n
thursday, november 12. 1981
lincoln, nebraska vol. 107 no 56
Copyright Daily Nebraskan 1981
Li
n
Volcker satisfied Federal Reserve on right track
By Pat Higgins
The Federal Reserve Board is firm in its
commitment to the policy of financial dis
cipline now in place, said board Chairman
Paul Volcker Tuesday morning before an
overflow audience in the Nebraska Union
Ballroom.
Volcker came to UNL as the third
annual EJ. Faulkner speaker presented by
the College of Business Administration.
Volcker said that after a 15 year period
of inflation, the transition to price stability
will not be a painless process. Economic
success is dependent upon sustaining con
sistent monetary and fiscal policies, he
said.
"We can look forward to sustained
growth for years ahead if there are funda
mental changes in expectations and be
havior that would reduce cost pressures,
enhance productivity and unwind the in
flationary process," he said.
The expectation that inflation would
continue indefinitely has undermined in
centives to produce, save and invest,
according to Volcker.
'There is a close connection between
rising inflation and poor economic perfor
mance," he said.
Two years ago the Federal Reserve
Board instituted a policy of control on the
growth of money and credit, a monetary
policy that Volcker said is central to
controlling inflation.
Intentions carried out
"Over these last two years our actions
reflect our stated intention in that we have
slowed the growth of money and credit,
he said.
In addition to the monetary policy now
in effect, Volcker said the net fiscal
position of the government has a direct
bearing on the overall economic picture,
particularly the financial markets.
Last year, the federal government pre
empted close to $80 billion to finance the
deficit and off-budget activities. That $80
billion is close to half the savings available
in the country, he said.
"This money was preempted at a time
when high interest rates were holding back
investment and home buying," Volcker
said. "These deficits work directly against
our objectives because they absorb funds
that should be used to meet our investment
and housing needs.
'The need is to make progress on both
sides of the savings and deficit relationship.
If further spending trends aren't brought
into line with our capacity to generate
revenues with present taxes, then we
cannot shrink from considering new
revenue sources."
Federal tax receipts are more than 21
percent of the Gross National Product this
year, a peacetime record, Volcker said. But
the Reagan administration tax plan will
lower the tax relative to GNP to 19 percent
in 1984, he said.
Cuts fall short
"In the perspective of the huge tax cuts,
the defense program, and the inexorable
rise in so-called entitlement programs,
Off-campus housing costs increase
as students lose units to families
By Leslie Kendrick
Off-campus housing is costing more and
more and the end to rent increases is not in
sight, said Joseph Kean, owner of the Jo
seph E. Kean Co.
Anywhere from 275 to 300 students
rent from Kean, he said. Those numbers
have declined over the past few years be
cause new families who can't afford a
house are competing with students for
apartments.
"As far as rentals are concerned it's a
very tight market," Kean said.
Kean said practically no new housing
units are being built and the older units
that have housed mostly students have
either been condemned or demolished.
Other units have turned into condomini
um, he said.
F.R. Michals, owner of Nebraska Real
Estate Corporation, said 75 percent of his
renters are students. The percentage has de
creased, Michals said, because students who
would normally rent alone are now doub
ling up and splitting the rent between
themselves.
An average one bedroom apartment
with stove, refrigerator, central air, and
wall-to-wall carpeting rents for $225 a
month without electricity and gas, Michals
said. The same apartment 10 years ago
would have rented for $110.
Many of the rent increases, Kean said,
are due to high construction costs for new
apartment buildings and high interest rates.
In 1971 a one bedroom unit cost $10,000
to build. Today the cost of construction
has nearly tripled, costing $28,000, Kean
DfDSD( thursday
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says television violence might have
detrimental effects on children. . . Page 6
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offers a night of poetry t
Roger8 ' ' the Dodger: ' ' Nebraska I-back
Roger Craig is used to being compared
to his brother, Curtis Page 10
said.
Kean said that in the past when interest
rates ranged from 6.5 percent to 75 per
cent, builders often borrowed 100 percent
of the money needed to construct a hous
ing unit. Today, with the lending rate at
about slightly more than 18 percent, build
ers often pay 50 percent of the cost of
building in cash from their own pockets,
Kean said.
In addition to the high building costs,
interest rates, the cost of gas and property
taxes have increased sharply, Michals said.
