World markets rally after Monday's collapse
• "ir? pwii. Tokyo, New York,
London on rebound
NYSE vice-president speaks at HUB
By BRAD GIBSON
Collegian Staff Writer
The New York Stock Exchange's
508-point drop this week is a signal
people are questioning whether the
bull market is finished, NYSE vice
president of business developement
said last night.
The market will continue to rise
back up as it did Tuesday and
Wednesday, William M. Earley said.
"I do not see any reason why it will
not," he said.
Earley, a 1969 Liberal Arts grad
uate of the University, spoke to a
group of about 60 people in the HUB
about the spirit of marketing, and
took time out to discuss recent stock
market developments.
Near-collision
reports rise
by 50 percent
By H. JOSEF HEBERT
Associated Press Writer
WASHINGTON, D.C. The num
ber of near-collision reports involving
commercial aircraft jumped nearly
50 percent during the first nine
months of this year, according to
Federal Aviation Administration fig
ures.
There was disagreement yester
day, however, among aviation safety
experts on the significance of the
increase on air safety.
The chairman of the National
Transportation Safety Board said the
sharp rise in near collisions shows
that travelers were exposed to an
"increa-ed risk" of an aerial collision
during the past summer, but the head
of the FAA called the statistical jump
"not in itself very meaningful."
According to the FAA, the agency
received 857 near-collision reports
from pilots during the first nine
months of the year, a 37 percent
increase over last year. The number
of such reports involving planes car
rying revenue-paying passengers in
creased even more sharply from 258
last year to 383 this year, up 48
percent.
During the busy summer months
June through August there were
159 near-collision reports involving at
least one commercial plane, an in
crease of 50 percent over the summer
of 1986. The sharpest increase 69
percent came in August when there
were nearly two such incidents re
ported a day, according to the FAA
figures.
"If you look at near midair colli
sions they continued throughout the
summer at very high levels," said
Jim Burnett, chairman of the NTSB.
"Somehow we're going to have to get
a handle on that."
He said the levels represented "an
increased risk" of a mid-air collision
to air travelers despite efforts by the
FAA during the summer to reduce
such risks.
But FAA Administrator Allan
McArtor said that while the increase
during the nine-month period, corn
pared to the same months in 1986, is a
matter of concern to his agency he
does not consider the figures in them
selves "very meaningful" because
actual collisions continue to be ex
tremely rare.
"The statistics of near midair colli
sions taken by themselves are not
good indicators of exposure to risk in
the national air system," McArtor
maintained in a telephone interview.
At the same time, he acknowleged,
"We have a very busy air system. We
know that. We're taking very aggres
sive action to minimize the exposure
to risk." He cited agency actions
already taken or planned to reduce
the mix of commerical and private
aircraft and installation of airborne
collision-avoidance devices in jetlin
ers over the next few years.
RUIM*2
index
opinion 8
sports 10
weather
This afternoon partly sunny but
still cold, high 47. Tonight partly
cloudy, chance of showers to
ward morning, low 33. Friday
variable cloudiness with rain
showers ending by late af
ternoon, high 53....R05s Dickman
the
daily
Consumer spending will be much
more cautious because of Monday's
record decline, he predicted. The
Dow industrials' plunge Monday
wiped out 22.6 percent of the index's
value a bigger one-day decline
than during the crash of 1929.
Earley said playing the market
takes courage.
"Some people have it and some do
not," he said. "Some wish they had
more," he added.
The Dow Jones Industrial Aver
age's increase Tuesday and Wednes
day is due to companies buying back
their own stock, he said.
Earley said this purchasing has a
two fold effect: it drives stock prices
back up and allows companies to
regain more control.
University retirement plan to get boost
By CAROL CHASE
Collegian Staff Writer
A retirement plan used by two
thirds of the University faculty will
be worth twice as much as its current
value under a bill passed by the
state's General Assembly Tuesday.
The legislation increases the
amount of money the University con
tributes to the Teacher's Insurance
and Annuity Association/College Re
tirement Equities Fund retirement
plan from 4.45 percent to 8.95 percent
of the employee's gross income. said
William J. Walsh, director of the Uni
versity salary administration and
benefits office.
