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November 26, 2003 - Image 1

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The Michigan Daily, 2003-11-26

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Wednesday
November 26, 2003
92003 The Michigan Daily
Ann Arbor, Michigan
Vol. CXI I I, No. 60

One-hundred-thrteen years of editorialfreedom

Weatber
TODAY:
Partly
cloudy
throughout
the day with H14
showers late LOW: 36
at night. Tomorrowx
47429
www.michigandaily.com

State's breathalyzer tactics ruled illegal

By Alison Go
Daily Staff Reporter

In a landmark decision, a federal judge
ruled yesterday that it is unconstitutional to
force underage pedestrians to take a prelimi-
nary breath test, or breathalyzer, without a
search warrant.
"The court believes that the right to be left
alone in public places ranks high on the hier-
archy of entitlements that citizens in a free
society have come to expect ... and one that
is protected by the Fourth Amendment," said

U.S. District Judge David Lawson in his
opinion.
In Spencer v. Bay City, the plaintiff, Jamie
Spencer, said she was unlawfully coerced into
submitting to a breathalyzer. In August 2001,
Spencer, who was 19 at the time, was told she
would be issued a civil infraction and fined
$100 if she refused the search. The test
revealed that she had not been drinking.
Michigan is the only state in which refusing
a breathalyzer is illegal. The ruling "effective-
ly eliminates the only law of its kind in the
country," said LSA junior Oliver Olsen, presi-

dent of the American Civil Liberties Union
chapter at the University.
The ACLU of Michigan filed the lawsuit on
behalf of Spencer. "The police have been vio-
lating the privacy rights of students through-
out the year," said Michael Steinberg, legal
director of the state ACLU.
Under the new ruling, police officers would
not be able to perform a breathalyzer without
a search warrant, which must be obtained with
evidence of probable cause. The ruling does
not apply to individuals apprehended while
driving.

Because Ann Arbor falls under the same
provisions of the Michigan Liquor Control
Act as Bay City, the ruling will eventually
affect police practices at the University.
"I would assume (the Ann Arbor Police
Department) would have to change their poli-
cy in accordance with the ruling," said LSA
senior Rob Goodspeed, member of the Uni-
versity's ACLU chapter.
However, the decision would not necessari-
ly decrease the amount of minor-in-possession
citations issued by the police.
"Cops do not need a (preliminary breath

test) to file a ticket," said Doug Lewis, direc-
tor of Student Legal Services. Slurred speech
and alcohol on the breath are enough for the
police to issue an infraction, he added. Also,
new technology allows judges to fax over
search warrants directly to officers on the
scene, he said.
The ruling does not immediately alter state
or city laws, but sets precedent for police
action.
"We hope the city attorneys across the state
would talk to the police chief and they would
See MIPS, Page 3

Profs say
analysts
often hype
stock prices
By Aymar Jean
Daily Staff Reporter
Often working behind the scenes
on Wall Street, financial analysts
are some of the market's most unno-
ticed participants. But a wave of
accounting scandals has prompted a
sweeping corporate crackdown that
is scrutinizing even these once-
overlooked businessmen.
Over the past year, researchers in
the Business School studying
immorality and inefficiency in ana-
lysts have reached striking, and
sometimes differing, conclusions.
Recent developments on Wall Street
suggest this information could pro-
vide legislators with ample ammu-
nition against corporate
malfeasance.
Analysts, who conduct market
research, have an incentive to hype
or overstate the stock price of firms
raising new financing or going pub-
lic, Business School Prof. Richard
Sloan's research suggests. On aver-
age, analysts over assess these
prices by 80 percent.
"They want to convince these hot
new firms that these stocks are
worth jumping into," Sloan said.
Other theories for the possible caus-
es of this inflation are numerous.
Many analysts, specifically those on
Wall Street, work for large investment
houses that conduct brokerage and
private wealth management, in addi-
tion to valuations.
Because these firms need to bring
investments, their analysts have an
incentive to overvalue certain secu-
rities.
But there is also a personal incen-
tive. Analysts receive bonuses when
clients come in, and since research
is otherwise difficult to sell - the
average investor will not pay for
advice - overstating stocks is
financially advantageous.
"They do it intentionally, and the
reason they do is to keep the party
going. They get paid through bro-
kerage fees, and the best way to do
this is to create excitement to get
people to start trading with them,"
Sloan said.
But many experts say this behav-
ior may be on the decline, especial-
ly after legislators brought the
Enron and WorldCom transgres-
sions into national focus.
"We have a lot less of that now, at
least from the bankers that I've
talked to," said Business School
junior Ryan Levine, who is an
aspiring financial analyst. "As the
industry changes, there's a lot more
regulation to prevent that."
There are other ways, however, in
which analysts could manipulate
markets, and often these may not
hint at misconduct, but at simple
inefficiency.
Business School research sug-
See ANALYSTS, Page 3

