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Discussing the new normal

Manuela Kasper-Claridge, Lake Como, Italy /hfApril 8, 2016

Every spring, political and economic leaders meet at Lake Como to attend the Ambrosetti Forum. The exclusive meeting is organized by the European House Ambrosetti, one of Europe’s most influential think tanks.

Villa d'Este am Comer See
Image: picture-alliance/dpa/A. Martinuzzi

The setting couldn't be more stunning. The Villa d'Este is beautifully situated in a park that extends over 10 hectares on the shores of Lake Como near Milan. Since 1873, the former renaissance palace has been housing one of Italy's most famous luxury hotels. The patrol boats of the Italian police inconspicuously patrol the lake. Their engines hum quietly, the distinguished guests are not to be disturbed in their conversations.

There is President Obama's economic advisor, a member of the European Central Bank, a European Commissioner, CEOs, politicians, bankers and top economists from China, Europe, the United States and Japan. Exclusive invitations were extended to 130 people by Italy's number one think tank: The European House Ambrosetti.

Valerio De Molli, managing partner at Ambrosetti, is proud of his network's success. He sees it somewhere between McKinsey's Global Institute and the World Economic Forum. The intention is to inspire reflection and discussion, to highlight possible solutions to economic problems. Ambrosetti just presented a study, which concluded that Italy urgently needs to advance the process of digitization in order to eradicate the shadow economy.

Lake Como and heated discussions

There are far less beautiful places to hold a conference than Villa d'Este but the participants can spare little more than a brief glance at the glistening sun on Lake Como during their coffee breaks. Inside, the discussions are fierce. They talk about the state of the world economy, the European crisis, China's problems and how to get the world economy going again. Only very few journalists are admitted and those who are need to abide by the so-called Chatham House Rules, which means that they may not quote anyone directly, except with express permission. The goal is to assure an open discussion.

Italy's former prime minister is concerned

Enrico Letta was Prime Minister of Italy from April 2013 to February 2014. Now he lives in Paris and views both his home country and Europe critically. He doesn't grant interviews to Italian journalists, he doesn't want to say anything too critical about Matteo Renzi, his successor as prime minister.

Italien Rücktritt Premierminister Enrico Letta
"We need more integration in the Euro area," says former Italian prime minister Enrico LettaImage: Reuters

Speaking to DW, Letta calls for a common economic and fiscal policy of the eurozone. "We have to concentrate our efforts to integrate the euro area in fiscal terms, in political terms. This is the only way to change Europe and the European economy. That means that the European Union still exists but we have to integrate the euro area and this is a matter of Italy, Germany, Spain and France."

Super-Mario can't fix it on his own

For Letta, there is not doubt that Europe needs more economic growth, but the solution cannot come from the European Central Bank alone.

"Mario Draghi and the ECB did really whatever it takes and Mario Draghi is really 'Super Mario.' ''He is saving Europe, he is rescuing the European economy. Quantitative easing was absolutely decisive but as Mario Draghi also says, it is not the task of the ECB to boost the European economy."

Influential US banker views monetary policy critically

Someone else views the role of the central banks and their dominance in the public perception critically as well: Jacob A. Frenkel is the chairman of JPMorgan Chase, the largest US bank. He was also the head of Israel's central bank for nine years. Speaking to DW, he stresses that the central banks simply can't solve all economic problems.

"Most of the problems today cannot be solved only by monetary policy. We have issues of demography, of savings, issues of tension. Those are issues that have to be solved by governments with their own policy instruments."

Israel Wirtschaft Jacob A. Frenkel
"Today's problems cannot be solved only by monetary policy," Jacob A. Frenkel, JP Morgan Chase CEO, saysImage: picture-alliance/dpa

The new normal

But what are our problems? At Lake Como people talk about "the new normal." That means slow growth and lower productivity and consequently also less employment.

"Is this a new normal? Or do we need to find something that will bring us back to a better performance? The answer is probably some of both," Frenkel says with a shrug.

An open and brutally honest analysis could at least help, and so could thinking outside the box. That is what they are trying to do here at Lake Como. When China's top economist is talking to the head of Bitcoin and European bankers talk to President Obama's economic advisor, then Ambrosetti's Valerio de Molli has achieved his first goal: the transfer of knowledge.