European Stars And Stripes (Newspaper) - December 11, 1988, Darmstadt, Hesse                                18 the stars and stripes business news Gorbachev gives Dollar Brief boost Culi in the Gorbachev effect. Tic unlikely hero of foreign Exchange markets last week was soviet president Mikhail Gorba Chev whose proposal la Cut soviet military strength by 500,000 men sent the Buck shoaling us High As 1,77 Marks to the Dollar in Jaloma lion at trading. Thai Brief High did l last but the Dollar still managed to finish the week better than it started nut u bad accomplishment considering the beating inc . Currency has taken since Early november. On Friday inc Buck was trading in Frankfurt Wem Germany us 1.7375 Marks and the Mili tary Exchange rate was Sot for monday at 1.72 Marks to the Dollar thai s one pfennig less own the High for the week but it s still better than the Dollar finished a week earlier. Why did Gorbachev s proposal mean a Little More pocket change for americans overseas foreign Exchange traders have been Hammer ing away at president elect go orc Bush since by Randy Mcclain he nov. 8 election to divulge his plan for shrinking America s budget and Trade deficits. Hush has answered Only with generalities so far  last week currency trader decided to devise u budget cutting scenario of their own. The traders thinking went something like this with the Sovil Union reducing troop strengths the Odds go up thai the United slates Mil make military cuts of its own to show Good Faith. And significant cuts in defense spending would be a first step toward getting the budget deficit under control. The problem was that after a few hours of euphoria in the Wake of Gorbachev s announce ment some financial analysts put pen to paper. Thar conclusion if inc United states were to match inc soviet Union s proposed cuts it still would t be enough to put a. Significant Dent in inc american budget deficit. The Busl news for the week was that the Dol Lar s drop from its soviet rebound ended with out the . Currency crashing through the floor. One published report in Frankfurt suggested the Buck will rude Over the next week Between 1.72 and 1.7j50 Marks. The Only thing with the potential to change thai Welcome trend m the Nel few Days will be the release of . Trade statistics Tor october due out wednesday Early indications Are that currency traders expect the monthly deficit to be Between 110 billion and1$ 11 billion this Lime around. One american banker in Frankfurt who spoke on the condition that his name not be used said the medium term Outlook for inc Dol Lar is still bearish More Sellers than buyers but the trading floor for the Dollar right now appears to be about 1.72 50 Marks. I personally doubt the Dollar will fait below 1.70 before year end he said. After thai we just go month to month and Sec what Bush docs on he gets in office the banker said. The world is still concerned about the , Trade and budget deficits. The key thing thai Bush must do is set some sort of policy to give his administration a Little  on another key topic Short term interest Rales in the United states edged up a bit last week but the Federal Reserve Bank remained silent on whether it plans to increase the discount rate the Rale at which it Loam Money to other Banks from the current 6.5 percent level currency traders remain split Over what the fed is Likely to do. Higher interest rates would tend to support the Dollar but some traders Don t believe the . Economy has overheated to an extent thai a hike in the discount rate is  stall jump in payroll costs  in the red by Charlie Bowden Munich Burtrid oarmi5ch, West Germany a 40 percent in crease in payroll expenses offset increased revenues in fiscal 1988 and left the armed forces recreation Cen Ter $2,2 million in the red. The deficit however came As no Surprise to arc management and actually is much less than projected by organization officials for the Chain of bavarian hotels we Hod budgeted to lose $2.9 million and actually lost $2.2 million said arc executive director James Mccryndle. Army and arc officials View the year end figures As evidence that Cost cutting measures Are beginning to work. The army s hold properties at arc and in Hawaii and South Korea were consolidated earlier this year under the Community and family support Center with the idea of cutting costs through centralized Pur chasing hmm . Sources thus decreasing the amount spent in foreign currencies for materials and some food and beverage supplies. However the weakened Dollar continues to play havoc with arcs budget Mccrindle said particularly in payroll expenses. Of All our Deutsche Mark expenses the biggest nut that we Hove to crack is payroll he said. Payroll expenses in German Marks for 1987 were slightly More than $10 million at a pegged Exchange Rale of 2.13, accounting for about 60 percent of the organization s total payroll. Last year that jumped to nearly s1j million or More than so percent