Sunday, October 12, 2008

New Bretton Woods Agreements to be worked out this weekend?

According to Bloomberg, leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.

Hmm... Will the world now move to a Quasi-Gold Standard?

Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

The Dow Jones Industrial Average fell as much 8.1 percent in early trading and pared most of those losses after Berlusconi's remarks. The Dow was down 0.5 percent to 8540.52 at 10:10 in New York.

Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis ``in coming days,'' he said.

Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are ``talking about a new Bretton Woods.''

The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.


Anonymous said...

Moving to a golf standard would be the best thing to do but I don't see it happening. The government would have to live within its means - can we afford 2 wars and a massive defense program? I really doubt those in power would trade being a superpower for world economic stability...

jerry said...

anonymous- i know you meant to say gold standard and not golf standard. but maybe a GOLF standard would be better. Those who could sink a 40 foot putt would get more balls than those who could not. we could have golf events to decide which countries would get favored nation status. something like that might be better than what we are seeing from Paulson and Bernanke, who, no doubt, loaded the PPT's cannon and blasted a bunch of buys in the Sunday DOW futures market.