield curve was more favorable.

[21624079] |Two new Remics totaling $900 million were announced by Freddie Mac yesterday.

[21624080] |Foreign Bonds

[21624081] |British government bonds ended little changed as investors awaited an economic policy address last night by Chancellor of the Exchequer Nigel Lawson.

[21624082] |The Treasury 11 3/4% bond due 2003/2007 was down 2/32 at 111 29/32 to yield 10.09%, while the 11 3/4% notes due 1991 were unchanged at 98 19/32 to yield 12.94%.

[21624083] |In Japan, the bellwether No. 111 4.6% bond of 1998 ended off 0.03 at 95.72, to yield 5.32%, and in West Germany, the 7% benchmark issue due October 1999 ended 0.05 point lower at 99.85 to yield 7.02%.

[21625001] |THE PANHANDLER approaches, makes his pitch.
[21625002] |It may be straightforward -- he wants money for food -- or incredibly convoluted; his sister is at this very moment near death in Hoboken, he has lost his wallet and has only $1.22 in change to put toward a bus ticket costing $3.83, and won't you give him the difference?
[21625003] |No?
[21625004] |Well, how about a loan, he'll take your name and address . . .

[21625005] |Figuring that their money would more likely go toward a bottle of Night Train Express, most people have little trouble saying no to propositions like this.
[21625006] |But healthy skepticism vanishes when they are solicited by an organized charity to help fight cancer, famine, child abuse, or what have you.
[21625007] |Most see little reason to doubt that their cash will go toward these noble goals.
[21625008] |But will it?

[21625009] |In a distressing number of cases, no.
[21625010] |In fact, the donors sometimes might be better off giving the money to the panhandler: at least he has no overhead, and he might even be telling the truth.

[21625011] |Last year, more than $100 billion was donated to the nation's 400,000 charities.
[21625012] |While the vast bulk of it was indeed spent by reputable organizations on the good works it was raised for, it's equally true that a sizable hunk was consumed in "expenses" claimed by other operators, including fraudulent expenses.
[21625013] |In many cases the costs claimed were so high that only a dribble of cash was left for the purported beneficiaries.

[21625014] |It's impossible to say exactly how much of the total charity intake is devoured by stratospheric fund-raising costs, high-living operators, and downright fraud.
[21625015] |But the problem clearly is widespread and persistent.
[21625016] |State law enforcers can barely keep up with charity scams, and reports from watchdog groups such as the Council of Better Business Bureaus are not encouraging.

[21625017] |The Philanthropic Advisory Service of the BBB reviews hundreds of new charities every year, measuring them against minimum standards for accountability; for accuracy and honesty in solicitation; and for percentage of funds actually going to work for which the charity was supposedly established.
[21625018] |The Service figures at least half of the money taken in should be spent on program.
[21625019] |Roughly a third of the charities reviewed flunk the test.

[21625020] |Which, it should be added, doesn't prevent the charities from raking in a lot of money anyway.
[21625021] |Without a microscope and a subpoena, it's often hard to sort out worthwhile causes from ripoffs if all you've got to go on is the solicitation itself.
[21625022] |On this basis, "there's no way the average person can know a good charity from a bad one," says David Ormstedt, an assistant attorney general in Connecticut.
[21625023] |"A lot of donors just get taken."

[21625024] |Including those, he contends, who put about $1 million into the kitty for the Connecticut Association of Concerned Veterans and the Vietnam Veterans Service Center.
[21625025] |The state has sued these charities in state court, complaining that much of the money was grossly misspent; 82%, says Mr. Ormstedt, went to fund raisers and most of the rest to the people who ran the charities and to their relatives -- for fur coats, trips to Florida, Lucullan restaurant tabs.
[21625026] |The telephone number for the charity in Shelton, Conn., has been disconnected, and the former officials couldn't be located.

[21625027] |Running a charity does cost money, but reputable organizations manage to get the lion's share of donations out to where they are really needed.
[21625028] |The Arthritis Foundation, the American Cancer Society and the United Way of America all say that they spend roughly 90% of their income on programs, not overhead.
[21625029] |With some other charities, however, its the other way around.

[21625030] |The fledgling National Children's Cancer Society, for example, took in $2.5 million last year to finance bone-marrow transplants for children.
[21625031] |By the time it paid its expenses it only had $120,000 left -- not enough to treat even one child.
[21625032] |The state of Illinois is suing the charity for fraud in Chicago, along with Telesystems Marketing Inc., its Houston-based fund raiser.

[21625033] |Both deny wrongdoing.
[21625034] |The charity admits spending a lot on fund raising, but says that was necessary to establish a donor base it can tap at much lower cost in years to come.
[21625035] |Michael Burns, president of Telesystems, says his concern has only benefited from the publicity surrounding the case, noting that three other charities have signed on as clients because they were impressed with the amount he raised for National Children's.
[21625036] |Meanwhile, a state court judge has allowed the charity to go on soliciting funds.

[21625037] |Enforcers can't put charities out of business simply because they spend the lion's share of their income on fund raising.
[21625038] |State laws previously used as a yardstick minimum percentages of income -- usually half -- that had to be spent on the program rather than overhead, but these have been overturned by the U.S. Supreme Court.
[21625039] |It has ruled that such laws might work to stifle fund raising, which would amount to limiting the charities' first-amendment right to freedom of expression.

[21625040] |This puts upon enforcers the burden of proving outright fraud or misrepresentation, and such actions have been brought against hundreds of charities recently.
[21625041] |The attorney general's office in Connecticut alone has put seven of them out of business over the past couple of years, and the enforcement drive is continuing there and elsewhere.

[21625042] |In making cases, the authorities frequently zero in on alleged misrepresentations made by the charities' fund raisers.
[21625043] |Illinois, for instance, currently has under investigation 10 of the 30 companies drumming up funds for charities soliciting there.

[21625044] |Enforcers pay special attention to operators using sweepstakes prizes as an additional inducement to give.
[21625045] |Attorneys general in several states, including Illinois, are already suing Watson & Hughey Co., an Alexandria, Va.-based outfit that they say has used deceptive sweepstakes ads to solicit donations for the American Heart Disease Foundation and the Cancer Fund of America.

[21625046] |According to the Illinois attorney general's suit, Watson & Hughey sent mailings indicating that recipients were guaranteed cash prizes, and could win up to an additional $1,000 on top of them, if they contributed as little as $7.
[21625047] |But the total value of the prizes was only $5,000 and most "winners" will receive just 10 cents, according to the attorney general's office.
[21625048] |The suit is still pending in Illinois state court.
[21625049] |Watson & Hughey has denied the allegations in court; officials decline to comment further.

[21625050] |While they can target some of the most obvious miscreants, enforcers concede that they are only scratching the surface.
[21625051] |There are so many cunning ploys used by so many dubious operators, they say, that it is probably impossible to stop them all.

[21625052] |One maneuver: the "public education" gambit.
[21625053] |The solicitation material indicates that donations will go toward a campaign alerting and informing the public about some health or other issue.
[21625054] |What it doesn't say is that the entire "campaign" may be the fund-raising letter itself.

[21625055] |"All too often this will merely be a statement on the solicitation such as, `Don't smoke!' or `Wear suntan lotion,' " says William Webster, attorney general of Missouri.
[21625056] |"By putting these pithy statements on the solicitations, hundreds of thousands of dollars are claimed to have been spent on education to consumers when in fact this represents the costs of sending the newsletters."

[21625057] |Mr. Webster cites a four-page mailing from the United Cancer Council that offers a chance to win $5,000 in gold bullion to those giving as little as $5 to cancer education.
[21625058] |"A few boilerplate warnings about cancer appear but that's only two inches in all four pages.
[21625059] |I think some people may believe they're helping fund a massive TV and print campaign, but we couldn't find that the charity does anything except write these letters," he says.
[21625060] |Officials at the Washington D.C.-based charity didn't return repeated phone calls.

[21625061] |Many fly-by-night charities ride the coattails of the biggest, best-known and most reputable ones by adopting names similar to theirs.
[21625062] |The established charities are bothered by this but say they can do little about it.
[21625063] |"We can't police the many organizations that have sprung up in the last few years using part of our name.
[21625064] |Most of them don't last for long, but in the meantime all we can do is tell people they aren't connected with us," says a spokeswoman for the American Heart Association.
[21625065] |And sometimes a reputable charity with a household name gets used and doesn't even know it.
[21625066] |A couple in Rockford, Ill., raised $12,591 earlier this year using the name and logo of Mothers Against Drunk Driving, without permission from the group.
[21625067] |MADD didn't learn of the fund raising until the couple sent it a check for $613, along with a letter saying that was the charity's "share."

[21625068] |The Illinois Attorney General won a court order to prevent the couple from raising further funds without MADD's permission.
[21625069] |The couple couldn't be reached for comment and apparently have left Rockford, law enforcement officials report.
[21625070] |Denise McDonald, a spokeswoman for MADD, says, "It's scary, because anybody could do this."

[21625071] |Mr. Johnson is a staff reporter in The Wall Street Journal's Chicago bureau.

[21625072] |Overhead costs at some of the largest charities, in millions of dollars

[21626001] |British Airways PLC, a crucial participant in the proposed buy-out of UAL Corp., washed its hands of the current efforts to revive a bid for the parent of United Airlines.

[21626002] |Specifically, the British carrier said it currently has no plans to participate in any new offer for UAL.
[21626003] |In addition, British Air officially withdrew its support for the previous $300-a-share bid in a terse statement that said "the original deal is closed."

[21626004] |Company officials said later that British Airways believes its involvement in the UAL buy-out ended last Friday when the buy-out group, which also includes UAL's management and pilot union, failed to obtain financing for the $6.79 billion transaction.

[21626005] |The carrier stopped short of saying it wouldn't at some point reconsider participating in any new bid for UAL.
[21626006] |However, company officials said they plan to take "no initiatives" to resurrect the transaction, and "aren't aware" of any restructured bid in the making.

[21626007] |Collectively, the statements raised questions about whether a new bid for UAL will ever get off the ground.
[21626008] |The transaction has had a series of setbacks since the financing problems became known last Friday, with no signs or statements from the buy-out group to indicate that any progress has taken place.

[21626009] |However, in response to the British Air decision, United's pilot union vowed to continue efforts to revive the buy-out.
[21626010] |Pilot union Chairman Frederick C. Dubinsky said advisers to UAL management and the union will begin meeting in New York today and will work through the weekend to devise a new proposal to present to UAL's board "at the earliest time possible."
[21626011] |Pilot union advisers appeared confident that a new bid could go forward even without British Air's participation.

[21626012] |UAL declined to comment on British Air's statement.
[21626013] |UAL Chairman Stephen M. Wolf, who is leading the management end of the buy-out, hasn't provided investors with any assurances about the prospect of a new deal.

[21626014] |In another setback yesterday, United's machinist union asked the Treasury Department to investigate whether certain aspects of the original buy-out proposal violated tax laws.
[21626015] |In an effort to derail the buy-out, the union has already called for investigations by the Securities and Exchange Commission, Transportation Department and Labor Department.

[21626016] |But there was one bright spot yesterday.
[21626017] |The United flight-attendants union agreed to negotiations that could lead to the flight attendants contributing concessions to a revived bid in exchange for an ownership stake.
[21626018] |The pilot union, the only one to support the buy-out thus far, said the flight attendants' decision "enforces our belief that an all-employee owned airline is practical and achievable."

[21626019] |Still, without the assurance of British Airways' financial backing, it will be tougher for the buy-out group to convince already-reluctant banks to make loan commitments for a revised bid, especially since British Air's original investment represented 78% of the cash equity contribution for the bid.

[21626020] |Under the previous plan, British Air would have received a 15% stake in UAL in exchange for a $750 million equity investment, with a 75% stake going to UAL employees and 10% to UAL management.

[21626021] |British Air officials said the airline's chairman, Lord King, was concerned about news reports indicating that British Air might be willing to participate in a bid that included a lower purchase price and better investment terms for the British carrier.

[21626022] |The previous reports were based on remarks by British Air's chief financial officer, Derek Stevens, who said any revised bid would have to include a lower purchase price to reflect the sharp drop in UAL's stock in the past week.

[21626023] |UAL stock dropped $1.625 yesterday to $190.125 on volume of 923,500 shares in composite trading on the New York Stock Exchange.

[21626024] |UAL declined to comment on British Air's statement.

[21626025] |In an interview Wednesday with Dow Jones Professional Investor Report, Mr. Stevens said, "We're in no way committed to a deal going through at all.
[21626026] |We're not rushing into anything.
[21626027] |We don't want to be party to a second rejection."

[21626028] |Indeed, British Air seemed to be distancing itself from the troubled transaction early in an effort to avoid any further embarrassment.
[21626029] |The original transaction fell through on the same day British Air shareholders approved the plan at a special meeting after the British succeeded in arranging the financing for its equity contribution.

[21626030] |The carrier also seemed eager to place blame on its American counterparts.
[21626031] |"The {buy-out} consortium ceased to exist because our American partners were not capable of organizing the financing," a British Air spokesman said.

[21626032] |British Airways may have begun to have second thoughts about the transaction after the Transportation Department forced Northwest's Airlines' new owners to restructure the equity contribution of KLM Royal Dutch Airlines in that carrier.
[21626033] |Most of the department's statements since the Northwest transaction indicated it planned to curtail foreign ownership stakes in U.S. carriers.

[21626034] |Even before British Air's announcement, pilot union leaders had been meeting in Chicago yesterday to consider their options.
[21626035] |The leaders expressed support for trying to revive the bid following a briefing Wednesday by the union's advisers, Lazard Freres & Co. and Paul, Weiss, Rifkind Wharton & Garrison.
[21626036] |They also unanimously re-elected Mr. Dubinsky, the union chairman who has led the pilots' 2 1/2-year fight to take control of the airline.

[21626037] |UAL's advisers have indicated previously that it may take a while to come forward with a revised plan since they want to have firm bank commitments before launching a new bid.
[21626038] |They have maintained that banks remain interested in financing the transaction.
[21626039] |The buy-out fell through after Citicorp and Chase Manhattan Corp., the lead banks in the transaction, failed to obtain $7.2 billion in financing needed for the plan.

[21627001] |Italy's industrial wholesale sales index rose 13.2% in June from a year earlier, the state statistical institute Istat said.

[21627002] |The June increase compared with a rise of 10.5% in May from a year earlier.

[21627003] |Domestic wholesale sales rose 11.9% from a year earlier, while foreign sales jumped 17.3%, Istat said.

[21627004] |For the first six months, wholesale sales rose 12.3% from the year before, reflecting to a 11.5% jump in domestic sales and a 14.6% boost in foreign sales.

[21627005] |Sales of capital goods to foreign and domestic destinations increased 16.6% in the January-June period from a year earlier.
[21627006] |Sales of consumer goods rose 6.9% in the same period, while sales of intermediate goods were up 13.8% from a year ago.

[21628001] |Senate Democrats favoring a cut in the capital-gains tax have decided, under pressure from their leaders, not to offer their own proposal, placing another obstacle in the path of President Bush's legislative priority.

[21628002] |A core group of six or so Democratic senators has been working behind the scenes to develop a proposal to reduce the tax on the gain from the sale of assets.
[21628003] |The plan was complete except for finishing touches, and there was talk that it would be unveiled as early as yesterday.

[21628004] |But Senate Majority Leader George Mitchell (D., Maine), a vigorous opponent of the capital-gains tax cut, called the group to meet with him Wednesday night and again yesterday.
[21628005] |Sen. Mitchell urged them to desist.
[21628006] |Afterward, leaders of the dissident Democrats relented, and said they wouldn't offer their own proposal as they had planned.

[21628007] |The decision is a setback for President Bush, who needs the support of Democrats to pass the tax cut through the Democratic-controlled Senate.
[21628008] |Having a proposal sponsored by Democrats would have given the president an advantage.
[21628009] |Having only a Republican measure makes the task harder.

[21628010] |Still, Sen. Bob Packwood (R., Ore.), the lead sponsor of the Republican capital-gains amendment, predicted that the tax cut would be enacted this year.
[21628011] |He said a clear majority of senators back the tax reduction and that ultimately there would be enough senators to overcome any procedural hurdle the Democratic leadership might erect.

[21628012] |But Sen. Mitchell, buoyed by his victory among fellow Democrats, strongly disagreed.
[21628013] |Mr. Mitchell has been predicting that the president's initiative would fail this year.
[21628014] |Yesterday, in an interview, he added that the Democrats' decision "increases the likelihood that a capital-gains tax cut will not pass this year."
[21628015] |Mr. Mitchell's first victory came last week, when the Senate passed a deficit-reduction bill that didn't contain a capital-gains provision.
[21628016] |That vote made it unlikely that a capital-gains tax cut would be included in the final bill, now being drafted by House and Senate negotiators.
[21628017] |The House version of the bill does include the tax cut.

[21628018] |Now Republican leaders are concentrating on attaching a capital-gains amendment to some other bill, perhaps a measure raising the federal borrowing limit or a second tax bill that would follow on the heels of the deficit-reduction legislation.
[21628019] |To help lay the groundwork for that fight, President Bush plans early next week to meet at the White House with some 20 Democratic senators who favor cutting the capital-gains tax or are undecided on the issue.

[21628020] |The president apparently will have only one bill to push, Sen. Packwood's, and at least some of the dissident Democrats plan to support it.
[21628021] |"I may want to offer additional amendments to improve it when the bill comes to the floor," said Sen. David Boren (D., Okla.), a leader of those Democrats.

[21628022] |The Packwood plan, as expected, would allow individuals to exclude from income 5% of the gain from the sale of a capital asset held for more than one year.
[21628023] |The exclusion would rise five percentage points for each year the asset was held, until it reached a maximum of 35% after seven years.
[21628024] |The exclusion would apply to assets sold after Oct. 1.
[21628025] |As an alternative, taxpayers could chose to reduce their gains by an inflation index.

[21628026] |For corporations, the top tax rate on the sale of assets held for more than three years would be cut to 33% from the current top rate of 34%.
[21628027] |That rate would gradually decline to as little as 29% for corporate assets held for 15 years.

[21628028] |The Packwood plan also would include a proposal, designed by Sen. William Roth (R., Del.), that would create new tax benefits for individual retirement accounts.
[21628029] |The Roth plan would create a new, non-deductible IRA from which money could be withdrawn tax-free not only for retirement, but also for the purchase of a first home, education expenses and medical expenses.
[21628030] |Current IRAs could be rolled over into the new IRAs, but would be subject to tax though no penalty.

[21629001] |Westmoreland Coal Co., realizing benefits of a sustained effort to cut costs and boost productivity, reported sharply improved third-quarter results.

[21629002] |The producer and marketer of low-sulfur coal said net income for the quarter was $5.9 million, or 71 cents a share, on revenue of $145.4 million.
[21629003] |For the year-earlier period, the company reported a loss of $520,000 or six cents a share.

[21629004] |In the latest nine months, the company earned $8.5 million, or $1.03 a share.
[21629005] |Last year's net loss of $3,524,000 included a benefit of $1,640,000 from an accounting change.
[21629006] |Revenue for the nine months rose to $449 million from $441.1 million.

[21629007] |In an interview, Pemberton Hutchinson, president and chief executive, cited several reasons for the improvement: higher employee productivity and "good natural conditions" in the mines, as well as lower costs for materials, administrative overhead and debt interest.

[21629008] |In the latest nine months, Mr. Hutchinson said, total coal sales rose to about 14.6 million tons from about 14.3 million tons a year earlier.
[21629009] |In addition, long-term debt has been trimmed to about $72 million from $96 million since Jan. 1.
[21629010] |He predicted the debt ratio will improve further in coming quarters.

[21629011] |Westmoreland's strategy is to retain and expand its core business of mining and selling low-sulphur coal in the Appalachia region.
[21629012] |The operating territory includes coal terminals on the Ohio River and in Newport News, Va.
[21629013] |Westmoreland exports about a fourth of its coal tonnage, including a significant amount of metallurgical coal produced by others that is used by steelmakers overseas.

[21629014] |For the past couple of years, Westmoreland has undertaken an aggressive streamlining of all aspects of its business.
[21629015] |Marginal operations and assets have been sold.
[21629016] |The size of the company's board has been reduced to eight directors from 13.
[21629017] |About 140 salaried management jobs and hundreds of hourly wage positions have been eliminated.
[21629018] |Even perks have been reduced.
[21629019] |For example, the chief executive himself now pays 20% of the cost of his health benefits; the company used to pay 100%.

[21629020] |"I think the ship is now righted, the bilges are pumped and we are on course," Mr. Hutchinson said of the restructuring program.
[21629021] |"Much of what we set out to do is completed."

[21629022] |But he cautioned that Westmoreland's third quarter is typically better than the fourth, so investors "shouldn't just multiply the third quarter by four" and assume the same rate of improvement can be sustained.
[21629023] |One difference, he said, is that the fourth quarter has significantly fewer workdays because of holidays and the hunting season.

[21629024] |"I don't want to give the impression that everybody can relax now," he said.
[21629025] |"We have to keep working at improving our core business to stay efficient.
[21629026] |It's a process that never really ends."

[21629027] |Nevertheless, Mr. Hutchinson predicted that 1989 would be "solidly profitable" for Westmoreland and that 1990 would bring "more of the same."
[21629028] |For all of 1988, the company reported an after-tax operating loss of $134,000 on revenue of $593.5 million.
[21629029] |An accounting adjustment made net income $1.5 million, or 18 cents a share.

[21629030] |In a move that complements the company's basic strategy, its Westmoreland Energy Inc. unit is developing four coal-fired cogeneration plants with a partner in Virginia.
[21629031] |Some of the coal the plants buy will come from Westmoreland mines.
[21629032] |Mr. Hutchinson predicted that the unit's contribution to company results in the 1990s "will be exciting."
[21629033] |He said Westmoreland is looking at investment stakes in other cogeneration plants east of the Mississippi River.

[21629034] |Westmoreland expects energy demand to grow annually in the 2.5% range in the early 1990s.
[21629035] |"We see coal's piece of the action growing," Mr. Hutchinson said.
[21629036] |"Coal prices, while not skyrocketing, will grow modestly in real terms, we think.

[21630001] |Chase Manhattan Corp., after trying unsuccessfully to sell its interest in its lower Manhattan operations building, has exercised its option to purchase the 50-story office tower.

[21630002] |Chase had purchased an option to buy the building at One New York Plaza for an undisclosed sum from the late Sol Atlas as part of its original lease in 1970.

[21630003] |The current transaction cost the bank approximately $140 million.
[21630004] |Of that amount, $20 million was payment for the land underneath the building and the rest was for the building itself.

[21630005] |The building houses about 4,500 Chase workers, most of whom will be moved to downtown Brooklyn after the bank's new back office center is completed in 1993.
[21630006] |The move is part of Chase's strategy to consolidate its back offices under one roof.
[21630007] |The headquarters is located a few blocks away at 1 Chase Manhattan Plaza.

[21630008] |As part of its decision to leave the building, Chase tried to sell its interest, along with the Atlas estate's interest, shortly after the October 1987 stock market crash.
[21630009] |Chase Senior Vice President George Scandalios said the bank decided to exercise its option after bids fell short of expectations.
[21630010] |He said Chase and the Atlas estate were looking to sell the entire building for $400 million to $475 million, but didn't get an offer for more than $375 million.

[21630011] |As the building's new owner, Chase will have its work cut out for it.
[21630012] |Chase is vacating 1.1 million square feet of space, and Salomon Brothers Inc., whose headquarters is in the building, also plans to move shortly.
[21630013] |In addition, another major building tenant, Thomson McKinnon Inc.'s Thomson McKinnon Securities, likely will vacate the premises as part of its liquidation.

[21630014] |New York real estate brokerage Edward S. Gordon Co. will have the difficult task of finding new tenants.
[21630015] |Even with its striking views of the New York harbor, the building is considered antiquated by modern office standards.
[21630016] |And Chase will have to spend approximately $50 million to remove asbestos from the premises.

[21631001] |WALL STREET, SHAKE hands with George Orwell.

[21631002] |The author of the futuristic novel "1984" invented a language called Newspeak that made it impossible to fully develop a heretical thought -- that is, anything negative about the policies and practices of the state.
[21631003] |Wall Street hasn't gotten that far yet, but it has made a promising start.

[21631004] |Its language -- call it Streetspeak -- is increasingly mellifluous, reassuring, and designed to make financial products and maneuvers appear better, safer or cheaper than they really are.
[21631005] |When something undeniably nasty happens, a few euphemisms are deployed to simply make it disappear, much as a fresh grave may be covered by a blanket of flowers.

[21631006] |For example, we'll bet you thought that the stock market crashed two years ago.
[21631007] |Wrong.
[21631008] |According to some of the grand panjandrums of the market, it never happened.
[21631009] |In their lexicon the 508-point collapse in the Dow Jones Industrial Average on Oct. 19, 1987, was just a big blip.
[21631010] |Trotting out a much-beloved Streetspeak term, New York Stock Exchange Chairman John Phelan recently declared that history would record the event as only "a major technical correction."

[21631011] |(Another much-beloved saying, however, this one in plain English, holds that if something walks like a duck and quacks like a duck, it is a duck.
[21631012] |On Oct. 29, 1929 -- a date historians stubbornly insist on associating with the dreaded C-word -- the DJ industrials fell 12.8%.
[21631013] |In the "technical correction" of two years ago, they lost a whopping 22.6%.)

[21631014] |Customers hear a lot of this stuff from people who try to sell them stock.
[21631015] |These people used to be called brokers, but apparently this word either is not grandiose enough or carries too many negative connotations from the aforementioned technical correction, when terrified customers couldn't raise brokers on the phone.
[21631016] |Either way, the word "broker" is clearly out of favor.

[21631017] |Of the major New York-based securities firms, only Morgan Stanley & Co. still calls its salespeople brokers.
[21631018] |At Merrill Lynch & Co. and Shearson Lehman Hutton Inc., they are "financial consultants."
[21631019] |At Drexel Burnham Lambert Inc., Prudential Bache Securities, and Dean Witter Reynolds Inc., they are "account executives."
[21631020] |At PaineWebber Inc., they are "investment executives."

[21631021] |Such titles are designed to convey a sense of dignified, broad-scale competence and expertise in selling today's myriad financial products.
[21631022] |It is a competence and expertise that some brokers themselves, overwhelmed by all the new things being dreamed up for them to peddle, don't feel.
[21631023] |"Its almost product de jour," grouses one account executive at Dean Witter.

[21631024] |The transmogrified brokers never let the C-word cross their lips, instead stressing such terms as "safe," "insured" and "guaranteed" -- even though these terms may be severely limited in their application to a particular new financial product.
[21631025] |The names of some of these products don't suggest the risk involved in buying them, either.

[21631026] |A case in point: "government-plus" bond funds.
[21631027] |What could imply more safety than investing in government bonds?
[21631028] |What could be better than getting a tad more income from them (the plus) than other people?
[21631029] |Indeed, conservative investors, many of them elderly, have poured more than $50 billion into such funds, which promise fatter yields than ordinary Treasury bonds -- only to learn later that these funds use part of their money to dabble in high-risk bond options, a gambler's game.

[21631030] |When a certain class of investment performs so poorly that its reputation is tarnished, look for Wall Street to give it a new moniker.
[21631031] |This seems to be happening now to limited partnerships, many of which either have gone into the tank in recent years or have otherwise been grievous disappointments.
[21631032] |They are still being sold, but more and more often as "direct investments" -- with all the same risks they had under the old label.

[21631033] |In such cases, the game hasn't changed, only the name.
[21631034] |In others a familiar old name still prevails, but the underlying game has changed.
[21631035] |For example, "no load" mutual funds remain a favorite with investors because they don't carry a frontend sales commission.
[21631036] |Getting out of them, however, may be a different story now.

[21631037] |Traditional no-loads made their money by charging an annual management fee, usually a modest one; they imposed no other fees, and many still don't.
[21631038] |In recent years, though, a passel of others flying the no-load flag have been imposing hefty charges -- all the way up to 6% -- when an investor sells his shares.
[21631039] |Shouldn't they properly be called exit-load funds?
[21631040] |The mutual-fund industry is debating the question, but don't expect a new name while the old one is working so well.

[21631041] |And don't expect anyone to change the term "blue chip," either, even though some of the companies that still enjoy the title may be riskier investments than they were.
[21631042] |American Telephone & Telegraph Co., for one, is still a favorite of widows, orphans and trust departments -- but shorn of its regional telephone units and exposed to competition on every side, it is a far different investment prospect than it was before divestiture.

[21631043] |Also, blue chips in general have suffered much more short-term price volatility in recent years.
[21631044] |Larry Biehl, a money manager in San Mateo, Calif., blames that on the advent of program trading, in which computers used by big institutional investors are programmed to buy and sell big blocks when certain market conditions prevail.
[21631045] |Blue chips, he says, "are now being referred to as poker chips."

[21631046] |Finally, even the time-honored strategy called "value investing" no longer means what it once did.
[21631047] |Before the takeover mania of the '80s, it referred to rooting out through analysis undervalued stocks, especially those with shrewd management, sound fundamentals and decent prospects.
[21631048] |Now, says Mr. Biehl, value investing often means "looking for downtrodden companies with terrible management that are in real trouble."
[21631049] |To institutional investors or brokers, he adds, a company with value is a company at risk of being swallowed up.

[21631050] |Ms. Bettner covers personal finance from The Wall Street Journal's Los Angeles bureau.

