The Atlanta Constitution from Atlanta, Georgia • 29

Indicators Dow Average 17.07 NYSE Volume 135.77 million NASDAQ 0.47 Prime Rate 10.00 26-Week T-bills 7.34 MM i Gold in New York $409.20 TUESDAY, SEPTEMBER 20, 1988 THE ATLANTA CONSTITUTION SECTION Use Tax Funds to Save Thrifts, Bank Leader Says Nick ft commercial bank deposits up to $100,000, might be merged with the Federal Savings and Loan Insurance Corp. (FSLIQ, which insures thrift deposits up to that amount The deterioration of the thrift industry and the FSLIC that insures it will be the single dominant financial issue for bankers in 1989, Mr. Pistor sid in a speech to the Iowa Bankers Association. He estimated the bailout would cost $50 billion to $100 billion, considerably more than predicted by the federal government's General Accounting Office (GAO), which estimated last week that the cost of merging, closing or disposing of insolvent thrifts would be in the range of $45 billion to $50 billioa Mr. Pistor said Congress should "accept the facts of life" that the problem requires taxpayer support He said the size of the problem was so large it left little alternative to using tax dollars to find a solutioa "The FDIC wasn't created to bail out insolvent thrifts, he said.

The FDIC insures an individual's deposits of up to $100,000 at commercial banks, while the FSLIC provides similar insurance at thrifts. The insurance funds are supported by premiums paid by the insured institutions. BAILOUTS Continued on 4D The Associated trcs DES MOINES, Iowa Tax dollars, and not the funds of the bank-financed Federal Deposit Insurance Corp. (FDIC), should help bail out insolent thrift institutions and their struggling insurance fund, a banking leader said Monday. Charles Pistor, president of the American Bankers Association, said an association committee will recommend Tuesday not only that tax funds be used to deal with the growing problem, but that the government step in to increase the pace of liquidation of insolvent thrifts.

Mr. Pistor noted that many bankers are concerned that the $18 billion FDIC, which insures vx I Charles Pistor Experts Disagree About Prospect Of Inflation Surge Is the inflation dragon dead, still hibernating or simply hiding U.S. Senate behind a big tree, waiting with malice aforethought to spring out when we least expect it and scare us witless again? 1 Ever since inflation rose to unprecedented double-digit levels in the 1970s, we've nurtured an underlying fear that it is only a question of time before the monster scorches us again with its fire and smoke. iroves App -i i- "I vii i I n.nn i I i IUI1MMMIU UU.HU J.I. M- U1 1 I.

I H. IUM HJ.HU1U 1 1L I. UU lHIH UJA.M -M J.IJ IM uji i 'h- Jk-: 'V-Srhf Uwin HUH If IWI.lll.l.UIIIIHIIII rvvv IJ 6 I Canadian Trade Pact For a while there, it appeared! WILLIAM BERRYStaff The Piedmont Road Kroger store in Buckhead is one of 63 Kroger stores in metropolitan Atlanta, up from 52 in 1983. fcff'Kroisei i Si Net Income fifln Pinions dollars No. of Stores (In thousands) 250 1.5r ri Growth the inflation dragon was about to breathe its last hot breath as consumer prices rose a meager 1.9 percent in 1986.

However, the decline in the rate of inflation was largely influenced by the collapse in oil prices, which at one point fell under $10 a barrel. Clearly, it would have been premature to read the last rites over the somnambulant dragon, for we have since experienced what might best be characterized as creeping inflation. Consumer prices were up 3.7 percent in 1987 and are now at an annual rate above 4 percent Many economists, including Albert Wojnilower of First Boston expect consumer prices to maintain their upward trend for the next year or so. Mr. Wojnilower looks for inflation to come close to a 6 percent rate in the next 12 months.

That's the time to start worrying about inflation, not now, the First Boston economist concludes. Producer Price Index Noted But the financial markets have been shadow boxing the crafty dragon for some and inflation-sensitive traders and investors have been keepiiig a sharp eye on the monthly government reports on price trends, On Sept 9, the Labor Department reported its producer price index for finished goods jumped an unsettling 0.6 percent in August which translates into a 6.9 percent compound annual rate of increase. So traders are focusing on the government's consumer price index (CPI) report for August to be released The CPI which rose at an annual rate of 5.2: 'percent for July, is expected to follow for August the lead of the producer prices number. But Lawrence A. Kudlow and his fellow economists at Bear, Stearns Co.

assert that most of the Wall Street boys, in effect are acting like a bunch of frightened rabbits. i In short, Mr. Kudlow infers Wall Street which is forecasting higher inflation and therefore interest rates as a 'result of the robust economy, i low unemployment and rising capacity uti-' ligation is acting as though the dragon is ready to pop out from behind that big tree. Wall Street, Mr. Kudlow asserts, is wrong.

