France

 For more than two decades, the Middle East fell easily into neat strategic pieces like a puzzle: A rock-solid peace treaty tied Egypt and Jordan to Israel; stable, pro-U.S. monarchies lined the length of the Persian Gulf oil channels; autocratic governments across North Africa seemed unshakable.

French Finance Minister Christine Lagarde tells the Journal it will take much stronger fiscal and economic coordination among EU member states for the euro to work.

In a large private garden in Manhattan, behind a grand New York City brownstone, a man in his 90s took the hand of a young girl who is not yet 12. The bridge between them, the man's son, the girl's father, stood at a distance, looking on.

"That was pure love," says Sandi Pei, the 60-year-old son of I.M. Pei, the architect who designed Hong Kong's Bank of China tower and the Pyramid at the Louvre, in Paris, France. "I wasn't quite sure whether Anna was leading my father or if he was leading her."

The French, known for their mistrust of banks, are not just stuffing money into mattresses in these anxious days of recession and minuscule interest rates. They are also putting their cash into cows.

For Pierre Marguerit, 60, cows make a safe, secure investment, allowing for long-term growth from a renewable resource. The cow contracts are hardly new, but go back to Richard the Lionheart; the French word for livestock, cheptel, is the root for "capital."

Leland had come to realize that the local arbitrage argument used by Black and Scholes to price options could be extended to actually create options. Rather than create a risk-free return by dynamically hedging an option with stock, as in Black-Scholes, why not reverse the process and create an option by dynamically hedging the stock with a risk-free asset?

During the summer of 1978, while working in France, Leland saw a possible resolution to the volatility problem.