I, Hans.

O sole mio.

FT.com / Africa - Italy and France draw fire over aid:
The report is especially scathing about Italy, which currently chairs the G8 group. It has delivered only about 3 per cent of the increase it promised in 2005.

Consultations with Rome reveal it is planning to cut, not increase, assistance in the future, says the report.

Italy promised to increase its aid from $1.4bn in 2004 to $5.08bn in 2010, but by the end of last year was paying only $1.57bn.

“Based on its performance against the Gleneagles commitments, it has no credibility to host discussions of such global importance,” said Mr Drummond.

Remedy to the actual Global crisis: a supra-national reserve currency as opposed to the temptations of nationalism and protectionism.

FT.com | Willem Buiter's Maverecon | After the Crisis: Macro Imbalance, Credibility and Reserve-Currency:
The question of a world reserve-currency was recently brought up by the president of the Chinese central bank. At first, this could be interpreted as nothing more than retaliation to the repeated declarations of American authorities that China has been manipulating its currency. The article of Zhou Xiaochuan, president of China’s central bank, is however sensible and well reasoned.[8] A supra-national reserve-currency is probably the most important element in the search for a more balanced world. The imbalance of the last decades is due, on the one side, to the unrestricted expansion of expenditures and indebtedness in the central countries and, on the other side, by a conservative export led stance, geared to the accumulation of foreign reserves, in the emerging countries. The issue of credibility, the ultimate determinant of the asymmetry between countries issuing reserve-currencies and all others, is at the root of the two types of behavior.

Modern money is purely fiduciary. It relies only on the credibility of the issuer. Credibility depends, above all, on the perception of economic and financial soundness of the issuer. It also requires a sense of responsibility from the issuer; responsibility for not abusing the privilege bestowed on it. But this does not exhaust the question of credibility. The credibility of a currency is based on the perception of an overall economic soundness of the issuer, but mainly its political, legal and institutional framework. A currency does not acquire the right of being a reserve-currency, to be used in international transactions, without the perception of economic, political, legal and institutional soundness of its issuer. The US dollar, according to these criteria, was a far better alternative than any other, since Bretton Woods. The resounding failure of the attempt to transform the artificial currency of the IMF, the Special Drawing Rights, into a world currency is thus understandable.

Why this crisis is now different from the Great Depression and why this is not good news.

FT.com | Willem Buiter's Maverecon | After the Crisis: Macro Imbalance, Credibility and Reserve-Currency:
There is a major difference between the present conditions and those prevailing at the time Keynes elaborated his theses. The General Theory is of 1936. Before that, from 1932 on, sketches of the argument could be found in his essays.[3] In 1932, the economy was still in profound depression, but - as known today - due in a large extent to the errors of monetary policy, the excess of debt of the private sector had been eliminated by the collapse of the financial system. The generalized bankruptcy of banks and firms solved the problem of excessive indebtedness. Banks, enterprises and households were broken, but with no debts. The costs were dramatic, but the excess of debt disappeared. The fact that the mistakes of 1929 have not been repeated, lead to circumstances far different from those of 1932. Financial collapse was avoided and despite the severity of the recession, we are still far from the thorough disorganization of the economy and massive unemployment -close to 30% of the labor force - of the Great Depression. The economy, however, almost two years after the beginning of the crisis, continues to be overwhelmed by unredeemable debts. As long as households and firms continue to bear the brunt of excessive debt, they will try to reduce expenditures and increase savings. Until debt is reduced to levels which are perceived as reasonable, the private sector expenditure will be exceptionally low. After the Great Depression, in the early thirties, there was a lack of demand because there was no economic activity and no income. Today, the lack of demand is the result of the exceptionally high rate of savings required to bring back private debt to reasonable levels. These are very different situations.