European Stars And Stripes (Newspaper) - October 23, 1987, Darmstadt, Hesse                                Friday october 23, 1967 the stars and stapes Baker rapped for Market Deane Washington a Treasury secretory James a. Baker Iii who a few Days ago was saying lax Happy democrats were to a Tam for the Stock Market s woes. Is coming in Tor criticism himself for what Many economist believe was Loose talk about the Dollar at a time of Market instability. While economists were not placing sole blame on Baker Many of them said wednesday that the Treasury Secretary s comments increased investor uneasiness at a Lime when the markets were most vulnerable. Baker s comments were one of the major causes for the dramatic decline in the Stock Market said Tom Megan an economist with Evans economics a Washington forecasting firm. It definitely contributed. We had a crisis of Confidence in the markets and the Baker German confrontation was certainly a part of it said Allen Sinai chief economist of Shearson Lehman Brothers. Baker s error in the View of Many economists was pressing too hard publicly in his attempts to gel the West germans to Roll Back recent interest rate increases in their country. Late last week and again on sunday in a televised interview Baker criticized West Germany for nudging up Shon irm interest rates. Such credit lightening Baker said ran counter to the so called louvre Accord the agreement signed in Paris last february by which the United states. West Germany France Britain Canada and Italy promised to stabilize currency rates. Baker warned on Sun Day thai the United slates might favor further de Clines in the . Dollar Baker Pinsi the Mark unless the West germans relented and cased their credit policies. Baker in the appearance on Abc s meet the press also suggested that the democrats work on Tan increase proposal had helped fuel a big drop in the Stock Market at the end of last week. Higher business taxes were among Hose the democrats considered. How could a Tiff Over German interest rates contrib Ute to i record shattering sos Point decline in the . Stock Market in the View at Many economists the explanation goo like this by signalling that the Reagan administration was willing to let the Dollar decline farther it raised fears among investors that . Interest rates would have to Rise in order to continue to attract the foreign borrow ing the United slates has grown dependent on. A weaker Dollar translates into higher interest Rales because foreign investors demand More of Premium for placing their Money in the United Stales during periods when the . Dollar is being devalued. The Specter of higher . Interest Rales rated fears that the country would be pushed into another recession As Consumers and businesses found it costlier to borrow Money worried investors thus chose to dump their Stock holdings and re real into safer havens for their Money such As government securities. Nobel Winner Solow Calls for tax increase Cambridge. Mass. A Massachusetts Institute of technology economist Robert a Solow win Ner of the 1987 Nobel memorial prize in economic science greeted the press wednesday with the same irreverent wit and Candor that have made him a favor Ite of students at the school of it happens to everybody i guess said Solow of the 6 30 . Telephone Call he received from swed ish officials notifying him of his prize. I was More or less asleep with my wife i want you to  Solow is widely recognized As an expert in mathematical economic theory the theory of capital and growth macroeconomics and the economics of natural resources. The specific work for which Solow was cited by the Nobel committee is 3d years old a mathematical formula that described How increased capital Stock generates greater production per capita. Ranked by Mit professor and 1985 Nobel Winner Franco Modigliani 69, Solow hesitated when barraged with questions about monday s Stock Market crash and its Impact on the Economy. One thing i managed to do this morning was talk to my kids and my son John who s also an economist told me just Don t say anything stupid about the Stock Market " Solow said. Solow said he does not believe the Market crash will trigger any immediate financial collapse or widespread depression. But he warned that the Economy is bound to slow Down and he sharply criticized the Reagan administration for refusing to raise taxes to reduce the National deficit. The Best thing you can say about reaganomics is that it probably happened in a fit of inattention he said. I would like to see the president Slop this non sense about How i will never raise taxes Over my dead body.1 " Mit economist Robert m. Solow. App Ala Market roars Back gains 186 Points new York up the Dow Jones Industrial average soared a record 186.84 Points in heavy trading wednesday As buying by Large institutional investors helped the Stock Market extend its recovery from Mon Day s sos Point plunge. The Dow climbed 186.84 to 2027.85, according to an unofficial tally toppling a Day old record climb of 102.27, Large institutional investors returned to the Market bargain Hunting for stocks that were battered in the decline that began last week and culminated in Mon Day s plunge. Unlike tuesday when the Dow s Rise occurred with out parallel advances in smaller stocks advancing is sues led losers by a 1,748-211 ratio among the 2,070 issues crossing the nose tape. The nose composite Index Rose 11.98 to 145.02, while Standard & poor s soc Slock Index surged 21.55 to 258.38. The Price fan average share jumped s1.05. Big Board volume totalled about 449,4 million shares the third heaviest trading Day Ever. But activity was relatively subdued compared with the record 608.1 million shares traded tuesday. After a rive session drubbing prices on the Ameri can Slock Exchange and Over the counter finally got Relief rising sharply in heavy trading. The american Stock Exchange Index Rose 23.81 to 281.97 and the Price of an average Ames share climbed s 1.0. The National association of securities dealers composite Index soared 24.07 to 351.86. Clearly this was a helpful Day said John Connolly head of the investment policy committee at Dean Wilder Reynolds inc. Nol Only Aid we have a Bounce in prices but we had a return to stability in a lot of  the Dow soared nearly 200 Points in the 90 minutes of trading on buy orders from foreign and Domestic bargain Hunters it held gains of 159 Points to about 200 Points throughout the Day avoiding the backsides that marked tuesday s session. Analysts said contributing to the Market s ability to steady itself has been the virtual absence of program trading. Asil did tuesday the new York Slock Exchange wednesday asked investors executing trades linked to Stock Index futures and options not to use the big Board s automatic order routing systems. On the trading floor at to led the nose Lis cd issues rising 2% to 291/. General electric followed rising 5k Losovs. Only iwo stocks in the Dow Industrial average declined. Bethlehem a Eccl slipped m to 12ft. United technologies dropped Vilo 39vt. Its Prait & Whitney unit lost a bid to Supply aircraft engines to Japan air lines. Texas air Rose in to is. Leading the actives on the american Stock Exchange. Ames volume totalled 34.6 million shares compared with 43,430,000 tuesday. Gainers led Losera 74i-i5b among the 976 issues traded. Fed eases Money in move to save off recess on Washington a the Federal Reserve moved again wednesday in an apparent further Effort to provide easier Money to the nation s Banks As president Reagan voiced optimism thai the recent Market Lur Moit would not spread through the econ omy. As the Dow Jones Industrial average rebounded for the second Day in a Row Reagan called the historic collapse in Stock markets some kind of Correl  when trading closed on wednesday presidential spokesman Martin ii Waier said we re pleased it s coming Back. We think in shows optimism and strength and we Hope the trend  at the same Lime lop administration officials conferred with congressional leaders in an attempt to strike a budget Compromise an overture that analysis said was helping to Calm frenzied markets. Both the fed and the administration appeared to be pursuing a course designed to minimize the dam age from the Market chaos of earlier in the week and to keep it from snowballing into a recession. With the administration lying Low and making conciliatory gestures toward Congress the focus on wednesday was clearly on Federal Reserve chair Man Alan Greenspan analysts suggested. Economists and Bank officials said the fed apparently injected new Cash into the nation s financial system in late morning. Wednesday s fed action according to analysts drove Down the Federal funds Rale the key rate that Banks charge for Short Terra Loam to one another to Between 3 5 and 6 from the 6v rate of late tues Day. That represented a further fall from the 7 i per cent rates of monday