European Stars and Stripes (Newspaper) - May 13, 1990, Darmstadt, Hesse                                Page 18 the stars and Stripe business news m Randy Mcclai dismal Dollar May hit new postwar Low the Dollar continued its tailspin last week tumbling live pfennig against the Mark in As Many Days and some speculators think it May be headed for a new postwar Low. A pair of economic reports on Friday that retail sales in the United states fell a surprising 0.6 percent in april after a Small dip in March As Well As a Sharp drop in wholesale prices for the month added to the Bucko a woes. The retail sales figure was seen As particularly dismal because consumer spending accounts for two thirds of total economic activity in the states. The 0.6 drop in april was the biggest decline in six months and the first time in More than three years that retail sales have fallen two months in a Row. Julian Callow an International economist with Chase investment Bank in London said fridays news May be too a. Much for the Buck to recover from a at least for several months. A this suggests that the Dollar is in for a weaker phase than we be seen so far this year a he said. . Growth is very sluggish at the  Callow said there seven a Chance the Dollar could slip to a postwar Low against the surging deutschmark. The Buck is already at its lowest Point since year end 1987, and it does no to have much farther to go to tie its All time Low of 1.58 Marks set in december 1987. On world currency markets late Friday the Dollar was trading in the neighbourhood of 1.63 Marks. I he military Exchange rate in Germany was set at 1.60 Marks Lor the weekend based on a mid afternoon Price fixing in Frankfurt. That rate will hold at Community banking facilities until monday afternoon. Callow said most currency traders arc now betting that the Bush administration will step up pressure on the . Federal Reserve for a Quick Cut in interest rates As a Means of jump starting the american Economy. Such a move would tend to drive the Dollar lower against other currencies. Lower interest rates in the states generally drive investors away from the Buck and toward currencies and countries where investment yields arc higher. Allow said he doubts the fed will announce a Cut in interest Rales when its Board of governors meets this week a but at some stage they will have  t he economist said there is still some concern among foreign Exchange dealers about the Impact that merging the currencies of East and West Germany will have when that takes place in july. But Callow said most traders have Faith that West German finance officials will be Able to handle the transition smoothly and keep their country a economic engine at full Speed despite the Cost of rebuilding the East. Callow said negative sentiment toward the Dollar actually began building a week ago after the May 4 announcement that unemployment in the United states reached 5.4 percent in april a 0.2 percent increase Over the March rate. Addi is non farm payrolls grew by a Mere 69,000 positions on the month and that Loo caught traders off guard. Bank at  a big increase of 400,000 new non farm jobs on the month and most other financial institutions expected about the same. The Job figures were really a turning Point in people s perception about the Dollar a he said and Friday s negative numbers on retail sales and wholesale prices reinforced the perception that the . Economy is still sagging. The Buck even lost ground last week against the Pound in Britain where prime minister Margaret Thatcher has been under attack recently because of her administrations taxation Doli pics. V a the Friday afternoon in London one Pound was Sellig for $ 1.6785. A week earlier $ 1.66 a uld have bought one Pound on the world Market. Tim Star and strip experts meet in Washington to debate future of Home prices by Kirstin Downey Washington Post Washington a will Home prices across the country soar plummet or stabilize that was the question on the table As four housing economists came to Washington armed with statistics and predictions to debate the future of Home prices last week. Speaking at an event billed by its sponsor the National association of Home builders As the a slowdown showdown a the economists brought varied viewpoints on what Home buyers and renters should anticipate in the Way of future prices. There were some areas of agreement All expect Home prices to continue to Rise. But they disagreed whether it will be by a paltry 3 percent annually or More. None expect raging 1970s and 1980s-style Price appreciation. But the economists also winningly agreed on one other fact. Nobody really knows what will happen with Home prices they said because the factors that motivate people to buy Are Complex and often More psychological than economic. The lightning Rod for the slowdown showdown was n. Gregory Mankiw an economics professor at Harvard University whose research published in an obscure academic journal last year continues to generate heated controversy. Extrapolating from historic Home Sale patterns and birth rates Mankiw said he had found that Home prices in the United states Rise As the adult population gets bigger. Consequently a decline in the maturing population in particular the baby bust generation now entering adulthood will translate to lower demand and Price declines he said. Mankiw said his research showed that although Home prices will probably Rise about 3 percent a year they will decline substantially when measured against inflation. He said he expected a a real Home prices a that is prices adjusted after inflation a to decline 47 percent within the next two decades. More than a year later in the face of continuing criticism from some of his Peers Mankiw still defends his findings. �?o1 think we re at the beginning of weak demand lasting through the beginning of the 21st Century a Mankiw said. A we expect the housing Market of the 1990s to look quite different from the housing Market of the 1970s.