The Michigan Daily - Tuesday, February 21, 1989 - Page 3
Fed pushes interest rates
higher; economists fret
WASHINGTON (AP) - Despite
objections from President Bush, the
Federal Reserve Board has forced in-
terest rates higher in an inflation-
fighting battle that some economists
fear may wind up pushing the coun-
try into a new recession.
The Fed's credit tightening efforts
have been blamed for sending a vari-
ety fo interest rates, including mort-
g ge rates and banks' prime lending
Federal Reserve Chairman Alan
Greenspan and other Fed officials ar-
gue that the central bank has no
choice but to move to dampen de-
mand in an effort to keep the aging
recovery from over-heating.
'However, critics, including the
new president, contend that the Fed is
overreacting to inflationary fears.
Some analysts believe if the central
bank does not soon relent, it will
topple the country into an economic
Greenspan will get a chance to
respond to the critics today when he
presents his semi-annual report to
Congress on monetary policy.
The testimony, before the Senate
Banking Committee, will come just
one week after the Fed embarked on
another round of credit-tightening
following a government report that
showed inflation at the wholesale
level took an unexpectedly sharp
jump in January, rising at an annual
rate of 12.7 percent.
ThetFed responded by pushing
short term interest rates higher
through a behind-the-scenes process
that siphons off available bank re-
serves. With the supply of money
lower, the cost of that money interest
Banks on Feb. 10 hiked their
prime lending rate, the benchmark
rate for many business and consumer
loans, to 11 percent, the highest the
prime rate has been since the end of
1984. Mortgage rates have been
climbing as well, with fixed-rate
mortgage now averaging above 10.5
The latest round of credit tighten-
ing comes at a sensitive time for the
new Bush administration. Higher in-
terest rates boost the cost to the
government of bailing out insolvent
savings and loan associations, a cost
already put at $126 billion over the
The higher rates will also under-
mine the new president's pledge to
lower the budget deficit without rais-
ing taxes because higher rates raise
the cost of government borrowing to
finance the debt.
In the last downturn of 1981-82,
then-Federal Reserve Chairman Paul
Volcker pushed the prime rate up to a
high of 21.5 percent and sent th
country into its worse recession since
the Great Depression as the Fed
struggled to contain the country's
steepest inflation since the Civil
Business Administration senior Rob Londeck lifts at the CCRB.
LSA senior Mike Solomon assists him as a spotter.
MCC requests more
Study faults foreign assistance work study money
programs, calls for alterations
WASHINGTON (AP) - A gov-
ernment report released yesterday
calls for a "radical reshaping" of U.S.
foreign assistance programs because.
current aid concepts are based on a
world that no longer exists.
"The challenges of today's prob-
lefns, and tomorrow's, cannot be met
with yesterday's solutions, suitable
as they may have been to yesterday's
problems," said the report, issued by
the head of the Agency for Interna-
tional Development, Alan Woods.
The 158-page study said the aid
program no longer seems able to
fulfill its original mandate of helping
poor countries achieve the transition
from dependency to self-sufficiency.
One problem highlighted by the
report is that "succeeding Congresses
and administrations, prodded by the
dominant crises and interest groups
of the moment, have piled differing
and often conflicting foreign assis-
tance objectives on top of each other.
A principle conclusion of the re-
port calls for altering future assist-
ance programs to face new realities
and to complement the contributions
to development of the U.S. private
sector in providing humanitarian aid.
This reshaping "must be an im-
mediate concern and a major long-
term national priority. Nothing less
will serve the national interests of
the United States," the report said.
B-School project becomes reality;
brings Mardi Gras flavors to town
FY BRADLEY KEYWELL
For those who missed the Mardi
Pras celebration last week in New
Orleans, and those who want to learn
what Mardi Gras is about, John
Vvanko's French Market Cafe has the
4nswer. The Cafe's "Mardi Gras Cel-
bration," running until March 31,
ipludes confetti, pinatas, and rag-
"The idea for the Cafe came from
a trip I took to the actual Mardi
Gras," said Ivanko, a University
Business School graduate. "The New
Orleans atmosphere is electric and
exciting, and that's what I'm trying
The one-year anniversary of the
French Market Cafe is being cele-
brated this week in continuation of
last week's national Mardi Gras cele-
Last year, Ivanko was assigned to
create, develop and refine a business
plan in the school's Retail Manage-
ment 312 class. His "French Market
Cafe" plan received an "A" and
prompted his entry into the Ann Ar-
bor business community.
