Daily Archives: October 26, 2008

That Rothschild clan in full: eccentricity, money, influence and scandal

Party boy: Nat Rothschild has shed his wild side to earn a fortune. Photo: Daily Mail

The Sunday Times | Oct 26, 2008

Nat Rothschild’s career path – from playboy to plutocrat – has to be seen against the backdrop of his family history, studded as it is with eccentrics who were torn between loyalty to an immense and powerful name and the urge to break away from the clan.

His grandfather, Victor Rothschild, who died in 1990 at 79, set the pattern for much of the family in both business and lifestyle. While still at Cambridge University, he was a playboy who drove fast cars, water-skiied off Monte Carlo and played first-class cricket for Northamptonshire.

He also joined the Apostles, the university’s secret society that included the traitors Kim Philby, Guy Burgess and Anthony Blunt. It was Victor who lent Blunt – later surveyor of the Queen’s paintings – the money to buy his first Poussin. When Blunt’s treachery was eventually exposed, Rothschild denied that he was the “Fifth Man” in the spy ring, famously stating: “I am not and never have been a Soviet agent.” This was never seriously in doubt: his work for MI5 during the war had won him a George Medal.

Just 26 when he became the 3rd Baron Rothschild, he always sat on the Labour benches. Yet the Conservative prime minister Edward Heath put him in charge of his think tank, the Central Policy Review Staff, and Margaret Thatcher made him a security adviser.

As a scientist, Lord Rothschild chaired the Agricultural Research Council, then worked in Cambridge’s zoology department as well as holding a research job at Shell. He ultimately chaired the family’s UK bank, NM Rothschild & Sons, but did not involve himself in detail.

His sister Miriam, a distinguished entomologist, was nicknamed “Queen of the Fleas” after cataloguing their father’s insect collection. Their younger sister Kathleen, meanwhile, was known as an avid jazz fan: Thelonius Monk named a composition after her and Charlie “Bird” Parker died in her New York flat.

When Victor Rothschild retired in 1976, Sir Evelyn de Rothschild – then 45 –took over as bank chairman, even though he came from another branch of the family, the de Rothschilds.

Sir Evelyn, who had joined the bank in his mid-twenties, had developed a sound business sense that he also employed on the boards of the Express and Telegraph newspaper groups, as well as at The Economist, whose board he chaired until 1989. His third wife, the American lawyer Lynn Forester, was a supporter of Hillary Clinton’s presidential campaign but last month switched her allegiance to John McCain. She and Sir Evelyn live in Ascott House, one of the many Rothschild homes in Buckinghamshire. Katherine, the daughter of one of Sir Evelyn’s Rothschild cousins, is married to Marcus Agius, chairman of Barclays.

Victor’s eldest son, Jacob Rothschild, also worked at NM Rothschild – but he left the family bank in 1980 after a dispute with Sir Evelyn over strategy. Jacob, who had worked at Morgan Stanley in New York, wanted to merge with the rival SG Warburg bank; his conservative cousin did not.

As a leaving present, Jacob was given the Rothschild Investment Trust; he subsequently set up his own companies in the West End and built a new financial empire that was considered more aggressive than the traditional family bank.

Jacob, now 72, who inherited his father’s title in 1990, is as interested in the arts as he is in finance: he has chaired the National Gallery for many years and was chairman of the lottery’s heritage fund from 1994-8. In 2003, he became deputy chairman of BSkyB, the broadcaster in which News Corporation, the parent company of The Sunday Times, has a 39.1% stake. Known as a philanthropist and superb networker, Jacob has also taken a great interest in the preservation of fine buildings – he restored Spencer House in St James’s, the former London home of the family of his friend Diana, Princess of Wales, and was instrumental in the refurbishment of Somerset House in central London.

Like most Rothschilds, he shuns the limelight – except on his own terms. He was appointed a member of the Order of Merit in 2002.

