European Stars and Stripes (Newspaper) - July 29, 1990, Darmstadt, Hesse                                Sunday july 29, 1990 the stars and stripes Paga 13 business new recession fears cause dollars value to stumble the Dollar which has been struggling against the West German Mark and British Pound took another beating last week after evidence was re leased showing that the . Economy was flirting with recession. The latest in a series of sour economic reports hit the Street Friday when the . Commerce department announced that the american Gross National product grew by a Mere 1.2 percent in the second Quarter of the year. A a that followed a weak 1.7 percent growth rate for january february and March and cast a huge doubt on the Bush administrations goal of hitting 2 percent growth for 1990 As a whole. The Gnu data lend credence to the View of Many economists that interest rates in the United states must fall if any life is to be injected into the american business scene. Gnu refers to the country a total output of goods and services. Tim Fox an economist with Midland Montagu Bank in London said currency traders were expecting a 1.6 per i Randy Mcclain cent growth rate for the second Quarter Gnu and be lower number disappointed them. A it confirmed that growth is still under performing White House targets and that fuels fears about recession prospects m the future a a Fox said Fox said the Dollar which is already trading at a 2 i year Low against the Mark could even Tumble to an All time Low in West Germany. The current Low Point is 1.56 Marks which was reached in december 1987. On Friday the Buck was trading in Europe at roughly 1.6180 Marks a loss of two pfennig on the week. The Community Bank Exchange rate Tor West Germany was set at 1.59 Marks for the weekend based on a Friday afternoon Price fixing in Frankfurt. Currency dealers Are keeping a close Eye on the Buck to see if it drops below the 1.6140-Mark level where it has drawn Strong investor support of late it the Dollar slips lower than that it a could reach a historic Low quite quickly a Fox said. The London economist said other factors con Spring to make life gloomy for spenders of greenbacks include investor worries that major snags will develop in the . Budget debate Between republicans and democrats and the ear that the savings and loan debacle will add billions to the already huge . Budget deficit. Fox said the White House is sure to increase pressure on the fed for a speedy Cut in interest rates As a Way to Pep up the . Economy but that could push the Dollar lower. International investors tend to put their Money in currencies that deliver bigger returns than the 8 percent interest rates currently available in the states. ,. L00 Tor the fed to lower interest rates not tvs week and not next week but within one to three months a Fox said. The Dollar also continued to Sag against the Unish Pound last week. Sterling is on a Roll Janks to High interest rates in great Britain and the expectation that the Pound will join the european monetary system sometime this fall. On Friday one Pound was Selling for $1,828, about one cent higher than a week earlier. The it of Exchange rate in great Britain was set at j i a Tor a Pound Friday afternoon. Lnni1�?Te i9hit? experts predict the Pound is ended still higher later this year. Anthony Thomas an economist with Klein. Benson inc., in London predicts one Pound will soon be Worth Between $1.90 and 1.95 on world markets. Tor a Pound is even possible but i j my that would be Long lasting a Thomas via. But i do expect the Pound to stay  the 8ur arvo 8trip#� Naf workers dealt setback in fight against paying taxes by Randy Mcclain financial write jew non appropriated fund employees in Europe who claimed they  have to pay . Income taxes lost a major Battle earlier this month.  and David Matthews both Naf emn Lov yes a Tzin West Germany were told by the appeals for the District of Columbia Are, of the . Government and As such do not qualify for the $70,000 foreign earned income exclusion.5, Ouw. Delusion allows americans living abroad to escape . Taxes on the first $70,000 they earn. The Nice exists so that americans overseas wont be taxed where they have u so government and the country american tax Law however expressly prohibits any is  government or an Agency thereof from taking the exclusion. Davis and Matthews argued that Naf employees Aren t government employees As far As the tax code is concerned. Gerald said at at yes Are essentially private contractors  Jod Toi the government but they Arentt government employees. Private contractors Are eligible to take the exclusion since they done to work directly for the government. Since the court of appeals did no to buy that argument Matthews said he and Davis Are considering their next step. A late Friday Matthews said he and Davis would s a \ c a Appel tote court level within the 55� a t0jky. Move that will require about $2 00� m additional Legal fees. A and Well also find an Naf employee who has paid his taxes for a specific year and have to a. Irs refuses to pay  go to Small claims court to seek payment Matthews said. The two pronged approach will take several More months but Matthews said he and Davis done to intend to give up. A it would be foolish for us to Roll Over and play dead now he said. A was disappointed by the court Deci Sion. What happened was the court applied a very strict statutory approach a the attorney said. Kafka said he still believes his arguments on behalf of Matthews and by Extension All other Naf taxpayers overseas Are legitimate. A