Taking his concept of a "New
Orleans open-air cafe" to downtown
restaurant owner David Kaplan,
Ivanko persuaded Kaplan to convert
his Kaplan's Cafe on Fourth and
Liberty into The French Market.
"I liked his ambition and drive.
And I especially liked the concepts of
beignets and cafe au lait," Kaplan
said. Beignets and cafe au lait, both
staples of the New Orleans restaurant
scene, are the essence of his restau-
Beignets are French square
dougnuts, and cafe au lait is a chicory
blend of coffee and milk.
"I saw an exciting opportunity to
turn a 60-page paper into a real-life
restaurant. It was a once-in-a-lifetime
chance," Ivanko said.
His entrepreneurial traits were en-
couraged by B-School Professor
Claude Martin, instructor of the retail
"Not many students are willing to
risk the failure of starting their own
business ventures," Martin said.
"There is great safety in climbing the
corporate ladder, yet those who are
willing to risk their ideas should be
encouraged to do so. John's experi-
ence will open new doors, doors not
available to corporate types."
Kaplan is pleased with Ivanko's
success, citing a tripling of sales and
a new excitement at the restaurant.
"Downtown businesspeople have
shown a newfound affection for our
New Orleans food and ambiance. It's
a new concept in Ann Arbor."
The restaurant is a ten minute
walk from campus. This distance has
frustrated Ivanko, but it has also
worked as a motivational factor. He
is currently looking to open a new
restaurant on South University.
ARE A GREAT
WAY TO GET
BY STEPHEN SCHWEIGER
Students must come first. This is
the message that the Michigan Col-
legiate Coalition is sending to the
governor of the state of Michigan.
MCC is demanding significant
changes in the Michigan Work Study
program, which helps financially
needy students attend colleges and
universities around the state.
MCC is asking the governor to
increase spending to double the
number of students who benefit from
Richard Kennedy, the university's
vice president of government rela-
tions, said that "anything we can do
to improve student aid aspects of
higher education is a good idea."
Paul Thompson, MCC member
and law school student said, "There is
a definite problem because the num-
ber of students who are being helped
by the program is low and the aver-
age award is only $914 per academic
year, which is not enough money."
Currently, the Michigan Work
Study program helps 6,000 students
across the state to pay college tu-
,ition. The Michigan Work Study
Program is a need based program
which allows students to receive
money by working in university
Each work study student is gran-
ted a certain sum of money which is
determined by the university accord-
ing to his orher specific needs.
The Michigan Collegiate Coali-
tion is comprised of a board of stu-
dent delegates representing each of
the public universities around the
state of Michigan. The MCC works
to expand the rights and influence of
SHORT OR LONG
Men and Women
Liberty off State . . 668-9329
Maple Village .... 761-2733
students around the state. They are
working to make students more in-
volved in governmental decisions
which directly effect them.
"Most students who receive this
aid are stuck in menial jobs for min-
imum wage," said Alaina Lewis,
chair of the MCC. Students are
allotted a certain amount of money
and must maintain university jobs in
order to collect this money. After the
hours are filled, the student loses the
Besides the fact that the work
study program does not supply
enough money, Thompson said, the
students are restricted to maintaining
jobs only through their respective
universities. The MCC is asking the
Governor to expand the work study
program so that students can work
for their communities and the state.
"What they (the state) are afraid of
is that students might work in abor-
tion clinics," said Thompson.
"The universities take advantage
of the fact that the students can only
work on campus," Lewis said.
The MCC also made another pro-
posal in order to put the students and
people in greater contact with the
state. The state, they feel, must no
longer be a partner only to the uni-
versities but to the academic com-
munity at large. To accomplish this,
MCC suggests that a "higher educa-
tion task force" be created by the
legislature and governor which would
represent the interests of students, the
universities, and the citizens of
Michigan. With the creation of such
a task force, students would have a
greater voice in decision making,
and greater access to policy.