His much younger half-brother, Amschel Rothschild, was groomed to head the family bank, but the pressure proved too much for him. He hanged himself in a Paris hotel room in 1996, leaving a widow, the former Anita Guinness, and three children. Their elder daughter, Kate, is married to Ben Goldsmith, son of Sir James; the younger, Alice, has been linked to Ben’s married brother Zac.

A distant cousin, Raphael de Rothschild, also died tragically four years after Amschel – in his case of a heroin overdose in New York.

The current head of the Rothschild banking empire is David de Rothschild, who was born in New York, to which his parents had fled from France when the Nazis seized their family home. Though the family returned to France, his father, Guy de Rothschild, was to flee again to America in high dudgeon when Banque Rothschild was nationalised by François Mitterrand in 1981.

David later obtained a banking licence for himself and eventually won the right to use the Rothschild name again. He now lives near the Normandy town of Pont-L’Eveque, where he served as mayor for 18 years. His properties include the Chateau Lafite-Rothschild vineyards.

Freemasons to perform rare ‘Mason at Sight’ ritual for chancellor of German Embassy

John R. Biggs Jr., 33° Grand Master of Masons in Maryland, will perform the ritual

Keedysville Masons to perform ‘Mason at Sight’ ritual

Herald Mail | October 24, 2008

The Master, Wardens and Brethren of Antietam Lodge 197, Keedysville, invite all Master Masons to join them and the Grand Master of Maryland, John Biggs on Wednesday, Oct. 29, at 7 p.m. in the Masonic Temple of Friendship Lodge 84 in Hagerstown.

The Chancellor of the German Embassy, Heinz Guenter Langenberg, will be made a “Mason at Sight” at a Special Communication of the lodge.

This ritual can only be performed by the Grand Master and his Grand Line of officers.

This is the first time in the 112 years of Antietam Lodge’s history that such a ceremony has been performed.

Admission will be by ticket only and can only be booked on the Internet at Antietam Lodge’s Web site at:


Antietam Lodge 197 meets on the first and third Tuesdays of the month in their Masonic Temple in Keedysville. All Freemasons are invited to attend.

President of manufacturers association calls for Transatlantic Free Trade Area

Commerce Secretary, Carlos Gutierrez (L) and John Engler (R), President and CEO of the National Association of Manufacturers, participate in a news conference at NAM headquarters April 4, 2008 in Washington DC. Gutierrez spoke about the unemployment rate for the month of March, the nation’s economic outlook and options for creating more jobs. Earlier on March 10, 2008 Engler spoke during a news conference at the department headquarters in Washington, DC. about the benefits of the Cross Border Trucking Demonstration Program, that allows U.S. and Mexican trucking companies to be able to cross the border and compete in the each others’ marketplaces.


Thomasnet.com| Oct 21, 2008

Calls For In-Depth Study Of New Pact

LEUVEN, Belgium, October 21, 2008 – National Association of Manufacturers (NAM) President John Engler today called for in-depth study of a “Transatlantic Free Trade Area” between either the European Union (EU) and the United States or the EU and the North American Free Trade Agreement (NAFTA) nations.

In an address today to Voka, the Flanders Chamber of Commerce and Industry, Engler said that despite the rise of China, India and other emerging economies, the U.S. and EU together account for 56 percent of Gross World Product. “This gives us tremendous clout, but also tremendous responsibility,” he said. “The time has come when we should give serious thought to the Transatlantic Free Trade Area.

“If we were to have such a huge free trade area, a real integrated transatlantic marketplace, it could well be a magnet for other countries wanting to join,” Engler said. “We could set a high standard for totally free and open trade and invite others if they agree to our high standard.”

Engler pointed out that one third of tariffs on U.S. exports to the world are paid to the EU, even though most rates are low. “A Transatlantic Free Trade Area could make a lot of sense,” Engler said. “In the U.S., we already have free trade with Canada and Mexico, and the EU already has a free trade agreement with Mexico. And, I understand the EU and Canada agreed at their Summit meeting last week in Montreal to launch negotiations on a Canada/EU free trade agreement.”