How much turkey can you stuff?

GEO votes to

settle with

U,

over health care

By Jeremy Berkowitz
Daily Staff Reporter

In a bittersweet, emotional
moment for graduate students
instructors, the Graduate Employees
Organization overwhelmingly voted
last night to settle an issue with the
University over health care premi-
ums. Under the deal, about 90 per-
cent of GSIs will now pay the same

for all GSIs with one or no depend-
ents, and keep premiums at $20 for
those with two or more dependents.
About 10 percent of GSIs have
two or more dependents, GEO said.
While GEO members seemed
happy that one plan was kept free,
some said they wish they could
have succeeded with all the insur-
ance plans GSIs are being offered.
"We shouldn't be happy -with this

rates they paid
before.
Due to a
twofold increase
in health care
expenditures over
the past decade,
Provost Paul

"We shouldn't be
happy with this offer,
but we should take it."
- David Dobbie

offer, but we
should take it,"
Dobbie said,
adding that it was
a good deal for
GSIs. "I think
this is the prag-
matic choice for
this union to
make."
University
spokeswoman
Julie Peterson
said she was very
sides came to an

Courant decided
in April that all Graduate Emp
University
employees,
including GSIs,
would pay 5 per-
cent of insurance premiums for
2004. GEO filed a grievance last
month, citing contract violations.
After threats of a grade strike or
walkout, both sides finalized an
agreement yesterday, which allows
the choice of using one health care
option with stable premiums.
The plan, GradCare, is used by
the vast majority of graduate stu-
dents, according to GEO President
David Dobbie. The agreement,
which GEO members approved by a
margin of 115-3 last night, keeps
GradCare monthly premiums free

President,
loyees Organization

happy that both
agreement.

"This settlement is really good for
both our students and our University,"
Peterson said, noting the rising expen-
ditures for the University.
Last Thursday, GEO decided by a
vote of 195-15 not to strike and to
return to the bargaining table with
the University. Yesterday afternoon,
both sides managed to work out the
final deal.
The University will give the GSIs
that do not use GradCare two weeks
See GEO, Page 3

DAVID TUMAN/Daily
Whitmore residents Terry and Sandy Klump stop by Meijer on Ann Arbor Saline Road yesterday in
search for the perfect turkey for Thanksgiving dinner tomorrow night.