[21632001] |I was amused to read your recent news stories on the banking industry's reserve additions and concomitant threats to cease making new loans to less-developed countries.
[21632002] |If the whole story were told, it would read something like this:

[21632003] |-- During the 1970s the commercial banks lured the country loan business away from the bond markets where the discipline of a prospectus and "Use of Proceeds" confirmation allowed lenders to audit expenditures of old loans before new loans were made.

[21632004] |-- The reward for that reckless lending was high reported earnings (and management bonuses); the price, a sea of bad loans.

[21632005] |-- For the past several years, the banks, lacking a private navy to enforce their interests, have been pressuring the U.S. Treasury to underwrite their bad LDC credits.

[21632006] |-- The Treasury wisely has refused, but has concluded that indirect credit support through various multinational agencies should be made available for a price: either debt reduction or debt-service reduction or new loans (the Brady Plan).

[21632007] |-- The banks will threaten not to make further loans, but in truth, lacking the capital to write off their mistakes or to build a navy, they have no alternative but to go along.

[21632008] |George A. Wiegers

[21633001] |Gillette Co. elected Warren E. Buffett, chairman of Berkshire Hathaway Inc., to its board, increasing the number of directors to 12 from 11.

[21633002] |Berkshire Hathaway earlier this year bought $600 million of preferred stock in Gillette that is convertible into an 11% stake, and Gillette said at the time that Mr. Buffett would be added to the board.

[21633003] |Separately, Gillette said its third-quarter earnings rose 2% to $65.2 million, or 57 cents a share, from $63.9 million, or 57 cents a share, in the year-earlier period; per-share earnings remained flat despite an increase in net income in part because the company paid a $10.4 million dividend on the new preferred stock in the period.
[21633004] |Sales rose 9% to $921.6 million from $845.7 million, with sales of the company's international/diversified operations "well above" the year earlier-period.

[21633005] |For the nine months, Gillette's net income declined 1% to $205.3 million, or $2.02 a share, from $207 million, or $1.82 a share, in the 1988 period.
[21633006] |Sales rose 6% to $2.77 billion from $2.61 billion.

[21633007] |In composite trading on the New York Stock Exchange, the company closed yesterday at $45.50 a share, up 25 cents.

[21634001] |When Walter Yetnikoff, the president of Sony Corp.'s CBS Records, last month told producer Peter Guber that Sony was about to make a $3.4 billion bid for Columbia Pictures and needed someone to run the studio, Mr. Guber jumped at the chance.

[21634002] |Within two days, he was on his way to New York and Tokyo to meet with top brass at Sony.
[21634003] |And before the week was out, Sony had offered Mr. Guber and his partner, Jon Peters, the most lucrative employment contracts in the history of the movie business.
[21634004] |Not only that, Sony also agreed to give them a stake in Columbia's future profits and buy their company, Guber Peters Entertainment Co., for $200 million, almost 40% more than the market value of the company.

[21634005] |There was just one sticking point: The two had a prior commitment.
[21634006] |Just seven months earlier, they had signed a five-year exclusive contract to make movies for Warner Bros. for which they had just produced the smash hit "Batman."
[21634007] |But Mr. Guber figured that Warner Communications Inc. chairman Steven Ross, would empathize and let the producers go, knowing the Sony offer was "the culmination of a life's work."

[21634008] |He figured wrong.
[21634009] |Last week, following fruitless settlement talks, Warner, now merging with Time Inc., filed a $1 billion breach of contract suit in Los Angeles Superior Court against both Sony and Guber Peters.
[21634010] |Sony promptly countersued, charging Warner with trying to sabotage its acquisitions and hurt its efforts to enter the U.S. movie business.
[21634011] |The accusations of lying and duplicity are flying thick and fast on both sides: As one Sony executive puts it, "It's World War III."

[21634012] |That two successful producers who aren't all that well known outside Hollywood could occasion such a clash of corporate titans suggests how desperate the quest for proven talent is in the movie business.
[21634013] |And they are a very odd team in any case.
[21634014] |Mr. Guber was raised in Boston and educated in New York.
[21634015] |He is a lawyer with a string of academic degrees.
[21634016] |Mr. Peters is a high-school dropout who came to fame as Barbra Streisand's hairdresser.
[21634017] |Yet, they are far and away the most prolific producers in Hollywood.
[21634018] |And despite their share of duds, they make movies that make money.

[21634019] |That is a skill Sony badly needs -- and Warner is loath to lose.

[21634020] |Although Columbia had a good summer with "Ghostbusters II" and "When Harry Met Sally," rivals such as Warner, Paramount Pictures, Walt Disney Co. and Universal Studios have been thrashing Columbia at the box office.
[21634021] |After five years of management turmoil, with four different studio heads, Columbia sorely needs a stable, savvy team to restore its credibility and get it back in the business of making hits.

[21634022] |Mr. Guber and Mr. Peters aren't universally loved in Hollywood but they are well connected.
[21634023] |Their stock in trade as "executive producers" is sniffing out hot properties, locking them up and then getting big studios to bankroll and distribute them.
[21634024] |Sometimes Mr. Guber and Mr. Peters do little more than grab the first draft of a screenplay for a "Flashdance," or buy rights to a best seller such as "The Color Purple."
[21634025] |It falls to others to do the writing, directing and producing.

[21634026] |With MGM/UA's "Rainman," for instance, Messrs. Guber and Peters had virtually nothing to do with day-to-day production, but their names still appear in big letters on the credits, and they are inevitably associated with its success.
[21634027] |Sometimes, as with "Batman," the pair really do make the film.
[21634028] |In that case, Guber Peters acquired the rights in 1979, nursed the movie through a dozen scripts, and were on the set in London for 11 months hovering over the most minute changes in casting and production.

[21634029] |"They're the best production talent around," says Brian De Palma, beholden to Guber Peters for hiring him to direct the Warner movie of Tom Wolfe's novel "Bonfire of the Vanities."
[21634030] |On that film, which is to start shooting in a few months, "they've been very much involved, hiring talent and discussing the development of the script.
[21634031] |And when you're making a movie this big, you need all the help you can get," Mr. De Palma adds.
[21634032] |"I wish they were around 24 hours a day."

[21634033] |And some movies seem to have been hurt by their inattention.
[21634034] |Warner executives blame Mr. Guber's and Mr. Peters's lack of involvement in "Caddyshack II" for casting and production problems and the film's ultimate dismal failure.
[21634035] |"We've had a few bombs," admits Mr. Peters.
[21634036] |"But by and large this company has only been profitable."
[21634037] |He says his company's prowess at packaging and marketing "is why we'll be good at Columbia.
[21634038] |We practically ran our own studio."
[21634039] |Longtime Hollywood associates describe Mr. Guber as the intellectual powerhouse of the two, a man with a flair for deal-making and marketing.
[21634040] |"Peter is a major piece of Hollywood manpower who has really earned his success," says Robert Bookman, an agent at Creative Artists Agency.
[21634041] |Mark Johnson, the producer of "Rainman," chimes in: "He has a great ability to hire terrific people and delegate authority. . . .
[21634042] |It's no accident that they've been able to develop such successful material."

[21634043] |Mr. Peters, on the other hand, has fewer fans in Hollywood, and his detractors like to characterize him as something of a hot-tempered bully.
[21634044] |He gets better reviews as a creative whiz, an enthusiast, an idea man.
[21634045] |He also had to fight harder for credibility than his partner did.
[21634046] |Barbra Streisand made him famous.
[21634047] |He cut her hair.
[21634048] |He lived with her.
[21634049] |He came to produce her records and her movies -- "A Star Is Born" and "The Main Event."

[21634050] |Thrice married but now single, Mr. Peters got plenty of ink last summer for an on-set romance with actress Kim Basinger during the making of "Batman."
[21634051] |Mr. Guber, by contrast, has been married to one woman for more than 20 years.
[21634052] |But for all their intellectual and stylistic differences, they make the perfect "good cop, bad cop" team, Hollywood associates say.
[21634053] |"Peter is the bright, sympathetic guy when you're doing a deal," says one agent.
[21634054] |"If there's a problem, Peter disappears, and all of a sudden Jon shows up."

[21634055] |Mr. Guber and Mr. Peters rub many people in Hollywood the wrong way.
[21634056] |Producers Don Simpson and Jerry Bruckheimer, who shepherded "Flashdance" through several scripts and ultimately produced the movie, bristle when Messrs. Guber and Peters take credit for the film.
[21634057] |Says Mr. Simpson: "The script was unreadable.
[21634058] |We reinvented it.
[21634059] |We are the producers of that movie.
[21634060] |They got a small piece of the net profits and a screen credit" as executive producers.

[21634061] |When Roger Birnbaum, an executive who worked for Guber Peters in the early 1980s, left to take a job as head of production at the United Artists studio, they made him forfeit all credits and financial interest in the films he had helped develop, including "Rainman" and "Batman."
[21634062] |Mr. Peters acknowledges that and says it's not unlike the situation he and Mr. Guber are in with Warner.
[21634063] |"I was upset with Roger, I fumpered and schmumpered," says Mr. Peters.
[21634064] |"But he wanted to pursue his own dream, and he went."

[21634065] |Still, Mr. Birnbaum says his relationship with Guber Peters was "one of the most successful I've had in Hollywood."
[21634066] |The two "have a wonderful chemistry -- Jon is very impulsive, and Peter is very compulsive," adds Mr. Birnbaum, who is now head of production at News Corp.'s 20th Century Fox Film Co.
[21634067] |"Jon Peters will come barreling into a room, say he's got a great idea, and be gone.
[21634068] |Peter will take the kernel of that idea and make it grow into something specific. . . ."

[21634069] |Mr. Birnbaum recalls that Mr. Guber and Mr. Peters shifted into high gear a few years back upon learning that they had competition for the story of the murdered naturalist Dian Fossey, which became "Gorillas in the Mist."
[21634070] |He says, "Within a few weeks, we made deals with the government of Rwanda and everyone who had ever met or talked to Dian Fossey.
[21634071] |I think Peter even made some deals with the gorillas."
[21634072] |Universal Studios was working on a competing film, but the studio and its producers ultimately agreed to co-produce the film with Guber Peters and Warner.

[21634073] |More recently, Guber Peters beat out a dozen other producers, reportedly including Robert Redford and Ted Turner, for rights to the life story of Chico Mendes, the murdered Brazilian union leader who fought developers in the Amazon rain forest.
[21634074] |Messrs. Guber and Peters assiduously courted the man's widow for months, showing her a tape of "Gorillas in the Mist" to impress her with the quality of their work.
[21634075] |Money helped, too.
[21634076] |Ultimately, they paid more than $1 million for the rights.
[21634077] |(The sale caused a rift between the widow and some of her husband's followers.
[21634078] |Some of the money will go to the Chico Mendes Foundation, but it isn't earmarked for groups trying to save the rain forest.)

[21634079] |It's hardly astonishing (given the men's track record) that Sony wants Mr. Guber and Mr. Peters.
[21634080] |But it is puzzling to some Hollywood executives that Sony rushed to hire them without clearing up the Warner situation first.
[21634081] |Some note that Sony might have saved itself some trouble by just hiring Mr. Guber and letting Mr. Peters stay on to fulfill the Warner contract.
[21634082] |But though "people in town may ask why Guber needs Peters, it's good to have a partner, and obviously the chemistry works," says Steven Tisch, a producer who once worked for Mr. Guber.
[21634083] |"This business isn't about personalities at the end of the day -- its about whether the ink is red or black.
[21634084] |In the case of Peter and Jon, the ink has been very, very black."

[21634085] |Mr. Guber got his start in the movie business at Columbia two decades ago.
[21634086] |Recruited from New York University's MBA program, he rose within two years to head of production, overseeing such films as "The Way We Were," "Taxi Driver," "Tommy" and "Shampoo."
[21634087] |In 1976, he teamed up with record producer Neil Bogart in Casablanca Records and Filmworks -- later called Polygram Pictures -- where they produced such hits as as "The Deep," and "Midnight Express."

[21634088] |In 1980, Mr. Guber got together with Mr. Peters, by then a successful producer in his own right, after the death of Mr. Bogart.
[21634089] |While Guber Peters produced a number of hits for Warner and others, their record wasn't always so impressive.
[21634090] |Among their clinkers were "The Legend of Billie Jean," "VisionQuest," "Clue" and "Clan of the Cave Bear."
[21634091] |And the failures make it possible for Warner in its current lawsuit to paint the producers as ingrates.
[21634092] |The studio says it stuck with them "even in the early years when the creative partnership was not particularly profitable for Warner."

[21634093] |Mr. Guber replies that "this is a Goliath, this Time Warner, trying to chew up two fellows who have done only well for them for a long period of time."

[21634094] |Mr. Guber and Mr. Peters maintain that executives at Warner have always known of their ambitions to run a major entertainment powerhouse, but that Warner never felt threatened until they linked up with Sony.
[21634095] |"From the beginning, {they} knew we had a goal and a dream," says Mr. Guber.
[21634096] |On a number of occasions, he adds, he tried to get Warner to buy Guber Peters outright.
[21634097] |"They always listened, but they never acted," Mr. Guber says.

[21634098] |In 1987, Mr. Guber and Mr. Peters contributed their company's assets in exchange for a 28% stake in Barris Entertainment, a small-fry TV production company controlled by Giant Industries Inc. Chairman Burt Sugarman.
[21634099] |In July a year later, Warner agreed to release the producers from their old contract when Messrs. Guber, Peters and Sugarman made a $100 million offer to buy 25% of MGM/UA.
[21634100] |Mr. Guber and Mr. Peters planned to run the nearly dormant MGM studio, and the two even tried to interest Warner Bros.' President Terry Semel in becoming a partner after he advised them on the deal.

[21634101] |But the MGM plan collapsed just two weeks later.
[21634102] |Mr. Guber and Mr. Peters say they got a look at the books and balked at the price.
[21634103] |Their relationship with Mr. Sugarman soured shortly thereafter.
[21634104] |Last May, he sold his 24% stake in Barris to a passive Australian investor and Barris was renamed Guber Peters Entertainment Co.
[21634105] |Meanwhile, Mr. Guber and Mr. Peters had agreed to extend their Warner agreement with the new five-year exclusive contract.

[21634106] |The new deal was considered the most generous of its kind, both financially and in terms of creative freedom.
[21634107] |But it paled by comparison to what Sony was to offer last month: the chance, at last, to run a major studio, about $50 million in deferred compensation, up to 10% of Columbia's future cash flow, 8% of the future appreciation of Columbia's market value, and annual salaries of $2.7 million for each.
[21634108] |The producers' 28% share of publicly held Guber Peters would net them an additional $50 million.
[21634109] |Sony also agreed to indemnify the producers against any liability to Warner.

[21634110] |Sony is paying a hefty price for a company that had revenue of only $42 million last year.
[21634111] |And earnings have been erratic.
[21634112] |In the the latest quarter, thanks in part to "Batman," Guber Peters earned $5.8 million, or 50 cents a share, compared to a loss of $6.8 million, or 62 cents a share, in last year's quarter.
[21634113] |Guber Peters stock, which traded as low as $6 a share last year, closed yesterday at $16.625.

[21634114] |The two sides now are accusing each other of lying.
[21634115] |Mr. Guber and Mr. Peters claim they have an oral agreement with Warner executives that allows them to terminate their contract should the opportunity to run a major studio arise.
[21634116] |But in affidavits filed yesterday in the Los Angeles court, Mr. Ross, Warner Bros. Chairman Robert Daly and President Semel deny that such an oral agreement was ever made.
[21634117] |Warner, in its court filings, calls it "a piece of fiction created for this litigation."

[21634118] |Mr. Daly in his affidavit acknowledges that Warner agreed to release the producers last year to take over MGM but says that situation was altogether different.
[21634119] |For one thing, according to Mr. Daly, the producers requested a release in advance.
[21634120] |Moreover, the old contract was about to expire, and the lineup of Guber Peters pictures for Warner wasn't as strong as it is now.
[21634121] |Warner itself was in negotiations with MGM over certain movie and other rights, and it was "in Warner's interest to accommodate MGM/UA, Guber and Peters by permitting them to become MGM executives," Mr. Daly said in his affidavit.

[21634122] |Warner obviously doesn't think that it is in its own interests to let Mr. Guber and Mr. Peters go off to Columbia.
[21634123] |At the very least, Mr. Ross clearly sees an opportunity to use the two men to get a pound of flesh from Sony.
[21634124] |During settlement talks, for example, Warner demanded such things as cable TV rights to Columbia movies and Columbia's interest in the studio it jointly owns with Warner, according to executives involved in the talks.
[21634125] |In any settlement, Warner is almost certain to demand rights to most of the 50 or so projects Mr. Guber and Mr. Peters have locked up for the next few years, notably sequels to "Batman."

[21634126] |Mr. Guber and Mr. Peters refuse to concede that they may have made a tactical error in accepting the Sony offer before taking it up with Warner.
[21634127] |And they say there are plenty of precedents in Hollywood for letting people out of contracts.
[21634128] |The last time Columbia Pictures was looking for a studio chief, they note, Warner released producer David Puttnam from his contract, then took him back after he was subsequently fired by his bosses at Columbia.
[21634129] |In his affidavit filed yesterday, Warner's Mr. Ross indicated he isn't buying any such argument: "If Sony succeeds here, no written contract in Hollywood will be worth the paper it's written on.

[21635001] |THE SALES PITCH couldn't sound better.
[21635002] |First, there's the name: "asset-backed securities."
[21635003] |Better than all those offers you get to buy securities backed by nothing.

[21635004] |And there's more.
[21635005] |The assets backing the securities come from some of the country's biggest -- and most secure -- institutions.
[21635006] |Most earn high ratings from credit agencies.
[21635007] |Their yields are higher than those of U.S. Treasury issues.
[21635008] |And the booming market has already attracted many of the nation's biggest institutional investors.

[21635009] |Ready to jump?
[21635010] |Well, think twice.
[21635011] |The concept may be simple: Take a bunch of loans, tie them up in one neat package, and sell pieces of the package to investors.
[21635012] |But the simplicity may be misleading.

[21635013] |Skeptics say the slightly higher returns aren't enough to compensate for the extra risk.
[21635014] |They warn that asset-backed securities are only as good as the assets and credit backing that support them -- and those are hard to evaluate.
[21635015] |Moreover, the securities were introduced only about 4 1/2 years ago; the biggest unknown is how they will fare in a recession.

[21635016] |"A lot of this stuff really is in untested waters," says Owen Carney, director of the investment securities division of the U.S. comptroller of the currency.
[21635017] |"We don't know how this whole market will work in a serious economic downturn."

[21635018] |Such concerns, however, haven't stopped asset-backed securities from becoming one of Wall Street's hottest new products.
[21635019] |Since the spring of 1985, financial alchemists have transformed a wide variety of debt into these new securities.

[21635020] |They have sold issues backed by car loans, boat loans and recreational-vehicle loans.
[21635021] |They have offered bundles of homeequity loans, as well as packages of loans used to buy vacation time-shares.
[21635022] |Last year, there was an issue of "death-backed bonds" -- securities backed by loans to life-insurance policyholders.
[21635023] |Some predict there will be "Third World bonds," backed by loans to Brazil, Argentina and other debt-ridden nations.
[21635024] |And the biggest volume this year has been on securities backed by credit-card receivables, sometimes known as "plastic bonds."

[21635025] |"This is the heyday of debt," says James Grant, editor of Grant's Interest Rate Observer, a newsletter.
[21635026] |"Before the sun sets on the '80s, it seems nothing will be left unhocked."

[21635027] |The result is a $45 billion market, according to Securities Data Co.
[21635028] |That includes more than $9.5 billion issued through August of this year, up sharply from $6.5 billion in the comparable 1988 period -- and more than in all of 1987.

[21635029] |Most issues have been sold to professional money managers, pension funds, bank trust departments and other institutions.
[21635030] |But wealthy individuals also have been jumping in, and lately brokers have been pushing smaller investors into the asset-backed market.
[21635031] |The entry fee is affordable: Issues typically are sold in minimum denominations of $1,000.

[21635032] |"We expect additional offerings" of asset-backed securities targeted toward individual investors, says Bill Addiss, a senior vice president at Shearson Lehman Hutton Inc.

[21635033] |The process typically begins when an institution, such as Citibank or Sears, Roebuck & Co., takes a pool of credit-card or other receivables and sells them to a specially created trust.
[21635034] |The trust then issues securities -- generally due in five years or less -- that are underwritten by Wall Street brokerage firms and offered to investors.
[21635035] |Issues typically come with "credit enhancements," such as a bank letter of credit, and thus have received high credit ratings.

[21635036] |Enthusiasts say the booming market has opened up a valuable new source of funds to issuers, while providing a valuable new investment for individuals and institutions.
[21635037] |Asset-backed securities "are an attractive investment compared to bank certificates of deposit or other corporate bonds," says Craig J. Goldberg, managing director and head of the asset-backed securities group at Merrill Lynch Capital Markets.

[21635038] |But skeptics question whether asset-backed bonds offer sufficient rewards to compensate for the extra risks.

[21635039] |Consider a $500 million offering of 9% securities issued last spring and backed by Citibank credit-card receivables.
[21635040] |The triple-A-rated issue offered a yield of only about 0.5 percentage point above four-year Treasury issues.
[21635041] |On a $10,000 investment, that's a difference of only $50 a year.

[21635042] |That kind of spread can be critical for money managers who buy bonds in large quantities and whose livelihood depends on outperforming the money manager across the street.
[21635043] |But for individuals who buy much smaller amounts and care less about relative performance than in preserving what they have, that margin is meaningless.

[21635044] |"If you're in the bond business playing the relative-performance derby, then even an extra 25 basis points (0.25 percentage point) becomes an important consideration on a career basis," says Mr. Grant.
[21635045] |"But if you're an individual investing money and trying to get it back again, then that isn't of overwhelming importance."

[21635046] |Moreover, the interest on asset-backed securities is fully taxable, while interest on Treasury issues is tax-free at the state and local level.
[21635047] |That's why some investment managers, such as Alex Powers, a vice president of Chase Manhattan Bank's private banking division, don't recommend most asset-backed issues for individuals in high-tax states, such as New York or California.

[21635048] |But Mr. Powers has purchased asset-backed issues for individuals with tax-deferred accounts, such as retirement plans.
[21635049] |He points out that institutions buying asset-backed issues in large quantities can earn higher spreads over Treasurys than individuals buying smaller amounts.

[21635050] |Another concern is liquidity, or how easily a security can be converted into cash.
[21635051] |The secondary, or resale, market for asset-backed securities is relatively new and much less active than for Treasury issues.
[21635052] |That could make it tricky for investors who need to sell their holdings quickly before the securities mature.
[21635053] |That's particularly true, analysts say, for certain of the securities, such as those backed by time-share loans.
[21635054] |"You could see massive gyrations here because it's such a thinly traded market," says Jonathan S. Paris, a vice president of European Investors Inc., a New York investment-management firm.

[21635055] |In addition, an investor who wants to know the daily value of Treasury bonds, or corporate bonds traded on the New York Stock Exchange, can simply check newspaper listings.
[21635056] |There aren't any such listings for asset-backed securities.

[21635057] |Evaluating asset-backed securities poses another problem.
[21635058] |Investors, for instance, may mistakenly assume that the bank or company that originally held the assets is guaranteeing the securities.
[21635059] |It isn't.

[21635060] |The front cover of the prospectus for the Citibank credit-card receivables offering points out in bold capital letters that the certificates represent an interest only in the specially created trust and "do not represent interests in or obligations of the banks, Citibank N.A., Citicorp or any affiliate thereof."
[21635061] |In other words, if there's a problem, don't expect Citibank to come to the rescue.
[21635062] |The prospectus also notes that the securities are not guaranteed by any government agency.

[21635063] |That means investors have to focus on the quality of the debt that lies beneath the securities, as well as on the credit enhancement for the issue and the credit ratings the issue has received.
[21635064] |That also isn't easy.

[21635065] |Take the "credit enhancements," which typically include a bank letter of credit or insurance from a bond-insurance company.
[21635066] |The letter of credit typically is not offered by the bank selling the assets to back the securities.
[21635067] |Nor does it cover the entire portfolio.

[21635068] |Details of credit enhancements vary widely from issue to issue.
[21635069] |Still, they play a crucial role in winning top ratings for most asset-backed issues -- which in turn is why the yield above Treasurys is so slim.
[21635070] |But skeptics ask why you should bother buying this stuff when you can get only slightly lower yields on government-guaranteed paper.
[21635071] |When you buy an asset-backed issue, you take the risk that a bank or an insurer could run into unexpected difficulties.
[21635072] |If a bank's credit rating was lowered because of, say, its loans to Third World nations, that could also affect the ratings, liquidity and prices of the asset-backed issues that the bank supports.

[21635073] |Underwriters insist these issues are constructed to withstand extremely tough economic conditions.
[21635074] |But despite the credit enhancements, despite the high ratings, some money managers still worry that a recession could wreak havoc on the underlying assets.
[21635075] |At a time when Americans are leveraged to their eyeballs, asset-backed investors may be taking a heady gamble that consumers will be able to repay loans in hard times.

[21635076] |At the very least, a recession would prompt investors to buy the highest-quality bonds they can find -- that is, Treasurys.
[21635077] |That could widen the yield spread between Treasurys and asset-backed securities, as well as make it tougher to unload the latter.

[21635078] |But it could be much worse.
[21635079] |Some analysts are especially wary of credit-card issues.
[21635080] |For one thing, credit-card loans are unsecured.
[21635081] |In addition, they fear that banks have been overeager to issue cards to the public -- giving cards to too many big spenders who will default during a recession.

[21635082] |"A day of reckoning is coming where we think the market will place a high premium on the highest-quality debt issues, and therefore we think the best debt investment is U.S. government bonds," says Craig Corcoran of Davis/Zweig Futures Inc., an investment advisory firm.

[21635083] |What about triple-A-rated asset-backed issues?
[21635084] |"Nope, we still say to stick with Treasurys," Mr. Corcoran replies.
[21635085] |Ratings, he notes, "are subject to change."

[21635086] |All this makes asset-backed securities seem too risky for many people.
[21635087] |And it reminds Raymond F. DeVoe Jr., a market strategist at Legg Mason Wood Walker Inc., of what he calls "DeVoe's Unprovable but Highly Probable Theory No. 1:

[21635088] |"More money has been lost reaching for yield than in all the stock speculations, scams and frauds of all time."

[21635089] |Mr. Herman is a staff reporter in The Wall Street Journal's New York bureau.

[21635090] |Volume of asset-backed securities issued annually

[21635091] |*Principal amount

[21635092] |**As of August 30

[21635093] |*Principal amount

[21635094] |Source: Securities Data Co.

[21636001] |IF YOU FORCE financial planners to sum up their most important advice in a single sentence, it would probably be a one-word sentence: Diversify.

[21636002] |Judging by a poll of Wall Street Journal readers conducted this summer by Erdos & Morgan Inc., serious investors have taken that advice to heart.
[21636003] |Nearly 1,000 investors responded to the Journal's poll, providing an in-depth look at their portfolios.

[21636004] |Those portfolios are remarkably diversified.
[21636005] |By spreading their wealth among several investment alternatives, the respondents have protected themselves against squalls in any one area, be it stocks, bonds or real estate.

[21636006] |For example, about 88% of Journal readers owned stock (down slightly from 91% in a similar poll last year).
[21636007] |But only 17.5% said they had more than half their money in the stock market.

[21636008] |Similarly, 57% of respondents own shares in a money-market mutual fund, and 33% own municipal bonds.
[21636009] |But only 6% to 7% of the investors were committing more than half their funds to either of those alternatives.

[21636010] |The poll, conducted Aug. 7-28, also provides a glimpse into the thinking of serious investors on a variety of other topics.
[21636011] |It found them in a cautious, but not downbeat, mood.

[21636012] |Of 1,500 people sent a questionnaire, 951 replied.
[21636013] |The response rate, more than 63%, allows the results to be interpreted with a high degree of confidence.
[21636014] |The results can't be extrapolated to all investors, though.
[21636015] |Journal readers are relatively affluent, with a median household income of between $75,000 and $99,000.
[21636016] |Nearly half of the respondents (47%) said their investment portfolio was worth $250,000 or more, and 17% said it was worth $1 million or more.

[21636017] |The respondents were mildly optimistic about the economy and investment markets, but their collective judgments were a notch more sober than they were a year ago.

[21636018] |For example, 12% of this year's respondents said they expect a recession within 12 months.
[21636019] |Last year, only 8% were expecting a recession.

[21636020] |An additional 56% of this year's respondents expect the economy to slow down during the next 12 months.
[21636021] |Only 42% of last year's respondents anticipated slowing growth.

[21636022] |Apparently, the respondents don't think that an economic slowdown would harm the major investment markets very much.
[21636023] |A slim majority (51%) think stock prices will be higher in August 1990 than they were in August 1989.

[21636024] |Their verdict on real estate is almost the same.
[21636025] |Some 50% expect real estate in their local area to increase in value over the next 12 months.

[21636026] |By contrast, only 32% expect an increase in the price of gold.
[21636027] |Since gold tends to soar when inflation is high, that finding suggests that people believe inflation remains under control.

[21636028] |Even though only 12% actually predicted a recession, many respondents were taking a better-safe-than sorry investment stance.
[21636029] |Nearly a third said they have made some portfolio changes to anticipate a possible recession.
[21636030] |For the most part, the changes were "slight."