Should Be Looking Elsewhere i Sales I (In billions) $20T 1 I lOUfll) '83 '84 '85 '86 'BT I7ie Associated Prm WASHINGTON The Senate approved a landmark free-trade agreement with Canada Monday, clearing the way for America's part in phasing out tariffs on $131 billion in merchandise that crosses the border each year. President Reagan lauded the Senate for approving the measure 83-9, saying negotiators for both countries had reached an accord that "will benefit our people for generations to come." "The agreement will create jobs and stimulate economic growth on both sides of the border and create the largest open market in the world," he said in a statement The measure never had any partisan flavor in the United States; 43 Democrats joined 40 Republicans, in voting for it while seven Democrats and two Republicans opposed it The bill, which now goes to Mr. Reagan's desk, would open the door for a 10-year phase-out of tariffs and a number of other trade curbs under the pact signed, in January by the president and Prime Minister Brian Mulroney. But political problems on the Canadian side must be resolved first Canada's House of Commons' has passed a bill to start the tariff phase-out, but majority Liberals in the appointive Senate have bottled it up until Mr. Mulroney calls new elections.

Mr. Mulroney is expected to call elections within a few weeks. Defeat for his Conservative Party could doom the plan. Israel is the only country that now has a free-trade agreement with the United States; But the volume is small compared with the $131 billion in goods a year that make Canada this country's top trading partner. The measure drew opposition from several senators representing energy- and wheat-producing states.

The measure already has cleared the House. In talks leading to the pact, Canadians agreed to drop subsi- dies for rail shipment of grain to Vancouver, British Columbia, but not similar payments to defray costs of sending wheat to the giant port at Thunder Bay, Ontario. 200 150 100 50 0 1.3 -isnitwn "11 if Although the firm is likely to stay dominant in Atlanta, a takeover challenge from Dart Group is expected to put it deep in debt. Kroger share of the metro food-store business is 34.6 percent. 63 '848586 "87 83 '84 '85 '86 '87 Source: The Krogef Co, CINDY JONESHULFACHOHStafl nearest competitors, Winn-Dixie Stores, Super Valu (Food Giant and' Cub Foods) and Big Star, is 19 percent, 15 percent and 14.8 percent respectively, according to the Shelby Report Kroger's strength in Atlanta will make the stores attractive to the ultimate winner of the takeover battle.

"Strong markets that are producing strong results and cash flow are needed by the remaining company to fund debt service," said Elizabeth M. Shiels, senior analyst for Hilliard Lyons a brokerage firm in Louisville, Ky. "You don't sell your stars; you sell the weak sisters." On Monday, the Dart Group offered to buy Kroger for $4.32 billion. The Landover, KROGER Continued on 9D By Chris Burritt StaffWrUer KrogerCo. has been a nearly invincible supermarket giant in metro Atlanta, but a takeover battle that heated up Monday for the Cincinnati-based chain could produce the first chink in its armor.

The battle between Kroger's management and Dart Group Corp. is expected to force the company deep into debt, which some industry experts say may hamper the growth of the chain locally. But other observers maintain that Kroger has the clout to withstand any cutbacks forced by a takeover battle. are not an invincible giant, but they are solid as a rock," said C. Craig vice president of Southern operations for Grand Union the parent of Big Star, a Kroger rival.

"Kroger has really positioned itself with the kind of real estate and facilities that will carry them through the next few. years," Mr. Sturken said. Kroger has spent more than $200 million building and refurbishing stores in metro Atlanta in the' last three years, said Fred C. All-vine, a Georgia Tech marketing professor, The number of Kroger stores here has increased to 63 from 52 in 1983.

Kroger's share of the more' than $3 billion metro Atlanta food store business is 34.6 percent, according to the February issue of the Shelby Report of the Southeast A year earlier, the Gainesville-based trade publication pegged Kroger's share at 30.8 percent Kroger wouldn't comment on the potential impact of the takeover battle, but Dr. Allvine, who specializes in grocery marketing, said the company could be forced to curtail its captial spending. "If Kroger increases its debt, they are going to have to focus more on cash flow and become less aggressive in capital expansion," Dr. Allvine said. "Kroger will not be able to stake out the choice locations for stores as it has done over the past 15 years," he said.