KABUL, Afghanistan (AP) -
Prime Minister Mohammed Hassan
Shard resigned yesterday, broadening
the power of President Najib.
Meanwhile, in Pakistan, Afghan
scholars and Moslem guerrillas, who
have vowed to topple Najib's gov-
ernment, took on the task of nomi-
nating an interim Afghan govern-
ment when their top leaders could
not agree on the issue.
Shard, 63, had remained in Na-
jib's 28-person Cabinet after a
weekend shakeup in which the
president replaced seven of 10 non-
Communist Party ministers with
members of his People's Democratic
Shard was not a member of the
party, but had been selected as prime
minister by Najib last May to por-
tray his government as enjoying
A source, who spoke on condi-
tion of anonymity, said Shard met
with Najib and agreed the president
should head the Cabinet during the
state of emergency that Najib de-
The state of emergency suspends
or limits freedom of expression, pri-
vacy, and public assembly. Najib
said it was needed because of
"conspiracies" and "armed interven-
tion from outside."
Also over the weekend, Najib
created a new military council that
appeared to take over as the most
powerful body in his government.
The 20-member Supreme Military
Council for the Defense of the
Homeland met yesterday to discuss
the government's battle against the
Foreign Minister Abdul Wakil
said Sunday the council will coordi-
nate economic and military activi-
ties. He said it will not replace the
Cabinet, but did not elaborate.
The council consists of the most
powerful Cabinet members, the
Communist Party Politburo and
Central Committee, and military
The seven guerrilla groups based
in Pakistan became bogged down
over the weekend in their attempts to,
form an interim government for their
takeover. Leaders have been divided
along fundamentalist and moderate
lines over power sharing.
Sources in Pakistan who spoke
on condition of anonymity said yes-
terday the leaders dropped their nom-
ination of hard-liner Ahmad Shah for
prime minister and appointed a
commission of 70 field commanders,
Moslem clergy and scholars to
nominate a head of government and
What's happening in Ann Arbor today
"Chinese Intellectuals in Crisis,
Again? No, Not Again!" - Prof. Yi
Tsi Feuerwerker, Lane Hall Com-
mons, 12 noon.
"The Spanish Revolution: Work-
ers Battle Facism" - B118 MLB, 7
pm. Revolutionary History Series.
"Perspective on Puerto Rico"-
Yvette Perfecto, International
Center, 12 noon.
"Brownian Motion, Martingales,
and Laws of the Iterated Loga-
rithm for Harmonic Functions"__
Prof. Rodrigo Banuelos, 3201 An-
gell Hall, 4:10 pm. Coffee hour,
3:30 pm in 3212 Angell Hall.
German Club Meeting/Film -
2212 MLB, 6:15 pm. Film: "Hei-
U of M Asian Student Coalition -
2439 Mason Hall, 6:30 pm.
"Students for the Exploration and
development of Space" General
Meeting - B131 MLB, 7 pm. New
Iranian Student Cultural Club -
Rm. C MiAcrh;iv2,iI Lan 710n
Union Ballroom, 5:30 pm. Open to
Peer Writing Tutors - 611
Church Street Computing Center,
7-11 pm. Tutors are ECB trained.
"Cry Freedom" - Stockwell Hall
Blue Lounge, 7 pm. Facilitators
from Baker-Mandela Center.
"War Generation Beirut" - MLB
3, 7 pm. Free. By PSC.
Pre-Interviews - Monroe Auto
Equip. Co., 1200 EECS, 6:30-8:30
On-Campus Recruiting Program
Information Session - Angell
Hall Aud. B, 5:10-6:30 pm.
Northwalk - Sun-Thur, 9 pm- 1
am. Call 763-WALK or stop by
Safewalk - Sun-Thur, 8 pm-1:30
am; Fri-Sat, 8-11:30 pm. Call 936-
1000 or stop by 102 UGLi.
"In the Traffic of a Targeted City"
- At the Performance Network,
curtain time 8 pm. Tickets $10 in
ALL YOU CAN EAT ALL YOU CAN EAT
"'TNT NT EDT
Tuesday & ''IINLr
CORNER OF STATE AND HILL
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