[21636031] |The two-thirds who haven't tried to make their portfolios more recession-resistant were split about evenly between investors who "don't believe in trying to predict the markets" (about 31%) and investors who "don't expect a recession" (about 15%) or are "unsure if and when a recession might come" (about 22%).

[21636032] |A buy-and-hold approach to stocks continues to be the rule among respondents.
[21636033] |Most own two to 10 stocks, and buy or sell no more than three times a year.
[21636034] |Some 71% had bought some stock in the past year; only 57% had sold any.

[21636035] |But the lurking shadow of 1987's stock-market crash still seems dark.
[21636036] |About 33% considered another crash "likely," while about 63% said one is "unlikely."
[21636037] |Those percentages hardly changed from the previous year's poll.

[21636038] |And the respondents' commitment to the stock market remains somewhat lighter than usual.
[21636039] |About 60% of them said they would "ordinarily" have at least 25% of their money in stocks.
[21636040] |But as of August, only 50% actually had stock-market investments of that size.

[21636041] |Most stock-market indexes were hitting all-time highs at around the time of the poll.
[21636042] |But it appears that many Journal readers were taking that news as a sign to be cautious, rather than a signal to jump on the bandwagon.

[21636043] |Mr. Dorfman covers investing issues from The Wall Street Journal's New York bureau.

[21637001] |Canadian steel ingot production totaled 276,334 metric tons in the week ended Oct. 14, down 5.3% from the preceding week's total of 291,890 tons, Statistics Canada, a federal agency, said.

[21637002] |The week's total was down 7.1% from 297,446 tons a year earlier.
[21637003] |A metric ton is equal to 2,204.62 pounds.

[21637004] |The cumulative total in 1989 was 12,283,217 tons, up 7.5% from 11,429,243 tons a year earlier.

[21638001] |Health Care Property Investors Inc. said it acquired three long-term care facilities and one assisted-living facility in a purchase-and-lease transaction valued at $15 million.

[21638002] |The real estate investment trust said that it leased the three Florida facilities to National Health Care Affiliates Inc. of Buffalo, N.Y.

[21638003] |Health Care Property holds an interest in 139 facilities in 30 states.

[21639001] |Moody's Investors Service said it lowered its rating on about $75 million of this Chatsworth, Calif., concern's convertible subordinated debentures, due 2012, to Caa from B2.
[21639002] |It said the reduction reflects impaired business prospects and reduced financial flexibility caused by continuing losses at the maker of Winchester disk drives.

[21639003] |VALLEY National Corp. --
[21639004] |Moody's Investors Service Inc. said it lowered its rating on about $400 million of this bank holding company's senior debt to B2 from Ba3.
[21639005] |Moody's said it expects Valley National, of Phoenix, Ariz., to make substantial further provisions against its real-estate portfolio, and that it continues to suffer from the high cost of carrying nonperforming assets, and from high loan-loss provisions.

[21640001] |Electronic theft by foreign and industrial spies and disgruntled employees is costing U.S. companies billions and eroding their international competitive advantage.

[21640002] |That was the message delivered by government and private security experts at an all-day conference on corporate electronic espionage.
[21640003] |"Hostile and even friendly nations routinely steal information from U.S. companies and share it with their own companies," said Noel D. Matchett, a former staffer at the federal National Security Agency and now president of Information Security Inc., Silver Spring, Md.

[21640004] |It "may well be" that theft of business data is "as serious a strategic threat to national security" as it is a threat to the survival of victimized U.S. firms, said Michelle Van Cleave, the White House's assistant director for National Security Affairs.

[21640005] |The conference was jointly sponsored by the New York Institute of Technology School of Management and the Armed Forces Communications and Electronics Association, a joint industry-government trade group.

[21640006] |Any secret can be pirated, the experts said, if it is transmitted over the air.
[21640007] |Even rank amateurs can do it if they spend a few thousand dollars for a commercially available microwave receiver with amplifier and a VCR recorder.
[21640008] |They need only position themselves near a company's satellite dish and wait.
[21640009] |"You can have a dozen competitors stealing your secrets at the same time," Mr. Matchett said, adding: "It's a pretty good bet they won't get caught."
[21640010] |The only way to catch an electronic thief, he said, is to set him up with erroneous information.

[21640011] |Even though electronic espionage may cost U.S. firms billions of dollars a year, most aren't yet taking precautions, the experts said.
[21640012] |By contrast, European firms will spend $150 million this year on electronic security, and are expected to spend $1 billion by 1992.
[21640013] |Already many foreign firms, especially banks, have their own cryptographers, conference speakers reported.
[21640014] |Still, encrypting corporate communications is only a partial remedy.
[21640015] |One expert, whose job is so politically sensitive that he spoke on condition that he wouldn't be named or quoted, said the expected influx of East European refugees over the next few years will greatly increase the chances of computer-maintenance workers, for example, doubling as foreign spies.

[21640016] |Moreover, he said, technology now exists for stealing corporate secrets after they've been "erased" from a computer's memory.
[21640017] |He said that Oliver North of Iran-Contra notoriety thought he had erased his computer but that the information was later retrieved for congressional committees to read.
[21640018] |No personal computer, not even the one on a chief executive's desk, is safe, this speaker noted.

[21640019] |W. Mark Goode, president of Micronyx Inc., a Richardson, Texas, firm that makes computer-security products, provided a new definition for Mikhail Gorbachev's campaign for greater openness, known commonly as glasnost.
[21640020] |Under Mr. Gorbachev, Mr. Goode said, the Soviets are openly stealing Western corporate communications.
[21640021] |He cited the case of a Swiss oil trader who recently put out bids via telex for an oil tanker to pick up a cargo of crude in the Middle East.
[21640022] |Among the responses the Swiss trader got was one from the Soviet national shipping company, which hadn't been invited to submit a bid.
[21640023] |The Soviets' eavesdropping paid off, however, because they got the contract.

[21641001] |The University of Toronto stepped deeper into the contest for Connaught BioSciences Inc. by reaching an unusual agreement with Ciba-Geigy Ltd. and Chiron Corp.

[21641002] |The University said the two companies agreed to spend 25 million Canadian dollars ($21.3 million) over 10 years on research at Canadian universities if they are successful in acquiring the vaccine maker.
[21641003] |It said $10 million would go to the University of Toronto.

[21641004] |Ciba-Geigy and Chiron have made a joint bid of C$866 million for Connaught, and Institut Merieux S.A. of France has made a rival bid of C$942 million.
[21641005] |The University is seeking an injunction against the Merieux bid, arguing that Connaught's predecessor company agreed in 1972 that Connaught's ownership wouldn't be transferred to foreigners.

[21641006] |The university implied that it would drop its opposition to foreign ownership if Ciba-Geigy and Chiron are successful with their lower bid.
[21641007] |It said the new agreement would "replace" the old one that forms the basis of its suit against the Merieux takeover.
[21641008] |"Notwithstanding foreign ownership of Connaught, this accord would enhance research and development in Canada," said James Keffer, the university's vice president of research.

[21641009] |Ciba-Geigy is a Swiss pharmaceutical company and Chiron is based in Emeryville, Calif.

[21641010] |In a statement, Jacques-Francois Martin, director general of Merieux, said the French company is still determined to acquire Connaught.
[21641011] |While he didn't comment directly on the pact between Ciba-Geigy and the university, he said Merieux can transfer new products and technologies to Connaught more rapidly than other companies "not currently producing and marketing vaccines {who} can only promise this for some . . . years in the future."

[21641012] |In national over-the-counter trading yesterday, Connaught closed at $28.625, up $1.25.

[21642001] |Microsoft and other software stocks surged, leading the Nasdaq composite index of over-the-counter stocks to its biggest advance of the year on breathtaking volume.

[21642002] |Leading the pack, Microsoft soared 3 3/4, or 4%, to a record price of 84 1/4 on 1.2 million shares.
[21642003] |On the other hand, Valley National tumbled 24% after reporting a sizable third-quarter loss.

[21642004] |The Nasdaq composite leaped 7.52 points, or 1.6%, to 470.80.
[21642005] |Its largest previous rise this year came Aug. 7, when it gained 4.31.

[21642006] |The OTC market's largest stocks soared as well, as the Nasdaq 100 Index jumped 10.01, or 2%, to 463.06.
[21642007] |The Nasdaq Financial Index rose 5.04, or 1.1%, to 460.33.
[21642008] |By comparison, the Dow Jones Industrials and the New York Stock Exchange Composite each rose 1.5%.

[21642009] |Volume totaled 173.5 million shares, 30% above this year's average daily turnover on Nasdaq.

[21642010] |Among broader Nasdaq industry groups, the utility index gained 18.11 to 761.38.
[21642011] |The transportation and insurance sectors each posted gains of 8.59, with the transports finishing at 486.74 and the insurers at 537.91.
[21642012] |The Nasdaq industrial index climbed 8.17 to 458.52, and the "other finance" index, made up of commercial banks and real estate and brokerage firms, rose 3.97 to 545.96.
[21642013] |The index of smaller banks improved 1.97.

[21642014] |Of the 4,346 issues that changed hands, 1,435 rose and 629 fell.
[21642015] |Jeremiah Mullins, head of OTC trading at Dean Witter Reynolds, said both institutional and retail investors were buying.
[21642016] |But there was a dearth of sellers, traders said, so buyers had to bid prices up to entice them.

[21642017] |"There's no pressure on OTC stocks at this point," said Mr. Mullins, who said some buyers are beginning to shop among smaller OTC issues.

[21642018] |Microsoft's surge followed a report this week of substantially improved earnings for its first quarter, ended Sept. 30.
[21642019] |The stock was trading at 69 just two weeks ago.

[21642020] |Rick Sherlund, a Goldman Sachs analyst, has raised his earnings estimates for the company twice in the past two weeks, citing improved margins.
[21642021] |After the earnings were announced, he raised his fiscal 1990 estimate to between $3.80 and $4 a share.
[21642022] |Microsoft earned $3.03 a share in fiscal 1989.

[21642023] |Among other software issues, Autodesk jumped 1 1/4 to 42, Lotus Development was unchanged at 32 1/2, Novell jumped 7/8 to 30 3/4, Ashton-Tate gained 1/4 to 10 5/8, and Oracle Systems rose 3/4 to 25 3/4.

[21642024] |Caere, a new software issue, surged from its offering price of 12 to close at 16 1/8.
[21642025] |The company also makes optical character recognition equipment.
[21642026] |Caere was underwritten by Alex. Brown & Sons.

[21642027] |Another recently offered Alex. Brown issue, Rally's, surged 3 1/8 to 23.
[21642028] |The operator of fast-food restaurants, whose shares began trading last Friday, climbed 3 1/8 to 23 on 944,000 shares.
[21642029] |Its 1.7 million-share offering was priced at 15.

[21642030] |Valley National's slide of 5 3/4 points to 18 1/2 on 4.2 million shares followed its report late Wednesday of a $72.2 million third-quarter loss.
[21642031] |In the 1988 quarter, the Phoenix, Ariz., commercial banking concern earned $18.7 million.

[21642032] |Valley National said its $110 million provision for credit losses and $11 million provision for other real estate owned is related to weakness in the Arizona real estate market.
[21642033] |Additionally, Moody's Investors Service said it downgraded Valley National's senior debt and confirmed the company's commercial paper rating of "not prime."

[21642034] |A new issue, Exabyte, surged 2 1/8 from its initial offering price to close at 12 1/8.
[21642035] |The offering was for about 2.8 million shares of the data storage equipment maker; more than 2.2 million shares changed hands after trading began.

[21642036] |Dell Computer dropped 7/8 to 6.
[21642037] |The company said earnings for the year ending Jan. 28, 1990, are expected to be 25 to 35 cents a share, compared with a previous estimate of 50 to 60 cents a share.

[21642038] |Nutmeg Industries lost 1 3/4 to 14.
[21642039] |Raymond James & Associates in St. Petersburg, Fla., lowered its third-quarter earnings estimate for the company, according to Dow Jones Professional Investor Report.

[21642040] |A.P. Green Industries advanced 1 5/8 to 36 1/8.
[21642041] |East Rock Partners, which has indicated it might make a bid for the company, said A.P. Green, a refractory products maker, told the partnership it isn't for sale.

[21643001] |Row 21 of Section 9 of the Upper Reserved at Candlestick Park is a lofty perch, only a few steps from the very top of the stands.
[21643002] |From my orange seat, I looked over the first-base line and the new-mown ball field in the warm sun of the last few minutes before what was to have been the third game of the World Series.

[21643003] |It was five in the afternoon, but that was Pacific time.
[21643004] |Back in New York the work day was already over, so I didn't have to feel guilty.
[21643005] |Even still, I did feel self-indulgent, and I couldn't help remembering my father's contempt for a rich medical colleague who would go to watch the Tigers on summer afternoons.

[21643006] |This ballpark, the Stick, was not a classic baseball stadium -- too symmetrical, too much bald concrete.
[21643007] |And it didn't have the crowded wild intimacy of Yankee Stadium.
[21643008] |But I liked the easy friendliness of the people around me, liked it that they'd brought their children, found it charming that, true citizens of the state of the future, they had brought so many TVs and radios to stay in touch with electroreality at a live event.

[21643009] |Maybe it was their peculiar sense of history.
[21643010] |The broadcasters were, after all, documenting the game, ratifying its occurrence for millions outside the Stick.
[21643011] |Why not watch or hear your experience historicized while you were living it?

[21643012] |The day was saturated with the weight of its own impending history.
[21643013] |Long lines of people waited to buy special souvenir World Series postcards with official postmarks.
[21643014] |Thousands of us had paid $5 for the official souvenir book with its historical essays on Series trivia, its historical photographs of great moments in Series past, and its instructions, in English and Spanish, for filling in the scorecard.
[21643015] |Pitcher=lanzador.
[21643016] |Homerun=jonron.

[21643017] |Players ran out on the field way below, and the stands began to reverberate.
[21643018] |It must be a local custom, I thought, stamping feet to welcome the team.
[21643019] |But then the noise turned into a roar.
[21643020] |And no one was shouting.
[21643021] |No one around me was saying anything.
[21643022] |Because we all were busy riding a wave.
[21643023] |Sixty thousand surfers atop a concrete wall, waiting for the wipeout.

[21643024] |Only at the moment of maximum roll did I grasp what was going on.
[21643025] |Then I remembered the quake of '71, which I experienced in Santa Barbara in a second-story motel room.
[21643026] |When the swaying of the building woke me up, I reasoned that a) I was in Southern California; b) the bed was moving; c) it must be a Magic Fingers bed that had short-circuited.
[21643027] |Then I noticed the overhead light was swaying on its cord and realized what had happened.
[21643028] |What should I do?
[21643029] |Get out of the possibly collapsing building to the parking lot.
[21643030] |But the lot might split into crevasses, so I had better stand on my car, which probably was wider than the average crevasse.
[21643031] |Fortunately, the quake was over before I managed to run out and stand naked on the hood.

[21643032] |At the Stick, while the world shook, I thought of that morning and then it struck me that this time was different.
[21643033] |If I survived, I would have achieved every journalist's highest wish.
[21643034] |I was an eyewitness of the most newsworthy event on the planet at that moment.
[21643035] |What was my angle?
[21643036] |How would I file?

[21643037] |All these thoughts raced through my head in the 15 seconds of the earthquake's actual duration.
[21643038] |The rest is, of course, history.
[21643039] |The Stick didn't fall.
[21643040] |The real tragedies occurred elsewhere, as we soon found out.
[21643041] |But for a few minutes there, relief abounded.
[21643042] |A young mother found her boy, who had been out buying a hotdog.
[21643043] |The wall behind me was slightly deformed, but the center had held.
[21643044] |And most of us waited for a while for the game to start.
[21643045] |Then we began to file out, to wait safely on terra firma for the opening pitch.

[21643046] |It was during the quiet exodus down the pristine concrete ramps of the Stick that I really understood the point of all those Walkmen and Watchmen.
[21643047] |The crowd moved in clumps, clumps magnetized around an electronic nucleus.
[21643048] |In this way, while the Stick itself was blacked out, we kept up to date on events.
[21643049] |Within 15 minutes of the quake itself, I was able to see pictures of the collapsed section of the Bay Bridge.
[21643050] |Increasingly accurate estimates of the severity of the quake became available before I got to my car.
[21643051] |And by then, expensive automobile sound systems were keeping the gridlocked parking lot by the bay informed about the fire causing the big black plume of smoke we saw on the northern horizon.

[21643052] |Darkness fell.
[21643053] |But the broadcasts continued through the blacked-out night, with pictures of the sandwiched highway ganglion in Oakland and firefighting in the Marina district.
[21643054] |By then, our little sand village of cars had been linked with a global village of listeners and viewers.

[21643055] |Everyone at the Stick that day had started out as a spectator and ended up as a participant.
[21643056] |In fact, the entire population of the Bay Area had ended up with this dual role of actor and audience.
[21643057] |The reporters were victims and some of the victims turned into unofficial reporters.

[21643058] |The outstanding example of this was the motorist on the Bay Bridge who had the presence of mind to take out a video camera at the absolutely crucial moment and record the car in front as it fell into the gap in the roadway.
[21643059] |The tape was on tv before the night was out.
[21643060] |Marshall McLuhan, you should have been there at that hour.

[21644001] |Investors who received Shearson Lehman Hutton Inc.'s latest stock commentary may be left with blank expressions.

[21644002] |The first 10 pages of the 76-page Weekly Portfolio Perspective are completely blank, except for the page numbers.
[21644003] |Rather than printing devils, Shearson puts all the blame on the unpredictable stock market.
[21644004] |The plunge made Shearson's market commentary instantly out of date.

[21644005] |In fact, last Friday's 190.58-point tumble in the stock market caught many people and businesses by surprise, not the least of them brokerage firms such as Shearson that print their weekly market commentaries on Fridays for dissemination the following week.
[21644006] |Shearson, a 62%-owned unit of American Express Co., didn't have enough time to update its market commentary so, "We decided to kill our strategy pieces," says Jack Rivkin, the head of Shearson's research department.

[21644007] |The first thought some investors had was that a red-faced Shearson must have been wildly bullish on stocks in its original commentary, and that's why it purged its pages.
[21644008] |Investors recalled that Shearson last week had been advising that "the market is still exhibiting all the signs of a further advance."
[21644009] |Many other brokerage firms had similarly bullish views.

[21644010] |But Mr. Rivkin insists that the 10 pages weren't pulled because they were too bullish.
[21644011] |Instead, he says, "they were cautious, and that wasn't the message we wanted to deliver" on Monday.

[21644012] |As Mr. Rivkin explains it, "We were raising some caution flags about rate rises in Europe and concerns about the LBO market.
[21644013] |And by late Friday afternoon, actually after the close, we decided that was the wrong tone to take.
[21644014] |With the market down, we wanted to tell people to put their orders in on the opening."

[21644015] |Both before and after the Friday plunge, Shearson has maintained a recommended portfolio weighting of 65% stocks, 20% bonds and 15% cash.

[21645001] |Sheldon B. Lubar, chairman of Lubar & Co., and John L. Murray, chairman of Universal Foods Corp., were elected to the board of this engine maker.
[21645002] |They succeed Robert W. Kasten and John R. Parker, who reached the mandatory retirement age.

[21646001] |China's slide toward recession is beginning to look like a free fall.

[21646002] |In a report on China's foundering economy, the official State Statistical Bureau disclosed that industrial output last month rose 0.9% from a year earlier-the lowest growth rate in a decade for September.
[21646003] |Retail sales are plummeting, while consumer prices still are rising.

[21646004] |Chinese and foreign economists now predict prolonged stagflation: low growth and high inflation.
[21646005] |"The economy is crashing hard," says an Asian economist in Beijing.
[21646006] |"The slowdown is taking hold a lot more quickly and devastatingly than anyone had expected."

[21646007] |A lengthy recession, if it materializes, would drain state coffers and create severe hardships for urban workers.
[21646008] |Experts predict the coming year will be characterized by flat or negative industrial growth, rising unemployment and a widening budget deficit.
[21646009] |Unless the government suddenly reverses course, wages for most workers won't keep pace with inflation, creating a potential source of urban unrest.

[21646010] |The economy's slowdown is due only partly to the austerity program launched in September 1988 to cool an overheated economy and tame inflation.
[21646011] |(Industrial output surged 21% in 1988, while inflation peaked last February at nearly 30%.)
[21646012] |The slowdown also results from chronic energy and raw-materials shortages that force many factories to restrict operations to two or three days a week.

[21646013] |In Western, market-driven countries, recessions often have a bright side: prodding the economy to greater efficiency.
[21646014] |In China, however, there isn't likely to be any silver lining because the economy remains guided primarily by the state.

[21646015] |Instead, China is likely to shell out ever-greater subsidies to its coddled state-run enterprises, which ate up $18 billion in bailouts last year.
[21646016] |Nor are any of these inefficient monoliths likely to be allowed to go bankrupt.
[21646017] |Rather, the brunt of the slowdown will be felt in the fast-growing private and semi-private "township" enterprises, which have fallen into disfavor as China's leaders re-emphasize an orthodox Marxist preference for public ownership.

[21646018] |"When the going gets rough, China penalizes the efficient and rewards the incompetent," says a Western economist.

[21646019] |Reports of an economy near recession come as officials prepare a major Communist Party plenum for sometime in the next few weeks.
[21646020] |The meeting is expected to call for heightened austerity for two years.
[21646021] |But with industrial growth stagnant and inflation showing signs of easing, some voices may call for measures to pump new life into the economy.

[21646022] |Some analysts believe China soon will begin relaxing economic controls, particularly by loosening credit.
[21646023] |That would benefit Chinese enterprises as well as Sino-foreign joint ventures, both of which have been plagued by shortages of working capital.
[21646024] |A dangerous buildup this year of billions of dollars in inter-company debts threatens, if unchecked, to bring the economy to a collapse.

[21646025] |One sign of a possible easing of credit policy was the decision this week of People's Bank of China, the central bank, to allocate $5.4 billion in short-term loans to pay farmers for the autumn harvest, the official China Daily reported.

[21646026] |But while pumping more money into the economy would bring relief to many industries, it also runs the risk of triggering another period of runaway growth and steep inflation.
[21646027] |The cycle has been repeated several times since China began reforming its planned economy in 1979.
[21646028] |And, because China's leaders have abandoned plans to drastically reform the economy, it is likely to continue, analysts say.

[21646029] |The statistical bureau's report, cited in China Daily, notes that industrial output in September totaled $29.4 billion, a rise of just 0.9% from a year earlier.
[21646030] |Output declined in several provinces, including Jiangsu and Zhejiang, two key coastal areas, and Sichuan, the nation's agricultural breadbasket.
[21646031] |Production in Shanghai, China's industrial powerhouse and the largest source of tax revenue for the central government, fell 1.8% for the month.

[21646032] |Nationwide, output of light industrial products declined 1.8% -- "the first decline in 10 years," a bureau spokesman told China Daily.

[21646033] |In an unusually direct statement, the bureau spokesman recommended that state banks extend more credit to shopkeepers so that they can purchase manufacturers' goods.
[21646034] |"This will prevent a slide in industrial production, which will otherwise cause new panic buyings," the spokesman said.

[21647001] |The 1986 tax overhaul, the biggest achievement of President Reagan's second term, is beginning to fall apart, and interest groups are lining up for tax goodies all over Capitol Hill.

[21647002] |Real-estate executives are lobbying to ease anti-tax-shelter rules.
[21647003] |Charitable groups are trying to reinstate the write-off for contributions made by individuals who don't itemize their deductions.
[21647004] |Big auction houses want to make collectibles eligible for lower capital-gains taxes.
[21647005] |And heavy-industry lobbyists are quietly discussing the possibility of reinstating the investment tax credit.

[21647006] |"Everything is up for grabs," says Theodore Groom, a lobbyist for mutual life-insurance companies.
[21647007] |Adds Robert Juliano, the head lobbyist for a variety of interests that want to protect the tax deduction for travel and entertainment expenses: "It appears as though the whole thing is wide open again."

[21647008] |The catalyst has been the congressional move to restore preferential tax treatment for capital gains, an effort that is likely to succeed in this Congress.
[21647009] |Other fundamental "reforms" of the 1986 act have been threatened as well.
[21647010] |The House seriously considered raising the top tax rate paid by individuals with the highest incomes.
[21647011] |The Senate Finance Committee voted to expand the deduction for individual retirement accounts, and also to bring back income averaging for farmers, a tax preference that allows income to be spread out over several years.

[21647012] |As part of the same bill, the finance panel also voted in favor of billions of dollars in narrow tax breaks for individuals and corporations, in what committee member Sen. David Pryor (D., Ark.) calls a "feeding frenzy" of special-interest legislating.
[21647013] |The beneficiaries would range from pineapple growers to rich grandparents to tuxedo-rental shops.

[21647014] |To be sure, the full Senate, facing a fast-approaching budget deadline, last Friday stripped away all of the tax breaks that were contained in the Finance Committee bill.
[21647015] |But lawmakers of both parties agree that the streamlining was temporary.
[21647016] |Other bills will be moving soon that are expected to carry many of the tax cuts, including both the capital-gains and IRA provisions.

[21647017] |"There isn't any doubt that the thread of the '86 code has been given a mighty tug," says Rep. Thomas Downey (D., N.Y.).
[21647018] |"You'll see the annual unraveling of it."

[21647019] |"It's back to tax-give-away time for the select few," says Rep. William Gray of Pennsylvania, the third-ranking Democrat in the House.
[21647020] |Referring to the chairmen of the Senate and House tax-writing committees, he adds, "Next year, every special-interest group is going to be there knocking on Lloyd Bentsen's door, on Danny Rostenkowski's door."

[21647021] |Many groups aren't waiting that long.
[21647022] |Just last week, a House Ways and Means subcommittee held a lengthy meeting to hear the pleas of individual cities, companies and interest groups who want to open their own special loopholes.
[21647023] |"It's a Swiss-cheese factory and the cheese smells pretty good," commented one veteran lobbyist who was watching the proceedings.

[21647024] |Even lobbyists for heavy industry, one of the interests hit hardest in the 1986 bill, are encouraged.
[21647025] |The return of pro-investment tax breaks such as those for capital gains and IRAs "creates more of a mood or a mindset that is helpful for getting better depreciation (write-offs) or investment credits," says Paul Huard, a vice president for the National Association of Manufacturers.
[21647026] |Corporate lobbyist Charls Walker is planning a spring conference to discuss what tax changes to make to improve "competitiveness."

[21647027] |In reaction to proposed capital-gains legislation, groups are lobbying to make sure they aren't left off the gravy train.
[21647028] |Real-estate interests, for example, are protesting an omission in President Bush's capital-gains proposal: It doesn't include real-estate gains.
[21647029] |"If there is going to be a tax scheme that contemplates lower treatment of capital gains, they certainly want to be part of it," says real-estate lobbyist Wayne Thevenot of Concord Associates.

[21647030] |In the House-passed tax bill, Mr. Thevenot got his wish; real-estate assets are included in the capital-gains provision.
[21647031] |But Sotheby's, Christie's and the National Association of Antique Dealers are still trying to get theirs.
[21647032] |They have sent a letter to congressional tax-writers asking that gains from the sale of collectibles also be given preferential treatment.
[21647033] |"Collectibles should continue to be recognized as capital assets," the letter states.

[21647034] |All of this talk is antithetical to the Tax Reform Act of 1986.
[21647035] |In exchange for dramatically lower tax rates, the framers of that legislation sought to eliminate most of the exemptions, deductions and credits that gave some taxpayers an advantage over others.
[21647036] |The goal was to tax people with roughly equivalent incomes equally, and to eliminate the many shelters that allowed the wealthy to escape taxes.

[21647037] |Two of the major ways that tax-writers managed to attain these ends were to scrap the preferential treatment of capital gains and to curtail the use of paper losses, also known as passive losses, that made many tax shelters possible.
[21647038] |Many other tax benefits also were swept away.

[21647039] |This year Congress, with prodding from President Bush, has been busy trying to put many of these same tax preferences back into the code.
[21647040] |It appears likely that, this year or next, some form of capital-gains preference and passive-loss restoration will be enacted.
[21647041] |Other tax benefits probably will be restored and created.
[21647042] |The main obstacle is finding a way to pay for them.

[21647043] |"The '86 act was a fluke.
[21647044] |They wanted reform and they got a revolution," says overhaul advocate Rep. Willis Gradison (R., Ohio).

[21647045] |So, is the tax code now open game again?
[21647046] |Mr. Juliano thinks so.
[21647047] |One recent Saturday morning he stayed inside the Capitol monitoring tax-and-budget talks instead of flying to San Francisco for a fund-raiser and then to his hometown of Chicago for the 30th reunion of St. Ignatius High School.
[21647048] |"I'm too old to waste a weekend, but that's what I did," the 48-year-old Mr. Juliano moans.
[21647049] |"These days, anything can happen.

[21648001] |Lufthansa AG said passenger volume climbed 5.2% for the first nine months of 1989 to 15.3 million passengers from 14.5 million passengers in the year-earlier period.

[21648002] |The West German national air carrier said cargo volume jumped 12% to 638,000 metric tons from 569,000 tons a year ago.

[21648003] |Load factor, or percentage of seats filled, climbed to 67.1% from 66.6%, even though the number of flights rose 6.9% to 215,845 in the first-three quarters.

[21648004] |From January through September, the distance flown by Lufthansa airplanes rose 5.6% to 266.2 million kilometers from a year earlier, the company added.

