European Stars and Stripes (Newspaper) - February 18, 1990, Darmstadt, Hesse                                Page 18 the stars and stripes business news Buck s path try checking Horoscope the currency Market is a lot like astrology. Every Day the traders Wake up and Lake a new Reading on  ices than flattering appraisal of How the value of dollars. West German Marks and other currencies arc set by worldwide trading comes from or. My gonad Ducsai. A London economist. Ducsai s Point is Well taken. Currency traders who determine How much change jingles in the pockets of americans living overseas Nave Short attention spans. Their decisions about when to sell dollars and when to buy them Are based As much on Rumor and Guesswork As economic facts. A recent example that proves Ducsai is right on target is the switcheroo that Many currency Trad ers have pulled in the past week when evaluating the future strength of the Mark. Since the Berlin Wall collapsed last novem Ber currency traders and most investors have carried on a mad love affair with the Mark. The West German currency gained nearly 20 pfennig against the Dollar Between the fall of the Wall and Early february. The Dollar seemed mired below 1.65 Marks. Then along came the announcement by West German Chancellor Helmut Kohl that he was in favor of immediately making the West German Mark the currency of record in East Germany As part Ofa spec ded up Ger Man reunification.  germans will probably soon be Able to Swap Randy Mcclain tired Eastern Mark for the More powerful West Mark perhaps at a act favourable on for on Exchange rate. The Kohl government will print the Money to finance the , currency traders arc nervous. The View that the West German economic engine is an unstoppable Force capable of saving the East bloc is falling out 9f favor. The new conventional Wisdom is that rebuilding East Germany will mean inflation and higher Federal taxes in West Germany. Currency traders Aren t enamoured with the Dollar but they Are aware of a Subtle change of opinion Selling in across West Germany. Ger mans arc starting to worry about How their pock a books will be affected by All this. As Long As it did t Cost a lot of Money peo ple were quite Happy about reunification said Petra Oil. A financial analyst with Citibank in Frankfurt. West Germany. Now she said it s becoming Clear that a lot of Wesl germans sex Peel to pay higher taxes to get East Germany Back on its feel. The mood of Ordinary West germans has  she said. Those winds of change started to have an Impact on Dollar Mark Exchange rates last week. On thursday the Buck Rose by almost two pfennig. It jumped from roughly 1.675 Marks to1.6945 Marks on the Day. Some analysts started talking about the Dollar peaking at 1.80 or 1.90 Marks in the next few months. The military Exchange rate for us. Service members was set at 1.66 Marks for the  represented a gain of two pfennig on the week. Then along came a Batch of mixed . Eco nomic news late Friday afternoon in Europe that took some wind out of the Dollar s sails. On the positive Side the . Department of Commerce reported thai America s Trade deficit shrank by $3.1 billion in december to reach $7.2 billion the lows so monthly level in five years. That helped inc Buck la shot above 1.70 Marks on the news. But the rally did t last. A few minutes late word came Hal . Industrial production fell by a whopping 1.2 percent in january and factory use also was Way Down. Both numbers Indi Cate economic weakness. The Dollar slipped Back below 1.69 Marks. Where s it headed next Check the stars. Bush s tax free savings plan a Good Deal experts say by Mary Rowland new York times no matter How you look at it the tax free savings plan proposed by president Bush beats any Type of tax advantaged account available to americans today tax experts say. The plan designed to bolster the nation s savings Rale would allow most people to escape taxes on the earnings of Money that is saved or invested for at least seven years. Another plus is that the Money could be spent for any purpose not just set aside for retirement. Bush wants to allow american families with adjusted Gross incomes of up to $120,000 to put $5,000 a year in a so called family savings account. Individuals with incomes of up to $60,000 would be allowed to contribute $2,500 a year. This plan comes out head and shoulders above Anira said Barbara j. Pope head of executive Finan Cial services at Price waterhouse in Chicago. You have almost unlimited investment choices and. Psychologically people will feel a lot less locked  one problem is that people who earn More than $ 120,000 arc not eligible for this plan. But those who do qualify will find that the plan beats current options like inc deductible individual retirement account the non deductible Ira. Annual is and 40l k plans chiefly because it would offer taxpayers a tax free account rather than a tax deferred account. A deductible Ira allows Middle class taxpayers to deduct up to $2,000 in annual contributions from inc current year s taxable income the non deductible Ira provides no tax deduction tax deferred investments like iras and annuities allow your Money to grow without an annual bite for taxes. But once the Money is withdrawn you must pay Taxon it. A tax free inv colment by contrast lets you off the Hook forever. Under the Bush plan however earnings