Gov. Robert P. Casey must sign
the bill before it will become law. If
he approves, it will be retroactive to
the 1987-88 fiscal year, Walsh said.
Raising the University's contribu
tion rate makes the retirement sys
tern at the University stable and
predictible, he said. Under the TIAA
/CREF plan, University employees
contribute five percent of their gross
income toward retirement.
"Adding 8.95 percent from the em
ployer will put ( the University )
Collegian
His generation is used to market
swings of 25 to 50 points, Earley said.
In the future, swings of 750 points
may not be inconceivable, he said.
Yesterday afternoon, James Miles.
associate professor of finance, said
Monday's record decline will have
little long-term affect, and that the
market is recovering nicely.
Miles said that the market could
drop as much as 50 or 60 percent and
not cause a national catastrophe sim
ilar to the Great Depression of the
19205.
- People were 22 percent poorer on
Tuesday than on Friday. To them it is
a big deal," Miles said.
He said he has no idea what caused
Monday's crash.
smack dab in the middle of the na
tional average of 12 to 15 percent..
Walsh said.
The plan would keep the University
competitive with institutions nation
wide. Potential faculty members
may base their decision about work
ing at Penn State on retirement bene
fits. Walsh said.
The law would be effective for five
years, providing financial security
for employees at the University and
other state institutions. Walsh said.
After five years, the law would be
subject to change. he said.
Ken Babe. University corporate
controller, said the increase will not
affect University students' tuition
because the extra money has already
been planned in the budget.
The increase will cost the Universi
ty $1.9 million more than the average
amount paid yearly to TIAA/CREF
since 1974.
Frank Forni. University special
assistant to the president for govern
ment relations, said the bill is going
to be very helpful to the University's
faculty."
Hampton Shirer. associate profes
sor of meteorology, said the increase
ANllli k
Collegian Photo / Jody Stecher
William M. Earley
will make the University look more University factulty members, is the
attractive to incoming professors. State Employee Retirement System.
Walsh said TIAA/CREF allows em- Under SERS, employees contribute
ployees nationwide to transfer bene- 6.25 percent of their gross income to
fits from one university to another. retirement, and the University con-
The alternate retirement plan to tributes a rate that is based on em-
TIAA/CREF, used by one-third of ployees' salary and length of service.
Contributions have varied yearly
University contributions toward the Teacher's Insurance and Annuity
Association/College Retirement-Equities Fund retirement plan in the
past have varied each year, said William J. Walsh, director of the
University salary administration and be 'Fits office.
University contributions in the pest were based on a rate set by the
Slate Employee Retirement System. They were:
. 7.83%
UlB3 54.0%
MIL 6.85%
INS . 6.42%
SU. 3.60%
lOW 4.45%
co ions are five percent of gross income; their _
-00110410011110 w re =a the same ender the proposed law. University
have fixed at LOS percent of the employee's gross
-Ity illMe bill palmed by the General Assembly Tuesday. The
was elsteradned by the Public Employee Retirement Study
Thursday, Oct. 22, 1987
Vol. 88, No. 72 16 pages University Park, Pa. 16802
Published by students of The Pennsylvania State University
= 1987 Collegian Inc.
By PETER COY
AP Business Writer
NEW YORK Investors flocked
back to the world's stock markets
yesterday, shaking off a trillion-dol
lar panic and sending indexes to
record gains in New York. London
and Tokyo.
The Dow Jones industrial average,
climbing halfway back from Mon
day's historic 508-point collapse, rose
186.84 points to 2.027.85. The index
had risen a record 102.27 points Tues
day.
A partial recovery in New York on
Tuesday contributed to record point
gains yesterday in indexes on the
Tokyo and London stock exchanges.
The improved attitude carried over
into trading in the United States.
"They're bouncing. They're really
bouncing," said Andrew Lanyi, ma
naging director at Ladenburg, Thal
mann & Co. Inc.
