April 24, 1997

A glimpse from the inside
Guest Editorial
Steve MacDow
University Task Force on Student Life

I first became a member of the Appalachian State University community nearly two decades ago.

As an undergraduate on the infamous 10-year plan, I lived in a residence hall as a freshman and worked as a security assistant the entire time I was a student. I have employed more than 400 ASU students as a local business manager, and I have been a part-time instructor here for the last three years.

When Dr. Borkowski asked me to serve on the University Task Force on Student Life, I was enthusiastic about accepting the opportunity to make a positive contribution to a community that has been an important part of my life.

I have since had the opportunity to meet and interact with most of the other members of the Task Force, and I have met none who view our task with an "us versus them" mentality. The singular force uniting this diverse group of students, faculty, and staff is a concern for the sense of community on this campus.

On February 14, the Chancellor charged the Task Force with evaluating all areas of student life and with making recommendations for improvements by May 1. We are an advisory body only; any policy recommendations we make will be approved or rejected by the normal University processes.

This Task Force has spent more than two months examining more than 30 issues and is almost ready to begin considering specific policies, but there is such a diversity of opinions on the Task Force that I have no idea what the final recommendations will be.

The creation of the Task Force has already begun serving what I view as its most important function: everyone in the University community seems to be discussing the issues of campus safety and campus community.

At first it dismayed me that there were many wild and unfounded rumors about the recommendations we would make, but I realized that these rumors were making people both think about the issues and get involved in the solutions.

It is awareness, discussion, and participation by all members of the university community that will create positive solutions. I strongly urge every class, organization, and social group to discuss these issues in a constructive manner.

The Administration must make policies to promote safety, but the actual creation of a safe campus and extended community is the responsibility of every individual.

How is the Task Force arriving at its recommendations? The very first thing to which the Task Force committed itself was listening to student input. One of the first documents distributed was a list of all the student responses from the "Teach-ln’s," and each subcommittee was charged with reviewing those suggestions as its first order of business.

We decided that no decisions could be reached until all members of the University community had ample opportunity to address the Task Force. We decided to hold Open Forums that would help shape our recommendations as they were being formulated, not to respond to decisions after the fact.

When the first Open Forum for only drew about 40 participants, we asked the students who were there how we could increase participation. We let them set the times for the next two Open Forums and publicized them as much as possible, going as far as putting a notice in every student’s ASU Box and sliding a notice under every door in every residence hall. In addition, we posted flyers around campus and publicized the Open Forums via every available local media.

The Open Forums were very beneficial in hearing student concerns and ideas on a wide variety of issues, but perhaps one of the most important functions they served was in illustrating for everyone present that there is not one single student voice on any issue before the Task Force.

The opinions of the students were as diverse as the individuals who make up the community of Appalachian State University. Most of the ideas students presented to the Task Force drew a heated response from other students, and the same heated debate occurs within the Task Force itself. This demonstrates that the members of the Task Force really do represent the diversity of the community from which we were drawn.

One question raised at each Open Forum was "How much weight will the wishes of the students be given?" There can be no simple answer to this question as the wishes of the students are so varied. No matter what recommendations the Task Force makes to the Chancellor on May 1, some students will feel that we have ignored them because they do not like a particular policy.

The large number of students who have participated in this process can be assured that their input has been the starting point for virtually every phase of our decision making process and has been advanced in every discussion.

We recognize that the considerable amount of work that we have put into this endeavor is for naught if any part of the community views the result as something imposed on them by the Administration instead of as an effort in which they have participated to produce creative solutions to serious problems facing us.

While the student input has been the starting point, the Task Force must consider many other things as well. The principle of this or any Task Force is to assemble a group of people who are committed to researching the issues in depth and making recommendations based on all the available information.

This Task Force follows that principle. We each bring a unite set of experiences to the Task Force. We are listening to a variety of voices on this campus, and we examining what other Universities have tried as well. For example, one suggestion that students frequently advance (and just as frequently oppose) is making some residence halls freshman only.

As I consider the merits of the students’ arguments on both sides of this issue, I will also consider my own experience of having lived in a freshman only hall my first year at ASU. I will look at the reasons ASU eliminated this practice and at the experiences of universities that continue it. All this will factor into any vote I cast.

It is ultimately the University community that will decide how safe this campus is. The Administration can do nothing if every member of this community; students, faculty, and staff- does not participate in the solutions.