[21649001] |Raymond Chandler, in a 1950 letter defending a weak Hemingway book, likened a champion writer to a baseball pitcher.
[21649002] |When the champ has lost his stuff, the great mystery novelist wrote, "when he can no longer throw the high hard one, he throws his heart instead.
[21649003] |He throws something.
[21649004] |He doesn't just walk off the mound and weep."

[21649005] |Chandler might have been predicting the course of his own career.
[21649006] |His last published novel featuring private detective Philip Marlowe, the inferior "Playback" (1958), at times read almost like a parody of his previous work.
[21649007] |When he died in 1959, Chandler left behind four chapters of yet another Marlowe book, "The Poodle Springs Story," which seemed to go beyond parody into something like burlesque.
[21649008] |"Champ" Chandler's last pitch, apparently, was a screwball.

[21649009] |Now Robert Parker, author of several best sellers featuring Spenser, a contemporary private eye in the Marlowe mold, has with the blessings of the Chandler estate been hired to complete "The Poodle Springs Story."
[21649010] |The result, "Poodle Springs" (Putnam's, 288 pages, $18.95) is an entertaining, easy to read and fairly graceful extension of the Marlowe chronicle, full of hard-boiled wisecracks and California color.
[21649011] |If it does not quite have Chandler's special magic -- well, at the end, neither did Chandler.

[21649012] |As the book begins, a newly wed Marlowe roars into the desert resort of Poodle (a.k.a. Palm) Springs at the wheel of a Cadillac Fleetwood.
[21649013] |His bride is the rich and beautiful Linda Loring, a character who also appeared in Chandler's "The Long Goodbye" and "Playback."
[21649014] |Philip and Linda move into her mansion and can't keep their hands off each other, even in front of the Hawaiian/Japanese houseman.
[21649015] |But the lovebirds have a conflict.
[21649016] |He wants to continue being a low-paid private eye, and she wants him to live off the million dollars she's settled on him.

[21649017] |That's Chandler's setup.
[21649018] |Mr. Parker spins it into a pretty satisfying tale involving Poodle Springs high life, Hollywood low life and various folk who hang their hats in both worlds.
[21649019] |The supporting lineup is solid, the patter is amusing and there's even a cameo by Bernie Ohls, the "good cop" of previous Chandler books who still doesn't hesitate to have Marlowe jailed when it suits his purposes.
[21649020] |The style throughout bears a strong resemblance to Chandler's prose at its most pared down.
[21649021] |All told, Mr. Parker does a better job of making a novel out of this abandoned fragment than anyone might have had a right to expect.

[21649022] |But there are grounds for complaint.
[21649023] |At one point, the reader is two steps ahead of Marlowe in catching on to a double identity scam -- and Marlowe is supposed to be the pro.
[21649024] |More bothersome, there are several apparent anachronisms.
[21649025] |Contact lenses, tank tops, prostitutes openly working the streets of Hollywood and the Tequila Sunrise cocktail all seem out of place in the 1950s.
[21649026] |A little more care in re-creating Marlowe's universe would have made the book that much more enjoyable.

[21649027] |Mr. Nolan is a contributing editor at Los Angeles Magazine.

[21650001] |Ko Shioya spent eight years as the editor in chief of the Japanese edition of Reader's Digest.
[21650002] |"Japan has been a major importer of foreign information and news," says Mr. Shioya.
[21650003] |"But one gets fed up with importing information and news."

[21650004] |Mr. Shioya has turned the tables.
[21650005] |Today, he is publisher of Business Tokyo magazine, the first English-language business magazine devoted to coverage of Japanese business.
[21650006] |After a slick redesign, the two-year-old magazine has been relaunched this month by its parent company, Keizaikai Corp., the Tokyo-based company with interests that include financial services, book publishing and a tourist agency.
[21650007] |Printed in the U.S. and carrying the line "The Insider's Japan," Business Tokyo's October cover story was "The World's No. 1 Customer" -- Japanese women.

[21650008] |Keizaikai is one of a small but growing band of Japanese companies taking their first steps into American publishing, after making major investments in entertainment, real estate and banking companies here.
[21650009] |Japanese concerns have retained a number of publishing consultants and media brokers to study the U.S. market, including the New York-based investment banker Veronis, Suhler & Associates.
[21650010] |And they are quietly linking up with U.S. publishing trade groups.

[21650011] |"Japanese publishers want to be introduced to the publishing and information industries," said John Veronis, chairman of Veronis Suhler.
[21650012] |While there aren't any major deals in the works currently on the scale of Sony Corp.'s recent $3.4 billion agreement to buy Columbia Pictures Entertainment Inc., observers don't rule out a transaction of that size.
[21650013] |"The Japanese take the long view." said Mr. Veronis.
[21650014] |"It may not be weeks or months, but they are also opportunistic and if they feel comfortable, they will move on a deal," he said.

[21650015] |In recent months, three big Tokyo-based publishing concerns -- including Nikkei Business Publications, Nikkei Home (no relation), and Magazine House -- applied for membership in Magazine Publishers of America, which represents almost all U.S. consumer magazines.

[21650016] |Japanese involvement in American publishing has been so small to date that magazines such as Business Tokyo are considered groundbreakers.
[21650017] |When Keizaikai launched Business Tokyo in 1987, it appealed to a more multinational audience.
[21650018] |The magazine was overhauled with the aid of American magazine design gurus Milton Glaser and Walter Bernard, and targets top-level U.S. executives with Japanese and American advertisers.

[21650019] |American publishers appear more than ready to do some selling.
[21650020] |Susumu Ohara, president of Nihon Keizai Shinbun America Inc., publisher of the Japan Economic Journal, said he receives telephone calls weekly from media bankers on whether his parent company is interested in buying a U.S. consumer or business magazine.

[21650021] |"The Japanese are in the early stage right now," said Thomas Kenney, a onetime media adviser for First Boston Corp. who was recently appointed president of Reader's Digest Association's new Magazine Publishing Group.
[21650022] |"Before, they were interested in hard assets and they saw magazines as soft.
[21650023] |Now they realize magazines are as much a franchise as Nabisco is a franchise.

[21651001] |Bell Atlantic Corp. and Southern New England Telecommunications posted strong profit gains for the third quarter, while Nynex Corp., Pacific Telesis Group and U S West Inc. reported earnings declines for the period.

[21651002] |Rate settlements in Minnesota and Colorado depressed U S West's third-quarter profit.
[21651003] |Denver-based U S West said net income dropped 8.9%, noting that the year-ago quarter included the sale of a building by its BetaWest Properties unit.

[21651004] |Revenue dropped 4.3% to $2.3 billion from $2.4 billion, reflecting declines in its consumer-telephone sector, long-distance carrier business and diversified division.
[21651005] |Revenue from business-telephone operations grew 3.3% to $618.9 million from $599.4 million a year ago.

[21651006] |New telephone lines posted healthy growth.
[21651007] |Overall they increased 2.8% to 12.1 million, putting U S West over the 12 million mark for the first time.
[21651008] |Business lines increased 3.7% to 3.3 million.

[21651009] |"On a truly comparable basis, we've seen modest earnings growth this year from the operations of our company," said Jack MacAllister, chairman and chief executive officer.
[21651010] |"The major negative factor was the cumulative impact of regulatory activity over the past two years."

[21651011] |He said the company expects to be "on target" with analysts' projections by year end but conceded that the fourth quarter represents "a significant challenge."

[21651012] |Expenses in the quarter dropped 11.2% to $664.3 million from $747.7 million a year ago.
[21651013] |Yesterday, U S West shares rose 75 cents to close at $71.25 in New York Stock Exchange composite trading.

[21651014] |Philadelphia-based Bell Atlantic said net rose 6.5%, aided by strong growth in the network-services business and an increase in the number of new telephone lines.

[21651015] |Revenue jumped 5.6% to $2.9 billion from $2.8 billion in the year-ago quarter.
[21651016] |Revenue from financial and real-estate services jumped 23% to $177.4 million from $144.1 million a year ago.
[21651017] |Network-access revenue from long-distance telephone companies increased 6.4% to $618.6 million.

[21651018] |Bell Atlantic added 148,000 new telephone lines in the quarter for a total of 16.9 million.

[21651019] |The company said per-share earnings were slightly reduced by the sale of 4.1 million shares of treasury stock to the company's newly formed Employee Stock Ownership Plans.

[21651020] |In composite trading on the Big Board, Bell Atlantic closed at $100.625, up $1.50 a share.

[21651021] |At Nynex, net slumped 14.8%, primarily because of a continuing strike by 60,000 employees, lower-than-expected profit at its New York Telephone unit and significantly higher taxes and costs.

[21651022] |State and local taxes increased to $131.3 million from $99.1 million a year ago.
[21651023] |Nynex said expenses rose 4.5% to $2.73 billion from $2.61 billion, a $119 million increase.
[21651024] |Most of the higher costs were associated with acquisitions and growth in nonregulated business units, it added.

[21651025] |"Our net income isn't where we would want it to be at this point," said William C. Ferguson, chairman and chief executive officer.
[21651026] |"This deviation from our past growth patterns is caused largely by lower earnings at New York Telephone."

[21651027] |Mr. Ferguson said a continued softness in New York City area's economy and increased competition, particularly in the private-line market, took a heavy toll on earnings.

[21651028] |The three-month-old strike at Nynex seriously hurt the installation of new telephone lines in the quarter.
[21651029] |Nynex said access lines in service at the end of the quarter were off 18,000 from the previous quarter, which reported an increase of 160,000 new access lines.

[21651030] |Revenue rose to $3.31 billion from $3.18 billion, mostly from acquisition of AGS Computers and robust non-regulated businesses.

[21651031] |In Big Board composite trading yesterday, Nynex common closed at $81.125, up $1.625.

[21651032] |Southern New England Telecommunications, which bolstered its marketing efforts for telephone and non-telephone subsidiaries, reported that net increased 8.1%.

[21651033] |Walter H. Monteith Jr., SNET chairman and chief executive officer, said: "Innovative marketing of our products and services contributed to increase revenue."

[21651034] |Revenue and sales increased 7.5% to $423.9 million from $394.4 million a year earlier.
[21651035] |Yellow pages advertising sales rose 11.8% to $41.2 million.

[21651036] |Cost and expenses for the quarter, excluding interest, increased 6.1% to $333.3 million from $314 million the year before.

[21651037] |SNET common rose $1.25 to $85.50 a share yesterday in composite trading on the Big Board.

[21651038] |San Francisco-based Pacific Telesis said net declined 12.6%, primarily because of regulatory action.
[21651039] |Revenue was about flat at $2.4 billion.

[21651040] |Revenue was reduced $33 million by three extraordinary items: a California Public Utilities Commission refund for an American Telephone & Telegraph Co. billing adjustment; a provision for productivity sharing to be paid to customers in 1990 and a one-time accrual for a toll settlement with long-distance telephone companies.

[21651041] |Excluding the one-time charges, the company would have posted earnings of $298 million, or 73 cents a share.
[21651042] |The company also was hurt by a $289 million rate reduction that went into effect in 1989.

[21651043] |"This is a good quarter for us in terms of our business fundamentals," said Sam Ginn, chairman and chief executive officer.
[21651044] |Pacific Telesis said new telephone lines increased 4.5% for a total of about $13.5 million for the quarter; toll calls increased 9.6% to 807 million and minutes of telephone usage increased to 9.9 billion.

[21651045] |In Big Board composite trading yesterday, Pacific Telesis common closed at $45.50, up 87.5 cents.

[21651046] |a-Includes a one-time gain of $88.7 million from a commonstock sale by U S West's U S West New Vector Group.
[21651047] |b-Includes a $41.3 million gain on the sale of FiberCom.

[21652001] |Amoco Corp. said third-quarter net income plunged 39% to $336 million, or 65 cents a share, as gasoline refining and marketing profits lagged substantially behind last year's record level.

[21652002] |A charge of $80 million related to projected environmental costs in its refining and marketing operations further depressed results.
[21652003] |A spokesman said Amoco completed an environmental analysis last quarter but that no single clean-up project was responsible.

[21652004] |In the 1988 third quarter, the Chicago-based oil company earned $552 million, or $1.07 a share.
[21652005] |Revenue in the latest quarter rose 12% to $6.6 billion from $5.91 billion.
[21652006] |Aside from the special charge, Amoco's results were in line with Wall Street estimates.
[21652007] |The company's stock ended at $48.375, up 25 cents in New York Stock Exchange composite trading.

[21652008] |Amoco is the first major oil company to report third-quarter results.
[21652009] |Analysts expect others to show a similar pattern.
[21652010] |Generally in the quarter, overproduction of gasoline and higher crude oil prices pressured profitability.
[21652011] |The industry's chemical profits also declined because excess capacity has depressed prices.
[21652012] |Gasoline margins may rebound this quarter, some industry officials say, but they believe chemical margins could worsen.

[21652013] |American Petrofina Inc., a Dallas-based integrated oil company, yesterday said its third-quarter earnings declined by more than half.
[21652014] |Fina blamed lower chemical prices, reduced gasoline margins and refinery maintenance shutdowns.
[21652015] |It said net income dropped to $15.1 million, or 98 cents a share, from $35.2 million, or $2.66 a share.
[21652016] |Sales rose 2.2% to $711.9 million from $696.1 million.

[21652017] |Amoco's refining and marketing profit in the quarter fell to $134 million from $319 million.
[21652018] |Chemical earnings declined by one-third to $120 million last year's robust levels.

[21652019] |Amoco's domestic oil and natural gas operations recorded a profit of $104 million in the quarter compared with a loss of $5 million, "primarily on the strength of higher crude oil prices," said Chairman Richard M. Morrow.
[21652020] |Amoco also sharply boosted natural-gas output, part of it from properties acquired from Tenneco Inc. last year.

[21652021] |But foreign exploration and production earnings fell sharply, to $12 million from $95 million.
[21652022] |Higher oil prices weren't enough to offset a roughly $20 million charge related to a 10% reduction in Amoco's Canadian work force as well as increased exploration expenses.

[21652023] |For the nine months, Amoco said that net income fell to $1.29 billion from $1.69 billion but if unusual items are excluded, operations produced essentially flat results.
[21652024] |Revenue rose 12% to $19.93 billion from $17.73 billion.

[21653001] |James F. Gero, former chairman and chief executive officer of Varo Inc., and Richard J. Hatchett III, a Dallas investment banker, were elected directors of this medical-products concern, boosting the board to seven members.

[21654001] |For retailers, Christmas, not Halloween, promises to be this year's spookiest season.

[21654002] |Many retailers fear a price war will erupt if cash-strapped companies such as Campeau Corp. slash tags to spur sales.
[21654003] |Concerns about the stock market, doubts about the economy in general and rising competition from catalog companies also haunt store operators.

[21654004] |"Profits at Christmas could be under attack for every retailer," asserts Norman Abramson, president and chief operating officer of Clothestime Inc., an off-price chain.

[21654005] |Even if there isn't any widespread discounting, the outlook for industry profits isn't good.
[21654006] |Management Horizons forecasts a 1.4% profit decline for non-auto retailers this year, after annual drops that averaged 4.5% in 1988 and 1987.
[21654007] |"For the last two and a half years, retailing has been in a mild recession," says Carl Steidtmann, chief economist at the Columbus, Ohio, consulting firm.

[21654008] |This year, many stores are entering the Christmas season in turmoil: Bonwit Teller and B. Altman parent L.J. Hooker Corp. is operating under Chapter 11 of the federal Bankruptcy Code; B.A.T Industries PLC's healthy Saks Fifth Avenue and Marshall Field's chains are on the auction block; Campeau's Bloomingdale's is also on the block.

[21654009] |Industry observers expect a wide divergence in performance.
[21654010] |Stores in a state of confusion are likely to fare poorly, and to lose customers to stable chains such as Limited Inc., May Department Stores Co. and Dillard Department Stores Inc., which should do well.

[21654011] |"There are going to be very clear winners and very clear losers," says Cynthia Turk, a Touche Ross & Co. retail consultant.

[21654012] |Says Mr. Steidtmann: "I'm looking for a bi-polar Christmas."

[21654013] |Economists expect general merchandise sales in the fourth quarter to rise 4.5% to 6% from year-ago figures.
[21654014] |But Mr. Steidtmann predicts that healthy stores hawking mostly apparel could ring up gains of as much as 25% to 30%.
[21654015] |Troubled chains could see their sales drop as much as 8%, he believes, as managers distracted by fears about the future allow their stores to get sloppy.
[21654016] |Thin merchandise selections at the most troubled chains are also expected to hurt sales.

[21654017] |Catalog companies are likely to pose a bigger threat to all stores this year, particularly in December.
[21654018] |More than 200 catalog outfits are promoting a low-cost Federal Express service that guarantees pre-Christmas delivery of orders made by a certain date.

[21654019] |"Traditionally, consumers were concerned about ordering after the first of December because they didn't believe they would get it by Christmas," says Adam Strum, chairman of the Wine Enthusiast Inc., which sells wine cellars and accessories through the mail.
[21654020] |Using Federal Express delivery last year, Mr. Strum says, "December was our biggest month."

[21654021] |Even Sears, Roebuck & Co. is getting into the act, offering for the first time to have Federal Express deliver toys ordered by Dec. 20 from its Wish Book catalog.

[21654022] |K mart Corp. Chairman Joseph E. Antonini summed up his outlook for the Christmas season as "not troublesome."
[21654023] |He's not predicting a blockbuster, but he is "more optimistic than three months ago" because employment remains strong and inflation low.

[21654024] |Other retailers are also preparing for a ho-hum holiday.
[21654025] |Philip M. Hawley, chairman of Carter Hawley Hale Stores Inc., expects sales at department stores open at least a year to rise a modest 3% to 5% over last year's totals, both for his company and the industry in general.
[21654026] |"I'm not looking for a runaway Christmas at all," he says.

[21654027] |"It isn't a real boom holiday season in our eyes," says Woolworth Corp. Chairman Harold E. Sells, "but it isn't going to be a bust either."
[21654028] |Mr. Sells expects fourth-quarter sales at his company -- which besides Woolworth stores includes Kinney and Foot Locker shoe stores and other specialty chains -- to rise "pretty much in line" with its year-to-date increases of between 8% and 9%.
[21654029] |The estimate includes the results of new stores.

[21654030] |A consumer poll conducted in early September by Leo J. Shapiro & Associates, a market researcher based in Chicago, also suggests a modest holiday.
[21654031] |Of the 450 survey respondents, 35% said they expect to spend less buying Christmas gifts this year than last year, while 28% said they expect to spend more and 37% said their gift budget would stay the same.
[21654032] |The results are almost identical to Shapiro's September 1988 numbers.

[21654033] |Retailers could get a boost this year from the calendar.
[21654034] |Christmas falls on a Monday, creating a big last-minute weekend opportunity for stores.
[21654035] |Most will stay open late Saturday night and open their doors again Sunday.

[21654036] |But many consumers probably will use the extra time to put off some purchasing until the last minute.
[21654037] |"What you'll hear as we get into December is that sales are sluggish," predicts Woolworth's Mr. Sells.
[21654038] |"The week ending the 24th is going to save the entire month for everyone.

[21655001] |The Spanish author Camilo Jose Cela won the Nobel Prize for literature yesterday, a surprising choice, but given the Swedish Academy's past perversities, hardly the most undeserved and ridiculous accolade handed out by the awarding committee.
[21655002] |In Spain, anyway, the 73-year-old Mr. Cela enjoys some renown for the novels and travel books he wrote during the parched Franco years, the everyday poverty and stagnant atmosphere of which he described in brutally direct, vivid prose, beginning with "The Family of Pascal Duarte" (1942).

[21655003] |Unlike other writers who either battled the fascists during the Civil War, or left Spain when Franco triumphed, Mr. Cela fought briefly on the general's side, no doubt earning with his war wound some forbearance when he went on to depict a country with a high population of vagabonds, murderers and rural idiots trudging aimlessly through a dried-out land.
[21655004] |Still, it was in Argentine editions that his countrymen first read his story of Pascal Duarte, a field worker who stabbed his mother to death and has no regrets as he awaits his end in a prison cell: "Fate directs some men down the flower-bordered path, and others down the road bordered with thistles and prickly pears.
[21655005] |The lucky ones gaze out at life with serene eyes and smile with a face of innocence at their perfumed happiness.
[21655006] |The others endure the hot sun of the plains and scowl like cornered wild beasts."

[21655007] |Mr. Cela himself was one of the lucky ones, his fortunes steadily increasing over the decades he spent putting out some 70 travelogues, novels, short story collections and poetry.
[21655008] |These days, he is as known for his flamboyant tastes and the youthful muse who shares his life as he is for his books.
[21655009] |The man who wore out his shoes wandering around Guadalajara in 1958, describing in his travel book "Viaje a la Alcarria" how he scrounged for food and stayed in squalid inns, now tours Spain in a Rolls-Royce.

[21655010] |Of his 10 novels, "The Hive" (1951), full of sharp vignettes of Madrid life and centered on a cafe run by Dona Rosa, a foul-mouthed, broad-based woman with blackened little teeth encrusted in filth, used to be available in English, translated by J.M. Cohen and published by Ecco Press, which now no doubt regrets relinquishing its copyright.
[21655011] |Here is an excerpt:

[21655012] |The lonely woman walks on in the direction of the Plaza de Alonso Martinez.
[21655013] |Two men have a conversation behind one of the windows of the cafe on the corner of the boulevard.
[21655014] |Both are young, one twenty odd, the other thirty odd.
[21655015] |The older one looks like a member of the jury for a literary award, the younger one looks like a novelist.
[21655016] |It is evident that their conversation runs more or less on the following lines: "I've submitted the manuscript of my novel under the title `Teresa de Cepeda,' and in it I've treated a few neglected aspects of that eternal problem which . . ."

[21655017] |"Oh, yes.
[21655018] |Will you pour me a drop of water, if you don't mind?"

[21655019] |"With pleasure.
[21655020] |I've revised it several times and I think I may say with pride that there is not a single discordant word in the whole text."

[21655021] |"How interesting."

[21655022] |"I think so.
[21655023] |I don't know the quality of the works my colleagues have sent in, but in any case I feel confident that good sense and honest judgment . . ."

[21655024] |"Rest assured, we proceed with exemplary fairness."

[21655025] |"I don't doubt it for a moment.
[21655026] |It does not matter if one is defeated, provided the work that gets the award has unmistakable qualities.
[21655027] |What's so discouraging is . . ."

[21655028] |In passing the window, Senorita Elvira gives them a smile -- simply out of habit.

[21656001] |Ashland Oil Inc. said it will take after-tax charges of $78 million, or $1.40 a share, in its fiscal fourth quarter, ended Sept. 30.

[21656002] |Because of the charge, Ashland expects to report a loss for the fourth quarter and "significantly lower results" for fiscal 1989.

[21656003] |The oil refiner said it will report fiscal fourth quarter and 1989 results next week.

[21656004] |The company earned $66 million, or $1.19 a share, on revenue of $2.1 billion in the year-ago fourth quarter.
[21656005] |For fiscal 1988, Ashland had net of $224 million, or $4.01 a share, on revenue of $7.8 billion.
[21656006] |Both revenue figures exclude excise taxes.

[21656007] |The charges consist of: a $25 million after-tax charge to cover cost overruns in Ashland's Riley Consolidated subsidiary; a previously announced $38 million after-tax charge resulting from a $325 million settlement with National Iranian Oil Co. and a $15 million after-tax charge from the previously announced sale of its Ashland Technology Corp. subsidiary.
[21656008] |Ashland expects that sale to be complete next year.

[21656009] |The charge for the Riley subsidiary is for expected costs to correct problems with certain bed boilers built for utilities.
[21656010] |The charge will be added to $20 million in reserves established a year ago to cover the cost overruns.

[21657001] |When President Bush arrives here next week for a hemispheric summit organized to commemorate a century of Costa Rican democracy, will he be able to deliver a credible message in the wake of the Panamanian fiasco?
[21657002] |Undoubtedly Mr. Bush will be praised by some Latin leaders prone to pay lip service to nonintervention, while they privately encourage more assertive U.S. action to remove Gen. Manuel Noriega and safeguard their countries from a Sandinista onslaught.

[21657003] |The Panamanian affair is only the tip of a more alarming iceberg.
[21657004] |It originates in a Bush administration decision not to antagonize the U.S. Congress and avoid, at all costs, being accused of meddling in the region.
[21657005] |The result has been a dangerous vacuum of U.S. leadership, which leaves Central America open to Soviet adventurism.
[21657006] |"The {influence of the} U.S. is not being felt in Central America; Washington's decisions do not respond to a policy, and are divorced from reality," says Fernando Volio, a Costa Rican congressman and former foreign minister.

[21657007] |The disarray of the Bush administration's Latin diplomacy was evident in the failure of the Organization of American States to condemn categorically Gen. Noriega.
[21657008] |Faced with this embarrassment, U.S. diplomats expressed confidence that the influential Rio Group of South American nations, which gathered last week in Peru, would take a stronger posture toward the Panamanian dictator.
[21657009] |But other than a few slaps on the wrist, Gen. Noriega went unpunished by that body, too; he was not even singled out in the closing statement.

[21657010] |Now Mr. Bush will come to Costa Rica and encounter Nicaraguan strongman Daniel Ortega, eager for photo opportunities with the U.S. president.
[21657011] |The host, Costa Rican President Oscar Arias, did not invite Chile, Cuba, Panama or Haiti to the summit, which was to be restricted to democracies.
[21657012] |However, Mr. Ortega was included.
[21657013] |Formally upgrading the Sandinistas to a democratic status was an initiative harshly criticized in the Costa Rican press.
[21657014] |Even Carlos Manuel Castillo -- the presidential candidate for Mr. Arias's National Liberation Party -- made public his opposition to the presence of Nicaragua "in a democratic festivity."

[21657015] |Nevertheless, the Bush administration agreed to the dubious arrangement in July, a few weeks before the Central American presidents met in Tela, Honduras, to discuss a timetable for disbanding the anti-Sandinista rebels.
[21657016] |According to officials in Washington, the State Department hoped that by pleasing President Arias, it would gain his support to postpone any decision on the Contras until after Mr. Ortega's promises of democratic elections were tested next February.
[21657017] |However, relying on an ardent critic of the Reagan administration and the Contra movement for help in delaying the disarming of the Contras was risky business.
[21657018] |And even some last-minute phone calls that Mr. Bush made (at the behest of some conservative U.S. senators) to enlist backing for the U.S. position failed to stop the march of Mr. Arias's agenda.

[21657019] |Prior to this episode, Sen. Christopher Dodd (D., Conn.), sensing an open field, undertook a personal diplomatic mission through Central America to promote an early disbanding of the rebels.
[21657020] |Visiting Nicaragua, he praised the Sandinistas for their electoral system and chided the Bush administration for not rewarding the Sandinistas.
[21657021] |In Honduras, where the Contras are a hot political issue, he promised to help unblock some $70 million in assistance withheld due to the failure of local agencies to comply with conditions agreed upon with Washington.

[21657022] |Aid was also the gist of the talks Sen. Dodd had with Salvadoran President Alfredo Cristiani; Mr. Cristiani's government is very much at the mercy of U.S. largess and is forced to listen very carefully to Sen. Dodd's likes and dislikes.
[21657023] |It was therefore not surprising that close allies of the U.S., virtually neglected by the Bush administration, ordered the Nicaraguan insurgents dismantled by December, long before the elections.
[21657024] |Fittingly, the Tela Accords were nicknamed by Hondurans "the Dodd plan."

[21657025] |The individual foreign policy carried out by U.S. legislators adds to a confusing U.S. performance that has emboldened Soviet initiatives in Central America.
[21657026] |On Oct. 3, following conversations with Secretary of State James Baker, Soviet Foreign Minister Eduard Shevardnadze arrived in Managua to acclaim "Nicaragua's great peace efforts."
[21657027] |There, Mr. Shevardnadze felt legitimized to unveil his own peace plan: The U.S.S.R. would prolong a suspension of arms shipments to Nicaragua after the February election if the U.S. did likewise with its allies in Central America.
[21657028] |He also called on Nicaragua's neighbors to accept a "military equilibrium" guaranteed by both superpowers.
[21657029] |The Pentagon claims that in spite of Moscow's words, East bloc weapons continue to flow into Nicaragua through Cuba at near-record levels.

[21657030] |Since Mr. Shevardnadze's proposals followed discussions with Mr. Baker, speculations arose that the Bush administration was seeking an accommodation with the Soviets in Central America.
[21657031] |This scheme would fit the Arias Plan, which declared a false symmetry between Soviet military aid to the Sandinista dictatorship and that provided by Washington to freely elected governments.
[21657032] |Furthermore, it is also likely to encourage those on Capitol Hill asking for cuts in the assistance to El Salvador if President Cristiani does not bend to demands of the Marxist guerrillas.

[21657033] |The sad condition of U.S. policy in Central America is best depicted by the recent end to U.S. sponsorship of Radio Costa Rica.
[21657034] |In 1984, the Costa Rican government requested help to establish a radio station in the northern part of the country, flooded by airwaves of Sandinista propaganda.
[21657035] |Recovering radiophonic sovereignty was the purpose of Radio Costa Rica, funded by the U.S. and affiliated with the Voice of America (VOA).

