By The
Associated Press
Edited by Jana Pedersen
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Economists say recession is imminent
WASHINGTON - The nation’s
economy nearly came to a standstill
in the second quarter, edging up a
feeble annual rate of 0.4 percent, the
government said Tuesday. Many of
the nation’s top economists believe a
recession is imminent - if not under
way already.
While White House spokesman
Marlin Fitzwalcr said “we don’t be
lieve we are in a recession right now,”
he acknowledged the latest Commerce
Department report on the gross na
tional product “is certainly cause for
concern. It’s not good news.”
The department’s revised report
on the GNP — the nation’s total out
put of goods and services - was the
lowest since a 0.3 percent rate during
the last quarter of 1989 and showed
the economy weakening even before
the Persian Gulf crisis.
“The economy was headed to
ward a recession before Iraq, and Iraq
was just the nail in the coffin,” said
Allen Sinai, chief economist for the
Boston Co. A recession “seems ines
capable,” he said.
Surveys following Iraq’s Aug. 2
invasion of Kuwait - and the subse
quent oil-price spiral -- showed many
top economists forecasting an immi
nent recession.
The National Association of Busi
ness Economists reported Tuesday
that more than half of the 71 profes
sional forecasters responding to its
survey in late August and early Sep
tember said a recession already has
begun or will begin in the fourth quarter
of 1990 or the first quarter of 1991.
And half of the top economists
surveyed each month by Blue Chip
Economic Indicators now believe the
economy will enter a recession this
year.
“In a sharp revision of earlier views,
50 percent of the 50 panel members
replying . . . now think the long
delayed recession will start this year,”
wrote R.J. Eggcrt, the newsletter’s
editor.
“Of those expecting the recession
to begin this year, three believe it
actually began in the second quarter,
six expect the downturn to begin in
the current quarter and 16 have pegged
the fourth quarter of this year as the
starting date.”
Sinai pointed to negative economic
data already available for July and
August and said, “It looks like the
recession started in the third quar
ter.”
‘ The economy ground to a halt in
the second quarter and is in the proc
ess of contracting right now,” added
Richard W. Rahn, chief economist
for the U.S. Chamber of Commerce.
Gas prices could reach up to $2 a gallon
NEW YORK - As crude oil
approaches $40 per barrel, some
analysts say consumers should enjoy
$1.35 a gallon gasoline while they
can.
Gas prices arc likely to go up,
perhaps even beyond $2 per gal
lon, if a shooting war breaks out in
the Persian Gulf, experts said Tues
day. And if oil should stay high for
a sustained period, the fallout will
be widespread, running up the cost
of practically everything while
slowing economic growth.
“This is not good news for the
consumer,” said Peter Beutel, an
oil analyst with Pegasus Econom
etric Group Inc. in Hoboken, N.J.
“The problem with energy is it
permeates the economy like a ripple
in a pond. It’s not just the price of
heating oil and the price of gaso
line.”
Not all analysts believe oil will
stay as high as it is. They say that
too much war hysteria may have
been built into the market, that
Iraq’s ability to take out Saudi
Arabian oil facilities may be over
estimated, and that replacing a
bombed oil well is much simpler
than replacing a bombed factory.
Others, including Beutel, say
$40 barrels of oil seem inevitable
in the near future. Some estimates
have put oil at $60 to $65 a barrel
during a war.
Oil prices have climbed stead
ily since Iraq invaded Kuwait last
month. Saddam Hussein’s saber
rattling this week put them less
than $1 away from the ominous
$40 figure. Crude last reached that
plateau a decade ago, in the last oil
crisis.
A price index tied to the GNP waj
unchanged at an annual rate of 3S
percent in the second quarter. Bu
with the surge in oil prices, inflatior
as measured in the Consumer Price
Index jumped 0.8 percent in Augusi
alone. The higher prices will be re
flected in the third-quarter GNP re
port.
The price of oil before the Iraqi
invasion was less than S20 a barrel. Il
reached a record S38 a barrel at one
point on Monday.