Several people pointed out at the Open Forums that they can bypass any security measures the University puts in place, so we are all ultimately responsible for our own safety.

While I agree with this, I would argue further that a basic principle of any community is that each of its members also assumes a responsibility for the safety of the community as a whole.

While the University has a legal and moral responsibility to provide everything possible to ensure the safety of its students in an atmosphere that is conducive to their educational and social development, it is the responsibility of each individual in this community to participate in the creation of an environment that fosters safety and respect.

Each member of this community who is concerned that policies might restrict personal lifestyle choices needs to become involved in helping to create a community whose members look out for each other’s safety to such an extent that those restrictions are not necessary.

The changes I have seen in the University community over the last two decades mirror the changes I have seen in our society, and the problems we face are not unique to this campus or to academic institutions. Just as the changes in society have created some inconveniences for many people to assure personal safety, we might need to endure some minor inconveniences to create an atmosphere where all members of our community feel safe.

As you react to any specific policy that the Task Force recommends or the University adopts, I urge you to ask yourself if the inconvenience it causes you is more troublesome than the risk to you or to someone else the policy is designed to reduce.

If it is something you can tolerate so that someone else feels secure where she or he lives, works, studies, or travels, then it is a good policy. If it truly is unbearable, don’t just grumble about it; propose a practical alternative that addresses the problem in a better way. Become part of the solution.

[back]

Junk bonds: Myth and reality
Financial News
Matt Jones

Previously, in one of my articles on investing, I mentioned an individual by the name of Michael Milken who in 1987 earned a lofty salary of $550 million for the year.

Recently, I noticed a list in Financial World naming Wall Street’s top earners, and on the top of this list was George Soros, an offshore hedge fund manager. Soros earned in 1995 a total of, get this, $1.5 billion, and that’s not all. Most of this is accruing tax-free in the Netherlands Antilles. How does this relate to you, me, and junk bonds? Milken made most of his salary selling junk bonds to investors because they provide a higher rate of return. Soros used vehicles such as junk bonds to achieve higher rates of return. This article’s purpose is to set the record straight for junk bonds by giving reasons for their growth and use, what benefits they provide, and risks associated with them.

Junk bonds are not a new innovation and, according to Milken, have been around forever. A junk bond is simply a lower rated bond, rated BB or less by Standard and Poor’s. The lower rating implies a higher degree of risk. To offset this increased risk, the bond includes a higher interest rate.

Junk bonds made available vast amounts of capital which Milken used to help many companies to raise money and stay competitive including MCI, McCaw Cellular, TCI, Viacom, Turner Broadcasting, and Time Warner. Drexel Burnham Lambert and Michael Milken will be linked to junk bonds forever for bringing them to their apex and downfall. Junk bonds in the early 1990s were seen as bad investments, due to bad press and a series of defaults, but this is far from the truth. The following will explain why the market grew and declined.

Why did the junk bond market grow? There are basically four reasons for its growth: increasing unpopularity of private placed bonds, development of market makers, changing risk perceptions, and merger demand.

Private placed bonds, which are bonds that are sold to a small group of investors privately, became unpopular for two reasons. The first reason was restrictive covenants. Restrictive covenants are restrictions that the purchasers require from the issuers before purchase, to limit the actions the firm can take. In addition, there were no standard contracts for bonds, which made secondary market sales hard. The unpopularity of private placements created an opportunity for public issues.

The second reason for growth of junk bonds was the development of market makers. Market makers are entities serving as an agent of liquidity in facilitating sales between buyers and sellers. This was a major factor in the growth of the market. Drexel Burnham Lambert became the active market maker.

The third reason for growth of the junk bond market was a change in investors’ risk perceptions of these types of bonds. Investors began to believe that the risk associated with bonds was less than what they had once perceived. Default rates of bonds were far less then originally believed. Drexel Burnham Lambert began to promote this through academic research.

Finally, the demand for mergers helped increase the junk bond market. There was an expansion of the whole field of mergers and acquisitions. The size of transactions became increasingly larger along with the demand for capital. The junk bond market was increasingly relied upon to provide part of the funding.

In the late 1980s and early 1990s there was a collapse of the junk bond market. What made this market collapse? There are many factors behind the collapse of the junk bond market. First, were the defaults of the LTV corporation in 1986 which made up 56 percent of the total debt defaulting in that year. Next were the financing failures, which took place in the first half 1989.