[21657036] |A few months ago, the Bush administration decided to stop this cooperation, leaving Radio Costa Rica operating on a shoestring.
[21657037] |According to news reports, the abrupt termination was due to fears that VOA transmissions could interfere with the peace process.
[21657038] |In the meantime, Russia gave Nicaragua another powerful radio transmitter, which has been installed in the city of Esteli.
[21657039] |It is capable of reaching the entire Caribbean area and deep into North America.
[21657040] |Perhaps its loud signal may generate some awareness of the Soviet condominium being created in the isthmus thanks to U.S. default.

[21657041] |The Soviet entrenchment in Nicaragua is alarming for Costa Rica, a peaceful democracy without an army.
[21657042] |Questioned in Washington about what would happen if his much-heralded peace plan would fail, President Arias voiced expectations of direct U.S. action.
[21657043] |A poll conducted in July by a Gallup affiliate showed that 64% of Costa Ricans believe that if their country is militarily attacked by either Nicaragua or Panama, the U.S. will come to its defense.
[21657044] |But in the light of events in Panama, where the U.S. has such clear strategic interests, waiting for the Delta Force may prove to be a dangerous gambit.

[21657045] |Mr. Daremblum is a lawyer and a columnist for La Nacion newspaper.

[21658001] |Holiday Corp. said net income jumped 89%, partly on the strength of record operating income in its gaming division.

[21658002] |Separately, the hotel and gambling giant said it was proceeding with plans to make a tender offer and solicit consents with respect to approximately $1.4 billion of its publicly traded debt.

[21658003] |That debt is part of the $2.1 billion of Holiday debt that Bass PLC of Britain said it would retire or assume when it agreed to buy the Holiday Inn business in August.

[21658004] |Holiday said third-quarter earnings rose to $39.8 million, or $1.53 a share, from $21 million, or 84 cents a share, a year earlier.
[21658005] |Results for the quarter included $19.2 million in pretax gains from property transactions, including the sale of one Embassy Suites hotel, and $3.5 million of nonrecurring costs associated with the acquisition of the Holiday Inn business by Bass.

[21658006] |Holiday said operating income related to gaming increased 4.5% to a record $61.4 million from $58.8 million a year earlier.
[21658007] |The jump reflected record results in Las Vegas, Nev., and Atlantic City, N.J., as well as a full quarter's results from Harrah's Del Rio in Laughlin, Nev.

[21658008] |Third-quarter revenue rose 2.7% to $433.5 million from $422.1 million.

[21658009] |For the nine months, earnings fell 2.9% to $99.1 million, or $3.86 a share, from $102.1 million, or $4.10 a share, a year earlier.
[21658010] |Revenue dropped 1.6% to $1.21 billion from $1.23 billion.

[21658011] |The tender offer and consent solicitation will be made to debtholders in December.
[21658012] |In effect, Holiday is asking holders for permission for Bass to buy their debt.

[21658013] |Holiday said Salomon Brothers Inc. has been retained to act as the dealer-manager and financial adviser in connection with the offer and solicitation.
[21658014] |The debt issues involved and the proposed consent fees and cash tender offer prices (expressed per $1,000 of principal amount) are as follows: 10 1/2% senior notes due 1994 at 101%; 11% subordinated debt due 1999 at 102%; 9 3/8% notes due 1993 at 100%; and 8 3/8% notes due 1996 at 95.25%.

[21658015] |Holiday said its 15% notes due 1992 also will be included in the tender offer and consent solicitation at a price to be determined by Holiday prior to the commencement of the offer.

[21659001] |The television units of Paramount Communications Inc. and MCA Inc. are exploring the possibility of offering prime-time programming to independent stations two nights a week, industry executives say.

[21659002] |Although such a venture wouldn't match the "fourth network" created by News Corp.'s Fox Broadcasting Co., MCA and Paramount may have similar ambitions.
[21659003] |Fox, which also owns six TV stations, provides programs three nights a week to those and other affiliates.

[21659004] |Paramount Domestic TV and MCA TV formed a joint venture last month, named Premier Advertiser Sales, to sell advertising in programs syndicated by both companies, such as "Star Trek: the Next Generation," "Charles in Charge" and "Friday the 13th: the Series."

[21659005] |A spokeswoman for Paramount said the company doesn't comment on speculation.
[21659006] |Calls to Shelly Schwab, president of MCA TV, weren't returned.

[21659007] |The two companies, like Fox, already have their own TV stations.
[21659008] |MCA owns WWOR in New York and Paramount last month agreed to purchase a 79% stake in the TVX Broadcast Group from Salomon Inc. in a deal valued at $140 million.
[21659009] |TVX owns five stations, including WTXF, a Fox affiliate, in Philadelphia.

[21659010] |One broadcasting executive familiar with the project said the co-venture would target stations affiliated with Fox because Fox has the desirable independent stations in most of the key cities.
[21659011] |Currently, Fox supplies programs on Saturdays, Sundays and Mondays, although the company plans to expand to other weeknights.

[21659012] |Jamie Kellner, president of Fox Broadcasting, said, "We believe the partnership of Fox, its affiliates and advertisers is succeeding and will continue to grow."

[21659013] |Another Fox official, who declined to be identified, said Fox wasn't pleased by the possible Paramount-MCA venture into prime-time programming.
[21659014] |"To make the venture work, they would need Fox affiliates," he said.
[21659015] |"We spent a lot of time and money in building our group of stations," he said, adding that Fox doesn't "appreciate" another company attempting to usurp its station lineup.

[21659016] |Fox said it plans to offer its stations movies, theatrical and made-for-TV ventures, probably on Wednesdays, sometime next year.
[21659017] |It is also planning another night of original series.

[21659018] |Paramount and MCA, according to the broadcasting executive, plan to offer theatrical movies produced separately by Paramount and MCA for Wednesdays and perhaps a block of original shows Fridays.

[21659019] |The executive said Paramount and MCA have also held discussions with Chris-Craft Industries' broadcasting unit, which owns five independent stations in cities such as Los Angeles, San Francisco and Portland, Ore.
[21659020] |A Chris-Craft station manager said there have been no formal talks.

[21659021] |"I think it's to Fox's advantage to be associated with the Paramount-MCA venture," said Michael Conway, station manager of WTXF, the TVX station that is a Fox affiliate.
[21659022] |Mr. Conway said the Fox shows appearing on nights when Paramount-MCA shows wouldn't be offered could be promoted on the programs produced by Paramount-MCA.

[21659023] |Michael Fisher, general manager of KTXL, a Fox affiliate in Sacramento, Calif., said, "The real question is whether the Paramount-MCA offering is practical.
[21659024] |It isn't. . . .
[21659025] |Why would I consider giving up Fox, a proven commodity," for an unknown venture?
[21659026] |Fox attracts a young audience with shows such as "Married . . . With Children," its most successful series.

[21660001] |Banco Popular de Puerto Rico and BanPonce Corp. -- agreed to merge in a transaction valued at $324 million.

[21660002] |Under the agreement, BanPonce stockholders will be able to exchange each of their shares for either shares in the new entity or cash.
[21660003] |In each case, the exchange is valued at $56.25 a share.

[21660004] |The two companies, both based in San Juan, will form a bank holding company with assets of just over $9 billion.
[21660005] |The holding company will be called BanPonce Corp.
[21660006] |The primary subsidiary will be the combined banking operations of the two companies and will be known as Banco Popular de Puerto Rico.

[21660007] |Rafael Carrion Jr., chairman of Banco Popular, will be the chairman of the holding company.
[21660008] |Alberto M. Paracchini, currently chairman of BanPonce, will serve as president of the bank holding company and chairman of the subsidiary.

[21660009] |Banco Popular originally proposed the merger in July, in a cash and stock transaction valued at $50 a share, or about $293 million.
[21660010] |BanPonce reacted cooly at first, but appeared to be won over, analysts said, by Banco Popular's assurances that it wanted only a friendly transaction.

[21660011] |"Banco Popular just kept waiting," said Edward Thompson, a vice president and analyst at Thomson BankWatch Inc. in New York.
[21660012] |"They got a transaction that's good for both companies."

[21660013] |The two banks appear to be a good fit.
[21660014] |BanPonce caters to a more affluent customer, while Banco Popular has always had a large presence among middle-income and lower-income markets.
[21660015] |The merger should also allow the companies to reduce costs by combining operations in many locations in Puerto Rico.
[21660016] |"They're often right across the street from one another," Mr. Thompson said.

[21660017] |Richard Carrion, who is currently president and chief executive officer of Banco Popular, said the merger will result in a "larger and stronger locally based bank."
[21660018] |Mr. Carrion, who will now serve as president and chief executive officer of the subsidiary bank, added: "We'll be able to better compete with large foreign banks.
[21660019] |It makes sense from a strategic standpoint."

[21660020] |The newly merged company will have 165 branches in Puerto Rico and 27 branches outside of the island.
[21660021] |The banks said they don't expect the merger to face any regulatory hurdles.
[21660022] |Mr. Carrion said the merger should be completed in six to nine months.

[21661001] |Hit by higher costs and lower sales, Caterpillar Inc. said third-quarter earnings tumbled 43% and full-year earnings will trail last year's results.

[21661002] |The construction equipment maker said third-quarter profit fell to $108 million, or $1.07 a share, from $190 million, or $1.87 a share, a year earlier.
[21661003] |Sales dropped 6% to $2.58 billion from $2.74 billion, reflecting eight fewer business days in the latest quarter.

[21661004] |The company, which is in a costly modernization program, said earnings were hurt by higher start-up and new program costs, increased costs of materials, higher wages and an $11 million provision for bad debts in Latin America.

[21661005] |In announcing a 1989 capital spending plan of $950 million early this year, Caterpillar said full-year earnings would be flat compared with last year's $616 million, or $6.07 a share.
[21661006] |But yesterday, the company said this year's profit will be lower.
[21661007] |It didn't say by how much.

[21661008] |Suffering from a downturn in heavy truck production that cut orders for its engines, Caterpillar also said it will indefinitely lay off about 325 workers in the Peoria area and temporarily shut its plant in York, Pa., for two weeks in both November and December.

[21661009] |For the first nine months of the year, Caterpillar said earnings fell 14% to $390 million, or $3.85 a share, from $453 million, or $4.46 a share, a year earlier.
[21661010] |Sales rose to $8.19 billion from $7.65 billion.

[21662001] |Millicom Inc. said it is one of two companies to receive a license to introduce and operate a cellular mobile telephone system in Pakistan.

[21662002] |The market during the start-up is estimated at 25,000 subscribers.
[21662003] |A spokeswoman for Millicom, a telecommunications company, said she didn't know the value of the contract.
[21662004] |Cable & Wireless PLC of Britain won the other license.

[21662005] |Millicom said it would build and operate the system in Pakistan with Comvik International AB, part of the Kinnevik group of Sweden, and Arfeen International, Pakistan.

[21663001] |B.A.T Industries PLC won overwhelming shareholder approval for a defensive restructuring to fend off a #13.35 billion ($21.23 billion) takeover bid from Sir James Goldsmith.

[21663002] |At a shareholders' meeting in London, the tobacco, financial-services and retailing giant said it received 99.9% approval from voting holders for plans to spin off about $6 billion in assets.

[21663003] |B.A.T aims to sell such U.S. retailing units as Marshall Field and Saks Fifth Avenue and float its big paper and British retailing businesses via share issues to existing holders.
[21663004] |Proceeds will help pay for a planned buy-back of 10%, or about 153 million, of its shares and a 50% dividend increase.

[21663005] |B.A.T yesterday started its share buy-back.
[21663006] |The company said it acquired 2.5 million shares for 785 pence ($12.48) each, or a total of #19.6 million ($31.2 million), from its broker, Barclays de Zoete Wedd.
[21663007] |The share buy-back plan is likely to underpin B.A.T's share price.

[21663008] |B.A.T said it may make more equity purchases until the close of business today, depending on market conditions, but will cease further purchases until Nov. 22, when it releases third-quarter results.

[21663009] |B.A.T shares rose 29 pence to 783 pence on London's stock exchange yesterday.

[21663010] |Shareholder approval sets the stage for a lengthy process of restructuring that might not be completed until next year's second half.
[21663011] |Before the recent tumult in global financial markets, B.A.T officials, holders and analysts had expected a substantial part of the restructuring to be complete by the end of the first half.

[21663012] |"We are not in any hurry to sell" Saks, Marshall Field or B.A.T's other U.S. retail properties, said Chairman Patrick Sheehy.
[21663013] |"This isn't a distress sale.
[21663014] |We are determined to get good prices."

[21663015] |Company officials say the flotations of the paper and British retailing businesses are likely only after the disposals of the U.S. retailing assets.

[21663016] |Meanwhile, Sir James still is pursuing efforts to gain U.S. insurance regulators' approval for a change in control of B.A.T's Farmers Group Inc. unit.
[21663017] |The Anglo-French financier has indicated he intends to bid again for B.A.T if he receives approval.

[21664001] |Hasbro Inc., the nation's largest toy maker, reported third-quarter earnings increased 73% from a year earlier on a 9.4% sales gain, reflecting improved margins.

[21664002] |Hasbro said it had net income of $31.3 million, or 53 cents a share, up from $18.1 million, or 31 cents a share, a year earlier, when it took a pretax charge of $10 million after dropping development of an interactive video entertainment system.
[21664003] |Revenue rose to $403 million from $368.4 million.

[21664004] |The company cited sales gains at its Milton Bradley and Playskool units and in its international business for the increase in revenue.
[21664005] |Alan G. Hassenfeld, chairman and chief executive, added that Hasbro's new line of battery-powered racing cars, called Record Breakers, and its acquisition of Cabbage Patch Kids, Scrabble and other lines from Coleco Industries Inc. puts the company "in a good position as we enter the Christmas buying season."

[21664006] |For the first nine months of the year, Hasbro's net income rose 33% to $68.2 million, or $1.15 a share, from $51.3 million, or 88 cents a share, on a 3.1% increase in revenue to $992.7 million from $963 million a year earlier.

[21665001] |Reebok International Ltd. posted a 35% increase in third-quarter net income despite a slight decline in sales.

[21665002] |The athletic footwear maker said net rose to $49.9 million, or 44 cents a share, from $37.1 million, or 32 cents a share, a year earlier.
[21665003] |Sales declined 3% to $524.5 million from $539.4 million.

[21665004] |Paul Fireman, Reebok chairman and chief executive officer, said, "Our gains in earnings provide further evidence that the controls we have put in place and our sales mix are continuing to improve the company's overall profit performance."

[21665005] |The company said it expects sales to improve due to a number of new products, including a "pump" basketball shoe that can be inflated to better fit the foot.

[21665006] |In the first nine months, net was $140 million, or $1.23 a share, on sales of $1.44 billion.

[21665007] |Separately, Reebok completed the acquisition of CML Group Inc.'s Boston Whaler unit, a builder of power boats.

[21665008] |CML, Acton, Mass., had agreed to sell the unit to Reebok for about $42 million.
[21665009] |The agreement also called for Reebok to receive warrants to purchase 400,000 shares of CML common at $31.25 a share, exercisable at any time before July 1,

[21665010] |An outside spokesman for CML said the terms were changed to a minor extent but wouldn't disclose what those changes were.

[21666001] |Pitney Bowes Inc. directors authorized the company to seek buyers for its Wheeler Group Inc. subsidiary, a direct mail marketer of office supplies.

[21666002] |Pitney Bowes said the decision was based on a long-term analysis of the compatibility of Wheeler Group's marketing business with other Pitney Bowes operations.
[21666003] |Pitney Bowes acquired the core of what evolved into Wheeler Group in 1979 by buying Dictaphone Corp.

[21666004] |A spokeswoman wouldn't comment on whether the company had talked with any potential buyers for the New Hartford, Conn., unit, which had 1988 sales of about $75 million.
[21666005] |She said Wheeler Group was profitable but wouldn't give figures.

[21666006] |The spokeswoman said the company doesn't have a timetable for the sale, adding that the board's decision just starts the search for a buyer.

[21666007] |Separately, Pitney Bowes said third-quarter net income gained 15% to $62 million, or 78 cents a share, from $54 million, or 68 cents a share, a year ago.
[21666008] |Revenue grew 13% to $734.8 million from $650.9 million.

[21666009] |The company said the growth was led by its major operations, particularly mailing, shipping, dictating and facsimile businesses.

[21667001] |Steel jackets of a type that may have prevented collapse of the columns of a 1.5-mile stretch of the Nimitz Freeway had been installed on at least a small test section of the double-decker highway last year by California's Department of Transportation, employees familiar with the project say.

[21667002] |The test project -- which reportedly survived Tuesday's earthquake -- was a prelude to a state plan to retrofit that critical section of the freeway with the steel casings.

[21667003] |State engineers have made a preliminary finding that it was failure of the concrete columns, wrenched and separated from the double-decker roadbed, that was responsible for the collapse.

[21667004] |The failure in Oakland of the freeway segment known as the Cypress structure was the deadliest aspect of the quake, although officials were hopeful yesterday that the death toll there might be significantly lower than the 250 initially feared.

[21667005] |Sorting out the wreckage is expected to take several days.
[21667006] |Red tractors gingerly picked at the rubble while jackhammers tried to break up some of the massive slabs of concrete.
[21667007] |Giant yellow cranes were wheeled up alongside the collapsed segment, preparing to lift off chunks of the debris.

[21667008] |In Sacramento, a transportation department spokesman said he couldn't immediately confirm or deny existence of the test work.
[21667009] |However, he asserted that the department hadn't mastered the technology needed to retrofit the entire Cypress structure.

[21667010] |Moreover, other officials noted, snafus in transportation funding that the state has experienced over the years may have restricted the availability of funds for such a retrofitting, even if it were technologically feasible.

[21667011] |Knowledgeable employees said the retrofitting, which hadn't yet been budgeted, was part of a planned, three-stage reinforcement of the Cypress structure begun by the California transportation department several years ago.
[21667012] |The Cypress reinforcement project itself was part of an annual effort to shore up structures believed vulnerable to earthquakes.
[21667013] |The state began such work after a 1971 tremblor in Southern California, when numerous bridges collapsed.

[21667014] |"We had just finished phase two" of the Cypress project that involved installing a series of retaining cables designed to prevent sections of the roadway from separating as a result of seismic shock, a state DOT engineer said.
[21667015] |After completing installation of the jackets on "one frame" of the freeway last year, the state DOT had sent the project over to its Sacramento engineers to draw up a final design.

[21667016] |Knowledgeable employees said the project had been stymied somewhat by "the difficulty of designing" the jackets.
[21667017] |The procedure involves encasing the concrete columns with steel, then connecting them more securely to the double-decker roadbed.

[21667018] |The employees also said the project may have been snagged by budgetary concerns.
[21667019] |One preliminary estimate put the retrofitting cost at as much as $50 million.

[21667020] |The collapse of the span has provoked surprise and anger among state officials.
[21667021] |Gov. George Deukmejian, who said he had been assured by state transportation officials that the structure could withstand an even larger quake, called for an immediate investigation.

[21667022] |"I want to know who made the decision that it was safe for 186,000 people to use every day," said Richard Katz, a state legislator who is chairman of the California Assembly's transportation committee.
[21667023] |He said he would convene hearings within two weeks.

[21667024] |The Cypress structure opened in June 1957, and as such, like many buildings in the San Francisco Bay area, does not meet current building codes requiring considerably more steel support.
[21667025] |The northern piers of the span lie in estuarian deposits that were of a type to have liquefied easily during the 1906 quake.

[21667026] |Transportation department officials, however, said they were as surprised as anyone by the Cypress destruction.
[21667027] |They said previous earthquakes suggested that multiple-column viaducts would stand up well, although they were working on ways to bolster them.

[21667028] |"Unfortunately, there is only one laboratory for developing techniques to withstand earthquakes, and that is an earthquake," said Burch Bachtold, San Francisco district director for the transportation department.

[21667029] |He said: "We know of no technology that exists anywhere in the world that would allow us to" reinforce the columns.

[21668001] |Financial Corp. of Santa Barbara said it rescheduled to Nov. 29 a special shareholder meeting to vote on a $75 million stock-for-debt exchange.

[21668002] |The meeting had been scheduled for Nov. 10 but the company delayed the meeting to allow time for the Securities and Exchange Commission to review the proposal.

[21668003] |As part of a restructuring announced earlier this year, the company proposed in August to exchange 168 newly issued common shares for each $1,000 face value of debt.
[21668004] |However, that figure could be revised, Financial Corp. said.
[21668005] |Currently, the company has about six million common shares outstanding.
[21668006] |If all the debt was converted, about 13 million new shares would be issued.

[21668007] |In composite trading Wednesday on the New York Stock Exchange, Financial Corp. closed at $1.125, unchanged.

[21668008] |The debt consists of $50 million of 13 3/8% subordinated notes due 1998, and $25 million of 9% convertible subordinated debentures due 2012.

[21668009] |Financial Corp. also is proposing to exchange each of its 130,000 outstanding shares of cumulative convertible preferred series A stock for two shares of common.

[21669001] |After years of quarreling over Bonn's "Ostpolitik", West Germany and the U.S. appear to have shifted onto a united course in Eastern Europe.

[21669002] |Bonn and Washington have taken a leading role in aid for the reformist countries, pledging billions of dollars in fresh credit and forgiving old debt while urging other industrial nations to follow suit.
[21669003] |Both hope to encourage pressure for change in East bloc countries still ruled by Stalinist holdouts by arranging liberal financial aid and trade benefits for Poland, Hungary and, to a lesser extent, the Soviet Union.
[21669004] |West German officials also have the special goal of holding out hope for East Germany's fledgling reform movement.

[21669005] |"The change taking place in the Soviet Union, Poland and Hungary has aroused new hope in both German states that reforms will be undertaken in {East Germany}, and that relations between the two German states, too, will get better," said Foreign Minister Hans-Dietrich Genscher.

[21669006] |Addressing a conference of the New York-based Institute for East-West Security Studies in Frankfurt yesterday, Mr. Genscher said, "History will judge us by whether we have taken the opportunities that emerge from these reforms."
[21669007] |The ultimate aim of Western support for East bloc reforms, he said, is to create "an equitable and stable peaceful order in Europe from the Atlantic to the Urals."

[21669008] |Mr. Genscher and U.S. Secretary of Commerce Robert A. Mosbacher, in separate speeches at the conference, appealed for more Western contributions to economic reforms and business development in Hungary and Poland.
[21669009] |Bonn and Washington are leading supporters of Poland's request for a $1 billion stand-by credit from the International Monetary Fund.

[21669010] |"We want the bold programs of market development and political freedom in Hungary and in Poland to succeed.
[21669011] |We are prepared to support those changes," said Mr. Mosbacher.
[21669012] |U.S. curbs on the exports of sensitive technology to East bloc countries will remain in place, however.

[21669013] |Meanwhile, the U.S. House of Representatives yesterday approved an $837.5 million aid package for Poland and Hungary that more than doubles the amount President Bush had requested.
[21669014] |The package was brought to the House just 15 days after it was introduced, indicating Congress's eagerness to reward Poland and Hungary for their moves toward democracy and freemarket economic reforms.

[21669015] |The legislation, approved 345-47 and sent to the Senate, establishes two enterprise funds, to be governed by independent nonprofit boards, which will make loans and investments in new business ventures in Hungary and Poland.
[21669016] |The Polish fund would be seeded with $160 million, the Hungarian fund with $40 million.

[21669017] |In addition, a group of 24 industrialized countries, including the U.S. and Japan and coordinated by the European Community Commission, has promised Poland and Hungary trade advice and a line of credit equivalent to $1.11 billion through the European Investment Bank, while the EC plans $222 million in direct aid.

[21669018] |When Chancellor Helmut Kohl travels to Poland Nov. 9, he is expected to take with him a promise of three billion West German marks ($1.6 billion) in new credit guarantees for industrial projects.
[21669019] |Last week, Bonn agreed to reschedule 2.5 billion marks in Polish debt that came due last year.
[21669020] |In addition, a one billion mark credit dating from 1974 is to be written off.
[21669021] |Poland's plan to switch to a free-market economy by 1991 is hampered by a foreign debt load of $39.2 billion.

[21669022] |West Germany also has increased its credit guarantees to Hungary by 500 million marks to 1.5 billion marks as the emerging democratic state rushes through its own economic reforms, including a broad privatization of state-owned industry and tax incentives for industrial investment.
[21669023] |An additional 500 million marks in credit-backing was promised by the West German state governments of Bavaria and Baden-Wuerttemberg.

[21669024] |Deutsche Bank AG, which last year arranged a three billion mark credit for the Soviet Union, is now moving to become the first West German bank to set up independent business offices in Hungary and Poland as they shift to free-market economies.
[21669025] |A maxim of Frankfurt banking holds that wherever Deutsche Bank goes, other West German banks follow.
[21669026] |Indeed, at least four other West German banks are believed to be making inquiries.

[21670001] |Mattel Inc. said third-quarter net income rose 73%, to $38 million, or 76 cents a share, from $21.9 million, or 45 cents a share, a year ago.

[21670002] |Revenue rose 34% to $410 million from $306.6 million a year earlier.

[21670003] |"Mattel's world-wide volume has grown 25% in a climate of relatively flat industry sales," said John W. Amerman, chairman.
[21670004] |He said the toy company's "prospects for a strong fourth quarter" are also good.

[21670005] |Mattel attributed the jump in quarter net to strong world-wide sales of its Barbie doll, Hot Wheels cars, Disney toys and other well-known toy lines.
[21670006] |The company also cited retail trade and consumer demand for new products introduced this year, such as Cherry Merry Muffin and Turtle Tots.

[21670007] |For the nine months, Mattel net more than doubled to $58.9 million, or $1.19 a share, from $25.4 million, or 53 cents a share, a year ago.
[21670008] |Revenue rose 25%, to $877.6 million, from $702.4 million.

[21670009] |Mattel said the company's sale of rights to land and buildings at its Hawthorne, Calif., headquarters resulted in a $13 million charge to third-quarter operating profit.
[21670010] |The charge didn't affect net for the quarter as it was offset by tax benefits.

[21670011] |Mattel has purchased a new headquarters building in El Segundo, Calif., which it will occupy by the end of next year.

[21671001] |Democracy can be cruel to politicians: Sometimes it forces them to make choices.
[21671002] |Now that the Supreme Court opened the door on the subject of abortion, politicians are squinting under the glare of democratic choice.
[21671003] |Their discomfort is a healthy sign for the rest of us.

[21671004] |Republicans are squinting most painfully, at least at first, which is only fair because they've been shielded the most.
[21671005] |So long as abortion was a question for litigation, not legislation, Republicans could find political security in absolutism.
[21671006] |They could attract one-issue voters by adopting the right-to-life movement's strongest position, even as pro-choice Republicans knew this mattered little on an issue monopolized by the court.
[21671007] |Now it matters.

[21671008] |Much of Washington thought it detected George Bush in a characteristic waffle on abortion the past week.
[21671009] |Only a month ago he'd warned Congress not to pass legislation to pay for abortions in cases of rape or incest.
[21671010] |Last Friday, after Congress passed it anyway, he hinted he was looking for compromise.
[21671011] |Was the man who once was pro-choice, but later pro-life, converting again?

[21671012] |In fact, Mr. Bush's dance was more wiggle than waffle.
[21671013] |Pro-life advocates say the White House never wavered over the veto.
[21671014] |Christopher Smith (R., N.J.), a pro-life leader in the House, suggested a compromise that would have adapted restrictive language from rape and incest exceptions in the states.
[21671015] |The White House, never eager for a fight, was happy to try, which is why George Bush said he was looking for "flexibility" last week.

[21671016] |When Democrats refused to budge, pro-life Republicans met at the White House with Chief of Staff John Sununu on Monday, and Mr. Bush quickly signaled a veto.
[21671017] |Amid charges of "timidity" on Panama and elsewhere, the president wasn't about to offend his most energetic constituency.

[21671018] |The GOP doubters were in Congress.
[21671019] |In last week's House vote, 41 Republicans defected.
[21671020] |After the vote, Connecticut Rep. Nancy Johnson rounded up nearly as many signatures on a letter to Mr. Bush urging him not to veto.
[21671021] |Even such a pro-life stalwart as Sen. Orrin Hatch (R., Utah) had counseled some kind of compromise.
[21671022] |The Senate passed the same bill yesterday, with a veto-proof majority of 67.

[21671023] |The manuevering illustrates an emerging Republican donnybrook, pacified since the early 1980s.
[21671024] |At the 1988 GOP convention, abortion was barely discussed at all, though delegates were evenly divided on the question of an anti-abortion constitutional amendment.
[21671025] |Ms. Johnson made a passionate statement to the platform committee, but she was talking to herself.

[21671026] |Now many Republicans are listening.
[21671027] |They're frightened by what they see in New Jersey, and especially Virginia, where pro-life GOP candidates for governor are being pummeled on abortion.
[21671028] |Eddie Mahe, a Republican consultant, says the two GOP candidates could have avoided trouble if they had framed the issue first.
[21671029] |(In Virginia, Marshall Coleman and his running mate, Eddy Dalton, are both on the defensive for opposing abortions even in cases of rape or incest.)
[21671030] |But Mr. Mahe adds, "The net loser in the next few years is the right-to-life side."

[21671031] |Darla St. Martin, of the National Right to Life Committee, says exit polls from the 1988 election had single-issue, pro-life voters giving Mr. Bush about five more percentage points of support than pro-choice voters gave Michael Dukakis.
[21671032] |But the Supreme Court's opening of debate may have changed even that.
[21671033] |GOP pollster Neil Newhouse, of the Wirthlin Group, says polls this summer showed that the single-issue voters had about evened out.
[21671034] |Polls are no substitute for principle, but they'll do for some politicians.