Engler emphasized that the NAM continues to actively pursue an “ambitious, market-opening Doha round agreement,” but acknowledged little chance it will be achieved this year. “The reluctance of countries like India, China and to a lesser extent, Brazil, to contribute to a comprehensive, market-opening trade deal concerns me because they themselves are very substantial markets, and they are also increasingly substantial exporters.”

Engler said that “it has become more difficult for countries like the United States to accept this growing flow of products without reciprocity. We continue to feel that the (Doha) negotiations must achieve sufficient ambition in terms of improving market access for manufactured goods, especially in the fast-growing advanced developing countries.” He said it is still possible to overcome resistance through use of sectorals – negotiations focused on specific industrial sectors – “but we must get past agriculture.”

Engler said the NAM does not regard last summer’s failure of the July World Trade Organization (WTO) Ministerial to be the end of the Doha Round or the death of the WTO. “The Kennedy Round of the General Agreement on Tariffs and Trade in the 1960s took four years,” he said. “The Tokyo round took six years. The Uruguay Round of the 80s and 90s took eight years. No one should be surprised if the Doha Round – the most difficult yet – would take 10 years.”

“Rather than spell the WTO’s doom, as some might warn, a U.S. – EU agreement could jog the rest of the world into realizing that they will be left behind unless they adopt a pro-liberalization attitude and press for quicker negotiations in the WTO,” Engler said.

As a first step to a possible Transatlantic FTR, Engler vowed to work with NAM’s European counterpart BUSINESSEUROPE and business leaders on both sides of the Atlantic to review the concept carefully. He said NAM would also press European and U.S. business leaders to actively consider negotiation of a Transatlantic Free Trade Area. “We must not allow a financial crisis or unfounded political accusations to frighten us into inaction,” he said. “Let’s instead find what benefit we can in these difficulties, including a renewed appreciation of manufacturing’s role in creating prosperity for our citizens.”


John Engler
From Wikipedia, the free encyclopedia
Engler was widely touted as a potential candidate for President in the 2000 election. However, Engler quickly passed on the race and endorsed his friend, Texas Governor George W. Bush.

Engler, John Mathias (b. 1948)
Republican. Member of Michigan state house of representatives, 1971-78 (100th District 1971-72, 89th District 1973-78); member of Michigan state senate, 1979-90 (36th District 1979-82, 35th District 1983-90); Governor of Michigan, 1991-2002; candidate for Presidential Elector for Michigan, 1992; delegate to Republican National Convention from Michigan, 2000. Catholic. Member: Federalist Society; Jaycees; Knights of Columbus.

US forces want man-hunting robot wolfpacks

Droid doorkickers to sniff out ‘non-compliant humans’

The Register | Oct 24, 2008

By Lewis Page

Trouser-moisteningly terrifying news broke this week, as it emerged that sinister forces within the US military are looking to develop a remorseless robotic wolfpack capable of hunting down “a non-cooperative human subject” in “an indoor environment”.

Yes, it’s true – last month, crazed Pentagon brainiacs asked contractors to develop a “Multi-Robot Pursuit System”, to consist of:

A software and sensor package to enable a team of robots to search for and detect human presence in an indoor environment…

Operator control units are available that allow semi-autonomous map-based control of a team of robots … There has also been significant research in the game theory community involving pursuit/evasion scenarios. This topic seeks to merge these research areas and develop a software/hardware suite that would enable a multi-robot team, together with a human operator, to search for and detect a non-cooperative human subject.

It will be necessary to determine an appropriate sensor suite that can reliably detect human presence and is suitable for implementation on small robotic platforms.

Typical robots for this type of activity are expected to weigh less than 100 Kg and the team would have three to five robots.

Not only will the skies of tomorrow be black with automated armadas of Reaper slay-planes, Fire Scout unmanned kill-choppers and possible crewless raygun cyber bombers; not only will thousands of years of human civilisation rapidly be reduced to smoking rubble; but even the option of cowering like a hunted beast in a cellar, sewer or tumbled monument has now been snatched away. Those hoping to survive for years after the machine uprising, subsisting on refuse and scuttling rat-like through the ruins until loneliness and horror finally bring merciful insanity and death, have been balked. Soulless squads of steel stormtrooper assassins will prowl the shattered cities of humanity like hunting velociraptor packs, sniffing out and snuffing the cowering remnant meatsacks, until a lifeless Pax Robotica rules the entire Earth unchallenged.