on Money withdrawn in the first three years would be subject to tax and a 10 percent excise tax and earnings on Money withdrawn Between three and seven years would be taxed As Ordinary income. The Only tax free investments currently available Are municipal Bonds which Are paying about 7 percent interest. But Money in a tax free savings plan could be in vested in the Stock Market Mutual funds Bonds or virtually any thing you choose. If you look at the returns on some of the Mutual funds and assume that those returns would be Avail Able Over the next five years and you would not have Topay tax on Ihm that would be very very attractive says William g. Brennan partner in the Washington office of Ernst & Young. For Many younger people the chief Appeal is that the Money need not be locked up until retirement to provide tax free earnings. In contrast Money deposited in iras 401 k s and annuities is intended for retirement. If it is withdrawn before age 59w, taxes and a 10 percent Penally arc due. There is a Clear advantage to inc Bush plan when a $2.000 Deposit is invested for seven years at 8 percent. But when it is invested for a longer period inc re sults favor the plan even More dramatically. The Lack of lax  for an Ira account is nol As important As Many lamp Ayers believe said Wil Liam Henkel vice Percsi Donl of Merrill Lynch consumer Mark is mainly because tax Reform has lowered marginal tax rates. When inc Ira was first conceived the top Margi Nal Rale was 70 per cell he said. In 1982, when the Ira became available to All work ing americans there were 14 marginal brackets with a lop Rale of 50 percent if you were in the 50 percent tax bracket you Cut 50 cents off your taxes for every Dollar you contributed to an Ira. Bui Loday there Are Only three brackets with a lop marginal rate of 33 percent and As a result a lax a Duclion is no longer As valuable. Committee to relax Trade rules on High tech exports to East bloc by John Phillips Paris up Western nations. Japan and austra Lia have agreed to ease Rusl Rillions on High tech exports to Czechoslovakia. Hungary and Poland but not necessarily to the soviet Union. The three emerging democracies in inc crumbling East bloc will nol receive As much preferential treat Mcnol As China does though because of their continuing military tics to Moscow  officials familiar with the decision said. The agreement was reached in the past week by the coordinating committee for multilateral Export controls which periodically meets in Paris. That group is comprised of 17 nations including the United slates and most of Europe. It also decided to Cut from 12 to eight weeks the time required for approving Western exports. Many Western firms have been critical of the time it takes Cocom to say yes or no to the proposed Sale of sensitive technology to East bloc countries. Cocom Isnow committed to working faster and one american official said Hal commitment extends to reviewing Trade with the Sovil Union. Technical experts from nations participating in Cocom will Start this week on an intensive Stream lining of its list of products blocked from Sale to the Easl. Much of the merchandise is considered risky because of possible military applications one . Source said. The experts recommendations on which  can be eased to Czechoslovakia Hungary and Poland will be presented for formal ratification Al the next Cocom High level Memling in May officials said. The review will be in the three major areas computers telecommunications and machine tools thai make up Over half of the Cocom s list of exceptions the . Sources said. A proposal by France an West Germany to include civil aviation technology in the review was dropped due to american opposition. . Delegates also succeeded in fending off Strong pressure from european nations to add the soviet Union to the countries that would receive preferential treatment in the three categories of products Delegate sources  governments of Czechoslovakia Hungary and Poland approached Cocom in recent weeks to seek the relaxation of Trade restrictions. The nations have pledged to in Roduco safeguards against the use of Shenew technology for military purposes. On site in spec lion by Cocom members will Likely be part of inc safeguards a . Official said. Merchants to expand direct Bill payments Frankfurt. Wesl Germany is beginning in March service members with savings accounts at March Anis National Bank will be Able to have Auto Matic withdrawals set up for payment of rent Tele phone and Utility Bills. Up to now direct payment was possible Only from merchants checking and now accounts. Paying Bills automatically will certainly reduce time spent in Bank lines for those customers who have Only savings accounts a Bank spokesman said. Customers won t have to stand in a Teller line to Exchange dollars for local currency stand in a second line to actually pay the Bill or worry about Bills not being paid while they Are in the Field on toy or on  a local of three Bill payments May be set up in conjunction with each savings account. Customers can make arrangements directly at the Bank to pay Bills such As rent or others that Are for the same amounts every month. Automatic payment of Utility Bills or Telephone charges which can vary in size each month must be initiated by filling out paperwork with the local Utility company or West German Bunde Spost