Show - 2F - MillartIMiWVOniatiw44ALWA41 The Salt Lake Tribune Sunday June 10 1990 Analysts Fear ES Will Fall Off Economic Tightrope By Bob Rast Newhouse News Service WASHINGTON — While many analysts think the nation can skirt awhile longer others believe the juggling act among debt growth and inflation is increasingly risky A month ago financial markets : were convinced the economy was :strengthening and the Federal Board was on the verge of further tightening credit to slow excessive growth that propelled prices up :at an 85 percent annual rate in the 'first three months of the year Now "sentiment seems to have :changed radically" after new data 'showing tepid employment growth in :May sluggish retail sales and an ap'parent slowdown in inflation says :former Fed governor Lyle Gram ley 'chief economist for the Mortgage Bankers Association "Evidently the :economy no longer appears so strong nor so inflationary" The economy still has forward momentum most experts say Wall :Street seems determined to drive the :blue-chi- p Dow Jones industrial stock index over 3000 soon And a majority of 50 economists polled by the Blue Chip Indicators newsletter say the nation is not in a recession now and forecast 2 percent growth for this year and 23 percent in 1991 : But like San Francisco's Marina district where sturdy buildings collapsed when a sudden earthquake Re-'ser- liquefied what had been solid ground concerned analysts say the economy has become extremely fragile Consider Donald Trump Robert Campeau Drexel Burnham Lambert Inc Greyhound Lines Inc and a host of other major players all either bankrupt or struggling to meet payments under crushing burdens of have been pushing Fed Chairman credit as a means of stimulating growth and keeping the economy out of an election-year recession of particular concern is weakness in services which have provided most of the new jobs and powered economic growth over the past decade In 1989 service businesses created an average 200000 jobs a month the Labor Department says So far this year services have added an average of only about 85000 jobs per month excluding census work- Cracks are appearing in the record peacetime expansion now in its 90th month causing some analysts to talk of a possible recession Some experts on Wall Street say Congress and President Bush must reduce the budget deficit even if it means higher taxes or the economy could take a dive GNP Growth Weakens Jobs Slump Manufacturing 197 million I 1-- 7 1 1-1 196 NNW manlij:DiaDcsturingillh million 1111111111111111111111 Jan Jilin '89 Source: Labor Department Wyss sees no sign of imminent recession but adds "I'm jittery there's reason to be nervous" Because of the sluggishness of :iiz:77??t7::: 7' 4'N't NI MIN MO MN IN Apr '90 '4o' '':'''::t::?'fP"--eel- i'':: q) : some of the economy's major players The high-yiel- d junk bonds that financed Trump's three Atlantic City this week on news casinos that the real estate and gambling mogul faces a cash liquidity crisis and may be forced to sell his assets to survive Strike-battere- d Greyhound the country's only remaining nationwide bus company filed for protection under Chapter 11 of the bankruptcy code Monday Greyhound lost $56 million in the first quarter and has missed more than $17 million in in nose-dive- d t e W ' - '" 4 ''' By Valerie Reitman t:'::: ' ''' f 1 4: :'' 1$ -:- : tiP : ' the :' fst:4::'-:::- ' tt :::: :iiMi'4' :' 1 :::: :::')''14:-i- i it: 4t :' 1A:1::1-:!0 ri: '4:k :::-- hand-hel- computer will d house the of the Concise Columbia Encyclopedia that weighs in at five pounds in text form Franklin Electronic Publishers Inc the Mount Holly Pa maker electronic-reference of hand-hel- d products introduced an electronic edition of the Concise Columbia Encyclopedia at the opening of the Consumer Electronics Show in Chicago last weekend Franklin says its $299 electronic encyclopedia won't land on retail shelves until January While the company doesn't have a working model available yet Franklin says the device will work much like the electronic Bible it introduced last year which can search for specific verses or words in the Old and New Testaments If you enter the word "poison" Franklin says the electronic encyclopedia will respond on a small screen first with a list of poison ivy sumac and oak then a list of 920-pag- ::::::: f'S 1 er 55-inc- ' :::: ::::A :::14 t:''':::b Newspapers The people that brought you the battety-operate- d Bible are bringing forth an electronic encyclopedia that fits 20000 entries into the palm of your hand h In its body Knight-Ridd- Itif04:50: - t!:i7 0000 A ' ' F" ) 0 r'o 0 (73 1 !14 (1) I 00 i p t -' ' 4 F-- media-motorcycl- ': VN Continued From 1 ago went totally unrecognized by the Hurricane branch manager of the Salt Lake bank from which Mr Tagloan of gett futilely sought a start-u- d t iT144 ''''''''46h:iNumataiV- ::::1re"::':ii::'::::::::ill!1:!