of the arc payroll about is percent of the payroll goes to meet Dollar salaries. Also hurting arcs financial showing was a dra Matic number of conference cancellations spurred by a defense department push to trim unnecessary expenses. The three arc recreation areas hosted 206 conferences in 1986 and 231 in 1987, but that dropped to 173 in fiscal 1988, including 71 religious retreats held in . In 1988, Berciles Gadon hosted 57 conferences and 71 retreats and six conferences were cancelled Garmisch hosted 45, but had 35 cancellations. The cancellations Cost arc an estimated $2.6 million in revenues not including spinoff income in food and beverage sales and recreation. Numerous organizations particularly schools and women s groups in the past couple of years have begun holding their conferences at German hotels in Central Germany Mccrindle wants to change that. We have completed a new contract package for next year in an attempt to draw conferences he said. Aside from inc devalued Dollar and the decline in conferences a nearly $6 million Cut in appropriated arc f occupancy of occupied rooms 1 \. N-"1 total incomes Fiora f / i -. R fv84 05 b6 87 88 m m to m 1b 17 16 15 14 13 is 11 fund support Huirt arcs fiscal posture. In 1987, arc received 122.7 million in tax Dollar support but in 1988 that dropped to $16.8 million Mccrindle said. No further cuts Are expected he said but use of appropriated dollars is watched carefully and can Only be used in certain specified areas. For example hotel operations such As laundry and employee salaries must be paid from operating revenues. On the positive Side arc experienced a 3 percent increase in Overall revenues boosted by a 10 percent jump in room rental income and a 3 percent increase in recreation income. Total revenues primarily rooms recreation food and beverage sales increased 16 Jib. 7 million in 1988 from $18.2 million in 1987. Room rental income helped slightly by the re opening of the Chiem Sce hotels for the summer and an Overall Rise in occupancy rates increased to $6.2 Mil lion from 15.6 million in 1987. Overall occupancy rates inched up to 84.8 percent from 83.3 percent in 1987, both notable increases from the 1986 Low of 14 percent occupancy. Car insurance in w. Germany to Rise As result of tax increase by Randy Mcclain financial Wilder car insurance in Weil Germany will be a Little More expensive after Jan. 1 in the Wake of a recent Vole by parliament to increase the Tux levied on both nato and German Tariff policies. Etc Active with the new year the tax on liability collision and comprehensive car insurance goes from 5 percent of a customer s annual Premium to 7 percent. The Cost to the average american service member will Range from 12 Marks to 3s Marks 17 to $20 per year on liability coverage alone depending on the insured person s Rale group said Barbara Man Coly spokeswoman for the Usa eur vehicle registry in Scidel Berg.  \ Man Coly could not estimate How the lax increase will affect the Cost of collision and comprehensive insurance. She said those premiums vary based on Many Falcon including the amount of deductible so thai it s impossible to estimate an average Cost. The bundestag. Or parliament approved the insurance tax hike late last month but finance officials still Are working out some of the finer Points of How inc new Taw will be  Gray area is what happens to customers who agree to a one year insurance policy before Jan. I but whose monthly premiums continue into the new year. As a general Rule nato Tariff rate increases in the past have been levied on such customers Only when they renewed their policy the following year. Whether that procedure holds True with the upcoming tax in crease is anybody s guess. Under German Tariff rules past Rale increases have been assessed immediately even if a customer was in inc Middle of the policy year. Roughly 8 percent of american service member buy German Tariff insurance while 92 percent buy nato Tariff policies Michael Eberhard director of .-nato business for the no Kura insurance Agency in Ober Ursel West Germany suggests anyone in the Market for car insurance in december should pay the entire annual Premium prior to Jan. I to avoid monthly payments that last into 1989. He said that is a foolproof Way of escaping the lax hike for at least 12 More months. But Mcneely declined to endorse Eberhard s idea. She said in was unclear to Usa eur whether paying an annual Premium for 1988-89 prior to Jan. 1 really docs preclude the German government from later As Sessing that customer the extra 2 percent in Tan. Plus annual premiums for car insurance can be exp Sta easily i Soo Marks j867 per year. The 2 percent tax increase comes on the heels of Basic rate increases in both the nato and German tariffs during the past year. Nato rates went up be tween 5 percent and 29 percent for three of five rate groups under the Tariff on Jan. 1, 1988. Rates under the German Tariff increased july i