What all of these costs add up to, Kean
said, is that rents will go up to justify costs
of running the buildings.
For an apartment building to be a good
investment, Kean said, the owner must
make about 55 cents per foot per month.
Currently in Lincoln, owners are receiving
38 cents, he said. In order for an apartment
building to be a comparable investment to
money market certificates or stocks and
bonds, Kean said there would have to be a
17 cents per foot increase in the rent now
received.
Alums speak
Governmental regulations are hurting
the growth of business, several UNL gradu
ates who are guests of the university for
Master's Week said at a Wednesday press
conference.
George Cobel, president of the D-H
Titanium Co. of Midland, Mich., said the
government must be careful not to over
burden business with unnecessary regula
tions. "No one is suggesting we repeal the
Sherman Antitrust Act," Cobel said, "but
some of these regulations approach the ri
diculous." Cobel said government red tape is so
prevalent that patents on some chemicals
expire before the chemicals are marketed.
W. Grant Gregory, a member of the in
ternational board of directors of the ac
counting firm of Touche Ross & Co. said
not enough attention is being devoted to
research and technology.
"Research has taken a back seat," Greg-,
ory said.
Continued on Page 2
those cuts fall far short of what would be
needed to balance the budget in any
reasonable amount of time," Volcker said.
Talk about balancing the budget is con
fusing unless the economic conditions are
specified in which the budget could and
should be balanced, he said. But to balance
the budget cyclical and structural prob
lems must be corrected first, he said.
"There is a great deal of inertia in an
economy like ours for wage and price
trends," he said. 'This inertia has intended
to accelerate the inflation process and the
average citizen will have to be shown con
clusively our commitment to a sustained
anti-inflation policy."
Volcker said he is optimistic that as the
trend of rising costs and prices subsides
there will be a firm foundation for sustain
ed growth and low interest rates.
"The battle against inflation has been
fairly joined, and we can see signs of pro
gress. We must carry through until the
battle is won."
J : V I "
X
Photo by Mark Billingsley
Paul Volcker
Library to close at 1 a.m.
By Melinda Norris
Love Library will extend its hours to 1
ajn. Sunday through Thursday beginning
Nov. 30 and lasting to the end of the sem
ester, ASUN Sen. Greg Abboud told the
applauding senate Wednesday.
Abboud said the expansion of hours is
an experiment and, if a significant number
of students use the library until 1 am., "it
should be no problem keeping it open."
"If the students want it," Abboud said,
"then they've got it."
Interim Vice Chancellor John Strong
was "very cooperative" in setting up the
experiment, Abboud said.
"Strong is truly working for the best in
terests of the students," he said.
Abboud cited several reasons for the
later hours.
"The present hours are tough on the
working student," he said. "If people work
til 9 p jn., and the library closes at 1 1 p jn.,
when do they study?
"With Nebraska Hall closing within a
year," Abboud added, "there will be no
place for the students to study."
Love Library closes early compared to
other college libraries across the state Ab
boud said. The UNO Library is open uniu
2 ajn. and the Alumni library on the
Creighton University campus remains open
til 1 ajn.
"I appreciate the. cooperation of Dean
(of libraries Gerald) Rudolph in this pro
ject," he said, "because the burden is fall
ing on his shoulders."
In another announcement, Monica
Frank, chair of the Commission on Student
Life, said the commission will be ordering
student discount cards Dec. 1 and is devel
oping a plan to allow students to ride the
Lincoln city buses for free.
The student discount cards will re
semble a credit card, Frank said, and will
give students discounts on purchases
at the participating merchants listed on
the back of the card.
The card costs nothing, Frank said.
Merchants will pay for the card itself.
Although the cards will be ordered
in December, 15 weeks are allowed for
delivery, Frank said, so they won't be avail
able until March.
The commission has contacted Dick
Rohde, manager of the Lincoln Transit
System, seeking a possible contract with
LTS, Frank said.
Admitting the plan is still in planning
stages, Frank said free busing for students
may be exchanged for a slight increase
in student fees. This free-fare would
extend over four or five years, she said.
"The cost for the experiment won't If any contract develops, she said, it
cost that much compared to the need,' he will be placed on a referendum in the
said. March elections.