[21671035] |The Republican danger is that abortion could become for them what it's long been for Democrats, a divisive litmus test.
[21671036] |It's already that in the Bush administration, at least for any job in which abortion is even remotely an issue.

[21671037] |Oklahoma official Robert Fulton lost a chance for a senior job in the Department of Health and Human Services after right-to-life activists opposed him.
[21671038] |Caldwell Butler, a conservative former congressman, was barred from a Legal Services post, after he gave wrong answers on abortion.
[21671039] |Even the president's doctor, Burton Lee, has said on the record that he'd love to be surgeon general but couldn't pass the pro-life test.

[21671040] |In the case of HHS Secretary Louis Sullivan, the litmus test could yet damage issues important to other parts of the Republican coalition.
[21671041] |After Mr. Sullivan waffled on abortion last year, the White House appeased right-to-lifers by surrounding him with pro-life deputies.
[21671042] |Their views on health care and welfare didn't much matter, though HHS spends billions a year on both.
[21671043] |It makes only a handful of abortion-related decisions.

[21671044] |Though Democrats can gloat at all this for now, they may want to contain their glee.
[21671045] |On abortion, their own day will come.
[21671046] |Eventually even Republicans will find a way to frame the issue in ways that expose pro-choice absolutism.
[21671047] |Does the candidate favor parental consent for teen-age abortions?
[21671048] |(The pro-choice lobby doesn't.
[21671049] |) What about banning abortions in the second and third trimesters?
[21671050] |(The lobby says no again.)

[21671051] |Democracy is forcing the abortion debate toward healthy compromise, toward the unpolarizing middle.
[21671052] |Roe v. Wade pre-empted political debate, so the extremes blossomed.
[21671053] |Now the ambivalent middle, a moral majority of sorts, is reasserting itself.
[21671054] |Within a few years, the outcome in most states is likely to be that abortion will be more restricted, but not completely banned.
[21671055] |This is where the voters are, which is where politicians usually end up.

[21672001] |Union Pacific Corp. third-quarter net income fell 17%.
[21672002] |Excluding earnings from discontinued operations a year earlier, net fell only 2%.

[21672003] |The energy, natural resources and railroad concern had net of $137.4 million, or $1.35 a share, down from $165 million, or $1.44 a share, a year earlier.
[21672004] |In the 1988 third quarter, profit from continuing operations totaled $140.1 million.
[21672005] |A year earlier, the company had profit from discontinued operations of $24.9 million from sale of a pipeline, a refinery and an interest in a second refinery.

[21672006] |Revenue rose 2% to $1.58 billion from $1.54 billion.

[21672007] |In composite trading on the New York Stock Exchange, Union Pacific jumped $1.375 to $75 a share.

[21672008] |The company said its Union Pacific Railroad had a 3% profit increase, despite a 14% rise in fuel costs and a 4% drop in car loadings.
[21672009] |Most of the commodity traffic was off, the company said.

[21672010] |Earnings from continuing operations of the Union Pacific Resources unit almost doubled, the company said.
[21672011] |It added that higher revenue, strong crude oil prices and higher natural gas prices offset declines in production of oil, gas and plant liquids.
[21672012] |In addition, the company cited cost-reduction moves and interest income.

[21672013] |Earnings from Union Pacific Realty dropped 50% to $3 million.
[21672014] |Before good will, Overnite Transportation earnings fell 11% to $15 million, Union Pacific said.

[21672015] |In the nine months, net fell 6.3% to $427.7 million, or $3.98 a share, from $456.4 million, or $4 a share, a year earlier.
[21672016] |Profit from continuing operations in the year-earlier period was $402.7 million.
[21672017] |Revenue was $4.75 billion, up 6% from $4.49 billion.

[21673001] |The Federal Trade Commission ruled that five major title-insurance companies illegally fixed prices for title search-and-examination services by participating in joint "rating bureaus" in six states.

[21673002] |The FTC ordered the companies not to use rating bureaus in those six states.
[21673003] |The commission order named the following companies: Ticor Title Insurance Co. of California, a unit of Los Angeles-based Ticor; Chicago Title Insurance Co. and Safeco Title Insurance Co., units of Chicago Title & Trust Co.; Lawyers Title Insurance Corp., a unit of Richmond, Va.-based Universal Corp.; and Stewart Title Guaranty Co., a unit of Houston-based Stewart Information Services Corp.
[21673004] |Chicago Title & Trust acquired Safeco in 1987 and changed the unit's name to Security Union Title Insurance Co.

[21673005] |The FTC ruled that the companies violated federal antitrust law by fixing rates in the following states: New Jersey, Pennsylvania, Connecticut, Wisconsin, Arizona and Montana.
[21673006] |The FTC first issued an administrative complaint in the case in 1985.

[21673007] |John Christie, a lawyer here for the two Chicago Title & Trust units accused the FTC of "second-guessing" state-level regulations, with which, he said, his clients had complied.
[21673008] |"I expect all the companies to appeal," he added.

[21673009] |A lawyer for Lawyers Title said that, because the named companies no longer use the type of cooperative rating bureaus attacked by the FTC, the commission's order won't have much practical impact.
[21673010] |Officials for the other named companies didn't return telephone calls seeking comment.

[21674001] |MARK RESOURCES INC., Calgary, Alberta, said it agreed to sell 75 million Canadian dollars (US$63.9 million) of 8% convertible debentures to a group of securities dealers.
[21674002] |Mark, an oil and gas concern, said the 15-year debentures are convertible before maturity at C$12.50 for each Mark common share, and can be redeemed at the company's option, under certain conditions, after Nov. 30, 1992.

[21675001] |The government will try to sell all the real estate managed by the Federal Asset Disposition Association in one fell swoop, said William Seidman, chairman of the Federal Deposit Insurance Corp.

[21675002] |The FADA real-estate package, with an asking price of $428 million, is comprised of 150 properties in Texas, California, Colorado, Arizona and Florida.
[21675003] |It includes apartments, shopping centers, office buildings and undeveloped land.

[21675004] |Mr. Seidman is chairman of the Resolution Trust Corp., established to sell or merge the nation's hundreds of insolvent savings-and-loan associations.
[21675005] |The RTC, created by this year's S&L bailout legislation, is trying to sell FADA's network of offices separately.
[21675006] |FADA, which holds problem assets of thrifts that were closed before the bailout legislation was enacted, is being liquidated.

[21675007] |The properties held by FADA won't be sold piecemeal, Mr. Seidman said in a speech before Southern Methodist University Business School in Dallas.
[21675008] |"You need to buy the entire lot," Mr. Seidman said, "so get out your checkbooks.

[21676001] |The following were among yesterday's offerings and pricings in the U.S. and non-U.S. capital markets, with terms and syndicate manager, as compiled by Dow Jones Capital Markets Report:

[21676002] |Sequa Corp. -- $150 million of 9 5/8% notes due Oct. 15, 1999, priced at 99.75 to yield 9.664%.
[21676003] |The noncallable issue was priced at a spread of 170 basis points above the Treasury's 10-year note.
[21676004] |Rated Baa-2 by Moody's Investors Service Inc. and triple-B-minus by Standard & Poor's Corp., the issue will be sold through underwriters led by Merrill Lynch Capital Markets.

[21676005] |Virginia Public School Authority -- $55.7 million of school financing bonds, 1989 Series B (1987 resolution), due 19912000, 2005 and 2010, through a BT Securities Corp. group.
[21676006] |The bonds, rated double-A by Moody's and S&P, were priced to yield from 6% in 1991 to 7.10% in 2010.
[21676007] |Serial bonds were priced to yield to 6.75% in 2000.
[21676008] |Bonds due 1991-1996 carry 6.70% coupons and bonds due 1997-2000 carry 6 3/4% coupons.
[21676009] |Term bonds due 2005 aren't being formally reoffered.
[21676010] |They carry a 7% coupon.
[21676011] |Term bonds due 2010 are 7.10% securities priced at par.

[21676012] |St. Johns River Water Management District, Fla. -- $50,005,000 of land acquisition revenue bonds, Series 1989, due 1990-2000, 2003, 2006 and 2009, tentatively priced by a Smith Barney, Harris Upham & Co. group to yield from 6% in 1990 to about 7.03% in 2003.
[21676013] |There are $9.76 million of 7% term bonds due 2003, priced at 99 3/4 to yield about 7.03%.
[21676014] |The $11,775,000 of term bonds due 2006 and the $13,865,000 of term bonds due 2009 aren't being formally reoffered.
[21676015] |Serial bonds were priced at par to yield to 6.90% in 2000.
[21676016] |The bonds are insured and rated triple-A by Moody's and S&P.

[21676017] |Federal Home Loan Mortgage Corp. -- $500 million of Remic mortgage securities being offered in 12 classes by Salomon Brothers Inc.
[21676018] |The offering, Series 105, is backed by Freddie Mac 9 1/2% securities.
[21676019] |Separately, $400 million of Freddie Mac Remic mortgage securities is being offered in 10 classes by Kidder, Peabody & Co.
[21676020] |The offering, Series 106, is backed by Freddie Mac 9 1/2% securities.
[21676021] |According to available details, yields range from 8.70%, a spread of 80 basis points over three-year Treasury securities, to 10.37%, a spread of 230 basis points over 20-year Treasurys.
[21676022] |The offerings bring Freddie Mac's 1989 Remic issuance to $32.6 billion and its total volume to $46.5 billion since the program began in February 1988.

[21676023] |European Investment Bank (agency) -- 200 billion lire of 12% bonds due Nov. 16, 1995, priced at 101 3/4 to yield 12% less full fees, via lead manager Banco Commercial Italiana.
[21676024] |Fees 1 3/4.

[21676025] |IBM International Finance (U.S. parent) -- 125 million European currency units of 9 1/8% bonds due Nov. 10, 1994, priced at 101 5/8 to yield 9.13% at the recommended reoffered price of par, via Banque Paribas Capital Markets.

[21676026] |Societe Generale Australia Ltd. (French parent) -- 50 million Australian dollars of 17% bonds due Nov. 20, 1991, priced at 101.90 to yield 16.59 less fees, via Westpac Banking Corp.
[21676027] |Guaranteed by Societe Generale.
[21676028] |Fees 1 1/4.

[21676029] |Mitsubishi Trust & Banking Corp. (Japan) -- 200 million Swiss francs of privately placed convertible notes due March 31, 1994, with a fixed 0.75% coupon at par, via Union Bank of Switzerland.
[21676030] |Put option on March 31, 1992, at a fixed 107 3/4 to yield 3.5%.
[21676031] |Callable from March 31, 1992, at 107 3/4, declining two points semi-annually to par.
[21676032] |Each 50,000 Swiss franc note is convertible from Nov, 27, 1989, to March 21, 1994, at a premium over the closing share price Oct. 25, when terms are scheduled to be fixed.
[21676033] |Also, the company issued 300 million marks of convertible bonds with an indicated 2 3/4% coupon due March 31, 1995, at par, via Westdeutsche Landesbank Girozentrale Bank.
[21676034] |Put on March 31, 1992, at an indicated 105 to yield 4.80%.
[21676035] |Call option beginning March 31, 1992, if the price of the stock rises more than 50% within 30 trading days as well as a call option for tax reasons.
[21676036] |Each 1,000 mark and 10,000 mark bond is convertible from Nov. 27, 1989, to March 21, 1995, at a price to be determined when terms are fixed Oct. 25.

[21676037] |Scandinavian Airlines System (Sweden) -- 100 million Swiss francs of 6 1/8% bonds due Nov. 24, 1999, priced at 100 3/4 to yield 6.03%, via Union Bank of Switzerland.
[21676038] |Call from Nov. 24, 1994, at 101 1/2, declining 1/4 point a year.
[21676039] |Federal Home Loan Mortgage Corp. -- $400 million of 10-year debentures with a coupon rate of 8.80%, priced at par.
[21676040] |The debentures, callable at par in five years, were priced at a yield spread of about 86 basis points above the Treasury 10-year note.
[21676041] |The issue is being sold through Freddie Mac's 17-member securities selling group.
[21676042] |The debentures mature Oct. 27, 1999.
[21676043] |The debentures will be available in book-entry form only in a minimum amount of $5,000 and additional increments of $5,000.
[21676044] |Interest will be paid semi-annually.

[21677001] |First they get us to buy computers so we can get more information.
[21677002] |Then the computers give us more information than we can ever read.
[21677003] |Now they plan to sell us products that sift through all the information to give us what we really want to know.

[21677004] |The products range from computer-edited, personal newsletters to systems that sit inside a personal computer and pick stories on selected topics off news wires.

[21677005] |"Filtered news is what people want," says Esther Dyson, editor of Release 1.0, an industry newsletter that spots new developments.
[21677006] |"Most people read 10 times more than necessary in order to find out what they really need."

[21677007] |Geoffrey Goodfellow, who dropped out of high school back in the 1970s to manage a computer network at a California research firm, says: "Old network hands have started to turn off the network because they don't have time to wade through the muck."
[21677008] |Mr. Goodfellow has started a Menlo Park, Calif., company called Anterior Technology that provides human editors for public electronic networks.
[21677009] |"I see it as a sewage treatment plant," he says.

[21677010] |A new product, NewsEdge, carries five business news wires simultaneously into a user's computer and beeps and flashes whenever an article appears that is of interest to the user.
[21677011] |The product, developed by Desktop Data Corp., a new company based in Waltham, Mass., scans the wires looking for articles that contain key words specified by the user.

[21677012] |One early user, David Semmel, a Chicago venture capitalist and investor in Desktop Data, says he uses it to track takeover developments.
[21677013] |He says he told NewsEdge to look for stories containing such words as takeover, acquisition, acquire, LBO, tender, merger, junk and halted.
[21677014] |"I'm pretty confident I'm catching everything," he says.

[21677015] |NewsEdge is pricey: $7,500 a year for a limited version, $40,000 a year if the cost of all the news wires is included.
[21677016] |And it works best in high-powered personal computers.
[21677017] |But some investors and consultants who have tried it are enthusiastic.
[21677018] |Jeffrey Tarter, editor of SoftLetter, a Watertown, Mass., industry newsletter, says: "I've seen a lot of people fooling around on the fringes of filtering information.
[21677019] |This is the first time I've seen something I could imagine a lot of people using."

[21677020] |NewsEdge uses an FM radio band to carry news wires provided by Reuters, McGraw-Hill and Dow Jones & Co., as well as PR Newswire, which carries corporate press releases.
[21677021] |An FM receiver attached to a user's personal computer receives the information.

[21677022] |Some organizations have devised their own systems to sort through news wire items as they come in.
[21677023] |George Goodwin, an account manager at Royal Bank of Canada, adapted a Lotus Development Corp. program called Agenda to sort through international news wires.
[21677024] |It automatically selects stories from particular countries for reading by the international bankers responsible for lending in those areas.

[21677025] |For those who don't need their personalized information moment by moment, some services are offering overnight newsletters.

[21677026] |Individual Inc., a new company in Brookline, Mass., uses filtering technology developed by Cornell University computer scientist Gerard Salton, to automatically produce customized newsletters it sends electronically to subscribers by 8 a.m. the next day.

[21677027] |"We are operating an information refinery that takes a broad stream of raw data and turns it into actionable knowledge," says Yosi Amram, founder and president.
[21677028] |The daily newsletter, which isn't widely available yet, will have a base cost of $2,000 a year and provides full text of relevant articles under license agreements with Reuters, McGraw Hill, United Press International, two press release news wires and Japan's Kyodo news service.

[21677029] |One early user is NEC Corp.'s U.S. printer marketing arm.
[21677030] |"They want the full press releases on printer announcements by their competition," Mr. Amram says.
[21677031] |It also tracks personnel and financial announcements by NEC's distributors and customers.

[21677032] |Individual Inc.'s technology goes beyond word searches by using a computerized thesaurus.
[21677033] |If a customer asks for stories about "IBM," the computer will also supply stories that mention "I.B.M., International Business Machines, or Big Blue," Mr. Amram says.

[21677034] |Moreover, Individual Inc.'s computers can weigh the value of an article based on how closely the story matches the subscriber's interest area.
[21677035] |It compares the position of key words in the story; words in the headline or first paragraph get a higher value.
[21677036] |And it calculates how often the words appear in the story compared with how often they appear in the entire data base.
[21677037] |The higher the ratio of hits to total words, the higher the presumed value to the reader.

[21677038] |Pinpoint Information Corp., Chantilly, Va., a producer of $1,800-a-year personalized newsletters about the computer industry that started full operation last month, relies on 12 human readers to code news releases by topic in order to select items for each subscriber.
[21677039] |"The computers find all the key words they can, but the editors confirm every one.
[21677040] |Computer picking isn't perfect," says Harvey Golomb, president and founder of Pinpoint.
[21677041] |The humans also write abstracts of articles from some 200 computer industry publications.

[21677042] |Once all the articles are coded and put in a data base, Pinpoint's computers pick the most relevant for each subscriber and lay them out in a three-to-five-page newsletter format; each newsletter is sent directly from the computer to the subscriber's fax machine.
[21677043] |Mr. Golomb says each of his computers can produce and send about 75 unique newsletters a night.

[21677044] |Many computer network users who never see news wires would like to sort through their electronic mail automatically.
[21677045] |So-called E-mail is the collection of inter-office memos, gossip, technical data, schedules and directives distributed over local and national computer networks.

[21677046] |"All these interconnected computers make it difficult to sort out what's junk and what's important," says Chuck Digate, a former Lotus Development executive who has started a new company to cope with the problem.
[21677047] |Mr. Digate says his firm, Beyond Inc., has licensed technology known as Information Lens from Massachusetts Institute of Technology and plans to develop it for commercial use.

[21677048] |The MIT project devised ways for E-mail to be automatically categorized as top priority if it comes from certain designated senders or requires action in the next couple of days.
[21677049] |Mr. Digate says that Beyond will refine the product "so the message will be smart enough to know to come back and bother you again next week."
[21677050] |And if a user is busy, "he can set it for crisis mode: `Don't bother me with reports until Monday.'"

[21677051] |A program called Notes, which is under development by Lotus, also is designed to sort E-mail sent within work groups.
[21677052] |One thing that makes E-mail difficult to sift through is that each item looks the same.
[21677053] |Notes, which is designed for advanced computers that display graphics, allows mail senders to put different logos on their mail.
[21677054] |A daily news briefing from the company librarian, for example, would have a distinctive format on the screen, just as a paper version would have.

[21677055] |"With E-mail, you don't have the visual clues of paper," says Mr. Tarter, the editor of SoftLetter.
[21677056] |"With Notes, they're visually distinct.

[21678001] |Dean Witter Reynolds Inc. lost its second recent arbitration case involving a former bond-trading executive.

[21678002] |A New York Stock Exchange arbitration panel ordered Dean Witter to pay $404,294 in back bonuses to William Kelly, the company's former head of high-yield, high-risk junk-bond trading and sales.
[21678003] |It also awarded $196,785 in back bonuses to former trader Michael Newcomb and $69,105 in fees to the two men's attorneys.

[21678004] |The sums awarded to Messrs. Kelly and Newcomb represent bonuses the two men said they deserved from the first half of 1988, but which weren't paid because of a dispute over an incentive contract.

[21678005] |Jeffrey L. Liddle, the two men's attorney at Liddle, O'Connor, Finkelstein & Robinson, said Mr. Kelly began working at Dean Witter in 1987.
[21678006] |Mr. Kelly built the company's high-yield bond group, which has been a minor player in the junk-bond arena.

[21678007] |Dean Witter lost a separate case involving a former bond executive earlier this year; in August it paid $666,666 in back pay and a bonus to a former corporate-bond trading chief, Harold Bachman.
[21678008] |That award ended a dispute between Dean Witter and Mr. Bachman over who was responsible for certain bond-trading losses around the time of the 1987 stock-market crash.

[21678009] |A spokesman for Dean Witter, a unit of Sears, Roebuck & Co., declined to comment.

[21679001] |DILLARD DEPARTMENT STORES Inc. said it offered $50 million of 9 1/2% debentures due 2001 at par.
[21679002] |The Little Rock, Ark., department-store retailer said proceeds will be used to reduce short-term debt.
[21679003] |Goldman, Sachs & Co. was the underwriter.

[21680001] |American Brands Inc. said third-quarter net income rose 13%, reflecting strong gains in its tobacco and distilled spirits businesses.

[21680002] |The company, which also has businesses in life insurance, office products and hardware, and home-improvement products, said net income rose to $166.4 million, or $1.71 a share, from $146.8 million, or $1.53 a share, a year earlier.
[21680003] |Year-earlier results for the quarter and the nine months were restated to reflect a change in accounting standards.

[21680004] |Revenue declined 2%, to $3.06 billion from $3.13 billion, because of the sale of Southland Life in March, and the impact of the stronger U.S. dollar on overseas results.

[21680005] |Operating profit for world-wide tobacco products rose 10% to $247.6 million.
[21680006] |For distilled spirits, operating profit rose 36%, to $24.8 million.

[21680007] |In the first nine months, net rose 1.5%, to $458.8 million, or $4.76 a share, from $452 million, or $4.50 a share, a year earlier.
[21680008] |The year-earlier period included $40.1 million, or 41 cents a share, from discontinued operations.
[21680009] |Revenue rose to $9.03 billion from $8.98 billion.

[21680010] |The average number of shares outstanding rose 2% in the third quarter but was down 4% for the nine months.

[21680011] |In composite trading on the New York Stock Exchange, American Brands shares rose $1.75 to $73.

[21681001] |SANTA FE PACIFIC PIPELINE PARTNERS Limited Partnership, of Los Angeles, increased its quarterly cash dividend to 60 cents a unit from 55 cents, payable Nov. 14 to units of record Oct. 31.
[21681002] |The company is an independent refined-petroleum-products pipeline serving six Western states.

[21682001] |WASHINGTON LIES LOW after the stock market's roller-coaster ride.

[21682002] |Lawmakers, haunted by charges that some of their comments contributed to the 1987 crash, generally shy away from calls for sweeping new legislation.
[21682003] |But a House Energy and Commerce subcommittee will quiz SEC Chairman Breeden Wednesday, and Treasury Secretary Brady will go before the Senate Banking panel Thursday.

[21682004] |The market's wild week may speed along the market-reform legislation that has been pending for months in the aftermath of the 1987 crash.
[21682005] |It may also expedite the SEC's modest pending changes in junk-bond disclosure rules and intensify the Treasury's look at plans for giving new tax breaks on dividends and raising taxes on short-term trades by pension funds.

[21682006] |Brady and Breeden work well together on the plunge, despite the fact that the Treasury secretary opposed Breeden's nomination to the SEC post.

[21682007] |BAKER FALTERS in the Mideast amid Israeli paralysis and Palestinian politics.

[21682008] |Despite seeing his plan for Israeli-Palestinian elections wither, the cautious secretary of state is so far unwilling to cut U.S. economic or military aid to force Israeli cooperation.
[21682009] |Baker nonetheless remains furious both at Shamir, for backing down on the elections, and at Shamir's rival, Peres, for political ineptitude in forcing a premature cabinet vote on Baker's plan.

[21682010] |Meanwhile, some U.S. officials fear PLO chief Arafat is getting cold feet and may back off from his recent moderation and renunciation of terrorism.
[21682011] |He is under intense fire from other Palestinian groups; Syria is pushing Ahmad Jibril, whose terrorist band is blamed for the Pan Am 103 bombing, as an alternative to Arafat.

[21682012] |DARMAN'S MANEUVERS on the budget and capital gains hurt him in Congress.

[21682013] |Republicans as well as Democrats were angered by the budget director's rejection of Speaker Foley's effort to expedite a deficitcutting measure by stripping it of the capital-gains tax cut as well as pet Democratic projects.
[21682014] |Darman now blames the clash on miscommunication, but House GOP leader Michel, who carried the offer to him, observes, "I was speaking English at the time, and quite loud so I could be understood."

[21682015] |Senate GOP leader Dole ridicules the budget chief on the Senate floor.
[21682016] |Democratic counterpart Mitchell, asked to interpret Darman's threat to make permanent the across-the-board Gramm-Rudman cuts that took effect this week, says, "I don't even bother to interpret them."

[21682017] |But Darman suggests such tensions will dissipate quickly.
[21682018] |"If I can show signs of maturity, almost anybody can," he jokes.

[21682019] |HHS OFFICIALS expect Secretary Sullivan to continue a ban on research using fetal tissue.

[21682020] |Before he was confirmed, Sullivan said he had "reservations about any blanket prohibitions on medical research."
[21682021] |But now, an official says, he is "surrounded by right-to-lifers," who contend that any breakthroughs in fetal-tissue research could increase the demand for abortions.

[21682022] |COOPERATION WANES on weapons development between the U.S. and Europe.

[21682023] |Britain, France and Italy pull out of a proposal to build new NATO frigates; the U.S. and West Germany have each withdrawn from missile projects.
[21682024] |Defense experts say joint projects are increasingly squeezed by budget pressures and the desire to save domestic jobs; some also fear rising protectionism as European unity nears.

[21682025] |BOTH SIDES NOW:
[21682026] |Virginia GOP lieutenant governor candidate Eddy Dalton tries to have it both ways on the abortion issue.
[21682027] |Though she opposes abortion in almost all cases, she airs a TV commercial using pro-choice buzzwords.
[21682028] |"A woman ought to have a choice in cases where her life or health are in danger and in cases of rape or incest," she proclaims.

[21682029] |HOT TOPIC:
[21682030] |Interest in the abortion issue is so great that the Hotline, a daily, computer-distributed political newsletter, comes up with a spinoff product called the Abortion Report dealing solely with its political implications.

[21682031] |CONSERVATIVES EXPECT Bush to solidify their majority on a key court.

[21682032] |Bush has three vacancies to fill on the prestigious D.C. Circuit Court, which handles many important regulatory issues and is often considered a warm-up for future Supreme Court nominees.
[21682033] |Conservatives now hold only a 5-4 edge.
[21682034] |One slot is expected to go to EEOC Chairman Clarence Thomas, a black conservative; after mulling a fight, liberals now probably won't put up a major struggle against him.

[21682035] |Other conservatives thought to be on the administration's short list include Washington lawyer Michael Uhlmann, who was passed over for the No. 2 job at the Justice Department, and Marshall Breger, chairman of a U.S. agency on administration.

[21682036] |The Bush administration would also like to nominate a woman; one possibility is former Justice Department official Victoria Toensing.

[21682037] |MINOR MEMOS:
[21682038] |In the wake of the failed Panama coup, a bumper sticker appears: "Ollie Would Have Got Him." . . .
[21682039] |Rep. Garcia, on trial for bribery and extortion, puts statements in the Congressional Record attributing missed votes to "scheduling conflicts." . . .
[21682040] |A GOP Senate fund-raising letter from Sen. Burns of Montana is made to appear personally written, and its opening line is, "Please excuse my handwriting."
[21682041] |But Burns confesses in an interview: "That's not my handwriting.

[21683001] |MC SHIPPING Inc., New York, declared an initial quarterly of 60 cents a share payable Nov. 15 to shares of record Oct. 30.
[21683002] |The announcement boosted the charter-shipping company's shares, which closed at $15.125, up $1.25 a share, in composite trading on the American Stock Exchange.
[21683003] |The company, which went public in May, intends to pay dividends from available cash flow; the amount may vary from quarter to quarter.

[21684001] |Ever since the hotly contested America's Cup race last year, the famous yachting match has run into more rough sailing out of the water than in it.
[21684002] |Now that a key member of the San Diego Yacht Club team is splitting off to form his own team, even more competition lies ahead.

[21684003] |Peter Isler, the winning navigator in the past two America's Cup challenges, has split from the team led by Dennis Conner, skipper of the victorious Stars & Stripes, to form his own team for the next contest in 1992.
[21684004] |And, in addition to a crack team of sailors, Mr. Isler has lined up some real brass to help him finance the syndicate.

[21684005] |Isler Sailing International's advisory board includes Ted Turner, Turner Broadcasting chairman and a former Cup victor; Peter G. Diamandis, head of Diamandis Communications, and Joseph B. Vittoria, chairman and chief executive of Avis Inc.
[21684006] |His steering committee includes other notable businessmen, including the California investor and old salt Roy E. Disney.

[21684007] |"We have the structure, people and plan," Mr. Isler said in a statement.
[21684008] |Now, the first order of business is raising enough money to keep his team afloat -- a new yacht will cost about $3 million alone, and sailing syndicate budgets can easily run to $25 million for a Cup challenge.

[21684009] |The split comes in the midst of a court battle over whether the San Diego Yacht Club should be allowed to keep the international trophy for sailing a catamaran against the New Zealand challengers' 90-foot monohull.
[21684010] |In September, a New York appellate court overturned a state judge's ruling that awarded the Cup to the New Zealand team.

[21684011] |Pending an appeal by the New Zealand team, led by Michael Fay, the finals for the next Cup challenge are scheduled to be held in mid-1992 in San Diego.
[21684012] |But because of the uncertainty of the outcome of the suit, Mr. Conner's team has done little to begin gearing up to defend its title.

[21684013] |"If you don't know what the rules of the game are, it's hard to start your fund-raising or design," said Dana Smith, an official with Team Dennis Conner.
[21684014] |The Conner team won't be able to negotiate with corporate sponsors until the suit is resolved and the race site is determined, Mr. Smith said, and the syndicate's budget could easily reach $30 million.

