A Tougher Year for Distributors

by Robert D. Peterson Prcsrden t Palnrer G. Lcwis Co. Auburn. Wl.

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different in '801 ln addition, they substantially increased reserve requirements and this reserve change made it necessary for all lending institutions to substantially increase the spread on the money they do lend. These gigantic monetary moves were equivalent to hitting the construction industry right between the eyes witha2x4!

There isn't any questionthat Federal Reserve Chairman Volcker got everybody's attention when the Federal Reserve recently jumped the discount rate all the way from I 1 to l2ohin one single move... only l9 days after they had raised it to I I')l,. By the time you read this, it could possibly be even higher.

In my opinion, however, these moves were needed, simply because the world is finally recognizing that inflation is an even greater danger than recession.

At this point in time. it's essential for all of us in this industry to definitely face facts. And the biggest fact of all is that the current money situation is having a huge negative effect on any industry that depends upon financing, whether it be housing, cars, boats, or what have you.

The stark reality of this was driven home to me when it was pointed out, at the end of October, that mortgage lending had alreadY dried up in about 5001, of the states due to their state usury limits. As these comments were being finalized, some national legislation was being discussed to override these state usury limits with ProPosed new floating limits to be tied to the federal reserve discount rates. Let's hope some quick action is taken.

Practically everybody in our industry is hoping that interest rates will be lowered in the relativelY