°: 7 Chums Empire Blossoms Like a Rose hand-drafte- I litoiF4:::'''''''""' i'1 i ::-- A "friend of a friend" finally put up $10000 Mr Taggett produced a relatively sophisticated prototype which he named "Chums" in honor of a friendly Labrador retriever named Chum ley (The first name he had chosen had been JERCS "Just an Eyeglass Retention and Comfort System") He leased half a booth at the sports trade show in Las Vegas In a neighboring booth was Swiss manufacSwatch a start-u- p turer of colorful quartz watches designed to compete with Japanese products Swatch's representative was enchanted by the Chums Two weeks later Swatch put in an order for 290000 to add to its accessories lines It wanted delivery in four months Mr Taggett in no way prepared to produce 290000 Chums in four months agreed to the order nevertheless and dared to ask for an upfront payment of $100000 To his astonishment a d check for $100000 from Swatch came in the mail It was enough to get a St George-basesewing factory to produce the requisite number in time Mr Taggett took the $100000 check to the banker who had rejected his $5000 loan application and — with great relish — asked the banker if he could possibly accommodate it as a deposit Needless to say Mr Taggett now transacts business with a competing bank in Cedar City "They serve me very well" Chums has been presented as a model of what can happen in rural jobs development Earlier this year it competed negotiations with Deseret Certified Development Co Salt Lake City a Small Business Administration agent for financing of hello Wear That included a working capital loan of $225000 from First Security Bank and a Farmers Home Administration loan of $200000 Mr Taggett owns 75 percent of the firm A "silent partner" who provided critical capital owns 25 percent Mr Taggett has packed much into his 34 years Born in Madison Wis he attended elementary school in Tucson and kigh school in Colorado He spent his junior year in Switzerland He studied liberal arts at the Uni- v ersity of Arizona graduating in Latin American studies : He has traveled much abroad and was on the Peace March in the Soviet Union four years ago A picture of “Gorby" is on one office wall His dreams of being a bush pilot in Australia went unrealized but he does own and fly his own plane His most recent model now is the late mogul Malcolm Forbes whose balloon conquests and Harley tours of China and the Soviet Union much impressed Mr Taggett '1 ::1:! Hi::4: d:':4: ok :::l under li:::I::::t1plegAzJ'H- E ci ': -- ()110 t'1 :i::::::4!::e40 c4 l ty dt : cb ': - i 0 t(:) :: sanommortolyal '':::T04A:'' —United Press International Jill Gold shows off the first electronic which was unveiled by Franklin Electronic Publishers June 2 at a Chicago trade show edi- tion of the Concise Columbia Encyclopedia way Builders "are being indiscriminately cut off from the credit markets" complains Martin Perlman president of the National Association of tIomebuilders "Production is dropping people are losing their jobs and businesses" Many American homeowners are skating on thin ice Deflating real-estavalues in some parts of the country notably the Southwest and Northeast are creating a surge in mortgage foreclosures which stood at seven per 1000 loans outstanding last year down from a peak of nine te per 1000 in 1987 slowdown triggered by even a modest recession could send the foreclosure rates up by 10 percent to 50 percent in coming years according to a survey released last month by Moody's Investors A real-estat- e Electronics Company Puts Encyclopedia at Fingertips 1 :'1 MIN Mil 11111 putting it in default on financial agreements On Jan 15 Campeau's Federated Department Stores Inc and Allied Stores Corp defaulted on billions of dollars of debt after failing to generate enough profit to meet interest obligations Drexel Burnham one of Wall Street's biggest investment banks went belly up when the high-yiel- d junk bond market it pioneered to finance corporate takeovers collapsed and swallowed its founder In all an estimated 735000 debtors 90 percent of them individuals will file for bankruptcy this year Federal officials project that number will rise to 890000 by 1992 even 'Ae' t:'::'::: ::::!::1A Economist Albert Sind linger who conducts a weekly nationwide telephone poll to get firsthand information about how businesses and consumers view the economy says a "credit-crunc- h recession" already is terest lease and principal payments There are signs that weak corporate profits squeezed by a combination of high interest rates and rising labor costs are beginning to test 'fi4: tr:11 AA4 baato"' t! '''Nv a r''''' gr"--' '' ' :':i": my" NOM IN NUN ME NHS NNW NI 1 st 1 sit 41thl at qtr qtr qtrqtr 87 '88 '90 '88 debt v r!!iw'-- Wird' Source: Commerce Department Korren Loeb Newhouse News Service growth in the near term "the economy remains vulnerable to outside shocks" says Nariman Behravesh chief economist for the WEFA Group a Bala Cynwyd Pa consulting company Debt levels are extraordinarily high considering the record period of peacetime prosperity "Credit expansion in the current recovery at the household corporate and federal levels is tracing the same pattern" as in some earlier financial crises says John E Silvia vice president and economist at Kemper Financial Services Inc in Chicago Despite a reasonably strong economy "the financial system is characterized