[21684015] |But spokesmen for both Mr. Isler and Mr. Conner say the formation of the new syndicate has to do with Mr. Isler's desire to skipper his own team and begin planning now, rather than any falling out between the two sportsmen.
[21684016] |Mr. Smith and a spokesman for the America's Cup Organizing Committee insist that the added competition for the defender's spot will only improve the race.

[21685001] |Missouri farmer Blake Hurst writing in the fall issue of the Heritage Foundation's Policy Review about the proposed location of a hazardous-waste incinerator in his county:

[21685002] |Of course I'd rather have a computer software firm in my backyard than a hazardous waste incinerator.
[21685003] |But I'd also rather live next door to an incinerator than to some of the hog farms I've seen (and smelt) in these parts.
[21685004] |An incinerator is also probably better than having nobody next door -- on our farm there are four unoccupied houses.
[21685005] |On my four-mile drive to farm headquarters each morning, I drive by another four empty houses.
[21685006] |A community of abandoned farmsteads, failing businesses, and crumbling roads and bridges is hardly a desirable one. . . .
[21685007] |The loss of 40 jobs by a depressed county in rural Missouri is hardly of national importance except for this: If the most environmentally safe way of dealing with a national problem cannot be built in Atchinson County, what hope have we for dealing with the wastes our economy produces?
[21685008] |After all, farmers here work with "hazardous" chemicals every day, many of them the same chemicals that would have been destroyed in the incinerator.
[21685009] |We know they are dangerous, but if handled with care, their benefits far outweigh any risk to the environment.

[21686001] |Just because Stamford, Conn., High School did nothing when its valuable 1930s mural was thrown in the trash doesn't mean the city no longer owns the work of art, a federal judge ruled.

[21686002] |The mural, now valued at $1.3 million according to appraisers, was tossed in a trash heap in 1971 by workers who were renovating the building.
[21686003] |The 100-foot-long mural, painted by James Daugherty in 1934, was commissioned by the federal Works Project Administration.

[21686004] |After the discarded mural was found outside the school by a concerned Stamford graduate, it eventually was turned over to Hiram Hoelzer, a professional art restorer.

[21686005] |Throughout the 1970s, Stamford school and city officials made no effort to locate the mural.
[21686006] |Apparently the officials didn't even know the mural was missing until 1980, when a researcher found that the painting was in Mr. Hoelzer's studio and questioned school officials about it.

[21686007] |In 1986, Stamford officials thanked Mr. Hoelzer for taking care of the mural -- and demanded he return it as soon as possible.
[21686008] |Mr. Hoelzer, however, sued Stamford, claiming that the city had abandoned the artwork and that it had waited too long to reclaim it.

[21686009] |But Judge Louis L. Stanton of federal court in Manhattan ruled that the city couldn't be faulted for waiting too long because it didn't realize until 1986 that its ownership of the painting was in dispute.
[21686010] |The judge also ruled that the painting wasn't abandoned because officials didn't intend for it to be thrown away and were unaware that the workmen had discarded it.

[21686011] |Mr. Hoelzer didn't return phone calls seeking comment on the judge's decision.
[21686012] |The judge ordered that a hearing be held Nov. 17 to determine how much the city should pay Mr. Hoelzer for his services.

[21686013] |Mary E. Sommer, corporate counsel for Stamford, said the city has discussed several possible plans for displaying the mural, which portrays various scenes from the Great Depression.
[21686014] |She said the mural "preserves an era in Stamford and in our country when this type of work was being done.

[21687001] |The prices of corn futures contracts jumped amid rumors that the Soviet Union is keeping up its dizzying October buying binge of U.S. corn.

[21687002] |Those rumors were confirmed after the end of trading yesterday when the U.S. Agriculture Department announced that the Soviets had bought 1.2 million metric tons of U.S. corn, bringing their U.S. corn purchases confirmed so far this month to about five million metric tons.

[21687003] |In trading at the Chicago Board of Trade, the corn contract for December delivery jumped 5.75 cents a bushel to settle at $2.44 a bushel.

[21687004] |The Soviet purchases are close to exceeding what some analysts had expected the Soviet Union to buy this fall, the season in which it usually buys much of the corn it imports from the U.S.
[21687005] |That pace is causing some analysts to speculate that the Soviet Union might soon purchase as much as another two million metric tons.

[21687006] |One sign that more Soviet purchases are possible is that U.S. grain companies yesterday bought an unusually large amount of corn futures contracts.
[21687007] |That sometimes signals that they are laying plans to export corn.

[21687008] |By some estimates, several grain companies combined bought contracts for the possession of roughly one million metric tons of corn.
[21687009] |By buying futures contracts, these companies attempt to protect themselves from swings in the price of the corn that they are obligated to deliver.

[21687010] |Rumors of Soviet interest also pushed up the prices of soybean futures contracts.
[21687011] |Among other things, the Agriculture Department is widely thought to be mulling whether to subsidize the sale of soybean oil to the Soviet Union.

[21687012] |On top of all this, corn and soybean prices rose on reports that the Midwest harvest was disrupted by a freakishly early snow storm that dumped several inches in parts of Indiana and Ohio.
[21687013] |The harvest delays, however, are expected to be temporary.
[21687014] |Balmy temperatures are forecast for next week, said Robert Lekberg, an analyst at Farmers Grain & Livestock Corp., Chicago.

[21687015] |Many farmers used the jump in prices to sell their recently harvested crop to grain elevator companies.
[21687016] |The heavy selling by farmers helped to damp the price rally.

[21687017] |Wheat futures prices rose slightly.

[21687018] |In other commodity markets yesterday:

[21687019] |PRECIOUS METALS:
[21687020] |Futures prices declined.
[21687021] |A number of developments were negatively interpreted by traders.
[21687022] |December delivery gold fell $1.80 an ounce to $370.60.
[21687023] |December silver eased 2.7 cents an ounce to $5.133.
[21687024] |January platinum was down $3.60 an ounce at $491.10.
[21687025] |One price-depressing development was the lower-than-expected increase of only 0.2% in the consumer price index for September, an analyst said.
[21687026] |He noted that the "core inflation rate," which excludes food and energy, was also low at 0.2%.
[21687027] |Other news that weighed on the market: Initial unemployment claims rose by 62,000 last week; American Telephone & Telegraph Co. will reduce its managerial staff by 15,000 through attrition; the oil market turned weaker; there wasn't any investor demand for bullion; and the dollar strengthened during the day, putting pressure on gold.
[21687028] |Also, the analyst said, economic circumstances are such that both South Africa and the Soviet Union, the principal gold and platinum producers, are being forced to continue selling the metals.
[21687029] |Both are in great need of foreign exchange, and South Africa is also under pressure to meet foreign loan commitments, he said.
[21687030] |"Putting it all together, we have a negative scenario that doesn't look like it will improve overnight," he said.

[21687031] |COPPER:
[21687032] |Futures prices recovered in quiet trading.
[21687033] |The December contract rose 1.50 cents a pound to $1.2795.
[21687034] |That contract fell a total of 5.75 cents during the first three days of this week, mostly in reaction to last Friday's stock market plunge, which prompted concern that it might signal a similar sharp slowing of the U.S. economy and thus reduced demand for copper, a leading industrial metal.
[21687035] |In recent days, however, there has been increased purchasing of copper in London, an analyst said.
[21687036] |Some of this buying was by Japan, which has had its supplies sharply reduced by long production stoppages at the Bougainville mine in Papua New Guinea, Highland Valley mine in British Columbia, and the Cananea mine in Mexico, which are major shippers to Japan.
[21687037] |The increasing likelihood that Cananea and Highland Valley will soon return to production may have cut some of that purchasing, but even if any of these mines begin operating soon, their output won't be significant until at least the end of the year, analysts note.
[21687038] |So, one analyst said, even though the long-term production problems may be easing, there will still be a significant need for copper over the next three months, when inventories will remain relatively low.

[21687039] |ENERGY:
[21687040] |Crude oil prices ended mixed.
[21687041] |West Texas Intermediate for November delivery fell 14 cents a barrel to $20.42.
[21687042] |But so-called outer month contracts finished higher.
[21687043] |For instance, December contracts for WTI rose 17 cents to $20.42.
[21687044] |Most energy futures opened lower, following Wednesday's market downturn.
[21687045] |But a flurry of late trading yesterday beefed up prices.
[21687046] |Heating oil and gasoline futures ended higher as well.

[21688001] |Melvin Belli's San Francisco law offices may have been the epicenter of legal activity after Tuesday's earthquake.

[21688002] |In the first 25 minutes after his office's telephone service was restored yesterday morning, 17 potential clients had called seeking the services of the self-proclaimed King of Torts.

[21688003] |Mr. Belli, like many other personal-injury lawyers, suspects that the earthquake, which measured 6.9 on the Richter scale, will generate enough lawsuits to keep this city's personal-injury and construction lawyers busy for quite some time.
[21688004] |Suits are likely to be filed against engineering firms, contractors and developers, as well as against local-government agencies.

[21688005] |But lawyers looking to cash in on the quake may have a tough time once their cases reach a judge.
[21688006] |Experts on California tort law say protections afforded government agencies in such cases are pretty ironclad.
[21688007] |Even claims against individuals and companies face significant roadblocks.
[21688008] |The major legal barrier is the principle that no one can be held liable for an "act of God."

[21688009] |For now, says Laurence Drivon, president-elect of the 6,000-member California Trial Lawyers Association, "the last thing we really need to worry about is whether anybody is going to get sued, or whether they have liability or not.
[21688010] |We still have people wandering around in a daze in San Francisco worrying about whether it's going to rain tonight."

[21688011] |But that won't stop plaintiffs' lawyers from seeking a little room for maneuvering.
[21688012] |In San Francisco, they argue, an earthquake was a near certainty.
[21688013] |Therefore, engineering firms, construction contractors and developers can be sued for not keeping structures up to standard, and government agencies can be held accountable for failing to properly protect citizens from such a foreseeable disaster, if negligence can be proven.

[21688014] |"My prediction is there will be mass litigation over errors and omissions in engineering and contracting," says Stanley Chesley, a well-known Cincinnati plaintiffs lawyer.
[21688015] |From what he saw on television, Mr. Chesley points out that Interstate 880, which collapsed and killed more than 200 commuters, suffered serious damage while surrounding buildings appeared to sustain no damage whatsoever.
[21688016] |He adds that "they were aware of the propensity for earthquakes and the San Andreas Fault."

[21688017] |The flamboyant and publicity-conscious Mr. Belli says he already has investigators looking into who could be held liable for the damage on the Bay Bridge and the interstate approaching it.
[21688018] |"We won't know until the smoke clears -- but yes, we're looking into it," he says.

[21688019] |Mr. Belli says he wants to know whether state or federal engineers or private companies could have prevented the damage.
[21688020] |Mr. Belli, who was at Candlestick Park for the World Series Tuesday night, says he has hired civil engineers to check out his own mildly damaged building and to investigate the bridge collapse.

[21688021] |Defense lawyers, perhaps understandably, say that plaintiffs' lawyers taking such an approach will have little success in pursuing their claims, though they add that the facts of each case must be looked at individually.
[21688022] |"A lot of this is going to be code-related," says Ignazio J. Ruvolo, a construction law specialist at Bronson, Bronson & McKinnon, a San Francisco law firm.
[21688023] |Plaintiffs, he says, will argue that damaged structures weren't built to proper design standards.
[21688024] |But if defendants can prove that they met San Francisco's stringent building codes, "that's probably going to protect them," Mr. Ruvolo says.

[21688025] |Government entities, continues Mr. Ruvolo, could be protected by the California Government Tort Liability Act.
[21688026] |Under the statute, agencies are provided "defenses that normally aren't available in the private sector," Mr. Ruvolo says.
[21688027] |"The legislature does not want to inhibit the unique government activities by exposing public entities to liability."

[21688028] |Built into the statute are so-called design immunities, which are likely to protect government agencies, according to Mr. Ruvolo and Richard Covert, a lawyer with the California Department of Transportation, which oversees the damaged Bay Bridge.
[21688029] |The state is protected when plans and designs for public structures were approved ahead of time or when structures met previously approved standards, says Mr. Covert.
[21688030] |He believes those defenses might well apply to the Bay Bridge collapse.
[21688031] |Nevertheless, he adds, "I wouldn't get totally shocked if we get lawsuits out of the Bay Bridge."

[21688032] |If there's going to be a race to the courthouse, it hasn't started yet.
[21688033] |Mr. Covert had to search through law books scattered on the floor of his office yesterday, and Mr. Belli's courtyard was strewn with bricks.
[21688034] |Wednesday, Mr. Belli's staff wasn't permitted into his office by city officials worried about their safety.
[21688035] |He said he set up shop on the sidewalk in front of his town-house office and helped victims apply for federal aid -- free of charge.

[21688036] |In a news release issued by Mr. Drivon, the trial lawyers association also promised free assistance to victims.
[21688037] |The association said it would monitor the conduct of lawyers and warned that solicitation of business is unethical.

[21689001] |What's in a name?
[21689002] |Apparently a lot, according to the British firm of Deloitte, Haskins & Sells.

[21689003] |The British firm has begun court proceedings in London to prevent the use of the name "Deloitte" by Deloitte, Haskins & Sells and Touche Ross & Co. in England and the rest of the world.
[21689004] |The British Deloitte firm recently withdrew from the merger of Deloitte and Touche world-wide and joined Coopers & Lybrand.

[21689005] |John Bullock, senior partner of Deloitte in the U.K., said "the decision to start these proceedings hasn't been taken lightly."
[21689006] |Mr. Bullock said the British firm has used the name "Deloitte" since 1845.
[21689007] |In the U.S., Deloitte, Haskins & Sells was known as Haskins & Sells until 1978, when it added the "Deloitte" name of its British affiliate.

[21689008] |John C. Burton, an accounting professor at Columbia University's Graduate School of Business, said "there's a lot of emotion involved in the name of an accounting firm with a long history and with roots in England, where accounting predates the U.S."
[21689009] |Although accountants aren't noted as "being deeply emotional, they really hold it all in," said Mr. Burton, former chief accountant of the Securities and Exchange Commission.

[21689010] |J. Michael Cook, chairman of Deloitte, Haskins & Sells International, said he believes the legal action by the British firm "to be without merit."
[21689011] |Mr. Cook said that last June, the international executive committes of Deloitte and Touche agreed to a world-wide merger.
[21689012] |"The merger is proceeding according to plan, except as to the withdrawal of the Deloitte U.K. firm," he said.

[21689013] |Partners at other accounting firms say that the Deloitte firm in the U.K. is filing the suit to get even with the merged Deloitte-Touche firm for keeping major auditing work in England.
[21689014] |General Motors Corp., a Deloitte audit client, for example, has agreed to keep its annual $18 million world-wide audit and associated tax work with the merged Deloitte-Touche firm, to be known as Deloitte & Touche in the U.S.
[21689015] |In England, this would mean that the British Deloitte would lose revenue for its audit of GM's Vauxhill unit.

[21689016] |The defection of Deloitte's affiliates in Britain and the Netherlands to Coopers & Lybrand will make Coopers one of the biggest accounting firms in Europe, rivaling KPMG Peat Marwick there.
[21689017] |Although Coopers hasn't been courted by other major accounting firms for a merger, it is benefiting greatly from fallout from the Deloitte-Touche merger.

[21689018] |In New York, Harris Amhowitz, general counsel of Coopers, said Coopers "was aware of the litigation," but he declined further comment.
[21689019] |He also declined to comment on the name that Coopers would use in England if Deloitte UK won its litigation to keep its name.
[21689020] |Coopers uses the Coopers & Lybrand name world-wide.

[21690001] |William Bennett, the White House drug-policy director, accused local officials in the Washington area of blocking construction of prison facilities to house convicted drug dealers.

[21690002] |"Politics has essentially put up a roadblock" to finding sites for new federal prisons, Mr. Bennett said at a news conference called to report on his "emergency assistance program" for the capital.
[21690003] |Without more space to incarcerate convicted criminals, he added, "we will not win the war on drugs."

[21690004] |Mr. Bennett declared in April that he would make Washington a "test case" for how the Bush administration would aid cities afflicted by heavy drug trafficking and violence.
[21690005] |The drug czar claimed that enforcement efforts are working here, "albeit at a slower and more halting pace than we would like."

[21690006] |He acknowledged, however, that Washington's "drug-related murder rate is intolerably high.
[21690007] |The prisons are too crowded.
[21690008] |Drugs continue to be sold openly around schools, parks and housing projects."

[21690009] |Mr. Bennett declined to name the area officials who he believes have impeded plans for building more federal prisons to ease Washington's problem.
[21690010] |But other Bush administration officials have criticized Maryland Gov. William Schaefer for blocking the use of possible sites in that state.
[21690011] |Administration officials also have said that Washington Mayor Marion Barry has delayed consideration of sites in the city.

[21690012] |In a letter to Mr. Bennett's office, released yesterday, Washington's city administrator, Carol Thompson, complained that the drug czar had exaggerated the amount of federal drug-related assistance provided to the capital.
[21690013] |Referring to Mr. Bennett's claim that the federal government would provide $97 million in emergency federal support, Ms. Thompson wrote, "Our analysis was unable to even come close to documenting that figure."

[21690014] |Of his successes in Washington, Mr. Bennett stressed that existing federal prisons have taken custody of 375 local inmates.
[21690015] |He also noted that the federal Drug Enforcement Administration has established a federal-local task force responsible since April for 106 arrests and more than $2 million in seizures of drug dealers' assets.
[21690016] |The Defense Department has lent the Washington U.S. attorney 10 prosecutors, and the Federal Bureau of Investigation has provided crime laboratory facilities and training, he added.

[21691001] |What if it happened to us?

[21691002] |In the wake of the earthquake in California and the devastation of Hurricane Hugo, many companies in disaster-prone areas are pondering the question of preparedness.
[21691003] |Some, particularly in West Coast earthquake zones, are dusting off their evacuation plans, checking food stocks and reminding employees of what to do if emergency strikes.
[21691004] |Others say they feel confident that steps they've already taken would see them through a disaster.

[21691005] |Preparedness involves more than flashlights and fire alarms these days.
[21691006] |Some big companies have teams of in-house experts focusing on safety and business resumption.
[21691007] |Many companies in the path of potential disaster have set up contingency offices in safe regions, hoping they can transport employees there and resume operations quickly.
[21691008] |That means making sure that copies of vital computer software and company records are out of harm's way.

[21691009] |Some businesses -- like Disneyland -- claim that even if they became isolated in a crisis, they would be able to feed and care for their people for as long as five days.

[21691010] |"Self-sufficiency has to be the cornerstone of your plan," says Stephanie Masaki-Schatz, manager of corporate emergency planning at Atlantic Richfield Co. in Los Angeles.
[21691011] |"If you don't save your critical people, you won't be able to bring up your vital business functions."

[21691012] |Although ARCO's head office, more than 300 miles from the epicenter, wasn't affected by this week's tremors, Ms. Masaki-Schatz used the occasion to distribute a three-page memo of "Earthquake Tips" to 1,200 ARCO employees.

[21691013] |"You need to capitalize on these moments when you have everyone's attention," she says.
[21691014] |"It was a good reminder that we all need to prepare prior to an event."

[21691015] |The ARCO memo urges employees to keep certain supplies at work, such as solid shoes and "heavy gloves to clear debris."
[21691016] |It also recommends that employees be aware of everyday office items that could be used for emergency care or shelter.
[21691017] |Among the suggestions: Pantyhose and men's ties could be used for slings, while removable wooden shelves might aid in "breaking through office walls."

[21691018] |ARCO maintains an office in Dallas that would take over if payroll operations in Pasadena were disrupted.
[21691019] |Two months ago the company set up a toll-free number, based outside California, to handle queries from employees about when they should report back to work after an earthquake or other disaster.

[21691020] |The ARCO plan takes into account such details as which aspects of business are busier at certain times of the year.
[21691021] |This way, depending on when a quake might strike, priorities can be assigned to departments that should be brought back on line first.

[21691022] |At Hewlett-Packard Co., the earthquake came just as the company was reviewing its own emergency procedures.
[21691023] |"We were talking about scheduling a practice drill for November," says Joan Tharp, a spokeswoman.
[21691024] |"Then we had a real one in the afternoon."

[21691025] |The Palo Alto, Calif., computer maker scrambled to set up a special phone line to tell manufacturing and support staff to stay home Wednesday.
[21691026] |Sales and service employees were asked to report to work to help Bay area clients who called with computer problems.
[21691027] |Hewlett-Packard also called in its systems experts to restore its own computer operations.
[21691028] |"That means we can accept orders" and begin getting back to normal, says Ms. Tharp.

[21691029] |Prompted by an earlier California earthquake, as well as a fire in a Los Angeles office tower, Great Western Bank in the past year hired three emergency planners and spent $75,000 equipping a trailer with communications gear to serve as an emergency headquarters.

[21691030] |Although officials of the savings and loan, a unit of Great Western Financial Corp., used some of their new plans and equipment during this week's quake, they still lost touch for more than 24 hours with 15 branches in the affected areas, not knowing if employees were injured or vaults were broken open.

[21691031] |"Some people flat out didn't know what to do," says Robert G. Lee, vice president for emergency planning and corporate security at Great Western.

[21691032] |As it turned out, bank employees weren't hurt and the vaults withstood the jolts.
[21691033] |Still, says Mr. Lee: "We need to educate people that they need to get to a phone somehow, some way, to let someone know what their status is."

[21691034] |Some companies are confident that they're prepared.
[21691035] |Occidental Petroleum Corp. holds regular evacuation drills and stocks food, oxygen and non-prescription drugs at checkpoints in its 16-story headquarters.
[21691036] |The company also maintains rechargeable flashlights in offices and changes its standby supply of drinking water every three months.

[21691037] |"We feel we are doing everything we can," an Occidental spokesman says.

[21691038] |Walt Disney Co.'s Disneyland in Anaheim, Calif., stocks rescue equipment, medical supplies, and enough food and water to feed at least 10,000 visitors for as long as five days in the event that a calamity isolates the theme park.

[21691039] |The park also has emergency centers where specially trained employees would go to coordinate evacuation and rescue plans using walkie-talkies, cellular phones, and a public-address system.
[21691040] |The centers are complete with maps detailing utility lines beneath rides and "safe havens" where people can be assembled away from major structures.

[21691041] |Vista Chemical Co., with three chemical plants in and near Lake Charles, La., "prepares for every hurricane that enters the Gulf of Mexico," says Keith L. Fogg, a company safety director.
[21691042] |Hurricane Hugo, an Atlantic storm, didn't affect Vista.
[21691043] |But two other major storms have threatened operations so far this year, most recently Hurricane Jerry this week.

[21691044] |Because hurricanes can change course rapidly, the company sends employees home and shuts down operations in stages -- the closer a storm gets, the more complete the shutdown.
[21691045] |The company doesn't wait until the final hours to get ready for hurricanes.
[21691046] |"There are just tons of things that have to be considered," Mr. Fogg says.
[21691047] |"Empty tank cars will float away on you if you get a big tidal surge."

[21691048] |Still, Vista officials realize they're relatively fortunate.
[21691049] |"With a hurricane you know it's coming.
[21691050] |You have time to put precautionary mechanisms in place," notes a Vista spokeswoman.
[21691051] |"A situation like San Francisco is so frightening because there's no warning.

[21692001] |Former Democratic fund-raiser Thomas M. Gaubert, whose savings and loan was wrested from his control by federal thrift regulators, has been granted court permission to sue the regulators.

[21692002] |In a ruling by the Fifth U.S. Circuit Court of Appeals in New Orleans, Mr. Gaubert received the go-ahead to pursue a claim against the Federal Home Loan Bank Board and the Federal Home Loan Bank of Dallas for losses he suffered when the Bank Board closed the Independent American Savings Association of Irving, Texas.

[21692003] |Mr. Gaubert, who was chairman and the majority stockholder of Independent American, had relinquished his control in exchange for federal regulators' agreement to drop their inquiry into his activities at another savings and loan.
[21692004] |As part of the agreement, Mr. Gaubert contributed real estate valued at $25 million to the assets of Independent American.

[21692005] |While under the control of federal regulators, Independent American's net worth dropped from $75 million to a negative $400 million, wiping out the value of Mr. Gaubert's real estate contribution and his stock in the institution.

[21692006] |Mr. Gaubert's suit to recover his damages was dismissed last year by U.S. District Judge Robert Maloney of Dallas under the Federal Tort Claims Act, which offers broad protection for actions by federal agencies and employees.

[21692007] |Earlier this week, a Fifth Circuit appellate panel upheld Judge Maloney's dismissal of Mr. Gaubert's claim as a shareholder but said the judge should reconsider Mr. Gaubert's claim for the loss of his property.
[21692008] |"It may depend on whether there was an express or implied promise . . . that the federal officials would not negligently cause the deterioration" of Independent American, the court wrote.
[21692009] |Mr. Gaubert's lawyer, Abbe David Lowell of Washington, D.C., says the impact of the ruling on other cases involving thrift takeovers will depend on the degree of similarity in the facts.
[21692010] |"I don't know if this will affect one institution or a hundred," Mr. Lowell says.
[21692011] |"It does establish a very clear precedent for suing the FHLBB where there was none before."

[21692012] |MAITRE'D CLAIMS in suit that restaurant fired her because she was pregnant.

[21692013] |In a suit filed in state court in Manhattan, the American Civil Liberties Union is representing the former maitre'd of the chic Odeon restaurant.
[21692014] |The suit, which seeks compensatory and punitive damages of $1 million, alleges that the firing of Marcia Trees Levine violated New York state's human-rights law.
[21692015] |Among other things, the law prohibits discrimination on the basis of sex and pregnancy.

[21692016] |The suit alleges that Ms. Levine was fired after she refused to accept a lower paying, less visible job upon reaching her sixth month of pregnancy.
[21692017] |Ms. Levine told her employer that she was pregnant in February; a month later, the suit says, the restaurant manager told Ms. Levine that she would be demoted to his assistant because he felt customers would be uncomfortable with a pregnant maitre'd.

[21692018] |Kary Moss, an attorney with the ACLU's Women's Rights Project, said, "They wanted a svelte-looking woman, and a pregnant woman is not svelte.
[21692019] |They told her, 'We don't hire fat people and we don't hire cripples.
[21692020] |And pregnant women are fat.'"
[21692021] |Ms. Moss said Ms. Levine secretly taped many conversations with her bosses at the Odeon in which they told her she was being fired as maitre'd because she was pregnant.

[21692022] |Paul H. Aloe, an attorney for Odeon owner Keith McNally, denied the allegations.
[21692023] |He said Ms. Levine had never been fired, although she had stopped working at the restaurant.
[21692024] |"The Odeon made a written offer to Marcia Levine on July 10 to return to work as the maitre'd, at the same pay, same hours and with back pay accrued," he said.

[21692025] |Mr. Aloe said the Odeon "has no policy against hiring pregnant people."

[21692026] |LAWYERS IN Texas's biggest bank-fraud case want out in face of retrial.

[21692027] |Lawyers representing five of the seven defendants in the case say their clients can no longer afford their services.
[21692028] |The trial of the case lasted seven months and ended in September with a hung jury.

[21692029] |The defendants were indicted two years ago on charges that they conspired to defraud five thrifts of more than $130 million through a complicated scheme to inflate the price of land and condominium construction along Interstate 30, east of Dallas.

[21692030] |The defense lawyers, three of whom are solo practitioners, say they can't afford to put their law practices on hold for another seven-month trial.
[21692031] |Some of the lawyers say they would continue to represent their clients if the government pays their tab as court-appointed lawyers.

[21692032] |Assistant U.S. Attorney Terry Hart of Dallas says the government will oppose any efforts to bring in a new defense team because it would delay a retrial.

[21692033] |FEDERAL JUDGE ALCEE HASTINGS of Florida, facing impeachment, received an unanticipated boost yesterday.
[21692034] |Sen. Arlen Specter (R., Pa.) urged acquittal of the judge in a brief circulated to his Senate colleagues during closed-door deliberations.
[21692035] |Among other things, the brief cited insufficient evidence.
[21692036] |Sen. Specter was vice chairman of the impeachment trial committee that heard evidence in the Hastings case last summer.
[21692037] |A former prosecutor and member of the Senate Judiciary Committee, Sen. Specter is expected to exercise influence when the Senate votes on the impeachment today.

[21692038] |RICHMOND RESIGNATIONS:
[21692039] |Six partners in the Richmond, Va., firm of Browder, Russell, Morris & Butcher announced they are resigning.
[21692040] |Five of the partners -- James W. Morris, Philip B. Morris, Robert M. White, Ann Adams Webster and Jacqueline G. Epps -- are opening a boutique in Richmond to concentrate on corporate defense litigation, particularly in product liability cases.
[21692041] |The sixth partner, John H. OBrion, Jr., is joining Cowan & Owen, a smaller firm outside Richmond.

[21692042] |LAW FIRM NOTES:
[21692043] |Nixon, Hargrave, Devans & Doyle, based in Rochester, N.Y., has opened an office in Buffalo, N.Y. . . .
[21692044] |Mayer, Brown & Platt, Chicago, added two partners to its Houston office, Eddy J. Roger Jr., and Jeff C. Dodd. . . .
[21692045] |Copyright specialist Neil Boorstyn, who writes the monthly Copyright Law Journal newsletter, is joining McCutchen, Doyle, Brown & Enersen.

[21693001] |New York Times Co.'s third-quarter earnings report is reinforcing analysts' belief that newspaper publishers will be facing continued poor earnings comparisons through 1990.