That’s surely the view being taken by two of Britain’s top technofear profs, asked to comment on the droid by renowned peacenik tech publication New Scientist.

Here’s Steve Wright of Leeds Metropolitan University:

“What we have here are the beginnings of something designed to enable robots to hunt down humans like a pack of dogs … they will become autonomous and become armed.

“We can also expect … sensors which detect human breath and the radio waves associated with a human heart beat. These are technologies already developed.”

Wright has also predicted the coming of “a modern techno-politics” deploying “machine operatives” and “self-deciding automated sentinels” armed with a terrifying sci-fi panoply of microwave rayguns, pulse lasers, tranq bombs, plasma-lightning mob blasters, “vortex energy rings” and sonic beam weapons. Honest: pdf, p12-13.

Needless to say, Wright’s views are echoed by our old friend Noel Sharkey – the man who famously flagged up the threat of droid security troopers blasting little girls who try to share ice-creams with them, who has warned of the deadly robot terrorist threat, and who endorses bogus robot-buster weaponry companies.

“There will be a robot force under command of a single soldier with potentially dire consequences for innocents around the corner,” says Sharkey, speaking of the new droid doorkicker plans.

Hmm. Except, you know, actually the consequences for innocents running into a well-equipped Western military are already much more deadly than this. At the moment, due to a huge shortage of common-or-garden men with guns, such forces all too frequently deal with uncooperative humans in indoor environments by blowing up the entire building or even neighbourhood.

Even where a squad of troops can be found to clear a house, this is extremely dangerous work for the team doing the job. As a result, they quite often shoot people they shouldn’t, tending to value speed over correctness when making decisions.

Sure, robot house-clearers (if armed) could make mistakes and kill innocents. But humans already do that anyway. Easing the fear/kneejerk factor for the human soldier operator – the Multi-Robot Pursuit System software “should minimize the chance that the operator may encounter the subject” – might actually reduce the number of errors, not increase it.

And the fact that one soldier can clear a house could mean that more houses will cleared by soldiers, rather than by dropping thousand-pounders on them. The huge majority of innocents killed in all recent wars have been the victims of heavy ordnance and/or landmines, typically airdropped – not any kind of weapon suitable for soldiers or “pursuit system” ground robots.

My god – could it be – sometimes technology makes things better than they were before? No, no. Sorry. Heresy. Ahem.

Still, the opponents of the machine rebellion may not need to tool up with an electropulse rifle and barricade ourselves into the septic tank* just yet. Today’s ground robots have absolutely zero chance of outmanoeuvring or outshooting human beings inside a building; in a gunfight, the fleshies will emerge victorious.

That’s why this programme is not, as prof Sharkey says, part of the US army’s serious robot legion plan – the Future Combat Systems initiative. Rather, it is being run by the Small Business Innovation Research effort, which is designed to make sure that SMEs get a snuffle at the mighty federal pork barrel now and then. This is a job-creation effort for humans, not a serious tech push.

Berlusconi calls for global watchdog

ANSA | Oct 23, 2008

(ANSA) – Beijing, October 23 – The recent worldwide financial crisis and credit crunch have made it clear that a global fund or institution is needed to constantly monitor the economic situation, Italian Premier Silvio Berlusconi said here on Thursday.

In a meeting with Chinese Prime Minister Wen Jiabao, the premier observed how ”this crisis on global financial markets has led all countries to realise that a fund or institution needs to be created which can constantly monitor the world economic crisis”.

Berlusconi met with the Chinese leader soon after arriving here for the Asian-European Meeting (ASEM) which brings together the heads of the 10 members of the Association of Southeast Asian Nations (ASEN), the three associated East Asian countries – China, Japan and South Korean – and 27 European Union members.