by undercapitalized banks and failing thrifts" maturely" 1 2 IIIIIMMINNIMME NM& pow IMILVM I 194 193 GNP percentage change from previous quarter (constant dollars) MM I 3 MI OM b"111111101Pli 111251111 million million yr I 5 4 NUM 195 111111111111 With services growth slowing and manufacturing activity soft some analysts believe economic growth in the April-Jun- e period could slide below a 1 percent annual rate "The economy looks increasingly unbalanced" says Donald Straszheim chief economist at Merrill Lynch and Co He had been forecasting a growth rate of 27 percent for second-quarte- r GNP but "now that looks too high" With growth slowing "the real danger is that the Fed makes a mistake that it eases but we don't get a recession" and inflation takes off again forcing sharply higher interest rates later in the year says David Wyss chief financial economist for Hill consultants The odds of that are small because Greenspan and other Fed policy-maker- s are "in a mood to keep policy tight" Wyss believes But "they are getting pressure from the White House and it is possible they could yield to that pressure and loosen pre- real-estat- 1 6 111111111111111 million er s And employment figures for May showed the number of non-farjobs fell by 34000 over the previous three months after excluding temporary census workers For the Fed the economy's sluggishness is probably welcome Gram-le- y says Weaker growth should ease inflationary pressures meaning the central bank doesn't have to crack down by boosting interest rates But the worry is that growth could slow too much a concern expressed by Bush administration officials who if the economy steers clear of a recession Meanwhile banks savings and loans and other lenders are becoming reluctant to extend credit to all but the soundest risks A recent Fed survey of 300 banks showed a widespread pullback by lenders across the country e The industry is "already dead" says Wyss noting that "a credit crunch is one thing that does have us worried "If it gets worse and starts to spread outside of construction to other commercial loans that could be a serious problem for the econo- Economy Heading for a Slowdown Alan Greenspan to loosen liquid poisons followed by a list of names of famous people who have died from poisoning such as Socrates If you punch in "Einstein" it will turn up a short biography of e the scientist then the entry for his theory of relativity and quantum theory Or you could search for the longest river in the world and come up with the Nile "The electronic encyclopedia's ability to provide intelligent answers at high speed will make it an essential tool for students researchers and businessmen" said Morton E David Franklin's president and chief executive Franklin will pay Columbia an undisclosed advance against future product royalties said James Raimes editorial director of the reference-boosection of Columbia University Press in New York which publishes the encyclopedia The entries in the Concise Cocross-referenc- k lumbia Encyclopedia average about 60 words each "Being concise is a real virtue in this' electronic form Raimes said "The Encyclopedia Britannica would not be appropriate" Franklin could use an infusion of money after a turbulent fiscal 1990 Abandoning Sinking Ship? UAL Buyout Challenge Lured C hrY sler's Heir Apparent By Frederick Standish AP Auto Writer DETROIT — When Lee Iacocca hired Gerald Greenwald to help him rescue Chrysler Corp from collapse it began with a discreet phone : wald's home in Caracas Venezu- - where he worked for Ford Motor Co More than decade later similar secret a a of- - fer confronted He has tremendous talent with banksaid Jerry H Pyle a former Chrysler executive who now is president of Gulf States Toyota in Houston "Mr Iacocca handled the Feds and Jerry handled the bankers and I'm not sure he didn't have a tougher job than Lee did" Pyle said In Greenwald's tenure with Chrysler he established himself as a careful deliberate diplomatic and complement to Iacocca the scrappy chairman of the No 3 automaker Greenwald is considered largely responsible for imposing the finan- ers" call to Greenela ment to provide $15 billion in loan guarantees "I could not think of anybody better suited to put together the awesome financial arrangements that the buyers of UAL are trying to do - tatk jt Greenwald again only this time a Gerald Greenwald UAL Corp union coalition was making the surreptitious contact luring the Chrysler vice chairman with the job of leading its effort to buy the airline company for $454 billion Why Greenwald vacated Chrysler especially at a time when its financial health again appears to be sliding dangerously may be debated for a long time Greenwald and people who know him say he was lured away by the enormous challenge of carrying off the UAL buyout a deal that would result in the largest employee-owne- d company in the country — if successful "Hero I am having a second chance to go through a major industrial event in American history" Greenwald said when he made the surprise announcement May 31 that he was quitting Some auto industry people familiar with Greenwald who spoke