There were glut bonds offered in the first half of 1989, more than double the amount offered in the same period in 1988. This caused demand for issues in the primary market, which declined as did the demand in the secondary market. In addition, Integrated Resources and Federated Stores also defaulted in 1989.

Default rates went from 2.662 percent in 1988, to over10 percent in 1990 and 1991. Milken’s legal problems coupled with Drexel Burnham Lambert’s filing for bankruptcy also contributed to the collapse. There was also a decline in asset values and a loss of confidence in the market. Finally, the Financial Institutions Reform, Recovery & Enforcement Act of 1989 (FIRREA), which required insurance companies and thrifts to dump significant percentages of their junk bond portfolios on the market, caused the market to sharply decline. The people who funded the high-yield deals of the 1980s in the savings and loans and the insurance companies had to get out of the junk bond business for regulatory reasons, and there wasn’t an immediate replacement.

There are many misconceptions about the performance of junk bonds; one being that they have significantly higher default rates, and most investors lose principal. According to a study done by Altman-Namacher from 1974-1984, default rates averaged only 2.1 percent for the period. In another study from 1971-1994, the average was only 2.758 percent. These statistics tend to imply that default rates on lower rated bonds are less than what was perceived.

Returns on junk bonds have historically been higher than yields on investment grade bonds. According to a study done by Blume, Keim, and Patel from 1980-1994, junk bonds on average yielded a full percentage point higher return than high grade bonds. The bonds’ average return was 12.44 percent, while the yield for investment grade corporate bonds and the S & P 500 was 11.45 percent and 14.52 percent.

But the risk for junk bonds, which was measured by their standard deviation, was lower than stocks, high grade bonds, and long-term treasury securities. This lower standard deviation and inherently decreased risk tends to imply that junk bonds provide the best of both worlds, higher returns and lower risk than investment grade bonds.

Investors can access these higher returns through high-yield or junk bond mutual funds which employ diversification to reduce risk. Two funds that have yielded above 13.00 percent over the last ten years are the AIM-High-Fund-A and the Kemper High Yield Fund.

I hope this article has explained the benefits, risk and returns for high-yield investments, and cleared up any misconceptions. Remember this, junks bonds have provided benefits to companies and investors.

Specifically junk bonds give investors a higher rate of return with less risk based upon the findings presented above. If you have any further questions, you may want to do some additional research or consult an investment professional.

Remember that when investing, perceptions may not hold true with reality. So get the facts before you invest.

[back]

Our Opinion

Fernendo, Jake... listen up guys

Okay, so it's the end of the year and SGA did a pretty good job of accomplishing their basic platform goals.

It's true that the alarms on the blue phones, Operation Outreach and Hunger and Homelessness Week were worthy causes that SGA fought for and won.

We have a few suggestions for Fernando Little and Jake Parker who will serve as next year's SGA President and Vice President respectively.

The main thing we'd like to see you guys accomplish is the return of the significance of students' ideas and concerns about issues which affect them. Make sure the administration requires that students serve on important committees. Students know what is best for themselves and their peers.

The purpose of this university doesn't revolve around money or the needs of alumni. It's all about the here and now.

First, Fernando and Jake should definitely have an open-door policy which would enable students to go to them directly if necessary. Some students don't live on-campus or don't know their residence hall senators so this policy would serve them well.

Second, SGA meetings should be advertised as being open to students. Many students don't know that these meetings are held to discuss items that affect them directly. SGA meetings should be advertised through fliers which show what the agenda for a given meeting is. The fliers should also encourage students to attend.

Third, we think you should install suggestion boxes in the Student Union so that those who don't feel comfortable approaching them can make constructive comments with anonymity.

Fourth, we think you should take criticism for what it's worth. Many students shrug off SGA saying it doesn't "do" anything. Listen to their ideas and prove them wrong.

Fifth, SGA should use their email account more often and for more things than communicating with students at other schools. ASU students should be able to email you guys to make suggestions.

Sixth, we have some suggestions on how to handle adversity. Don't be afraid to make mistakes. Learn from them and go on. Don't let people get you down. Don't go after people who go after you. Be the bigger person.

Seventh, have fun. The whole point of SGA is to make things better for students in all areas of college life. If you don't enjoy your work, you're not going to get anything done.

