October 2, 1998

Merrill Lynch & Co says it had $1.4 billion of financial exposure to Long-Term Capital Management; Merrill Lynch says it covered exposure by requiring hedge fund to provide cash and government bonds as collateral; Merrill Lynch is leading member of consortium of 14 big financial companies that injected $3.6 billion into hedge fund to stave off bankruptcy; Merrill says it participated in bailout because it feared that Long-Term Capital's collapse would damage world's financial system (M)

Worsening meltdown in stock prices expands to damage every market worldwide on growing concern about financial turmoil and possibility of global recession; Dow Jones industrial average slumps 210.09 points, or 2.7 percent, as investors seek safety of US Treasury securities, driving interest rates substantially lower; Government's benchmark 30-year bond ends at 4.88 percent, level not seen since 1967; stocks in Brazil plunge 9.6 percent, while shares fall 7.6 percent in Frankfurt, 5 percent in Paris and 3.1 percent in London; Nikkei index of 225 Japanese stocks falls 1.6 percent; Nasdaq composite index drops 81.51, or 4.8 percent, to 1,612.33; Standard & Poor's 500-stock index falls 3.01 percent, to 986.39; graphs; charts (M)

''The Mystery of Irma Vep,'' a revival of the Ridiculous Theatrical Company's 1984 hit by Charles Ludlam, is far and away the funniest two hours unfolding on a New York stage. An outrageous spoof of about a thousand literary and movie genres, with references ranging from the Brontes to Mel Brooks, the play, which opened last night at the Westside Theater, tells the story of Lady Enid Hillcrest, installed as the second wife of Lord Edgar Hillcrest in Mandacrest, a chintz-filled English mansion. There, she is haunted by reminders of the mysterious Irma Vep, Lord Edgar's first wife. With two actors taking on eight roles between them, the show is solidly built on a lightning-fast series of costume changes and on gags that pile allusion upon allusion but never collapse under their silly weight. Everett Quinton, at left as Lady Enid, who was in the original production with Ludlam, is joined now by Stephen DeRosa; both exhibit a consummate sense of timing. William Ivey Long's hilarious costumes and John Lee Beatty's lavishly tacky sets perfectly complement the action. A theater review by Peter Marks, page 3.

Ambulance driver Anne Lamberson is arrested on charges of manslaughter after police say she sped through red light on nonemergency call and caused a crash that killed three children in Brooklyn; photo (M)

Isaac Mizrahi, considered the designer most likely to inherit mantle of Donna Karan and Calvin Klein, representing next generation of American fashion, announces that he will close his business this week; news startles New York fashion community, which had built Mizrahi into one of its most beloved and celebrated figures; but, in the end, his sales were less than stellar and his celebrity did not pay the bills; Chanel Inc, American arm of French fashion house, which had quietly bankrolled Mizrahi since 1992, pulls plug after years of losses; photos (L)