Pressure Mounts On The U.S. As Italians Call For A New Bretton Woods

Delegation at Bretton Woods

September 19, 2008 (LPAC)-- Italian Economics Minister Giulio Tremonti brought the fight for a New Bretton Woods (NBW) to the national industrialists association yesterday. At a conference of Confindustria in Rome, Tremonti repeated everything he had said about the crisis and the NBW in the Corriere interview published the same day, adding an attack against economists. "The intellectual capital of the category [of economists] has been cancelled", he said. "They did not understand what has happened, and now they look at the effects instead of the cause." He used a famous sentence by Carl Schmitt against jurists who could not see Nazism coming, against the economists. "Today I say: economists, be silent." Currently, only forecasts "based on large numbers developing on the long term" have a sufficient margin of credibility. Tremonti's call for a NBW initiative at the G-8 was endorsed by a spokesman of the opposition present, former minister Enrico Letta.

The head of the industrialists association, Emma Marcegaglia, painted a gloomy economic picture, saying Italy is already in a recession. She supported Tremonti's idea to have the European Investment Bank finance large infrastructure projects. The democratic party-friendly newspaper Il Riformista freaked out at Marcegaglia, saying that she speaks like Tremonti.

That same day, the financial daily Il Sole 24 Ore (owned by the Industrialists Association) ran an article entitled "We need a new Bretton Woods to change rules", written by an economist at the neoliberal Bocconi university in Milan, Donato Masciandaro. Masciandaro writes: "American finance needs a New Deal: a new set of rules, of oversight, of the leadership that has mis-governed such a system. The possibility of this happening depends much on how much the costs of the current U.S. instability will push other countries to push in this direction. In sum, we need a New Bretton Woods of rules and of financial oversight."

Masciandaro says that "The existence of external [repercussions] of financial instability could unleash mechanisms of prohibitionism and protectionism. Better, then, [to have] a New Bretton Woods on rules, to unleash the New Deal of finance."

On Sept. 17, the Swiss daily Corriere del Ticino has an article by economics commentator Alfonso Tuor, calling for "a new Bretton Woods to establish the world economic, financial and commercial rules".

Text taken here.

As a note:

The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing strain, the system collapsed in 1971, following the United States' suspension of convertibility from dollars to gold. This created the unique situation whereby the United States Dollar became the "reserve currency" for the Nations who signed.