Winnipeg Free Press

Winnipeg Free Press (Newspaper) - May 8, 1981, Winnipeg, Manitoba 4 Winnipeg free press Friday May 8, 1981 Winni Eggers feel High interest rates Tough necessary re Stroo x by Greg Bannister High interest rates Are unpleasant but necessary Medicine for High inflation and a weak Dollar a majority of people surveyed in Winnipeg by the press yesterday said. I m certainly not in favor of it High interest but i Don t think there is any said Eric Rogerson a retired businessman who lives on King Ston Row. The Bank of Canada has no other Choice when inflation is As High As it is and the Dollar is Rogerson s View was shared by All but two of 20 people surveyed at ran Dom in Winnipeg late yesterday for reaction to the Selling of the record High 18.71-per-cent prime rate by the Bank of Canada. Rogerson said he knows what High interest rates will mean to businessmen from his Days in business. If your Cash flow is Low you have to borrow and at today s astronomical rates businesses will certainly fold up. They will have no he also said the High rates predicted for consumer Loans will probably Trig Ger a minor recession. Another former businessman Walter j. Martens of Wellington Crescent also predicted Tough times ahead for Small merchants. In my Case in business prime rates at Banks hit record 19.5% now i d advise people to pull in their horns and be very careful about what you Martens provided a vivid example of the Strain Many Small businessmen were under due to the rising rates. He said he recently observed a Man faint in a local Bank after being told by the manager that his new yearly interest charges on a refinanced loan would Rise to from he walked out of the manager s office looking pretty Pale. Then he just keeled Over and hit the Brandon housewife Agnes Kasmir Cek in town to do shopping yesterday said had come to expect increases such As yesterday s. I guess i should be upset but it has been going up so frequently i be lost she said she and her husband owned their Home and had no Large purchases on the horizon i guess you could say we Are Lucky in that several people said they would Post pie Large purchases As a result of the interest rates they would face on any loan. University of Manitoba student Richard Grenier 22, of Pembina High Way said he had been considering buy ing a new automobile to replace the 1972 car he has been nursing alone for the last three years. It looks now As though i would be faced with a 22 or 23 per cent interest rate on a Bank loan which i can t Harry Mackay of Fairlane Avenue voiced a common sentiment i m very glad 1 Don t owe a pile of a retired disabled Veteran Mackay said three of his children own Homes and have talked to him about the problems with interest rates. It the Rise in rates must be done for a reason but i sure Don t under stand it David Sanders Al of Rownd ave nue said without a doubt i won t be buying a House in the near Sanders was one person to express concern Over the government s handling of the situation. I Hope those Guys know what they re doing. I really Don t know How they figure it higher rates will help the Economy. I guess we have to Hope they Are a businesswoman who declined to give her name also attacked the government s method of fighting inflation. There Are things that could be done other than raising the interest rates. The whole question of Oil pricing and allowing the Laws of Supply and demand to function normally is one the government should address. I think they Are doing too much tinkering with the Jim win v Winnipeg flee press continued from Page i but if prices have been set based on 10-per-cent interest rates for example and the rates go to 21 per cent businessmen will lose their profit margin Benham said. Benham said he Hopes the rates will have peaked and be on the decline by the end of june. We re looking at a relatively Short period of this crazy lie said. Harvey Scrivener of Dominion securities in Winnipeg said this is going to make things very difficult for people buying houses or taking Loans. It s a very difficult As a Rule of thumb you can add at least two per cent to the prime rate to determine the rate for consumer Loans although it May vary from customer to customer depending on personal credit ratings. Benham said people can hold off buying Homes or taking consumer Loans in the Short run and wait out the rates but people appear to be taking Mort gages now despite High interest rates. The shifts in interest rates Are costly Over the life of a consumer loan Al though they do not appear to mean much in terms of monthly payments. A loan for a new car for example paid Back Over five years costs about a month at 17 per and a month at 20 per cent. But Over the five years it Means paying the Bank about More. The week has also seen mortgage charges increased by several lenders. While some mortgage Money was available at about 17 per cent most Model Issue probed continued from Page 1 i he modelling service about two months ago after receiving a complaint from the student who said Soliman