Last but hardly least, make sure that at the end of the year, the elections go smoothly.

[back]

Letters to the Editor

Core classes help future

To the Editor,

You recently published an editorial inventory of things wrong with the university. A subsequent column offered a conciliatory list of nice things about Appalachian and the High Country, few of which had anything to do with why you or anyone else should bother to go to college.

My particular concern is with the complaint in the first editorial that Appalachian requires a Core Curriculum having nothing to do with a student’s future. I know a good deal; but, even at 53, I still don’t know what does and what doesn’t have to do with my future. And I don’t know anything, however painful, that I wish I didn’t.

W. H. Ward
Chair, Core Curriculum Council

Traffic police need to be more considerate

To the Editor,

I know that a lot of students seem to have various complaints with the University’s Traffic Department and some of them are more valid than others. What concerns me is when the staff makes no attempt to be somewhat accommodating towards those students who are physically disabled. I was diagnosed with cancer two years ago and underwent extensive chemotherapy and various surgeries to remove tumors. The doctors had to remove over one-third of my lung tissue due to the way in which the cancer had spread. The operation has left me with limited breathing capacity and as a result it is at times very difficult to make it around Boone. The State of North Carolina has issued me a handicap parking permit which I use to try and park as close to class as possible. However, I left class on Wednesday of this week to find one of those glorious yellow parking tickets on my car. My car was parked in one of the very few spots designated for handicapped students but nevertheless the offcer saw fit to fine me forty dollars. I don’t think I need to tell anyone of the students at Appalachian how far forty dollars can be stretched on a college budget. I gave the officer the benefit of the doubt, maybe he/she had not seen my pass hanging in the window. I made my way to the Traffc Department and waited to speak with one of the officers. The lady at the desk directed me to Cpt. Loretta R. Harmon, who I am certain is one of the most inconsiderate people on the face of the earth. Cpt. Harmon was not interested in seeing my pass, the only thing she could say is: "You can appeal it if you want." Sure Captain, I’m going to try and appeal this ticket so I can be denied and charged more money for reviewing my appeal.

It certainly is nice to know that Captain Harmon is working for our beloved Appalachian, I hope that no one ever decides to follow in her footsteps and charge her if she ever becomes disabled.

Eric West
ASU Box l6115

Writing lab is lacking

To the Editor,

I recently had a major- 35% of my total grade- paper due in a required major course and thought it might be helpful to have someone proofread the draft.

I took my paper to the ASU Writing Lab, where a female English professor read my paper for grammatical and transitional errors. The proofreader found several mistakes, which is not uncommon for my papers.

When I turned in my final copy of my paper, my professor handed it back with many marks. I had made a C (74) on the paper and could not believe my eyes. Not to be conceded, but I usually make B’s or better on writing assignments.

My professor cited my paper was confusing, lacking structure and transitional flow. My professor’s confusion was because of the changes the writing center had made.

Not to say I had no part in the confusion, but the writing center was little if no help at all. This was my first nightmare experience with the writing lab and it will be my last.

I wild also go so far as to say I will never recommend the ASU Writing Center to anyone and will always tell this story of woe anytime the subject arises.

Sincerely,

Jason Wesson
ASU Box 10291

Another NASCAR letter

I am writing in response to the "nascar’s for losers" article in the paper. I wrote to Daniel Bothun about it and he said that he was intentionally trying to get people mad. I agree with what the article said about pollution and the waste of fossil fuels. I don’t know anyone who doesn’t. I have a real problem with someone who appears to be writing a hate message about people who like nascar or people who buy "tacky religious" trinkets at stuckeys. I thought that this campus was about treating people fairly. I would be just as angry if you let an article be published that said that black people or women were "greasy haired, drunken, chain-smoking losers". What does people’s lifestyles, intelligence or buying habits have to do with the environment? Why did you let something that not only insulted some students but also their families be published in our paper? These statements were not fair, accurate or honest and did not serve the public in any way. It only insulted them. The environment is an important issue, but a more important issue is hate. Hate against men, women, black, white, yellow or nascar fans is wrong. I really want to know what your intentions were in letting this article be published as it was written. Is are paper going to become another tabloid?

Sincerely,
Paul Zettek

[back]

E-mail The Appalachian Online at theapp@conrad.appstate.edu