New Braunfels Herald Zeitung (Newspaper) - October 20, 1987, New Braunfels, Texas
Herald-Ze/fung, New Braunfels, Texas
Tuesday. October 20 1987
Bankers believe market plunge unlikely to push up interest rates
DALLAS IAP) — The stock market’s collapse may have left many In the financial world badly shaken, but it has brightened the outlook on interest rates, banking officials say.
"The Fed is not going to tighten (credit policies) in this environment,’’ Thomas G. Labrecque, president of Chase Manhattan Corp., the nation’s second-largest bank holding company, told a news conference during the American Bankers Association’s annual convention here. “The bias, if anything, may be the other way,” he said. By raising interest rates, the Federal Reserve can signal its desire to rein in economic growth. However, if the stock market continues to fall as it did during Monday’s record drop, that ultimately could dampen the economy, bankers and economists say.
Lower interest rates may also aid the stock market because yields on bonds, a competing investment, would become less attractive and could prompt some investors to buy stocks again, some analysts said in separate interviews.
The stock market suffered its biggest one-day loss ever Monday, with the Dow Jones Average of 30 industrial stocks plunging about 508 points in record-high trading Already, Interest rates have eased somewhat in the credit markets, as investors yanked their money out of stocks in favor of bonds, whose yields have been rising steadily in recent weeks.
Yields on the Treasury’s bellwether 30-year bond tumbled to 9.94 percent Monday from 10.17 late Friday. Short-term rates also fell. The yield on the three-month Treasury bill, for instance, plunged 62 basis points to around 6.50 percent. A basis point is one-hundredth of a percentage point.
William E. Gibson, chairman of the ABA S economic advisory council and executive vice president at Continental Illinois Corp., said economic growth "is certainly not going to change in a matter of hours no matter what’s happening with the Dow "
But he said, “The next issue to be thinking about is
what psychological impact this might have on spending behavior.”
“When the stock market was running high, people felt good about the economy and were spending money. Now, we hope there won’t be a reversal.” he said While most bankers remained generally optimistic about the state of the economy, with many predicting modest growth and inflation and low unemployment, some said they were concerned that the stock market’s drop could shake consumer confidence.
That, in turn, could impact consumer spending and ultimately send the economy into a recession. Banks would be indirectly affected by this trend because it could change the way companies and individuals save or borrow money, they said Interest rates would have to come down to restart the economy. Jay Goldinger, an investment banker for the Beverly Hills. Calif., firm Cantor. Fitzerald & Co., said in a telephone interview.
He predicted that as long as the dollar remained stable, interest rates would persue a downward trend “I think the stock market is responding to the high interest rate levels." said Robert H Dugger, the ABA I chief economist. "It s a technical adjustment to what’s happening in the credit markets.”
The recent runup in the credit market rates also was largely responsible for the rise in banks’ prime lending rates because it pushed up banks' cost of borrowing money and paying interest on deposit accounts On Oct. 8. banks raised their prime lending rates a half percentage point to 9.25 percent However, most banks failed to follow Chemical Bank's decision to raise its key lending rate another half percentage point to 9 75 percent last week, the highest level in more than two years Banking officials at the ABA convention said they had preferred to wait for upward pressure on rates before boosting them As the stock market began its free fall early Monday most bankers took the situation in stride
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Blue chips rally
NEW YORK stocks rallied on Wall Street today, giving signs of recovering from Monday’s historic collapse
The Dow Jones average of 30 Industrials. down 508 points Monday for its biggest loss in modern times, rebounded 113 88 to 1.852 62 In the first half hour today
In the overall tally on the New York Stock Exchange, however, gainers trailed losers by about 4 to 3, with 466 up 627 down and 174 unchanged
Volume on the Big Board came to 62 19 million shares as of IO a rn on Wall Street
Analysts said it was too soon to conclude that the market s recent debacle was over But they said there were encouraging signs that some of investors biggest worries were eas mg
Hospital Lab’s Error Causes Tragic Surprise for Couple
DEAR ABBY: My wife, Kathy, and I are both Jewish, so when she became pregnant in 1985, I took a simple blood test to determine if I was a carrier of Tay-Sachs — a hideous disease that predominantly strikes Jewish children About one out of 30 Jewish adults is a lay Sachs carrier If a carrier marries another carrier, there is a one out of four chance that their baby will develop Tay-Sachs
I was tested at a local hospital and was told I was not a carrier, so since both parents must be carriers in order to produce a Tay-Sachs child, there was no reason for Kathy to be tested
In June 1986, Kathy had a beautiful baby. We named her Abigail She appeared to be a normal, happy baby, but when she didn’t sit up or progress the way-other babies her age did. we became concerned and consulted a specialist His diagnosis Tay-Sachs We were devastated' Abby, our daugh ter will never crawl, walk or speak Instead, she will go blind, become paralyzed, have seizures and die before she is 3, 4 or 5 years old How could this have happened when I was told I was not a carrier ' Our specialist called the hospital and discovered that the lab techm clan had made a simple mathemat leal error' We later learned that the hospital's policy was to only "spot-check their results Meanwhile, we looked into suing the lab, but were advised by several prominent mal practice attorneys that in New York it is not possible to collect damages for "pain and suffering.” We Finally found a lawyer who agreed to take our case, but were told not to expect ' too much.
Abby, no amount of money can compensate for having to watch one s child slowly die, but we want I to warn other prospective parents so this won t happen to them. No one should have to go through the hell we are presently going through You may use my name.
DAVID ASTOR, QUEENS. N Y
DEAR .MR ASTOR: My heart goes out to you, Kathy and your precious daughter. Thank you for caring enough to write as a warning to others.
Readers, be aware that Tay-Sachs has occurred in non-Jewish babies, too — but the incidence is much lower. And in order to reduce the possibility of a laboratory error, the man and woman should be tested twice — preferably at different labs.
DEAK ABBY I appreciated your answer to that letter from “Consid ering Marriage” — the older, impo tent man who was considering what he presumed would be a sexless marriage to a younger woman in a wheelchair Thanks for setting him straight.
My husband has been a paraplegic since he was a teen ager (spinal cord injury), but being in a wheelchair has not stopped him from being the sexiest, most satis f'ving lover a woman could want.
DEAK FULFILLED: To assume that all people in wheelchairs have no sexual feelings and cannot perform is a popular myth that needs to be dispelled. Thank you for validating my atatement.
DEAR ABBY: I felt compelled to write after reading the letter in your
column about how many people had lost their cats in clothes dryers Last week. Adam, our 2 I 2 year old son, crawled into our clothes dryer and pulled the door shut I w as in the next room and could hear him playing contentedly, then I heard the dryer door slam shut Soon I heard his muffled cries for help Abby, that dryer is airtight, and if the radio or dishwasher had been on, Adam might have suffocated before I found him As it was, he suffered only a big scare
I hope you feel that this warning is worthy of space in your column ELAINE WALLAC K. MOUNTAINTOP PA
DEAR ELAINE: I do. And thanks for shouting it from the mountaintop!
(For Abby’* booklet. “How to llnvr a Lovely bedding.” aend a cheek or money order for $2.50 and a long, ••tamped (39 centai, self-addreaaed envelope to: Dear Abby, bedding Booklet. P.O. Box 447, Mount Morris, III. H1054.)
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