initially offered nude modelling assignments and later pay for sex. Two reporters placed separate ads in the jobs wanted listing of the classified advertising Section of the newspaper to Check the student s claim. Soliman telephoned both of them and in several subsequent Telephone Calls offered them work As nude Art models and the Opportunity to have sex for pay with the men and women he could refer them to. In an interview earlier this week. Soliman said he Only interviewed the student when he came to his office on two sundays. He said he met people at his office just to meet the person and get their Telephone numbers. I met somebody for an interview hut not for a modelling he said he went to his office which he described As an open area to meet the student. He said he went to his office to work on government business at the same time. I had to go to the office to do some he said. Soliman said the student also mod oiled for him at his Home. Soliman also said the student threatened to Telephone his employer if he did t receive More assignments As he had been promised. He said the student told him he had tapes of some of their conversations. The civil servant said he advised the student to Contact his lawyer. He was paid for his modelling Job and the Guy was expecting More and lie phoned at work acid said he would be phoning my so Man said he told the student my Boss knows that i am a photographer that i am an artist. 1 am not hiding what i am go and see my when interviewed by the free press Soliman said he was not worried that he might lose his Job Over the modelling operation because he could easily get Mother. Lenders were seeking 17.5 per cent and at least one jumped earlier this week to 19 per cent. For people seeking either a new mortgage or a renewal of one taken out five years ago the rates can mean Cri Sis. A mortgage to be repaid Over 25 years for example would Cost about a month in principal and interest at 17 per cent and a month at 19 per cent. Little Choice if a Homeowner however took out a mortgage a few years ago at 11 per cent he has been paying about a month against the renewal charges he could be facing if he Renews soon. Many economists agreed that the Bank of Canada and the Canadian government have Little Choice but to continue policies if they make reducing inflation the no. 1 economic priority. Several asked to comment on the latest surge in interest rates noted that the United states is committed to High rates in its Battle against Canada is locked h since the two coun tries economies Are so closely joined. They also noted that interest rates have been extremely volatile in the last year rising to a then record 17.5 per cent a year ago and plunging nearly five percentage Points last summer be fore starting the climb that has produced yesterday s record Levels. Ben Gestrin vice president and chief economic adviser to the Commerce Bank said the current situation is built on Fine tuning the . Money Supply and this leads to extreme volatility in interest better to ride Tiger he said that while no one likes High interest rates it is better to ride the Tiger and try to Calm him Down rather than face the problems that could arise from an unrestrained Economy. G. P. Hanson assistant manager of Money markets at the Royal Bank said demand throughout the Economy has continued to be stronger than anyone had anticipated. Since demand has to be eased before inflation can be reduced High interest rates Are needed he said. One economist however said that using monetary policy alone will not bring inflation under control. He said government spending also must be reined in. Using monetary policy alone is like pushing with your right hand and pull ing Back with your he said. They be got to work Many of the economists agreed that speeches earlier this week by Gerald Boury governor of the Bank of can Ada and finance minister Allan Mac Eachen spelled out Ottawa s economic approach. Bouey told a Moose jaw sask., Audi ence wednesday that canadians cannot expect interest rates to decline while the country has a serious inflation problem. Inflation As measured by the con Sumer Price Index now is at 12.9 per cent annually and recent predictions say it is More Likely to increase this year than decrease. Bouey said High interest rates make life difficult and even painful but they Are the Best Way of fending off even More disastrous inflation. Maceachen reaffirmed his govern ment s anti inflation fight before a to Ronto audience. As Long As inflation persists he said. Canadians must face High interest rates. Banks and other financial institutions have been increasing the interest rates they pay on deposits and term Deposit rates have jumped in the past few weeks. One Winnipeg Trust company was offering 17 per cent on Short term deposits yesterday. A Small group of spectators watch As a Winnipeg firefighter pours water on a burning wooden Bridge yesterday at Waverley Bridge Blaze Street and Chevrier Boulevard. The Bridge was in the process of being demolished so damage was minor. Immigrant ;