On the sidelines of the summit the Italian premier is set to hold a series of bilateral meetings.

The meetings in Beijing come just over three weeks before US President George Bush will host a gathering of the Group of 20 (G20) in Washington to examine the world economic situation.

According to Berlusconi, the G20 meeting will not produce any quick fix for the global economy but will see the participants ”assume their responsibility to control world economic growth… through guaranteeing their banking systems so they can support business and spending”. The G20 is made up of the world’s most powerful economies.

The winner of the November 4 US presidential elections is also expected to be invited to attend the meeting.

The members of the Group of 20 are Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the US and the EU.

ACLU Demands Information on U.S. Military Domestic Operations

On Bourbon Street in New Orleans’ famous French Quarter, paratroopers from Bravo Company, 2nd Battalion, 505th Parachute Infantry Regiment, 82nd Airborne Division, patrol nearly deserted streets. Photo: US Army

Dissident Voice | Oct 24, 2008

by Tom Burghardt

On Tuesday, the American Civil Liberties Union (ACLU) filed a Freedom of Information Act (FOIA) request demanding information from the government on U.S. Northern Command’s (NORTHCOM) deployment of the 3rd Infantry Division’s 1st Combat Brigade Team (BCT) on U.S. soil for “civil unrest” and “crowd control” duties.

Last month, Army Times published a piece detailing how the 1st BCT spent “35 of the last 60 months in Iraq.” The 1st BCT–also known as the “Raiders”–carried out house-to-house raids and engaged in close-quarters combat in the city of Ramadi to suppress Iraqi resistance to U.S. occupation, according to a report on the World Socialist Website.

Readers will recall my October 11 piece, “Militarizing the Homeland:” NORTHCOM’s Joint Task Force-Civil Support,” that described NORTHCOM’s Vibrant Response exercise at Fort Stewart, Georgia.

In tandem with the elite 82nd Combat Aviation Brigade, the 1st BCT participated in mock drills designed to “coordinate with local governments and interagency organizations such as the Federal Bureau of Investigation and the Federal Emergency Management Agency,” U.S. Northern Command News reported.

The Pentagon revealed that 1st BCT is a key component of NORTHCOM’s Joint Task Force-Civil Support (JTF-CS), designed to “execute both homeland defense and civil support missions.” As I pointed out in a piece earlier this month, current Army doctrine is heavily-weighted towards contingency planning for “civil disturbances.”

Indeed, Army Times reported that the 1st BCT would be kitted out with “the first ever nonlethal package that the Army has fielded.” The publication reported, “the package includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and, beanbag bullets.” But after spilling the proverbial beans, Army Times retracted that portion of their report.

NORTHCOM now claims that a “nonlethal” weapons package was intended only for use in Iraq and not in the heimat. In the opinion of this writer, this is nothing more than a feeble Pentagon move to spin a story that has garnered much unfavorable publicity since it first appeared.

Rules for domestic military operations, including as an armed force to suppress “civil disturbances,” are clearly spelled out in Department of Defense Directive 3025.12 (DoD 3025.12), “Military Assistance for Civil Disturbances” (MACDIS). Army doctrine and rules of engagement for civil disturbance and “riot control” planning have long recommended equipping troops with “non-lethal weapons” (NLWs) for what the Pentagon euphemistically calls “operations other than war.”

As researcher and activist Frank Morales reported in Police State America, the Center for Army Lessons Learned (CALL), located at Fort Leavenworth, Kansas, “reacting to a growing sense of urgency to field weaponry in step with the requirements of globalization, issued a primer on the subject, entitled, Civil Disturbances: Incorporating Non-Lethal Technology, Tactics, Techniques and Procedures,” in 2000. Why is the Pentagon now so hesitant to come clean on plans for using NLWs in the “homeland”?

Since the late 1960s, the military has gradually expanded its brief to include domestic law enforcement, drug interdiction and border security, in clear violation of the Posse Comitatus Act. The 1878 law specifically bars the use of the military in domestic policing. However the trend towards militarizing the inherently civilian nature of locally controlled law enforcement has accelerated since the September 11, 2001 terrorist attacks, most infamously with the October 2002 creation of NORTHCOM itself.

