Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Bretton Woods’

The Next Phase of Finance

Posted by hkarner - 14. März 2018

Bertrand Badré

Bertrand Badré, a former managing director of the World Bank, is CEO and Founder of Blue like an Orange Sustainable Capital and author of Can Finance Save the World? 

Today’s strengthening economic recovery has not overcome the understandable but devastating loss of trust in the financial system that followed the crisis a decade ago. Restoring trust will require reasserting control over the financial sector, to ensure that it is serving the economy, not the other way around.

WASHINGTON, DC – The decade since the global financial crisis has been tumultuous, to say the least. True, no great war has erupted, and we have more or less avoided the mistakes of the Great Depression, which led in the 1930s to greater protectionism, bank failures, severe austerity, and a deflationary environment. But renewed market tensions indicate that these risks have not been eradicated so much as papered over.

In a sense, the story of the 2008 financial crisis begins when the global order was created from the ashes of World War II. Initiatives like the Bretton Woods institutions (the World Bank and the International Monetary Fund), the Marshall Plan, and the European Economic Community supported the reconstruction of significant portions of the world economy. Despite the Cold War (or perhaps because of it), they also re-started the globalization that WWII had brought to a halt. Den Rest des Beitrags lesen »

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Europe’s Bretton Woods Moment

Posted by hkarner - 2. März 2018

Harold James is Professor of History and International Affairs at Princeton University and a senior fellow at the Center for International Governance Innovation. A specialist on German economic history and on globalization, he is a co-author of the new book The Euro and The Battle of Ideas, and the author of The Creation and Destruction of Value: The Globalization Cycle, Krupp: A History of the Legendary German Firm, and Making the European Monetary Union.

Political leaders in France and, soon, Germany will have a chance to deliver the European Union from its malaise, but only by heeding the right lessons from the past. The success of grand bargains between France and Germany in 1963, and between the victors of World War II in 1944-1945, speak to the need for a bold, comprehensive approach.

PRINCETON – After years of paralysis during the debt crisis that began in 2009, the European Union seems to have regained some momentum. In France last year, Emmanuel Macron and his La République En Marche ! won the presidency and a strong parliamentary majority. And in Germany, after much delay, the center-left Social Democrats are currently voting on a new coalition agreement with the center-right Christian Democratic Union and its Bavarian sister party, the Christian Social Union.

The hope now is for renewed Franco-German cooperation and a new Élysée Treaty, updating the historic 1963 agreement negotiated by German Chancellor Konrad Adenauer and French President Charles de Gaulle. A new arrangement might involve more spending at the EU level and overcoming old German taboos against a “transfer union.” Den Rest des Beitrags lesen »

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Addicted to Dollars

Posted by hkarner - 3. März 2017

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An Inheritance of Incompetence

Posted by hkarner - 16. August 2016

By John Mauldin, August 13, 2016mauldin 

– Dean Acheson

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

– John Maynard Keynes

I don’t often agree with Keynes, but he is the most quotable of all major economists. The above sentence was one of his best. He was right about defunct economists. Of course, he was talking about all those other defunct economists who no longer kept up with his new and improved way of thinking about all things economic. Now his quip comes back to haunt his legacy and his followers.

Theories and practices often outlive their usefulness in our fast-changing world. So do institutions, including those chartered at the 1944 Bretton Woods Conference. In today’s letter we are going to look closely at the International Monetary Fund and a scathing report from its own internal auditors. For those of us who have been following the IMF for decades, the report is not all that surprising.

My real purpose here is not to point the finger at the IMF but to point out where its problems are part and parcel of a greater problem in global institutions. During the next global recession we are going to see a continuation of the same approaches to crisis solving that we’ve seen in the past, based on the theories of defunct economists mixed with personal and institutional biases. Their prescription is a witches’ brew that we will be told is good for us but that will in fact ensure that those of us least able to cope will bear the brunt of its impact. Den Rest des Beitrags lesen »

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From Golden Dollar to Petro Dollar to Narco Dollar

Posted by hkarner - 10. Mai 2016

Dank an H.F.
9.05.2016 Author: F. William Engdahl, NEO

3454344The role as world reserve currency is something no financial hegemon in history has willingly surrendered. It took two world wars for the City of London and Bank of England to reluctantly concede hegemony of the Pound Sterling to the Dollar. As Henry Kissinger is said to have remarked decades ago, “If you control the money, you can control the entire world.” Whether or not Kissinger ever said that publicly, he and his patron, David Rockefeller, certainly believed it. Now, with US government debt shooting past $19 trillion and the true state of the American economy and its infrastructure at its worst since the Great Depression, with most Americans living on the brink of financial disaster, the brilliant financial engineers of Wall Street and Washington have once again come up with a scheme to prolong the role of Dollar as King in the world economy.

