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Western Press Review: Spotlights On Economics And Finance

Prague, 15 October 1997 (RFE/RL) -- It's the season for Western press commentary to focus on economics and finance. The Royal Swedish Academy of Sciences yesterday awarded the Nobel Prize for Economics to Robert Merton of Harvard University and Myron Scholes of Stanford University. Evidence mounted that Europe's rich and poor are growing respectively richer and poorer. Merger fever rose this week to higher temperatures. And European Monetary Union gained a head of steam.

NEW YORK TIMES: A contribution enabling investors to price accurately their bets on the future

The Merton-Scholes contribution to economic science Peter Passell says today, was "for work that enables investors to price accurately their bets on the future, a breakthrough that has helped power the explosive growth in financial markets since the 1970s and one that plays a profound role in the economics of everyday life."

Passell writes: "Their solution helped lay the basis for today's vast global options marketplace, where the trading affects everyone with a stake in the financial markets, from employees who receive stock options as part of their pay to mutual fund investors who use options to hedge interest-rate risk."

He says: "Until 1973, when Merton and Scholes published their analysis, it was extremely difficult to assess all the variables that could affect an option's price. Their work overcame that difficulty, which had limited the growth of options trading."

INTERNATIONAL HERALD TRIBUNE: Poverty in Western Europe is accelerating and becoming a matter of ugly routine

John Vinocur writes in an analysis that (a) Europe's poor-rich gap is exacerbating; (b) statistics to validate this are so hopelessly out of date by the time they are published as to provide minimal incentive for action; and (c) that European governments largely are blinking at the trend.

He writes: "Nowhere in France or in all of Europe has the political will catalyzed to acknowledge that beyond appearances, poverty in Western Europe is deepening, worsening, accelerating and becoming a matter of ugly routine."

Vinocur says the reasons for the trend are evident: "At the lower end of the income scale, part-time jobs, short-term contracts, and changing requirements in job qualifications have combined with general downsizing and the use of new technologies to push toward poverty large numbers of workers with limited qualifications. (Conversely), at the higher end, new incentive plans, new remuneration packages, new methods and new attitudes relating to individual investment have made more Europeans relatively rich."

NEW YORK TIMES: Europe has become the stage for a burst of mergers and hostile takeover bids

"Europe became the staging ground Monday for a burst of mergers and hostile takeover bids potentially worth more than $100 billion, as corporate buccaneers from France to Italy to Britain were pitted against each other in at least three different industries," Edmund L. Andrews wrote yesterday.

Andrews said: "In the insurance industry, Italy's largest insurer, Generali, announced a $9 billion hostile bid for AGF of France. (And) in the beverage industry, Guinness and Grand Metropolitan moved closer to their planned $34.8 billion merger by cutting a deal with the luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton, which had vowed to block the marriage. (And) meanwhile, the British-Dutch publishing company, Reed Elsevier, announced a merger with a Dutch publisher, and two Scandinavian banks proposed a $10.6 billion merger."

He wrote: "While there was no connection between any of these deals, at least part of the driving force, analysts said, was Europe's accelerating push toward a single currency in 1999, the increasingly transparent flow of goods and services across national borders and the growing trend toward global markets. As Europe moves closer toward a single economy, the national fiefdoms are rushing to shore up their European position. The extraordinary gyrations highlighted the tough new brand of empire-building that has seized European industry, where hostile takeovers were rare until recently in any place outside Britain."

TIMES: Confidence in a smooth launch for the European single currency hardened

Speaking of "Europe's accelerating push toward a single currency in 1999," a news analysis says today that the euro took a large step forward yesterday. Charles Bremner writes from Brussels: "Confidence in a smooth launch for the European single currency hardened yesterday when France and Germany cleared the way for a new body to co-ordinate policy in the future euro zone and a Brussels forecast showed that all states except Greece were on track to qualify for the currency."

The analyst says: "With the prospect that 11 of the 15 EU states will qualify for the euro next spring, the deal raises the likelihood of a new EU power center. Britain, which is expected to stay out of the single currency, would be excluded from this euro council, along with Greece, Sweden and Denmark."

CHICAGO TRIBUNE: In a Europe struggling toward monetary union there is no room to increase defense budgets

Ray Moseley reports today that a study by the International Institute for Strategic Studies made public yesterday in London says that NATO member countries -- concentrating on business and commerce -- are unlikely to invest large sums in NATO expansion. Moseley writes: "The question of financial burden-sharing has become a major issue in the Senate debate over expansion of NATO to bring in the former Soviet satellites of Poland, Hungary and the Czech Republic."

He writes: "In a Europe struggling toward monetary union and convergence of economic performance there is no room to increase defense budgets without painful reductions in social welfare programs. Two of Europe's major nations, Germany and France, will not increase their defense spending to accommodate NATO expansion." The study also noted that Canada plans only a small contribution." And added: "The ability of the prospective new members to pay is even more in doubt."

LE FIGARO: No link between work hours and the unemployment rate has ever been established

French industrialist Guy Perrier, president of Walo Bertschinger France, protesting French government plans to mandate a reduction in work hours for French wage earners says "No link between work hours and the unemployment rate has ever been established." He contends that France, continuing the traditional struggle between management and the working class, has failed to develop a social consensus like that in Germany and Scandinavian countries. There, he said, "Management and unions agree on one aim -- to protect the economy and assure the survival of the enterprise."

Perrier writes: "There is no national solution to the problem of the reduction of work hours. The only realistic approach is for each company or group of companies separately to solve the problem. Unfortunately our culture and our education are obstacles to this. We will have to transform our behavior and our organization of the work time and not be afraid to innovate."