European Stars And Stripes (Newspaper) - July 31, 1988, Darmstadt, Hesse                                Page 18 the stars and stripes business news Dollar higher after a hectic up Down week the Dollar closed higher on overseas currency markets during a Rocky week dominated by conflicting economic news and repeated Centra Bank intervention. Despite the  and Downs traders in Frank Furt and London said they believed the Buck will continue to rally in the Short term. Several predicted a new trading Range above 1.90 West Ger Man Marks this week. The Buck began last week higher on the strength of reports that durable Good orders in the United states Rose 8.8 percent in june. How Ever the Dollar tumbled to its previous Levels following word that the . Gross National product grew by 3.1 percent in the second Quarter a rate lower than expected by the markets. We were looking for something like 4 to 4.5percent," a German trader said so that was a by . Kominicki big Surprise. A lot of people started vacating their Dollar positions  the Central Banks led by the . Federal Reserve and the West German Bundesbank exacerbated the Dollar s fall by dumping Dollar re serves in the hectic trading following release of the Gnu figures. Despite the Dollar being forced lower Frankfurt trader said i d say most dealers Are just looking for positive news of any kind so the can get Back in. The Market is definitely still bullish on the  although the Market continued to be wary of Central Bank intervention few dealers believed the Banks could swing the Dollar More than fraction of a percent before the currency re bounded. I saw a report that the Bundesbank s foreign currency reserves dipped by 4 billion Marks in a single week and most of that was dollars on trader said Friday. They were in every Day last week. That s not a Pace they can keep up  based on the Dollar s end of week strength most dealers believed the Buck would break the 1.90-Mark level this week. There was a Lack of consensus on whether it could continue to climb much beyond that Point however. One Frank Furt dealer suggested that investor Confidence in the Greenback would Peak at about 1.95 Marks. Sterling continued to attract investors despite news that the British current account deficit surged to $1.7 5 billion in june. Dealers said the country s relatively High interest rates were the cause of the Pound s continued strength since the higher yields make the currency More attractive to investors. Fearing that an overvalued Pound would Hurt its Trade posture with other european nations the Bank of England repeat edly sold Sterling. The Pound remained Strong however posting a two year High against the Mark. Figures on personal income and consume spending in America released thursday did not seem to Bode Well for the . Trade  americans earned 0.7 percent More Iri june the Commerce department reported the spent 1 percent More of their incomes than in the previous month. Analysts have been looking for . Consumer demand to slow to free up production capacity for Export goods. That s got to happen if the . Trade Gap ingoing to continue to narrow a London trader noted. Although the group of seven Central Bank appeared to be working More in concert in the last weeks several traders said they doubted that relationship is As Strong As when first forged at the g-7 meeting last december. Experts unsure of . Position recession Cycle on expansion new York a the subject comes up again and again is the current economic expansion really 67 months old a lifespan that puts it into the great grandparent age group or is it a lot younger than that perhaps Only a couple of years or so to put it another Way Are we watching a continued uninterrupted expansion Over the past 67 months or was there a break in the record that perhaps for methodological reasons was t officially recorded in Short is it conceivable that we Are watching a Young expansion with room to grow rather than Anold and tottering expansion getting ready for the sickbed Are we watching the grandparent or its offspring a recession which is a break in an expansion is said to occur when the Gross National product de Clines for at least two straight quarters. There is nothing official about that definition it is simply the one most used. By that definition the current expansion began late in 1982 and has continued since then. But not everyone is willing to accept the definition. Timeshare changed maybe the definition should too. Could it be that the country actually Wen through a recession that just was t recorded As such according to some people who spend a lot of time examining such things it in t just possible but probable. To illustrate in late 1986, the Economy was said to be in an expansion Mode. For the nation As a whole the Gross National product was rising an according to the popular concept that meant there was no recession. Examining the breakdown of the National figures however seemed to present a reasonable Challenge to the accepted definitions. The breakdown showed Many industries and Many states doing very poorly and a few doing very Well. The economic numbers from states doing Well mainly on the East and West coasts tended to hide the negative numbers produced in the nation s mid Section by