unfortunately for us this was just a situation where the judges hearing the Case were unwilling to go beyond the four Corners of the irs code Quot Kafka said. Some judges Are strict constructionists. They wont go beyond what a written in Black and  and Davis Case was watched closely a the irs it  hit Tenn iih4 of 4 to by the Irsos International division and by Naf employees overseas. Irs officials said several million dollars m Revenue would be lost each year if Naf workers Luad aria Mia a a a 1. Ii a. A a a a. Lerald Kafka the lawyer representing both men l at a court hearing in mid april that Naf employ Are essentially private contractors doing a Jofe for 1 a a t. Jew Fri i4 oni Wum Cra were allowed to invoke the foreign named income Rule. The court of appeals ruling basically held that nothing in . Tax Law or the tax Reform act of 1981 indicates that Congress intended to Grant special privileges to Naf workers. U changes under the 1981 tax act a were expansive but nothing indicates that employees of nails were beneficiaries of this broadening a the court said in its opinion earlier this month. Agencies that Are non appropriated fund instrumental ties generate most of their own Revenue t relying Only m part on Federal tax dollars for support. Examples of Naf agencies include the stars and stripes the Exchange service and the Community and family support Agency where Davis and Matthews work . Still economic Leader but losing ground to Japan by Leonard silk new York times which country has the strongest Economy in the world the question has assumed growing importance at a time when economic strength is perceived As the Cardinal component in National Power and when the Industrial world May be dividing into three regions entered on the United states Japan and a United Germany. Finding an answer involves Complex issues of concept and measurement. As measured by Gross Domestic product a the total volume of goods and services produced by a nation within its Borders a the United states still has the largest Economy by far. The . Gap in 1989 was $5.17 trillion compared with Japan a $2.82 trillion and a United Germany a $1.5 trillion at current Exchange rates Between the Dollar the yen and the Mark. But much of the difference is attributed to population  the american population nearly twice As Large As Japan a and More than three times Germany amen can a per capita Gross Domestic product was $20,766 last year less than Japan a $22,855 but ahead of United Germany a $19,230. These comparisons Are misleading however because they Are measured at current Exchange rates which have swung widely and Are a poor indicator of the real value of Money spent in ones own country. For instance Japan is expensive for americans earning dollars and the United states is cheap for japanese earning yen. To Correct this distortion three University of Pennsylvania economists a Irving Kravis Robert Summers and Alan Heston a have developed measures of International output and income based not on Exchange rates but on so called purchasing Power parities which Are conversion rates that equalize Price Levels among countries. The Kravis Summers Heston data show that Japan a per capita Domestic product was Only 75 percent As Large As that of the United states in 1987, on a purchasing Power basis. Commenting on that Large Gap Herbert Stein a see a Jef fellow at the american Enterprise Institute said i Here is already so much paranoia about Japan in the United states that it seems to me important to get this comparison  from 1980 through 1989, Japan s real Gross Domestic product measured in purchasing Power parities grew at an average annual rate of 4.2 percent. Compared with the United states�?T2.6 percent. If those disparate growth rates continue Japan a per capita Gross Domestic product in 2000 would equal 95 percent of that in the United states and Japan would pass the United states by 2004. In an article a capital investment key to competitiveness and growth Quot in the current Brookings review Ralph Landau of Stanford University examines the reasons Why productivity has been lagging in the United states. He finds a High correlation Between National growth rates of capital per worker and labor productivity. Japan had a growth rate of capital per world or of More than 8 percent and a growth rate of labor productivity of nearly 5 percent from 1964 through 1985, while . Gross capital per worker Rose less than 2 percent a year and Tabor productivity less than 1 percent a year. The Council on competitiveness a group of economists executives and Union officials reports that in absolute terms Japan has overtaken the United states with investment in new factors and equipment at $549 billion in 9?a with 5513 billion by the United states h1�?~thbaicuchancs,in pm icy concludes the High Cost of capital greater uncertainty inadequate savings and investment increasing Reliance on foreign capital in an open world capital Market and Short time horizons by corporate managers and Public policy makers will continue to gnaw away at the american Standard of  further concern on that score emerges from the 1990 human development report of the United nations. A human development Index prepared by a group of economists ranks 130 nations according to lire expectancy at birth adult literacy and other factors. The United states was 17th on the list a tied with Austria and Ireland a with a life expectancy at birth of 76 years and an adult literacy rate of 96 percent the Index rated Japan first with life expectancy of 78 years and adult literacy of 100 percent