Time

COVER: As the Marine spy scandal 14

spreads, Soviet bugs infest U. S. facilities

More espionage arrests among guards and lax State Department security abroad stir an angry reaction in Washington. -- From Moscow to the Beirut bombing and Ollie North' s escapades, the proud tradition of the Leathernecks takes a beating. -- In the spooky world of electronic snooping, where a mike can be as tiny as a pinhead, the KGB may be overtaking the CIA. See NATION.

WORLD: Israel' s spirit sags amid 34

scandals and coalition squabbles

The breach between the two leading members of the national- unity government grows wider, but Prime Minister Shamir tells TIME, "We are self- confident, and we know we are on the right track." -- Former President Carter calls for an international peace conference on the Middle East. -- Cheering crowds greet Soviet Leader Gorbachev during a visit to Czechoslovakia.

BUSINESS: Embattled Texaco chooses 50

to file for bankruptcy protection

The company loses a Supreme Court decision that could cost it $10 billion in its epic battle with Pennzoil. As credit starts to dry up, Texaco becomes the largest firm ever to go into Chapter 11. Though its executives and directors fly to Houston for negotiations with Pennzoil, the two sides fail to achieve a settlement.

-- In wild trading, the dollar hits new lows against the yen.

29

Nation

Wedtech' s widening web of corruption is an urban morality tale. -- The Government tries to block an outing by John Hinckley.

59

Medicine

Striking results from a controversial cancer therapy give cause for guarded optimism. -- First U. S. brain implant for parkinsonism.

60

Ethics

In pursuing Nazi war criminals, should the U. S. use Soviet- supplied evidence? Critics call it unreliable. Others call it essential.

62

Sport

Tough and quick- fisted, bright and quick- witted, Sugar Ray Leonard pulls off one of boxing' s greatest upsets. -- Campanis ejected.

70

Education

As tuitions continue to climb, universities try to justify the increases by pointing to the high costs they are facing.

71

Books

Larry McMurtry' s latest novel asks, Is there a life after The Last Picture Show? -- Sort of, suggest Mary Gordon' s new short stories.

75

Living

Meet the DINKS, double- income, no- kids couples. Marketing and advertising folks have isolated yet another species of consumer.

86

Dance

American Ballet Theater opens its New York City season with a light and lively production of the classic Sleeping Beauty.

9 Letters

11 American Scene

63 Computers

64 Religion

64 Milestones

68 Environment

76 Cinema

80 People

84 Photography

Cover: Illustration by Burt Silverman