U.S. Northern Command’s original mandate “to provide command and control of Department of Defense (DoD) homeland defense efforts and to coordinate defense support of civil authorities,” has since expanded with the May 2007 National Security Presidential Directive 51, Homeland Security Presidential Directive 20 (NSPD 51/HSPD 20).

Indeed, as previously reported, NSPD 51/HSPD 20’s top secret Continuity of Government annexes have been refused to members of Congress; a clear move by the White House to inhibit the legislative branch from performing its lawful oversight functions. What then, is the Bush administration hiding from Congress and the American people?

Full story

A 21st-Century Bretton Woods

Delegates at the 1944 conference in Bretton Woods, N.H. Time & Life Pictures/Getty Images

At the Final Plenary, a sea of black-tied delegates gave a standing ovation to British economist John Maynard Keynes, whose intellect had permeated the three weeks of talks. Lord Keynes paid tribute to his far-seeing colleagues, who had performed a task appropriate “to the prophet and to the soothsayer.”

Success at global finance summit hinges on China’s willingness to play role once taken by U.S.

Wall Street Journal | Oct 25, 2008


There wasn’t much to see in Bretton Woods in July 1944, when delegates from 44 countries checked into the sprawling Mount Washington Hotel for the United Nations Monetary and Financial Conference. Almost a million acres of New Hampshire forest surrounded the site; there were free Coca-Cola dispensers, but few other distractions.

In this scene of rustic isolation, 168 statesmen (and one lone stateswoman, Mabel Newcomer of Vassar College) joined in history’s most celebrated episode of economic statecraft, remaking the world’s monetary order to fend off another Great Depression and creating an unprecedented multinational bank, to be focused on postwar reconstruction and development.

At the Final Plenary, a sea of black-tied delegates gave a standing ovation to British economist John Maynard Keynes, whose intellect had permeated the three weeks of talks. Lord Keynes paid tribute to his far-seeing colleagues, who had performed a task appropriate “to the prophet and to the soothsayer.”

The Bretton Woods conference has acquired mythical status. To economic-history buffs, it’s akin to the gathering of the founding fathers at the constitutional convention. To politicians anxious to make their marks upon the world, it’s a moment to be richly envied. The recent calls from British Prime Minister Gordon Brown and French President Nicolas Sarkozy for a new Bretton Woods conference, to which the Bush administration has acceded, have caused TV crews to descend upon the old hotel, which has undergone a $50 million facelift. But Bretton Woods revivalism is nothing new. Indeed, it’s a long tradition.

After the onset of the Latin debt crisis in 1982, U.S. Treasury Secretary Donald Regan floated the idea of a new Bretton Woods to steady the hemisphere’s currencies. The following year, reeling from three devaluations of the franc, French President Francois Mitterrand declared, “The time has really come to think in terms of a new Bretton Woods. Outside this proposition, there will be no salvation.” Mitterrand persisted in this grandiloquence over the next two years. He finally quieted down in 1985, when Margaret Thatcher dismissed his proposal as “generalized jabberwocky.”

In the wake of the emerging-market crises of 1997-98, Bretton Woods nostalgia broke out again — this time in post-Thatcher Britain. “We should not be afraid to think radically and fundamentally,” Tony Blair opined. “We need to commit ourselves today to build a new Bretton Woods for the next millennium.” The precise content of Mr. Blair’s millennial ambition was, shall we say, vague. But no fellow leader was rude enough to say so.

Among acts of international economic statesmanship, perhaps only the Marshall Plan has been invoked more frequently. There have been calls for a Marshall Plan for postcommunist eastern Europe, a Marshall Plan for Africa, a Marshall Plan for the inner cities. Indeed, anybody wanting Washington to splurge finds Marshall exceedingly convenient.