The recent Panama Papers revelations by a select group of Western mainstream media including the New York Times, BBC and Süddeutsche Zeitung, were notable as a brazen attempt to attack foreign leaders such as Russia’s Vladimir Putin and China’s Xi Jinping for alleged corruption. Notably, the leaked files of the Panama law firm, Mossack Fonseca, so far have failed to leak even one significant name of a US citizen hiding money in offshore accounts of the Panama facilitators. Den Rest des Beitrags lesen »

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Imagining a New Bretton Woods

Posted by hkarner - 5. Mai 2016

Photo of Yanis Varoufakis

Yanis Varoufakis

Yanis Varoufakis, a former finance minister of Greece, is Professor of Economics at the University of Athens.

MAY 4, 2016, Project Syndicate

AUSTIN, TEXAS – The financial meltdown of 2008 prompted calls for a global financial system that curtails trade imbalances, moderates speculative capital flows, and prevents systemic contagion. That, of course, was the goal of the original Bretton Woods system. But such a system today would be both untenable and undesirable. So, what might an alternative look like?

The 1944 Bretton Woods conference featured a clash of two men and their visions: Harry Dexter White, President Franklin Roosevelt’s representative, and John Maynard Keynes, representing a fading British Empire. Unsurprisingly, White’s scheme, founded on the United States’ post-war trade surplus, which it deployed to dollarize Europe and Japan in exchange for their acquiescence to full monetary-policy discretion for the US, prevailed. And the new post-war system provided the foundation for capitalism’s finest hour – until America lost its surplus and White’s arrangement collapsed.

The question asked periodically during much of the last decade is straightforward: Would Keynes’s discarded plan be more appropriate for our post-2008 multipolar world? Den Rest des Beitrags lesen »

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The Fragmentation of Bretton Woods

Posted by hkarner - 16. August 2014

Date: 16-08-2014
Source: Project Syndicate

MOHAMED A. EL-ERIANEl-Erian

Mohamed A. El-Erian, Chief Economic Adviser at Allianz and a member of its International Executive Committee, is Chairman of President Barack Obama’s Global Development Council. He previously served as CEO and co-Chief Investment Officer of PIMCO. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. His book When Markets Collide was the Financial Times/Goldman Sachs Book of the Year and was named a best book of 2008 by The Economist.

LAGUNA BEACH – The world has changed considerably since political leaders from the 44 Allied countries met in 1944 in Bretton Woods, New Hampshire, to create the institutional framework for the post-World War II economic and monetary order. What has not changed in the last 70 years is the need for strong multilateral institutions. Yet national political support for the Bretton Woods institutions – the International Monetary Fund and the World Bank – seems to have reached an all-time low, undermining the global economy’s ability to meet its potential and contributing to geopolitical insecurity.

When the Bretton Woods conference was convened, its participants understood that the IMF and the World Bank were integral to global stability. Indeed, both institutions were designed to discourage individual countries from adopting short-sighted policies that would harm other economies’ performance, incite retaliatory action, and ultimately damage the entire world economy. In other words, they were intended to prevent the kind of beggar-thy-neighbor policies that many major economies adopted during the Great Depression of the 1930s.

Moreover, by encouraging better policy coordination and the pooling of financial resources, the Bretton Woods institutions boosted the effectiveness of international cooperation. And they enhanced stability by offering collective insurance to countries facing temporary hardship or struggling to meet their development-financing needs.

