Italian Economy Minister Tremonti in Beijing Pushes New "Bretton Woods" Treaty

November 21, (LPAC)—Speaking at the central school of the Chinese Communist Party, Italian Economy Minister Giulio Tremonti said yesterday that the crisis is not over, and a that real solution can come only from an international treaty among governments, which he called a new Bretton Woods.

"After the disaster, I was of the view that only those banks should be bailed out, which finance families and companies. Instead, all of them have been bailed out. In this way, we gained time, but did not solve the problem. And therefore, the threat of another crisis is around the corner."

"Stock markets are again at pre-crisis levels, and derivatives are growing again at a frightening rate.... The world can be precipitated again into the crisis because the chance of changing was lost." Throughout the world, "governments have intervened using two hands: with one, they injected an enormous amount of liquidity in the system. With the other, they turned private debt into public debt." Such interventions have fixed the balance sheets of large investment banks but not those of the state, and "an enormous part of this money has stayed in the banks themselves, which today are using it to make profits, by borrowing at 1% and reinvesting into financial instruments at 5.5%.

"At the end of the '90s, de facto the power of uttering currency, which was a power of sovereign states, was put into the hands of banks and the market," allowing large banks to count more than average nations.

"The crisis has put governments back on center stage, but nevertheless there is still an enormous mass of finance inside banks, out of control of the state. Now we must do something completely new."

"We cannot think of solving the problems that emerged out of the crisis through a series of new technical rules written by the bankers," Tremonti "roared" according to the daily Il Riformista, drawing applause from the audience.

The G20 was necessary but "not sufficient," Tremonti said. "Today we need a collective political effort to define the new order, an international treaty to define a new Bretton Woods, which must be the product of a multilateral effort, not only in joining it, but also in drafting it," Tremonti said. "I have the honor to deposit here a first draft of my treaty. I could not imagine a better place."
During his stay in Beijing, Tremonti will meet Chinese government officials.