�?� Mankiw a research Drew barbs from at least two other economists. William Apgar assistant director of the joint Center for housing studies at Harvard University in Cambridge mass., said Mankiw a findings were based on a a poorly calibrated Model a and that published reports on the findings could Hurt consumer Confidence. Apgar said simple population statistics were an inadequate measure of housing demand because people Are marrying having children divorcing and forming new households at Ages different from in the past a my View of the 1990s is a lot More optimistic re Apgar said. Barbara Allen a housing Industry analyst for Kin Der Peabody amp co., was even More strident in it criticism. She said she found research such As Man kiwis As Well As resulting newspaper articles a flamboyantly  a n Allen said such extreme statements Are not pay ii a made by Wall Street analysts because a we lose 2 jobs we done to have  in Allens opinion the housing Market is instead entering a a Golden Era a with prices annually climbing 1 percent to 2 percent higher than inflation Allen said that although the baby bust generation is smaller than the preceding baby Boom group the 25-to 34-year-old group is enormous and that a Large percentage of them have yet to buy Homes. When they do she expects the a ional Home ownership rate to Rise substantially. That a the greatest potential demand we have Ever had a Allen said. A fourth economist Karl Case professor of economics at Wellesley College took the Middle Road partially agreeing with Mankiw. A nevertheless he said that Many other factors including Consumers inflationary expectations regional economic differences government regulation and land costs significantly affect Home prices. Case added that contrary to Mankiw he had found that Home prices Seldom fall sharply. He said his research on several markets showed that Home Sellers set what he called a a reservation Price a which is a Rock Bottom Price from which they wont Budge and refuse to sell for less than that no matter what happens to the Market. A people wait and they wait and they wait a he said. Mankiw who is in his Early 30s, ruefully admitted that his research had struck a nerve in some circles. A a there a a tendency to shoot the messenger a he said. The Home builders group took the Issue one step further publishing a brightly coloured 12-Page handbook containing rebuttals to Mankiw a research. The publication contained articles written by Apgar Allen nah president Martin Perlman Robert Van order chief economist at the Federal Home loan mortgage corp. And John Savacool senior economist and director of real estate and construction services for Wharton econometric forecasting associates. At the nah discussion Mankiw said he was surprised that people viewed his projections As pessimistic when they Are actually Good news for renters Young people who do not yet own Homes and for the environment. He said that slow Price growth will allow More people to find affordable housing and give society time to catch up with the growth of the past few decades. A people Call us pessimists a he said. A i think we re optimists for housing As a  majority of firms in ., Europe hopeful about Trade with East bloc by David Tarrant Brussels Bureau Brussels Belgium a eighty percent of top . Companies and 97 percent of european firms see the events of the last six months in Eastern Europe As providing them with new business opportunities a Survey shows. I More to Lan of a . Companies and nearby three quarters of the european companies that take this View have made plans to take advantage of new openings in the East bloc. B the information comes from a Survey of 50  Center re pm an companies by the european business Center of Komg a private International advisory  business brains on both sides of the Atlantic a if Crea 8 a real interest in Eastern Europe a said Scott Cormack head of the Brussels based firm. A despite the widespread interest in Eastern Europe most business executives do not believe that exd Andiori the nearsfuture.wl11 contribute greatly to their profits in about half of the top . Companies expect Eastern  so amp a Stag so. Ute $25 million or More to profits Over the period. The . Companies primarily favored East Germany and Poland for new investments. The major european companies cited Hungary As the prime target followed by East Germany. A interest in East Germany has clearly been sparked by the Prospect of unification with the Federal Republic of Germany and particularly on the part of americans by a belief in the country a positive economic Outlook a Cormack said. A leading european companies say they Are drawn to Hungary because of its Industrial engineering history a belief in its efficiency with technology the Prospect of Market expansion and a positive View of its future economic  the Survey also found Strong interest among american companies in increasing Trade with the 12 Western european nations of the european economic Community. In identifying top . Companies firms were ranked by number of employees Cormack said. Eleven of the 50 companies surveyed were financial institutions. The rest were manufacturing and Industrial concerns. Two thirds already have subsidiaries in Europe. Cormack declined to identify any of the companies saying his Survey promised confidentiality