European Stars And Stripes (Newspaper) - June 5, 1988, Darmstadt, Hesse                                Page 18 the stars and stripes business news Mark rises As buyers sell pounds the British Pound continued its slide last week As investors abandoned Sterling which they considered overvalued in favor of the West German Mark. Meanwhile currency traders predicted the Dollar would hold fast to its new Range Between 1.70 and 1.73 Marks despite profit taking ale in the week that pushed the Buck Down slightly. In closed Friday at 1.7143 Marks theories on. The cause of the dramatic reversal of the Pound a popular currency in the past few weeks were easy to come by but what Ever started he decline traders were uniform i appraising the near term Outlook. The Pound will go Down some More As on Elondon trader summed it up. The Pound had been gaining strength especially against the Mark despite Central Sank efforts Paul Cozby to slow it Down. But after starting the week at 3.20 Marks the British currency had fallen Helow 3. 1 0 Marks by Friday. The slide was fuelled by a better than expected report card for the German Economy. The mar Ket Wigan favouring the Mark and " he currency hit the hardest was Sterling the London Trade said. While the British discount rate had been Low ered earlier to tool interest in the Pound the Market continued testing Central Bank resolve to keep the currency in a narrow trading Range markets like movement the Irader said. If i hey find a currency they can push around easily icy will do so until the Central Bank inter  an american banker in London said the Pound often swings dramatically and the Sharp Ness of the decline came As no Surprise. It was in i act evidence of the Market s distrust of the cur Rency the British trader said. When the Pound started slipping people started asking Why they were investing in Ster Ling she said. They lost  the strength of the Pound had been reflecting investor Confidence in British prime Miniker Margaret Thatcher rather than any firm eco nomic data the trader said. They were investing in .  and full the first sign of a currency gaining strength on More stable fooling namely the Mark investors dumped Sterling. The Pound fell despite a thursday hike in the British interest rate from 7.5 to s percent. By Friday a Pound was Worth , Down fromj1.9q just last month. That increase came just two weeks after the rate hid been lowered to 7.5 percent in an Effort by  the exchequer Nigel Lawson to Stem the steady Rise of Sterling. Lawson had been a i Odds with Thatcher Over lowering the Rales because of Thatcher s fear of rekindling inflation. But the Market the London trader said wanted the Raie increase. There were rumours Friday of a second Dis count rate hike of 0.5 percent in Britain but traders called so dramatic a move unlikely. Meanwhile the course of the Pound remained it keeps going  the Irader said. The Dollar benefited during the week from the Pound s woes. Interest in the . Currency had been All but dead throughout the Spring but the Buck climbed in recent weeks out of the 1.60 Mark Range. It was widely thought incapable of maintaining its new fringe however with Sterling overbought in the words of a Frankfurt trader. There was renewed interest in the Dollar. The military Exchange rate through monday is1.71 Marks 10 the Dollar. Index shows . Losing War with Trade partners Washington . Against major trading partners has eroded dramatically and dangerously in is years according to an Index released thursday by the Council on competitiveness. The non partisan research and education Organiza Tion unveiled its competitiveness Index Al St new conference. It showed that american workers Stan Dard of living since 1972 has increased Only one seventh As fut As that of Japan and one half As fast a West German the Index also showed the United slates lagging behind other major Industrial democracies in Trade productivity and investment three other major components of a competitive society. The Index measures America s performance in Al four categories against past performance and against foreign  its findings the Index showed the average american wage earner was paid s28.400 in 1987, Well below West Germany s $34/00. The . Standard of living grew More slowly last year than to any other of the seven major Industrial democracies. The american share of world exports despite a Export Boom in the past year was Only 10 percent in 1987 compared with 12 percent in 1972. Since 1972, Japan s productivity has risen eight limes faster than that of the United states and West Germany s has increased three times faster than Amer Ica s. Long term . Investment in education research and development and capital equipment has not matched that of its trading partners in the past 15 years and . Investment Levels in 1986 actually were lower than 1972 Levels. The competitive Index which will be updated Ever six months was designed to fill a Gap of knowledge and understanding Between anecdotal evidence and government economic statistics which the Council believes Are often misleading or incomplete. We Are awash in economic statistics., that Don t Tell the Story said Michael Porter the. Harvard University