Such a situation may put Kroger at a disadvantage in the face of stiff competition from rivals vying for a bigger stake in the local grocery business, observers say. Cub Foods, for instance, opened a store in Stone Mountain on Sunday, its sixth in metro Atlanta. The market share of its three Foes of Textile Bill to Permit House Vote Dukakis, Bush Camps Debate Health Policies Action Will Almost Certainly Bring About A Pre-Election Confrontation With Reagan The Associated Press WASHINGTON Opponents of legislation to curb textile, clothing and shoe imports have agreed to allow -a House vote on the Senate-passed bill rather than sending it to a House-Senate conference committee, a supporter of the measure said Monday. The decision virtually assures a pre-election showdown on the textile bill between President Reagan and Congress. Rep.

Ed Jenkins (D-Georgia) said he expects the House to vote Friday to approve the Senate-passed bill and send it to Mr. Reagan. The president's 1985 veto of a similar textile bill was sustained by just eight votes in the House. "I don't know if we have picked up any votes or not" since the last override vote, said Mr. Jenkins, a sponsor of the earlier bill.

"I think it would be a tough job to override." Mr. Jenkins said the decision to allow a House vote on the Senate-passed bill was relayed to textile-state lawmakers late last week by Rep. Dan TEXTILES Continued on 9D ri i nvi fi nmf if Witiw iri firi-n nw The Bear, Stearns -economist says Wall Street traders should be focusing instead on key market prices such as gold, sensitive in-; dustrial commodities including oil, the dollar and interest rates. These are better forecasting tools, and they are signaling er economic growth, a slower rate of. increase in prices, and thus lower interest rates, Kudlow avers.

The stronger dollar has tended to hold down inflationary pres-'. sures, though Mr. Kudlow ac-; knowledges he's disturbed by the Treasury's opposition to further dollar appreciation. He adds that declining gold and oil prices are reflecting disinflationary tendencies in the 1 However, some observers warn that not too much should be read into the recent action of gold and oil prices because the precious metal is being unduly influenced by oversupply and oil by overproduction of some members of the Organization of Petroleum Export-- ing Countries. So what's that dragon really, up to? Nick Poulos is business editor of The Atlanta Journal-Constjputlon.

Rep. Ed Jenkins ByPamBelluck StaffWriter The Bush campaign fired rhetorical torpedoes Monday at Michael S. Dukakis's health-care policy, while the Dukakis camp claimed its candidate would be the first president "who really understands health care." In an Atlanta debate before the Association of Private Pension and Welfare Plans, David M. Walker, assistant secretary of labor for pensions and welfare benefits in the Reagan administration, traded barbs with Dukakis emissary Gary A Christopherson, director of health legislation for the 'House of Representatives Select Committee on Aging. Calling the Massachusetts governor's ideas a "dictatorship approach," Mr.

Walker criticized most of Mr. Dukakis's specific health-care proposals as too costly. "Where do you draw the line to big government?" Mr. Walker asked, assailing the Massachusetts governor's endorsement of a mandatory health insurance system. "It's the nose of the camel, and the camel is mighty big and mighty ugly once you get past the nose." Mr.

Christopherson shot back at Republican criticisms, citing Reagan administration proposals to cut Medicare funds and raise the premiums charged elderly benificiaries. "Mike Dukakis came out of a family HEALTH Continued on 6D CSX Is Restructuring to Concentrate on Transportation Businesses percent of its outstanding common stock and sell two natural gas subsidiaries: CSX NGL Corp: of Houston and Texas Gas Transmission Corp. of Owensboro, Ky. The company also is considering the sale of its interests in several resort properties, including the famous Greenbrier resort in White Sulphur Springs, W. said Thomas E.

Hoppin, a spokesman ByTomEblen StaffWrlter i CSX Corp. announced a billion-dollar, restructuring Monday designed to increase stock value and allow the company to concentrate on its transportation1 businesses. CSX said it would buy back as many as 60 million cf mmon shares about 38, at the company's headquarters in Richmond, Va. In addition, CSX said it is "immediately launching an aggressive program designed to' significantly reduce operating and overhead costs." Company officials declined to elaborate on the announcement, or say how it CSX Continued on 9D.