Economy climbs in
third quarter, fuels new

SOLE SEARCHING
Student-wbzs shoe-desi~gn contest
By Bartosz Kumor
For the Daily

hopes or
WASHINGTON (AP) - The econ-
omy in the third quarter galloped ahead
faster than an initial estimate, which
was already the swiftest in nearly two
decades. That burst, along with a surge
in consumer confidence, raised hopes
for the recovery's staying power.
The broadest measure of the econo-
my's performance, gross domestic
product, increased at a 8.2 percent
annual rate in the July-to-September
quarter, even better than the 7.2 per-
cent rate estimated a month ago, the
Commerce Department said yesterday.
The new GDP reading - embraced
by President Bush as proof of the
effectiveness of his administration's
economic policies - represents the
strongest growth since the first quarter
of 1984, when the economy surged at a
9 percent pace. The new estimate is
more than double the 3.3 percent rate
in the second quarter.
"I think the economy is back,"
declared an optimistic Mark Zandi,
chief economist at Economy.com. "It
has evolved from a very fragile recov-
ery to a sustainable rebound."
In other economic news, consumers'
confidence in the economy climbed in
November to the highest level in more
than a year as people perceived the job
market to be turning around, the Con-
ference Board reported. The private
research group's consumer confidence
index rose to 91.7 in November, up
from a revised 81.7 in October.
Tn n ra in nncnui r nnnf

recovery

"Households are becoming more
confident about the labor markets
and the future in general and that
bodes well for this crucial holiday
shopping season."
On Wall Street, the Dow Jones
industrial average gained 16.15 points
to close at 9,763.94.
Some analysts believe the economy
is growing at a slower but still healthy
rate of about 4 percent in the current
October-to-December period, as some
of the stimulus that helped in the third
quarter - President Bush's third round
of tax cuts and a wave of mortgage
refinancing - fades.
Sales of previously owned homes fell
by 4.9 percent in October to a seasonally
adjusted annual rate of 6.35 million, the
National Association of Realtors said.
But even with the decline, October's
sales marked the third best month on
record and were on track to set an all-
time high for all of 2003.
The main factors behind the upward
revision to third-quarter GDP were
stronger investment by business on
new equipment and software, less
severe cuts in companies' inventories
and more brisk spending on residential
projects. GDP measures the value of
all goods and services produced within
the United States.
"The economy is regaining the
confidence of businesses and they
are stepping up to the plate and
spending and investing for the
ffiim- " said ernnnmikt Ken Mav-

A contest designed by two University alums who
made it big in the footwear business is giving the
winner, a University student, the chance to see one
of his designs go from the drawing board to store
shelves.
Last night, addressing a group of about 20 anxious
students in his class, Art and Design Prof. Chiwei
Lee announced the winner of a design contest for the
most stylish, yet comfortable shoe.
Mykal Richey, the winner of the contest, designed
a futuristic shoe he described as a fusion of comfort
and style. Richey said he found inspiration in nature
for his design. "I was inspired by carnivorus plants
- beautiful, enticing, deadly."
The design project, originating early this year, has
inspired a new drive in Lee's students.
"It was exhausting, but in a good way. This was a
good opportunity for (University) students because
we don't get to compete in the real world very
often," said Richey, an LSA and Art and Design sen-
ior concentrating in industrial design.
Judged by entrepreneurs Shane and Shawn Ward,
who graduated from the University in 1996, the com-
petition allowed students an early opportunity to
brush with the world of professional shoe design.
The Ward brothers own and manage a start-up
footwear design company, which launched its first
line of products in the fall of 2003.
Although based in New York, the brothers, who
were raised in Detroit, remembered their roots by
naming their company DETNY after Detroit and
New York. Shawn Ward, an Engineering alum who
runs the company's business operations, said he owes
a great deal to his upbringing.
"Coming from a meager background, we had to
work for everything. This created a work ethic. Our
nasinn came from nr mother and grandfather who

Art and Design
senior Mykal
Richey won a
shoe-design
competition
organized on
yesterday by
alumni Shane
and Shawn Ward,
founders of
DETNY shoes.
(DAVID TUMAN/
Daily)

price tag on."
In that spirit, the brothers hope to give back to the
University by manufacturing the winning shoe
design, and by funding an all-expense paid trip to
New York for Richey. The brothers also gave a lec-
ture today at a separate event at the School of Art
and Design. They addressed different aspects of the
desiin industrv. ranain2 from what motivated them

m I 'W N I

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