Since oil is used in producing sc
many consumer goods as well as for
; heating and transportation, any price
1 increase not only slashes available
: funds needed to feed economic growth
but also feeds inflation.
The department originally had
estimated the economy grew at a 1.2
percent rate from April through June,
after advances of 1.7 percent in the
first quarter and 2.5 percent in 1989
and 4.5 percent in 1988.
But it said Tuesday that more
complete data showed weaker net
exports an'd lower inventory accumu
lation than first thought.
The new data showed net exports
declining by S9.2 billion rather than
$4.5 billion, and inventories totaling
$19.8 billion rather than $22.4 bil
lion.
‘‘But there really were no areas of
strength,” Sinai said.
Consumer spending, which repre
sents two-thirds of the nation’s eco
nomic activity, rose just 0.2 percent,
down from 1.1 percent in the first
quarter. Business investment fell 4.7
percent after a 5 percent gain from
January through March.
Saddam addresses America
WASHINGTON - Iraqi President Saddam Hussein said in a message
to Americans broadcast Tuesday that President Bush was sending
Americans to a war more terrible than Vietnam.
In a 75-minutc address taped last week, Saddam warned that if Bush
were to launch war against Iraq, “it would not be up to him to end it.”
Silting at his desk with an Iraqi flag at his side, Saddam said he was
addressing his message to the American people to explain the truth
behind Iraq’s Aug. 2 invasion and occupation of Kuwait.
The rambling address, peppered with references to Allah and his
teachings, repeatedly accused Bush and Kuwait’s rulers of plotting to
impoverish his country and steal its oil.
I “Bush, ladies and gentlemen, is sending your sons to war for no
purpose save fatal arrogance,” Saddam said.
The U.S. decision to deploy troops in Saudi Arabia and the possible
war that could ensue would be a repeat of the Vietnam experience for
the United States, except “more violent and causing bigger losses,”
Saddam said.
He challenged Bush, again, lo an international television debate so
that he could tell the world the facts about Iraq’s actions and so that the
American leader could learn about his intentions.
Iraq desires peace, but one that is based on a broad resolution of all
the region’s problems, Saddam said. He repealed his call for a peace
conference that would resolve Israel’s 23-year occupation of Arab
lands, Syria’s 14-year occupation of Lebanon and Iraq’s claims to
Kuwait.
Cable News Network began airing portions of the tape at 4 p.m.
EDT.
U.N. approves air-embargo
UNITED NATIONS - The Security Council voted 14-1 on Tuesday
to impose an air embargo against Iraq, cutting off flights to and from
that nation and occupied Kuwait. Cuba cast the lone dissenting vote.
Resolution 670 also calls on all member slates of the United Nations
to deny landing rights to airplanes coming from Iraq or Kuwait, which
was invaded Aug. 2 by the Iraqis and annexed.
Only flights authorized by the Security Council’s sanctions commit
tee will be allowed lo go to Iraq and Kuwait, and then only after they
have been inspected to confirm they are carrying humanitarian cargo --
food or medical supplies.
It also calls on all U.N. member nations to ‘ ‘detain any ships of Iraqi
| registry which enter their ports and which are being or have been used
I in violation of Resolution 661,” the council’s original trade embargo
resolution passed Aug. 6.
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Nebraskan
Editor Eric Planner Professional Adviser Don Walton
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ALL MATERIAL COPYRIGHT 1990 DAILY NEBRASKAN
East Germany’s last leader
says people fear unification
EAST GERMANY - The lasl leader
of a sovereign Easl Germany said
Tuesday his people arc truly afraid as
they prepare to join the competitive,
free-thinking and robust society next
door.
Lothar dc Maizierc, in a wide
ranging talk with The Associated Press
board, said his nation’s 16 million
people will need help to thrive in a
new world based on initiative and
free enterprise.
He said Easl Germans, forced to
live in a Communist society for four
decades, have grown accustomed to a
life in which their futures — and their
jobs -- were largely preordained by
the government.