manufacturing mining farming and Oil related businesses. Sindlinger & co., an economic research firm that conducts lengthy personal finance surveys on a Reg ular basis relegated the economies of no less than 31 states to what it says were recession Levels. Things turned around after that however an dearly this year Sindlinger s measurements put Only four states at recession Levels Oklahoma Louisi Ana West Virginia and Mississippi. Meanwhile the new York Economy had declined. The employment and jobless figures suggest something roughly similar an initial economic Advance a slowdown and then a renewed period of strength. Reporting to Congress Janet Norwood commissioner of the Bureau of labor statistics called at Tention to the phenomenon. We have really had three distinctly different stages of employment growth she said. First a Strong initial rebound occurred in the first two years following the 1981-1982 recession. Then we had a two year period of slower More moderate expansion and finally the last year and a half has been a period of Strong  in the past 18 months she said factory and construction jobs Rose considerably and the service producing sector continued to Advance. All major worker groups had lower jobless rates with the sharpest drop among adult men. Other respected analysts also have observed the inconsistency of the expansion. Edward Yardeni of Prudential Bache securities even suggests that deep recessions have been replaced by rolling re  the term is not an empty euphemism but refers to the tendency noted by Many others for one Sec Tion of the nation to pick up the economic Slack of another and for certain categories of industries to strengthen while others weaken. The National statistics might not show a recession or expansion has occurred. But the residents of those areas and the workers in those industries Donot rely on the statistics. They know. Some of them will Tell you that no matter what the Learned folks say about a 67-month expansion they have been through a recession. And for Man of them the economic expansion is Brand new and probably headed for a Long life. Yes the . Is now a debtor nation and some boldly say that s a plus new York a in a strange twist of logic the United states is referred to these Days As a debtor nation attended by All the negative implications that go with such a categorization. The popularity of the debtor thesis arises mainly from statistics that show the value of foreign held As sets in the United states now exceeds the value of . Assets held abroad. The official figures verify the situation. In 1987,americans were said to own $1.1 trillion of foreign assets whereas foreigners were credited with owning about $1.5 trillion Worth of the United states. But say critics of such thinking so what before lamenting the passing of a great financial Power the critics say an application of reason might reveal that what is suggested As an american weakness May very Well be strength instead. Their Contention is that foreigners should indeed be attracted to . Assets since such assets Are a solid investment providing a Good return in the most Politi Cally stable Large nation on Earth. In Short that foreign Money in t Lent to Desper ate americans so much As it is invested in attractive holdings. It in t Money begged to Avert disaster itis Money attracted by Good prospects and rates of return. At any rate says William k. Macreynolds of . Chamber of Commerce the debtor nation idea does not comport with accepted notions of what debt or status  he Points out for example that a common definition of a debtor is that of an entity having negative net Worth owing More in liabilities than is owned in assets. Budget crunched As he is Uncle Sam does t fit the definition. Macreynolds said that All . Assets including corporate equity and Bonds government obligations real estate Bank assets and More amount to $30 trillion. Of that foreigners own but 5.6 percent. He offers still another method of looking at the so called Burden compare it with a year s Worth of in come. By that test he says one year s . Income is More than enough to buy out All foreign assets owners at once. That eventuality of course is implausible. More realistically Only a Small portion of . Income measured by Gross National product is needed to satisfy foreign asset holders in the form of an annual rate of return. Remember what is called debt is really investment. And investors foreign and Domestic expect Only a certain annual percentage a rate of return rather than the entire amount at once. Besides says Macreynolds who is director of financial and monetary affairs for the chamber even if the popular but spurious definition of debtor nation is used the United states still might come out on top. Officially the United states held $1.1 trillion of foreign assets at the end of 1987, or considerably less than the estimated $1.5 trillion of . Assets held by foreigners. But says Macreynolds something does t add up. He asks How it could be that . Investors abroad should earn $6 billion More than foreigners earned Here. His guess is that the total of foreign assets held by americans is greatly undervalued. Rather than the reported $1.1 trillion he says such assets should be valued at More than $1.5 trillion