economist who helped prepare Etc Index. The Standard of living Index is the Fuccy indicator of a nation s ability to compete and Prosper in the global Economy Porter said. Trade productivity and invest ment help determine a nation s Standard of living. The Index says the United states is falling behind in All categories especially productivity warned por Ter. He predicted the Index will be useful to educate american on their precarious economic standing inthe world. Lawrence Chimerine chairman of the wefa group economic forecasting firm consulted on the project and stressed the importance of the Index findings the Issue of . Competitiveness in world Market is the no. I economic Issue right now " he said the fundamental problem is that . Productivity has no grown much Over the past 1s years so the question is now can we gel growth the four Index components Are measured against a1972 base of 100. In 1987, the . Standard of living Index had dropped to 78.9, the Trade Index to 82,6, the productivity Index to 68.7 and the investment Index to 96.2. In contrast Japan s standing in the competitive Index has skyrocketed. The Council on competitiveness founded in 1986,consists of top executives from Industry the labor movement and Academia. The Council plans to release a report this fall Outlin ing its recommendations on How to boost America s competitiveness. We Are not pessimists Porter said noting that deteriorating . Competitiveness is not an irreversible  he said the major recommendation will be to eliminate the massive . Budget deficit now at j150 Bil lion per year and which in eight years has doubled in National debt to 12.8 trillion. Open ministers will face Host of problems at june meeting by Patricia Koza Vienna Autri a pro open 13 Oil ministers meet june 11 with a plateful of problems before them All of them keyed to finding ways to bolster sagging world Oil prices. The organization of Petroleum exporting  june 8 Dale for Ili semiannual meeting to june 11 because of an Arab league Summit in m Girs Algeria this week on the palestinian uprising in israeli occupied territories. The 13-Nalion Cartel is dogged by cheating on Oil production quotas the collapse of its recent attempt to negotiate Oil Export curbs with six non open producers and heavy new losses by Iran in the Gulf War against fellow open member Iraq. Oil prices Sank As Low As $13 a barrel in Early March because of rising non open production and spreading open discounts but have rebounded somewhat 10 thes15 to s16-a.barrel average. In december 12 of specs 13 members Sel an inter Nal production ceiling of 15.06 million barrels a Day forthe first Hal of i9sb. But Iran which refused to join the Accord and several other open Stales Are exceeding their official Quolas open s total production is estimated at More than1s million barrels a Day. The problem is twofold discipline in open anyhow to maintain it and How to reach a Compromise with non open countries which would be satisfactory to both sides said one Oil specialist. In april open members led by saudi Arabia another Arab Gulf Stales rejected a proposal by six non open producers under which each Side would have reduced exports by 5 percent. The Issue May be brought up again at the Vienna celing which som outside producers were expected to attend. The saudi led group favors higher production de spite us depressing effect on prices while a majority Ltd by Venezuela and Iran want to retain or even lower the Oul Pul ceiling to push prices toward specs offi Cial s1 a a Faircl target. The authoritative Middle East economic Survey has released a forecast estimating demand for open Oil at 19 million barrels a Day for the second half of the year. The open secretariat s estimates Are a More conserva Tive 18.4 million barrels a Day. The most Likely outcome is that the current quota ceiling will probably be extended certainly for the third Quarter and probably for the fourth Quarter said Fergus Macleod an Oil analyst at Barclays Dezzele Wedd in London. Open projections Are that demand is stronger now. When you be got thai the usual outcome in open is a Compromise to leave things where the Yare Macleod said. Raising the production ceiling could dim Hopes of future cooperation with the non open countries led by Mexico even though an unexpected 300,000 barrel a Day jump in non open output earlier this year has been the primary Force behind weakening Oil prices. Some non open producers have offered to restrain their production As a gesture of support toward Ope but Are stepping up output Al the same Lime Industry sources said. Another unknown Factor is an offer by Iraq Oil minister Issam Abdul Raheem of Chalabi to join in any production agreement worked out with non Ope countries that could mean a lot because so far open has been unable to control the iraqis one analyst said Iraq s current output is estimated Al 2.4 million barrel a Day while its spec assigned quota is 1.6 million barrels a Day. Another political problem is the growing isolation of Iran within open Over the persian Gulf War and the rupture of diplomatic relations Wilh saudi Arabia Fol lowing iranian inspired riots at the holy saudi City of Mecca last july