[21693002] |The publisher was able to register soaring quarter net income because of a onetime gain on the sale of its cable-TV system.
[21693003] |However, operating profit fell 35% to $16.4 million.
[21693004] |The decline reflected the expense of buying three magazines, lower earnings from the forest-products group, and what is proving to be a nagging major problem, continued declines in advertising linage at the New York Times, the company's flagship daily newspaper.

[21693005] |In composite trading on the American Stock Exchange, New York Times closed at $28.125 a share, down 37.5 cents.

[21693006] |Analysts said the company's troubles mirror those of the industry.
[21693007] |Retail advertising, which often represents half of the advertising volume at most daily newspapers, largely isn't rebounding in the second half from extended doldrums as expected.
[21693008] |At the same time, newspapers are bedeviled by lagging national advertising, especially in its financial component.
[21693009] |Dow Jones & Co. recently reported net fell 9.9%, a reflection, in part, of continued softness in financial advertising at The Wall Street Journal and Barron's magazine.

[21693010] |"We expect next year to be a fairly soft year in newspaper-industry advertising," said John Morton, an analyst for Lynch, Jones & Ryan.
[21693011] |"Next year, earnings will hold steady, but we just don't see a big turnaround in the trend in advertising."

[21693012] |John S. Reidy, an analyst for Drexel Burnham Lambert Inc., said, "The Times faces the same problem of other publishers: linage is down.
[21693013] |It will be hard to do handstands until real linage starts heading back up."

[21693014] |In the quarterly report, Arthur Ochs Sulzberger, New York Times Co. chairman and chief executive officer, said negative factors affecting third-quarter earnings will continue.
[21693015] |Analysts agreed with company expectations that operating profit will be down this year and in 1990.
[21693016] |Mr. Sulzberger said the scheduled opening of a new color-printing plant in Edison, N.J., in 1990 would involve heavy startup and depreciation costs.

[21693017] |"With the Edison plant coming on line next summer, the Times is facing some tough earnings comparison in the future," said Peter Appert, an analyst with C.J. Lawrence, Morgan Grenfell.
[21693018] |"But many newspapers are facing similar comparisons."

[21693019] |The sale of the company's cable franchise brought an after-tax gain of $193.3 million, part of which will be used to reduce debt.
[21693020] |The company also has a stock-repurchase plan.

[21693021] |Analysts said they were impressed by the performance of the company's newspaper group, which consists of the Times, 35 regional newspapers and a one-third interest in the International Herald Tribune; group operating profit for the quarter increased slightly to $34.9 million from $34.5 million on flat revenue.

[21693022] |Drexel Burnham's Mr. Reidy pointed out that "profits held up in a tough revenue environment.
[21693023] |That's a good sign when profits are stable during a time revenue is in the trough.

[21694001] |Investors celebrated the second anniversary of Black Monday with a buying spree in both stocks and bonds.
[21694002] |But the dollar was mixed.

[21694003] |Stock and bond investors were cheered by last month's encouragingly low inflation rate.
[21694004] |This news raised hopes for further interest-rate cuts.
[21694005] |Treasury-bond prices immediately rallied, setting the stock market rolling from the opening bell.

[21694006] |The Dow Jones Industrial Average, up about 60 points in mid-afternoon, finished with a gain of 39.55 points, to 2683.20.
[21694007] |That brought the average's cumulative gain this week to about 114 points.
[21694008] |Since the 1987 crash, the industrials have soared more than 54%, and the widely watched market barometer is about 4% below its record high set earlier this month.

[21694009] |The stock-market rally was led by blue-chip issues, but, unlike Monday's rebound, was broadly based.
[21694010] |Indeed, over-the-counter stocks, led by technology issues, outleaped the industrial average.
[21694011] |The Nasdaq Composite Index soared 7.52, or 1.6%, to 470.80, its highest one-day jump in points this year.

[21694012] |Many takeover-related stocks rose after news that a group obtained financing commitments for the proposed buy-out of American Medical International Inc.
[21694013] |Among the biggest winners were brokerage-house stocks, responding to heavy trading volume.

[21694014] |The government said consumer prices rose only 0.2% last month.
[21694015] |Economists expected twice as large an increase.
[21694016] |That news, plus recent signs of economic sluggishness, greatly increases pressure on the Federal Reserve to ease credit further, which in turn would be good news for stocks, investment managers say.
[21694017] |"I see a lot of evidence indicating a slower economy, and that means my interest-rate outlook has a downward tilt," said Garnett L. Keith Jr., vice chairman of Prudential Insurance Co. of America, one of the nation's largest institutional investors.
[21694018] |Fed officials probably won't drive down rates immediately, Mr. Keith said.
[21694019] |Despite the inflation news, several Fed officials still fear consumer-price pressures will intensify because they insist the economy is stronger than generally believed.

[21694020] |But Wall Street analysts expect further signs of economic weakness in government reports during the next few weeks.
[21694021] |If so, that will cinch the case for another shot of credit-easing within a month or so.
[21694022] |That, in turn, is expected to persuade banks to cut their prime lending rate, a benchmark rate on many corporate and consumer loans, by half a percentage point, to 10%.

[21694023] |"We're not out of the woods yet by any means," said George R. Mateyo, president and chief executive of Carnegie Capital Management Co., Cleveland.
[21694024] |But the economy "is slowing enough to give the Federal Reserve leeway to reduce interest rates."

[21694025] |But many individual investors are leery about stocks because of fresh signs of fragility in the huge junk-bond market.

[21694026] |Investors also are anxious about today's "witching hour," the monthly expiration of stock-index futures and options, and options on individual stocks.
[21694027] |This phenomenon often makes stock prices swing wildly at the end of the trading session.

[21694028] |In major market activity: Stock prices surged in heavy trading.
[21694029] |Volume on the New York Stock Exchange rose to 198.1 million shares from 166.9 million Wednesday.
[21694030] |Gaining Big Board issues outnumbered decliners by 1,235 to 355.

[21694031] |The dollar was mixed.
[21694032] |In New York late yesterday, it was at 141.70 yen, up from 141.45 yen late Wednesday.
[21694033] |But it fell to 1.8470 marks from 1.8485.

[21695001] |Tuesday's rout of a GOP congressional hopeful in a Mississippi district that hasn't backed a Democratic presidential candidate since Adlai Stevenson is another reminder that, at least at the federal level, political "ticket splitting" has been on the rise over the past half century.
[21695002] |In only one presidential election year prior to 1948 did more than 20% of the nation's congressional districts choose a different party's candidate for the White House than for the House of Representatives.
[21695003] |Now that percentage routinely equals a third and twice has been above 40%.

[21695004] |As we know, voters tend to favor Republicans more in races for president than in those for Congress.
[21695005] |In every presidential election over the past half century, except for the Goldwater presidential candidacy, the GOP has captured a greater percentage of the major-party popular vote for president than it has of congressional seats or the popular vote for Congress.
[21695006] |Prior to 1932, the pattern was nearly the opposite.

[21695007] |What accounts for the results of recent decades?
[21695008] |A simple economic theory may provide at least a partial explanation for the split personality displayed by Americans in the voting booth.
[21695009] |The theory relies on three assumptions:

[21695010] |1) Voters can "buy" one of two brands when they select their political agents -- a Republican brand that believes in the minimalist state and in the virtues of private markets over the vices of public action, and a Democratic brand that believes in big government and in public intervention to remedy the excesses attendant to the pursuit of private interest.

[21695011] |2) Congressional representatives have two basic responsibilities while voting in office -- dealing with national issues (programmatic actions such as casting roll call votes on legislation that imposes costs and/or confers benefits on the population at large) and attending to local issues (constituency service and pork barrel).

[21695012] |3) Republican congressional representatives, because of their belief in a minimalist state, are less willing to engage in local benefit-seeking than are Democratic members of Congress.

[21695013] |If these assumptions hold, voters in races for Congress face what in economic theory is called a prisoner's dilemma and have an incentive, at the margin, to lean Democratic.
[21695014] |If they put a Republican into office, not only will they acquire less in terms of local benefits but their selected legislator will be relatively powerless to prevent other legislators from "bringing home the bacon" to their respective constituencies.
[21695015] |Each legislator, after all, is only one out of 535 when it comes to national policy making.

[21695016] |In races for the White House, a voter's incentive, at the margin, is to lean Republican.
[21695017] |Although a GOP president may limit local benefits to the voter's particular district/state, such a president is also likely to be more effective at preventing other districts/states and their legislators from bringing home the local benefits.
[21695018] |The individual voter's standing consequently will be enhanced through lower taxes.

[21695019] |While this theory is exceedingly simple, it appears to explain several things.
[21695020] |First, why ticket splitting has increased and taken the peculiar pattern that it has over the past half century: Prior to the election of Franklin Roosevelt as president and the advent of the New Deal, government occupied a much smaller role in society and the prisoner's dilemma problem confronting voters in races for Congress was considerably less severe.

[21695021] |Second, it explains why voters hold Congress in disdain but generally love their own congressional representatives: Any individual legislator's constituents appreciate the specific benefits that the legislator wins for them but not the overall cost associated with every other legislator doing likewise for his own constituency.

[21695022] |Third, the theory suggests why legislators who pay too much attention to national policy making relative to local benefit-seeking have lower security in office.
[21695023] |For example, first-term members of the House, once the most vulnerable of incumbents, have become virtually immune to defeat.
[21695024] |The one exception to this recent trend was the defeat of 13 of the 52 freshman Republicans brought into office in 1980 by the Reagan revolution and running for re-election in 1982.
[21695025] |Because these freshmen placed far more emphasis on their partisan role -- spreading the Reagan revolution -- in national policy making, they were more vulnerable to defeat.

[21695026] |Fourth, the theory indicates why the Republican Party may have a difficult time attracting viable candidates for congressional office.
[21695027] |Potential candidates may be discouraged from running less by the congressional salary than by the prospect of defeat at the hands of a Democratic opponent.
[21695028] |To the extent that potential Republican candidates and their financial backers realize that the congressional prisoner's dilemma game works to their disadvantage, the Republican Party will be hindered in its attempts to field a competitive slate of congressional candidates.

[21695029] |Fifth, the theory may provide at least a partial reason for why ticket splitting has been particularly pronounced in the South.
[21695030] |To the extent that Democratic legislators from the South have held a disproportionate share of power in Congress since 1932 and have been able to translate such clout into relatively more local benefits for their respective constituencies, voters in the South have had an especially strong incentive to keep such Democrats in office.

[21695031] |Finally, the theory suggests why Republicans generally have fared better in Senate races than in campaigns for the House.
[21695032] |Since local benefit-seeking matters more and national policy making matters less in the lower chamber of Congress, this is precisely the pattern one would expect if Republicans are less willing to engage in local benefit-seeking than their Democratic counterparts.

[21695033] |Is there any empirical support for this theory?
[21695034] |Three pieces of evidence corroborate the key assumption that Democratic legislators are more willing to engage in local benefit-seeking than their Republican colleagues.
[21695035] |First, economists James Bennett and Thomas DiLorenzo find that GOP senators turn back roughly 10% more of their allocated personal staff budgets than Democrats do.
[21695036] |To the extent that the primary duty of personal staff involves local benefit-seeking, this indicates that political philosophy leads congressional Republicans to pay less attention to narrow constituent concerns.

[21695037] |Second, if the key assumption is valid, Democrats should have lower attendance rates on roll-call votes than Republicans do to the extent that such votes reflect national policy making and that participating in such votes takes away from the time a legislator could otherwise devote to local benefit-seeking.
[21695038] |This is indeed what the data indicate, particularly in the case of the House.
[21695039] |The Democratic House attendance rate has not exceeded the Republican House attendance rate since 1959.

[21695040] |Finally, as shown in the table, Democrats allocate a higher proportion of their personal staffs to district offices -- where local benefit-seeking duties matter more and national policy making activities matter less relative to Washington offices.
[21695041] |An examination of changes in personal staffing decisions in the Senate between 1986 and 1987 (when control of that body changed party hands), moreover, reveals that the personal staffing differences noted in the table cannot be attributed to the disproportionate control Democrats exercise, due to their majority-party status, over other resources such as committee staff.

[21695042] |An additional piece of evidence from the Senate: Holding other factors constant, such as incumbency advantages and regional factors, the difference between popular votes for Republican presidential and senatorial candidates in states conducting a Senate election turns out to be a positive function of how onerous the federal government's tax burden is per state (a progressive tax rate hits higher-income states harder).
[21695043] |Put more simply, GOP candidates for president are looked on more kindly by voters than Republican candidates for the Senate when the prisoner's dilemma is more severe.

[21695044] |Moreover, ticket splitting appears to take the same peculiar pattern at the state government level as it does at the federal level.
[21695045] |State government is more typically split along Republican-governor/Democratic-legislature lines than the reverse.
[21695046] |A cross-state econometric investigation, furthermore, reveals that, holding other factors constant, the difference between a state's major-party vote going to the Republican gubernatorial candidate and the Republican share of the lower state house is a positive function of the state tax rate.

[21695047] |In sum, at both the federal and state government levels at least part of the seemingly irrational behavior voters display in the voting booth may have an exceedingly rational explanation.

[21695048] |Mr. Zupan teaches at the University of Southern California's business school.

[21696001] |A House-Senate conference approved a nearly $17 billion State, Justice and Commerce Department bill that makes federal reparations for Japanese-Americans held in World War II internment camps a legal entitlement after next Oct. 1.

[21696002] |The measure provides no money for the promised payments until then, but beginning in fiscal 1991, the government would be committed to meeting annual payments of as much as $500 million until the total liability of approximately $1.25 billion is paid.
[21696003] |The action abandons earlier efforts to find offsetting cuts to fund the payments, but is widely seen as a more realistic means of expediting reparations first authorized in 1988.

[21696004] |The action came as Congress sent to President Bush a fiscal 1990 bill providing an estimated $156.7 billion for the Departments of Labor, Education, Health and Human Services.
[21696005] |Final approval was on a 67-31 roll call in the Senate, which sets the stage for a veto confrontation with Mr. Bush over the issue of publicly financed abortions for poor women.

[21696006] |Reversing an eight-year federal policy, the measure supports Medicaid abortions in cases of rape and incest, but Mr. Bush has so far refused to support any specific exemption beyond instances in which the mother's life is in danger.
[21696007] |Mr. Bush's veto power puts him a commanding position in the narrowly divided House, but a vote to override his position could well pick up new support because of the wealth of health and education programs financed in the underlying bill.

[21696008] |The measure before the conference yesterday funds the Departments of State, Justice and Commerce through fiscal 1990.
[21696009] |An estimated $1.32 billion is provided for next year's census, and negotiators stripped a Senate-passed rider seeking to block the counting of illegal aliens.

[21696010] |Elsewhere in the Commerce Department, nearly $191.2 million is preserved for assistance programs under the Economic Development Administration.
[21696011] |And in a footnote to the fall of House Speaker James Wright this year, the conference voted to rescind $11.8 million in unspent EDA funds for a Fort Worth, Texas, stockyards project that figured in ethics charges against the former Democratic leader.

[21696012] |Fiscal pressures also forced the adoption of new fees charged by federal agencies, and an 18% increase in the Securities and Exchange Commission's budget would be financed entirely by an added $26 million in filing fees.
[21696013] |In an unprecedented step, the measure anticipates another $30 million in receipts by having the Federal Bureau of Investigation charge for fingerprint services in civil cases -- a change that is almost certain to increase Pentagon costs in processing personnel and security clearances.

[21696014] |The bill doesn't include an estimated $1.9 billion in supplemental anti-drug funds for Justice Department and law-enforcement accounts that are still in conference with the House.
[21696015] |But yesterday's agreement would make it easier for state governments to handle the promised aid by deferring for one year a scheduled 50% increase in the required state matching funds for law-enforcement grants.

[21696016] |Similarly, the measure adjusts the current funding formula to promise smaller states such as New Hampshire and Delaware a minimum allocation of $1.6 million each in drug grants, or three times the current minimum.

[21696017] |The odd mix of departments in the bill makes it one of the more eclectic of the annual appropriations measures, and the assorted provisions attached by lawmakers run from $1.5 million for a fish farm in Arkansas to a music festival in Moscow under the United States Information Agency.
[21696018] |Lawmakers scrapped all of a $7.4 million State Department request for the 1992 Expo in Seville, Spain, but agreed elsewhere to $15,000 for an oil portrait of former Chief Justice Warren Burger.

[21696019] |Senate Commerce Committee Chairman Ernest Hollings (D., S.C.), who also chairs the Senate appropriations subcommittee for the department, attached $10 million for an advanced technology initiative, including work on high-definition television.
[21696020] |His Republican counterpart, Sen. Warren Rudman (R., N.H.), has used his position to wage a legislative war with the conservative board of the Legal Services Corp.

[21696021] |An estimated $321 million is provided to maintain the program, but Mr. Rudman also succeeded in attaching language seeking to curb the authority of the current board until new members are confirmed.
[21696022] |The effective date of any new regulations by the current board would be delayed until Oct. 1 next year, and the bill seeks to reverse efforts by the corporation to cut off funds to service organizations such as the Food Research and Action Center.

[21696023] |The bill also provides $620.5 million to meet U.S. contributions to international organizations and $80 million for peace-keeping activities.
[21696024] |Both accounts reflect significant increases from fiscal 1989, although the amount for peace-keeping shows a 27% cut from the administration's request.

[21697001] |Mercury Savings & Loan Association said it retained Merrill Lynch Capital Markets as its lead investment banker to advise it regarding a possible sale or other combination of the Huntington Beach, Calif., thrift.

[21697002] |Mercury, which has assets of more than $2 billion and 24 branches in California, said the action to improve its regulatory capital position is related directly to new capital requirements mandated by recently adopted federal legislation.
[21697003] |Mercury also said it extended its two-year advisory relationship with Montgomery Securities of San Francisco.

[21697004] |Mercury's stock closed yesterday at $4.875, unchanged in composite trading on the New York Stock Exchange.

[21698001] |Watching Congress sweat and grimace through its annual budget labors, fighting the urge to spend more, we're reminded of those late-night movies in which the anguished serial killer turns himself in to police and says, "Stop me before I kill again."
[21698002] |The Members know they're doing wrong, but they need help to restrain their darker compulsions.

[21698003] |Arkansas Democrat David Pryor spilled his guts on the Senate floor the other day after he'd joined the Finance Committee's early-morning pork-barrel revels: "I must tell you . . .
[21698004] |I come to the floor tonight as one who ended up with a busload of extraneous matter.
[21698005] |It was nothing more or nothing less than a feeding frenzy."
[21698006] |He was turning himself in.

[21698007] |"Frankly, as I was walking back to get in my car, I heard many, many people . . . opening champagne bottles and celebrating individual victories that some of us had accomplished in getting our little deal in the tax bill and winking at this person for slipping this in," he said.
[21698008] |"As I was driving home, I did not feel very good about myself."

[21698009] |We can applaud Mr. Pryor's moment of epiphany, even as we understand that he and his confreres need restraint lest they kill again.
[21698010] |A good place to start the rehabilitation is a "legislative line-item veto" bill now being offered by Indiana Senator Dan Coats.
[21698011] |The Coats bill, which already has 32 Senate co-sponsors, isn't a pure line-item veto because it would apply only to spending bills.
[21698012] |Instead it's a form of "enhanced rescission," giving a President a chance to rescind, or strike, specific spending items that just go too far.

[21698013] |Under the proposal, a President would have a chance twice each year to return a package of "rescissions" to the Hill -- once when he proposes his budget and again after Congress disposes.
[21698014] |Congress would have 20 days to reject the package with a 50% majority, but then a President could veto that rejection.
[21698015] |Congress would then need the usual two-thirds majority to override any veto.

[21698016] |The proposal would restore some discipline erased from the budget process by the 1974 Budget "Reform" Act.
[21698017] |Before 1974, a President could "impound," or refuse to spend, funds appropriated by Congress.
[21698018] |Presidents Kennedy and Johnson were both big users of the impoundment power, but Congress saw its chance against a weakened President Nixon and stripped it away.

[21698019] |Today a President can still send up spending rescissions, but they're meaningless unless Congress has a guilty conscience and changes its mind.
[21698020] |This is like asking foxes to feel remorse about chickens, and naturally rescissions are almost never approved.
[21698021] |In 1987, President Reagan sent 73 rescissions back to the Hill, but only 3% of the spending total was approved by Congress.
[21698022] |Senator Coats's proposal would let the proposed spending cuts take place automatically unless Congress acts.
[21698023] |The Members could still try to serve their constituents with special-interest goodies, but the police (in the form of a President) would be there with a straitjacket if they really get crazy, as they do now.

[21698024] |Mr. Coats plans to offer his proposal as an amendment to a bill to raise the federal debt limit before the end of the month.
[21698025] |President Bush has endorsed the idea, and at least 50 sitting Senators have voted to support enhanced rescission authority in the past.
[21698026] |We're told Senator Pryor isn't yet a co-sponsor, but if he and his colleagues are serious about kicking their compulsions, they'll sign up.

[21699001] |Business and civic operations lurched back toward normalcy here as congressional officials estimated that the price tag for emergency assistance to earthquake-ravaged California would total at least $2.5 billion.

[21699002] |"That is a minimum figure, and I underscore minimum," said House Speaker Thomas Foley (D., Wash.) after conferring with California lawmakers.
[21699003] |"It's impossible to put an exact figure on it at this time."

[21699004] |The Office of Management and Budget has begun looking into legislation to provide more funds for earthquake repairs.
[21699005] |And California's 45-member delegation in the House is expected to propose that emergency funds be added to a stop-gap spending bill that the House Appropriations Committee is to consider Monday.

[21699006] |For the most part, major corporations' headquarters and plants were unaffected or only slightly damaged by Tuesday's earthquake, which registered 6.9 on the Richter scale.
[21699007] |One of the last big employers in the Silicon Valley to report in, Seagate Technology, said it expects to be back at full strength Monday.
[21699008] |The day before the quake, Seagate completed three days of emergency training and drills.

[21699009] |Echoing the response of almost all big corporations in the Bay Area, Don Waite, Seagate's chief financial officer, said, "I wouldn't expect this to have any significant financial impact."

[21699010] |The city's recovery from the earthquake was uneven.
[21699011] |Banks indicated they were operating at greater than 90% of their usual capacity, but a Nob Hill hotel said tourists had fled, leaving the previously full hotel with an 80% vacancy rate.
[21699012] |City crews tallied the wreckage to buildings, but lacked a clear sense of how gravely transportation arteries were disabled.
[21699013] |Among the city's banks, Bank of America said all but eight of its 850 branches were open.
[21699014] |The closed branches, in San Francisco, Hayward, Santa Clara and Santa Cruz, sustained structural damage.
[21699015] |Power failures kept just seven of its 1,500 automated-teller machines off-line.
[21699016] |Securities-trading operations were moved to Bank of America's Concord office, and foreign-exchange trading operations were shifted to Los Angeles, the bank said.

[21699017] |Wells Fargo & Co. said its Emergency Operations Committee -- which met all night Tuesday -- moved its global-funds transfer system to El Monte, Calif., 500 miles to the south.
[21699018] |Only five of 496 branches statewide remain closed, while 23 of 600 automated-teller machines remained out of order.

[21699019] |The most extensive damage was in small towns near the quake's epicenter, 80 miles south of San Francisco.
[21699020] |Santa Cruz County estimates total damage at nearly $600 million.
[21699021] |Santa Clara County has a running total so far of $504 million, excluding the hard-hit city of Los Gatos.

[21699022] |Oakland officials were still uncertain about the magnitude of structural damage late yesterday; a section of I-880, a twotiered highway, collapsed in Oakland, causing a majority of the deaths resulting from the quake.

[21699023] |San Francisco Mayor Art Agnos estimated that damages to the city total $2 billion.
[21699024] |That includes dwellings in the ravaged Marina district that must be demolished, peeled business facades south of Market Street, and houses in the city's outer Richmond district that were heaved off their foundations.
[21699025] |Many streets and sidewalks buckled, and subterranean water mains and service connections ruptured.

[21699026] |The federal funds would go to a range of programs, including the Federal Emergency Management Agency, highway construction accounts and the Small Business Administration, according to Rep. Vic Fazio (D., Calif.).

[21699027] |FEMA, which coordinates federal disaster relief, is already strapped by the costs of cleaning up after Hurricane Hugo, which hit the Carolinas last month.
[21699028] |It is likely to get as much as $800 million initially in additional funds, and eventually could get more than $1 billion, according to Mr. Fazio, a member of the House Appropriations Committee.

[21699029] |White House spokesman Marlin Fitzwater said there is enough money on hand to deal with immediate requirements.
[21699030] |The Bush administration has at its disposal $273 million in funds remaining from the $1.1 billion Congress released for the cleanup after Hurricane Hugo.

[21699031] |"We feel we have the money necessary to handle the immediate, short-term requirements," Mr. Fitzwater said.
[21699032] |He added that the Office of Management and Budget, the Transportation Department and other agencies are "developing longer-term legislation" that should be ready soon.

[21699033] |Much of the cost of cleaning up after the earthquake will involve repairing highways and bridges.
[21699034] |California lawmakers are seeking changes in rules governing the federal highway relief program so more money can be made available for the state.

[21699035] |Some things can't be repaired.
[21699036] |The Asian Art Museum in Golden Gate Park reports $10 million to $15 million in damage, including shattered porcelains and stone figures.
[21699037] |Its neighbor, the De Young Museum, totaled $3 million to $5 million in structural damage and shattered sculpture.

[21699038] |The city's main library is closed because of fissures that opened in its walls, and marble facings and ornamental plaster at the Beaux Arts City Hall broke off in the temblor.

[21699039] |The ground along the Embarcaderothe street that skirts the city's eastern boundary and piers -- dropped six inches after the quake, wreaking major damage to at least one of the piers.
[21699040] |At San Francisco International Airport, shock waves wrecked the control tower, knocking down computers and shattering glass.
[21699041] |Offices of the city's Rent Board were destroyed.

[21699042] |Mayor Agnos's $2 billion estimate doesn't include damage to freeway arteries leading into the city, some of which remained closed.
[21699043] |A major chunk of the $2 billion is expected to be eaten up by overtime for city workers deployed in the emergency, said a spokesman for Mr. Agnos.
[21699044] |"All of the city's $5.9 million emergency reserve was spent in the first 24 hours" on overtime salaries, he said.

[21699045] |Insurers struggled to to get a firm grasp on the volume of claims pouring into their offices.

[21699046] |At Fireman's Fund Corp., a spokesman said 142 claims were received in the first 24 hours after the quake, and the company is braced for as many as 5,000 claims from its 35,000 residential and 35,000 business policyholders in the affected area.

[21699047] |"Claims range from a scratched fender -- and there were an awful lot of cars damaged in this -- to a major processing plant," a spokesman said.
[21699048] |"We're delivering a check for $750,000 to an automotive business in Berkeley that burned on Tuesday."

[21699049] |Fireman's is part of a $38 million syndicate that supplies business interruption insurance to the city on the Bay Bridge, which must pay employees during the three weeks or more it is expected to be out of service and deprived of toll income.

[21699050] |California lawmakers want to eliminate temporarily a $100 million cap on the amount of federal highway relief for each state for each disaster, as well as a prohibition on using the emergency highway aid to repair toll roads.

[21699051] |In addition, under the highway-relief program, the federal government provides 100% of emergency highway aid for only the first 90 days of a repair effort.
[21699052] |After that, the federal share diminishes.
[21699053] |For interstate highways, the federal share normally would drop to 90% of the cost of repairs, and the state would have to pick up the remainder of the cost.
[21699054] |But lawmakers want to extend the period for 100% federal funding for several months.

[21699055] |Those changes also would apply to two areas hit hard by Hurricane Hugo -- South Carolina and the U.S. Virgin Islands, according to an aide to Rep. Fazio.

[21699056] |Meanwhile, the FEMA announced a toll-free telephone number (800-462-9029) to expedite service to victims of the earthquake.
[21699057] |Lines will be available 24 hours a day to take applications for such disaster relief as temporary housing and emergency home repairs by phone.

[21699058] |Transportation officials are expecting utter traffic pandemonium beginning Monday and growing worse over the next several weeks.
[21699059] |Some 250,000 cars normally cross the closed Bay Bridge between Oakland and San Francisco daily.
[21699060] |Officials say it is clear that alternate routes can't handle the overflow.

[21699061] |The state is calling in a flotilla of navy landing vessels and other boats to expand ferry service across the bay and hopes to add numerous new bus routes and train departures to help alleviate the traffic problem.
[21699062] |Moreover, state officials are urging freight haulers to bypass many of the area's main highways and to travel late at night or during predawn hours.
[21699063] |Even so, "We're looking for chaos," said George Gray, a deputy district director at the California Department of Transportation.
[21699064] |"If there's any way you can do it, you ought to go to Idaho and go fishing for a while."

[21699065] |Most of San Francisco's tourists and business travelers already have left -- despite hotel's offers of rate cuts.
[21699066] |"Everyone left," said Peter Lang, reservations manager of the Mark Hopkins Hotel.

[21699067] |The Westin St. Francis hotel, which survived the 1906 earthquake and fire, currently is less than 50% occupied.
[21699068] |"We still have our die-hard baseball fans," a spokesman said.
[21699069] |"One lady from New York said she's not going home until the {World Series} is over."

[21699070] |Gerald F. Seib and Joe Davidson in Washington contributed to this article.