First day highlights from the 2010 World Economic Forum in Davos, Switzerland.
Former Foreign Minister of Afghanistan, Dr. Abdullah Abdullah, joins the Davos Debates to answer the following question posted on youtube.com/davos: If education helps prevent disease and poverty rates, why do governments not offer more to help in developing countries?
Is financial reform shattering into so many different pieces that it'll never become the strong, coherent, globally-unified project that it needs to be to get popular support and avoid regulatory arbitrage? I fear so.
For one thing, there are literally more representatives of Bill Clinton here in Davos than there are of Barack Obama. If the Obama administration is serious about its newest ideas for regulatory reform, especially the Volcker Rule, it would have made a great deal of sense to send Paul Volcker -- or at the very least someone like Austan Goolsbee -- to Davos, to try to get the rest of the world excited about it. But they didn't.
And even the president himself doesn't seem to wedded to it. Here's the relevant bit of his address last night:
Nicolas Sarkozy gave a rather predictable speech to kick off the World Economic Forum today. He started out with fiery populism, talking about how "without state intervention, the world would have imploded", and how globalization had created, pre-crisis, "a world where everything was given over to capital, and nothing to labor, in which the entrepreneur gave way to the speculator". But then, after bashing excessive pay packages and warning of dire consequences if Davos Man didn't change his ways, he spent most of his speech becoming vaguer and vaguer, devolving into standard Davos platitudes, and talking -- as all Davos speakers do -- about being bold and tackling poverty and changing the world and so on and so forth. By the time it was all over, he had proposed absolutely nothing concrete, and the assembled plutocrats were happy to give him a loud ovation.
I suspect that what we saw with Sarkozy is Davos 2010 in a nutshell: while seeming to make a decisive break from the past, in reality it's just more of the same. Sarkozy will fly back to Paris convinced that he confronted the delegates with harsh new realities; the delegates themselves, meanwhile, will feel that they belong to the future rather than the past and that they're part of the solution rather than being part of the problem.
Now, if you'll excuse me, I must dash. I've been invited to a fondue dinner being thrown by JP Morgan. I'm sure that no one there will feel in the slightest bit threatened by Sarkozy's pro-forma rhetoric.
Being bullish is, of course, part of the job if you are a CEO.
But sentiment really is improving. The annual PricewaterhouseCoopers survey of 1,200 industry bosses from 52 countries shows a nice pick in in the short- and long-term confidence curves, with 31 percent of those questioned now “very confident” about revenue prospects for the next 12 months and 81 percent plain-vanilla confident.
More remarkable, perhaps, confidence about sales looking out 3 years is now back up around its historic highs.
One of the more annoying aspects of the Davos echo-chamber is the way in which people are constantly asking each other what "the mood" is this year; the result is an inchoate consensus that since the crisis is over, markets are up, and countries are growing again, there must be grounds for optimism and the kind of yes-we-can thinking in which the World Economic Form has always specialized.
I'm moving the other way, however, siding with the pessimists like Nouriel Roubini and Martin Wolf. They're both convinced that the problems of southern Europe are both grave and intractable, although they differ in their prediction of what the consequences will be: Nouriel sees a good chance of the eurozone breaking up, while Martin sees the PIGS (Portugal, Italy, Greece, Spain) staying in the euro and ending up stuck in a long-term slump, able to neither cut interest rates nor devalue their currencies in an attempt to regain competitiveness. The only other option is an across-the-board cut in nominal wages, on the order of 30% or so. That's something which is pretty much inconceivable, although Ireland seems to be trying to move in that direction.
Of course the one entity which will benefit from this is the Squid: Goldman Sachs seems to be taking the lead in trying to orchestrate a desperate and expensive sale of Greek debt to China. Expect more such desperate moves as the southern European macroeconomy continues to deteriorate; anybody who watched the world's investment bankers swarming all over Domingo Cavallo in the final weeks of Argentina's currency board will remember just how vulturish they can be in such situations.
As World Economic Forum kicks off in Davos in earnest on Wednesday, one focus (of the fashionistas) will be what key movers and shakers are wearing.
While it’s snowing outside with temperatures often dipping below zero, inside the main congress centre is boiling hot not least because participants are engaged in heated debate over how to reshape the world.
The dress code is smart casual, but from my own experiences people wearing anything but black or dark blue would stand out, just because everyone would still be wearing normal — or boring — business suits.
Howard Davies has taken an early lead in the Great Davos Narcissism Stakes, with this classic parenthetical:
As you climb the mountain to Davos (the train via Landquart is my demotic route of choice - eschewing the expensive corporate Audis) you tend to think you know what the Forum’s financial talking points will be.
This ranks up there with the Hollywood stars who congratulate themselves on helping to save the planet by flying commercial: taking the efficient and comfortable Swiss railway to Davos is not much of a hardship. What's more, if you think that Davies is going to admit that he was thinking wrong about what the Forum's financial talking points would be, think again.
As the World Economic Forum kicks off in earnest, the only real cause of buzz so far has been the apparent suicide of its long-time security chief, Markus Reinhardt. Reinhardt was an aggressive man: he took the decision to fire water cannons at demonstrators in sub-freezing temperatures in 2001; he was also acquitted of murder in 2002 after ordering the lethal shooting of a man.
For the 2010 meeting, I'm sure that this news will mean that security will be if anything stepped up. But I'm hoping that maybe as of next year calmer minds will start prevailing, and that the multiple layers of security cordons will largely be kept in storage. Part of the attraction of Davos is its small-town feeling, but everybody here has to plan out their day strategically, to minimize the number of times they have to pass through metal detectors to get into the convention center, the media center, or the Belvedere Hotel. The result is a constant and not particular pleasant feeling of being hemmed in whenever you're taking part in official activities. More generally, the omnipresent and high-profile security does tend to cut against the much-vaunted "spirit of Davos". It would be wonderful if, next year, the World Economic Forum was the first major international confab to start reducing its security levels.