Analysts speculated that investors
may have been pleased by world
leaders' response to the market's
panic, which erased more than $5OO
billion from the value of U.S. stocks
and more than $1 trillion from world
stocks in 24 hours.
The Dow industrials' plunge Mon
day wiped out 22.6 percent of the
index's value a bigger one-day
decline than during the crash of 1929.
West Germany took a small step
Exiled guerilla calls for
end to Salvadoran aid
By MAUREEN QUINN
Collegian Stall Writer
The United States must stop eco
nomic support of the El Salvadoran
government for peace to come to the
war-torn region, an exiled member of
the country's opposition forces said
last night. .
"The only support the president of
El Salvador has is from the United
States and the huge military and
economic support given to continue
this war," Ernesto Godoy told an
audience of 80 in the HUB.
The eight-year old civil war be
tween Salvadoran troops and leftist
guerilla, or opposition, troops has
killed 63,000 Salvadoran citizens and
23,000 government troops, Godoy
said.
The $5OO million in U.S. aid sent to
the Duarte government to date has
mostly helped Salvadoran troops, and
not the economic crisis racking the
Central American nation, Godoy
said.
One and one-half million dollars per
day is given to the Salvadoran gov
ernment, yet the country has a 32
percent inflation rate and 50 percent
unemployment rate, Godoy added.
"In the entire history of the coun
try, there's never been a crisis like
this," he said, adding that citizen's
wages can't cover even basic neces
sities.
Opposition forces hope to stop the
many human rights violations that
Godoy said most Americans never
hear about. The abductions, killings
and detentions of political prisoners
are downplayed by the U.S. govern-
this week to hold down its interest
rates, and President Reagan and
leaders of Congress recommitted
themselves to whittling away the
federal budget deficit.
Reagan said yesterday he has not
eased his opposition to higher tax
rates and his chief budget adviser
said flat out that the president "is not
going to take a tax increase. -
Nevertheless, economists said
there was no major news event to
account for either the plunge or the
partial recovery.
Advancing issues outnumbered de
clining ones by a 8-to-i margin on the
New York Stock Exchange in very
heavy trading. That contrasted with
Tuesday, when the Dow industrials
gained but losers outnumbered gain
ers 5-to-2.
Stocks also gained on the American
Stock Exchange and in the over-the
counter market, reversing sharp
losses both Monday and Tuesday.
"Today it's a much broader rally.
You're getting buying from all of the
country and the world," said Peter
DaPuzzo, head of stock trading for
Shearson Lehman Brothers Inc.
Some of the money flowing into
stocks had probably been in limbo
after having been yanked out of the
market in the preceding days. Da-
Puzzo said. It takes five days to settle
a transaction, he said.
hoto / Bruce E. Moody
Ernesto Godoy
ment, which portrays a different
image of the Salvadoran government
to justify military aid, he said.
The Central American Peace Plan
signed in August by five Central
American presidents. including
Duarte, established a favorable con
text for each Central American gov
ernment. Godov said.
Duarte's government had set condi
tions before it would speak with thy
guerilla forces, he added. but outside
pressures have forced the govern
ment to negotiate with the rebel
group.
Godoy said he is sure. with the
popular support of the people, that
opposition forces can eventually con
quer the Duarte troops.
Flag to mark
completion of
hotel exterior
An American flag Nv iII be displayed
today atop Atherton Hotel on South
Atherton Street. marking the end of a
year and a half of exterior construc
tion at the site.
A construction industry tradition
calls for the placement of a good-luck
object at the top of a new building,
said Pam Stewart. head of advertis
ing for the Atherton Street Part
nership and Atherton Hotel.
Following tomorrow's 'topping off .
ceremony. construction workers are
expected to begin moving away the
giant crane that was needed for the
exterior stage of construction.
Stewart said Atherton Street will be
blocked Monday while the crane is
dismantled.
The project was undertaken by the
Atherton Street Partnership and the
Hughes Crawford division of K.C. Orr
Contractors. Construction will now
begin on a fitness room, cocktail
lounge, kitchen, dining room and
guest rooms.
—by Ted Sickler