Although most Easl Germans des
perately desire the German unifica
tion that takes place Oct. 3, de Maizi
erc said they realize they will be
expected to take control of their indi
vidual destinies.
“The future in the past meant the
future prescribed by the Politburo,”
he said. "Now the people sec their
future is not a prescribed lime, but a
free time. This is something people
did not learn, and they arc afraid of
that.”
He said the government of a united
Germany must have a “strong social
consciousness” to help East Germans
make the transition and avoid becom
ing a second-class population.
Dc Maizicre, a 50-year-old law
yer, will turn over to West Germany
the leadership of his nation in just
eight days.
He was East Germany’s first freely
chosen leader and guided it through a
rocky, six-month period of tough
negotiations on the terms and timing
of unification.
He said he has made no decision
on whether to accept one of the tour
new Cabinet posts that wil! be filled
by East Germans in the newly ex
panded government of West German
Chancellor Helmut Kohl.
Butdc Maizieresaidhchas viewed
his role as prime minister as that of a
lawyer representing a very large client,
and he would accept a similar role in
a united Germany.
He defended his people, who crit
ics say will be bringing nothing to a
united Germany but debts, social
problems, a questionable work ethic
and a crumbling economy.
He said East Germans did not choose
their system, which was imposed by
the Soviets and remains a legacy of
the war started by the Nazis. The
nation, de Maiziere said, is part of
German history and the cradle of the
culture that gave the world Bach,
Goethe and Handel.
Students protest ban on clothing
OMAHA - An Omaha school board board members. since the era of Vietnam war protest
committee heard 17 high school stu- Brace, who wore a sign saying ers.
dents protest new guidelines banning “Freedom of Expression Big Brother “Restricting what students can wear
gang-style clothing and symbols from is Watching” pinned to the back of to stifle gang activity treats only the
schools, then decided to stay out of his black leather jacket, said he was symptoms and deprives all students
the controversy. suspended Friday for refusing to put of their First Amendment right to
The students from Omaha’s Burke the jacket in his locker. expression,” Schatz said.
High School Monday protested guide- Brace and other students, some of “The goal is to ensure student
lines that ban certain professional whom said they may be suspended safety and to reduce the anxiety and
athletic team clothing, hair styles, for leaving school early for the 1 p.m. intimidation factors in schools,”
hats or jackets worn in the school meeting, said their right to express Assistant Superintendent Don Bcn
building, saggy pants worn below the themselves through clothing shouldn’t ning said.
hips, red suspenders, combat bools, be infringed because a minority ol He and Ron Burmood, director of
and bandannas. students arc involved in gangs. student personnel services, said dis
The committee took no action to They won support from BiU Schatz uia administrators and principals
rescind or rewrite the guidelines. of Lincoln, who said he represented developed the guidelines because some
“If the gangs all start wearing suits, the American Civil Liberties Union schools have had fights on campuses
will you stop wearing them? Burke and hadn’t encountered such an in- arising out of clothing worn by stu
High student Jason Brace asked the fringement of freedom of expression dents
Mulroney s approval rating plummets
TORONTO - Conservative Prime
Minister Brian Mulroney heads into
the new political season with an
awesome array of worries ranging
from rebellious Indians and unpopu
lar taxes to threats of a breakup of the
confederation.
Mulroney is in big trouble with
voters, scoring 14 percent or less in
the polls. But the opposition Liberals
have been unable to capitalize on
Mulroncy’s growing unpopularity and
were drubbed in two recent provin
cial elections.
Many Canadians feel the country
is lcaderlcss and adrift.
Mulroncy’s government is the most
unpopular since the Gallup organiza
tion began taking polls in the country
50 years ago. The polls say the Pro
gressive Conservatives arc favored
by only 20 percent of the population.
At the end of July, Gallup asked
Canadians who would make the best
prime minister - Mulroney, Chretien
or socialist New Democratic Party
chief Audrey McLaughlin.
Of those questioned, 30 percent
chose Chretien, 18 percent McLaugh
lin and 14 percent Mulroney. Thirty
eight percent rejected all three or said
they didn’t know which one they liked.