on condition of anonymity said they're skeptical about his chances of assembling the financing needed to purchase UAL which has seen several debt-finance- d earlier buyout proposals fall through The current climate of tight credit won't make it any easier for him to meet an Aug 9 deadline for raising the money But others said that if anyone can coordinate the UAL effort it is Greenwald His calm and reassuring manner was critical in winning the confidence of skeptical lenders to Chrysler in the early 1980s and helped convince the federal govern soft-spok- cial discipline that resurrected Chrysler's profitability and made himself and Iacocca wealthy in the process The two men could hardly be more different Iacocca 65 is a profane flamboyant engineer and the son of Italian Catholic immigrants Greenwald 54 is son of Russian Jewish poultry wholesalers He grew up in St Louis attended Princeton on an Eagle Scout scholarship rose in the auto industry as a financier and is known to think carefully before making any important move "Iacocca was bombastic" one former Chrysler executive said "Jerry would examine ideas all the way to the obvious A lot of times he would take the more obtuse direction He was very much solicitous of the opinions of other people But he would come to the point of having examined this whole thing and say 'OK this is the way we should go'" Despite their contrasting styles both men developed a warm friendship and Greenwald widely was considered lacocca's likely successor But Greenwald always treated the talk about taking lacocca's place with modesty "I don't think anyone is going to step into Lee's shoes and walk the way he does" Greenwald once said Greenwald's early experience in the auto business may have helped him prepare for his tenure at troubled Chrysler which lost $11 billion ll g h in 1979 and $17 billion in 1980 His first job came with Ford in 1957 as a personnel administrator for a new division called Edsel It collapsed in three months Greenwald later recollected: "I wondered how I could have done so badly so Despite the close relationship that developed over the next decade speculation persisted about the succession question at Chrysler The question was compounded by Iacocca's vague plans about retirement and the financial backslide in recent years "Clearly there was some kind of a battle shaping up over there" a former executive said "There is a certain amount of satisfaction and adrenalin that goes into the kind of situation that he and we all had at Chrysler — putting it all back together and making it succeed "Once you've done that then it didn't work out too well it's time again" Some people familiar with Greenwald speculated privately that he was excited at the prospect of going into a new industry and defying the skepticism that a large employee-owne- d airline will succeed "I think he figures he's got a better Iacocca-Greenwal- auto-maker- 's soon" But his career fared better than the Edsel He moved into financial analysis and by the late 1960s was concentrating on Ford's Latin American operations The company promoted him to management positions in Brazil Paris London and Caracas over most of the following 10 years It was a life of workdays and regular upheavals for wife Glenda and their four children 12-ho- household-movin- d downon-your-- g knees Greenwald liked life abroad but the prospect of rising further in Ford's hierarchy remained unclear So the phone call from Iaccoca in the spring of 1979 offering Greenwald a quantum leap in stature wasn't chance of doing that than taking over an unhealthy Chrysler Corporation and making it work" one former Chrysler official said Greenwald isn't considered extravagant or publicity hungry and is known for quiet demonstrations of generosity For example he set up a college scholarship program for 50 s in the public schools of University City Mo where he grew up It could cost him $775000 if all go on to get undergraduate degrees Greenwald's wife who established an independent writing career while the family was abroad founded and runs the magazine Michigan Woman It appears there will be no immediate changes in her professional life while her husband jets from home in the Detroit suburb of Bloomfield Hills to UAL's base in Chicago and to New York where lies much of the money he seeks "We jokingly say if you've got to commute" Greenwald said "have one of the spouses run an airline" fifth-grader- Week's End Market Data MetalsComniodities 060 Thu Seiec fed world sToid lake $354 apF'OCI7 bona $353 60 up SO 80 Landon afternoon fixtv2 $353 50 up $O 70 London kale $354 $0 up SC 35 Pans afternoon Ming $357 97 up $636 Non Stye Ming $353-7up $O 04 Zurich icee afternoon $354 00 up 5100 $354 50 asked NY Handy & Norman $353 50 up $O 70 NY Envethard $354 75 up $O 75 NY Enpeihord Mbrocated 6372 49 up SO 74 NY Comes gold spot month close Ina t354 60 off $2 80 NY RePutec Notional flank 4 pm Mu $353 60 off 5315 iiitona rnornmo O L Welt NW YOSet tAP) — Handy & Norman Stem Fftlav vous S5 010 up 0 0 tO Me paean pnce to tIve octets in London was $5 0125 $0 0255 $5040 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