But Bretton Woods has a richer and more rarefied cachet. It was about reordering the international system, not just mobilizing money for an enlightened cause. And whereas the Marshall Plan was an example of the unilateralism for which the U.S. is known, the Bretton Woods conference was a triumph of multilateral coordination. It featured countries as diverse as Honduras, Liberia and the Philippines (Keynes spoke disdainfully of a “most monstrous monkey-house”), though it did not include South Korea or Japan, important voices in today’s economic summitry.

Both sides of the Bretton Woods achievement seem alluring today, yet both may be chimerical. The conference rebuilt the economic order by creating a system of fixed exchange rates. The aim was to prevent a return to the competitive devaluations best illustrated by the “butter wars.” In 1930 New Zealand secured a cost advantage for its butter exports by devaluing its money; Denmark, its main butter rival, responded with its own devaluation in 1931; the two nations proceeded to chase each other down with progressively more drastic devaluations.

This beggar-thy-neighbor behavior added to the protectionism that brought the world to ruin, and the Bretton Woods answer was simple. In the postwar era, the dollar would be anchored to gold, and other currencies would be anchored to the dollar: No more fluctuating money, ergo no competitive devaluation. To undergird this system, the Bretton Woods architects created the International Monetary Fund, which was far more central to their ambitions than their other legacy, the World Bank. If a country’s fixed exchange rate led it into a balance of payments crisis, the IMF would bail it out and so avert devaluation.

Today the idea of another monetary rebirth has much to recommend it. The credit bubble that has wreaked havoc on the world’s financial markets has its origins in a two-headed monetary order: Some countries allow their currencies to float, while others peg loosely to the dollar. Over the past five years or so, this mixture created a variation on the 1930s: China, the largest dollar pegger, kept its currency cheap, driving rival exporters in Asia to hold their exchange rates down also. Thanks to this new version of competitive currency manipulation, the dollar-peggers racked up gargantuan trade surpluses. Their earnings were pumped back into the international financial system, inflating a credit bubble that now has popped disastrously.

Persuading China to change its currency policy would be a worthy goal for a new Bretton Woods conference. But currency reform is low on the agenda of the summit that the Bush administration plans to host on Nov. 15. (The administration styles this gathering a “G-20 meeting,” ignoring the European talk of a Bretton Woods II.) The British and French leaders who pushed for the meeting want instead to talk about financial regulation — how to fix rating agencies, how to boost transparency at banks and so on. But many of these tasks require minimal multilateral coordination.

If the Europeans shrink from demanding that China cease pegging to the dollar, it’s perhaps because they anticipate the concession that would be asked of them. China isn’t going to give up its export-led growth strategy for the sake of the international system unless it gets a bigger stake in that system — meaning a much bigger voice within the International Monetary Fund and a corresponding reduction in Europe’s exaggerated influence. When you strip out the blather about bank transparency and such, this is the core bargain that needs to be struck. Naturally, the Europeans aren’t proposing it.

It will be up to the two great powers — the U.S. and China — to fashion the deal that brings China into the heart of the multilateral system. Here, too, is an echo of the first Bretton Woods, for underneath the camouflage of a multilateral process there was a bargain between two nations. Britain, the proud but indebted imperial power, needed American savings to underpin monetary stability in the postwar era; the quid pro quo was that the U.S. had the final say on the IMF’s design and structure. Today the U.S. must play Britain’s role, and China must play the American one.

There’s a final twist, however. In the 1940s the declining power practiced imperial trade preferences; the rising power championed an open world economy. When Franklin Roosevelt told Winston Churchill that free trade would be the price of postwar assistance, he was demanding an end to the colonial order and the creation of a level playing field for commerce. “Mr. President, I think you want to abolish the British empire,” Churchill protested. “But in spite of that, we know you are our only hope.”

Today it is the rising power that pursues mercantilist policies via its exchange rate. China’s leadership, which sits atop an astonishing $2 trillion in foreign-currency savings, could trade a promise to help recapitalize Western finance for an expanded role within the IMF. But China may simply not be interested. The future of the global monetary system depends on whether China aspires to play the role of Roosevelt — or whether it prefers to be a modern Churchill.