It is difficult to identify more than a small handful of countries that have not benefited in some way from the IMF or the World Bank. Yet countries seem hesitant to contribute to the reform and strengthening of these institutions. In fact, a growing number of systemically important countries have taken measures that are undermining the Fund and the Bank, albeit largely inadvertently. Den Rest des Beitrags lesen »

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After the Dollar

Posted by hkarner - 27. Juli 2014

Date: 26-07-2014
Source: Project Syndicate
JOSÉ ANTONIO OCAMPO

OCAMPO CC

José Antonio Ocampo, former United Nations Under-Secretary-General for Economic and Social Affairs and former Finance Minister of Colombia, is Professor and Member of the Committee on Global Thought at Columbia University. He is the co-author (with Luis Bértola) of The Economic Development of Latin America since Independence.

NEW YORK – It is symbolic that the recent BRICS summit in Fortaleza, Brazil, took place exactly seven decades after the Bretton Woods Conference that created the International Monetary Fund and the World Bank. The upshot of the BRICS meeting was the announcement of the New Development Bank, which will mobilize resources for infrastructure and sustainable development projects, and a Contingent Reserve Arrangement to provide liquidity through currency swaps.

The Bretton Woods Conference marked one of history’s greatest examples of international economic cooperation. And, while no one can say yet whether the BRICS’ initiatives will succeed, they represent a major challenge to the Bretton Woods institutions, which should respond. Rethinking the role of the US dollar in the international monetary system is a case in point.

One key feature of the Bretton Woods system was that countries would tie their exchange rates to the US dollar. While the system was effectively eliminated in 1971, the US dollar’s central role in the international monetary system has remained intact – a reality that many countries are increasingly unwilling to accept.

Dissatisfaction with the dollar’s role as the dominant global reserve currency is not new. In the 1960s, French Finance Minister Valéry Giscard d’Estaing famously condemned the “exorbitant privilege” that the dollar’s status bestowed upon the United States. Den Rest des Beitrags lesen »

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The global monetary system: Not floating, but flailing

Posted by hkarner - 5. Juli 2014

Date: 03-07-2014
Source: The Economist

After 150 years of monetary experimentation, the world remains unsure how to organise global finance

SEVENTY years ago this month, 730 delegates gathered in Bretton Woods, New Hampshire to reopen an old debate. Global commerce has long faced a fundamental tension: the more certainty countries create around exchange rates, the less room they have to manage domestic economic affairs. Thirty years before Bretton Woods a war wrecked the world’s first stab at the problem—the gold standard—and the attempt to rebuild it in the 1920s led to depression and another war. The exchange-rate system agreed at Bretton Woods lasted only a generation. After 150 years of experimentation the world has yet to solve its monetary problem.

Most monetary systems have been the product of accident rather than design. The classical gold standard developed in industrialising Britain. Its economic success encouraged others to transact on its terms. Germany’s adoption of gold in 1871 put Europe’s two leading economies on one standard; others quickly followed suit.

The gold standard’s priority was the lubrication of global trade. Exchange rates were fixed across economies and capital flowed without any regulatory hindrance. Though the free flow of capital left currencies vulnerable, the system survived for decades thanks to governments’ iron commitment to gold. That, in turn, was built on the relatively feeble political influence of working people and the relative strength of creditors. Central banks refrained from destabilising actions and lent to each other in times of crisis. Den Rest des Beitrags lesen »

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A Bretton Woods for the 21st Century

Posted by hkarner - 28. März 2014

by Don Tapscott, Harvard Business Review, March 2014Tapscott

If you are the leader of a large organization (or only of yourself) who cares about improving the world, here’s a question you should consider: How will you participate in the global solution networks that are increasingly managing to address the world’s problems?

A global solution network is a group of independent parties that have coalesced around a global problem or task they all perceive as important but that none can handle on its own. They become a network when they begin communicating about and coordinating their activities to make progress, rather than working unilaterally and competitively (as, for example, an industry does in a market economy).

Cooperative efforts to solve shared problems have of course arisen in the past. In business the great examples have been standards networks. But the world’s biggest social and economic ills have been addressed by gatherings of nation-states. The model for global cooperation was forged after World War II, when representatives of 44 countries met at Bretton Woods, New Hampshire; the work they did there led to the International Monetary Fund, the World Bank, the United Nations, the G8, the World Trade Organization, and more.

Once state-based institutions like these had taken hold, it became hard to imagine other ways to address territory-spanning social challenges—the human problems that, in the words of Kofi Annan, the former UN secretary-general, “do not come permanently attached to national passports.” But over time it has also become clear that these institutions aren’t equal to the task. Progress on many fronts is stalled.

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