Davos Notebook

Is Davos still relevant?

DAVOS/Among the most commonly asked questions during the annual World Economic Forum meeting in Davos (along with ‘which famous people have you seen?’ and ‘is it still snowing?’), is this: ‘will it actually achieve anything?’

It’s a divisive issue, and one that comes up every year. Here’s a link to a video of Reuters’ Chrystia Freeland and Felix Salmon discussing the merits of Davos. As you’ll see, they don’t agree with each other.

The conference certainly brings together an impressive list of the world’s leading politicians, businessmen (and, if the organisers have anything to do with it, businesswomen), kings, queens, and heads of charitable organisations, providing them with the rare opportunity to be in the same snowy ski resort at the same time so they can discuss new ideas, network and solve all the world’s problems.

That’s the idea anyway. Some critics, however, argue that it’s all an expensive waste of time, with little to show for our efforts.

What do you think? Does the WEF meeting in Davos fulfil founding chairman Klaus Schwab’s vision of finding solutions to the major global issues of the day or, post-economic crisis, is it time for a new approach?

Groundhog Day in Davos

groundhog

The programme may strike a different  note — this year’s Davos is apparently all about Shared Norms for the New Reality — but much of the discussion at the 41st World Economic Forum annual meeting in Davos this month will have a distinctly familiar ring to it.

Last January, the five-day talkfest in the Swiss Alps was dominated by Greece’s near-death experience at the hands of the bond market and recriminations over the role of bankers in the financial crisis, as well as worries about China’s rapid economic ascent and a lot of calls for a new trade deal.

Fast forward 12 months and not much has changed.

Ireland has joined Greece in the euro zone’s intensive care unit and Portugal and  Spain are getting round-the-clock monitoring. The annual round of bankers’ bonuses is once again stirring up trouble. China looms larger than ever on the global stage, after overtaking Japan in 2010 to become the world’s second-biggest economy. And trade ministers who signally failed to make headway last year say they really must get down to business when they meet on the sidelines of Davos this time round.

from James Saft:

Ailing Belgium could be game changer

James Saft is a Reuters columnist. The opinions expressed are his own.

Just when it looked like Spain would force the euro zone to get serious about destroying its crippling debts, here comes plucky Belgium, hobbling its way to history.

While some are focusing on whether Portugal will take a bailout (hint: they will) and how to extinguish the burning firewall around Spain,  markets are steadily losing confidence in Belgium, which is big enough, ugly enough and heart-and-soul-of-Europe enough to change the game, potentially forcing sovereign defaults and bank recapitalization.

Investors imposed an all-time-high risk premium on Belgian bonds relative to German ones on Monday amid political chaos. Belgium's parties have for the past 212 days been unable to agree a government, forcing King Albert II to step in and ask for a cost-cutting budget for 2011. Gross government debt is very high, hovering around 100 percent of GDP, leaving Belgium very vulnerable to a loss of market confidence.

from Felix Salmon:

Davos: Where epic shifts are converging

Chrystia and I differ on whether Davos is actually important. I say it isn't, and Exhibit A is this invitation, which I received today. There will be many, many more like it arriving over the next couple of weeks:

davos.jpg

The whole thing, obviously, is [sic]. But Davos does tend to attract the kind of people who can straight-facedly pretend to believe that entering the human age, or the New Reality, or unleash and leverage human potential as the key competitive differentiator to win, or entering a new era, or epic shifts are converging, or talent is the new 'it' actually mean something.

The panel that these people have put together is prototypical Davos: dean of this, best-selling author of that, general secretary of the other, plus a CEO and a corporate president. There's no shared expertise here, and there won't be any real debate. Instead, they'll all intone sonorously in an attempt to appear visionary and important, as jet-lagged delegates ask themselves why on earth they dragged themselves out of bed at 7am Swiss time (which is 1am New York time) to listen to such pablum.

from Chrystia Freeland:

The new global elites

The January/February issue of The Atlantic features Chrystia's cover story, "The Rise of the New Global Elite." The piece discusses the rise in income inequality over the past few decades, how today's tycoons are more likely to be self-made and cosmopolitan than the plutocrats of the past, and how the new elite have more in common with the nouveau riche in emerging markets than with their own countrymen.

Chrystia was on Morning Joe this morning to preview the article along with James Bennett, The Atlantic's editor-in-chief. Here's the video of their conversation:

And, here is an excerpt from Chrystia's piece in the Atlantic:

Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.

from Felix Salmon:

How to deal with the plutocrats

Chrystia Freeland has a long essay in the Atlantic on the new global elite, which will eventually become her next book. It's well timed to coincide with the self-congratulatory plutocratic gabfest that is Davos, which kicks off in three weeks' time, and with which Chrystia is very familiar.

The difference between the new global elite and the old global elite is that today the world is owned and run largely by first- or second-generation money: people who tend to think that they've earned it, somehow, especially if they came to their wealth from a background in the lower-middle classes:

While you might imagine that such backgrounds would make plutocrats especially sympathetic to those who are struggling, the opposite is often true. For the super-elite, a sense of meritocratic achievement can inspire high self-regard, and that self-regard—especially when compounded by their isolation among like-minded peers—can lead to obliviousness and indifference to the suffering of others...

Davos, Google and Chinese walls

schmidtOne big item nowhere to be seen on the official agenda in Davos this year was the delicate matter of Google’s clash with China.

So was the censorship row censored in order not to offend the Chinese?

That’s not the way the Klaus Schwab, the founder of the World Economic Forum, sees it.

“We raise issues where we know we can make a positive contribution to them,” he told Reuters. “This is an issue that is still cooking and we don’t think we could have made a positive contribution on it.”

Watch Felix Salmon interview Nouriel Roubini

Yesterday evening Reuters.com streamed an interview with renowned economist Nouriel Roubini live from our studio at the World Economic Forum in Davos. Reuters columinst Felix Salmon presented the interview and all the questions he put to Roubini were sent in by visitors to our Davos 2010 live blog.

Greece’s economic woes, U.S. GDP and the trustworthiness of statistics coming out of China were just some of the issues being discussed. If you missed it, or if you want to see it again, watch the interview in the player below.

Italian CEO says retail banks need time to adapt

Yesterday I spoke to Antonio Vigni, CEO of Siena-based Banca Monte dei Paschi di Siena, the world’s oldest bank. Below are two video clips of Vigni answering questions on lending in Italy and the hot topic of regulation.

In this first clip, Vigni says bank lending is holding up in Italy and he sees improvement.

In the next clip, Vigni says that retail banks may need more time to adapt to the brave new regulatory world.

from Felix Salmon:

World hunger and the locavores

Every so often at Davos you have a short, startling conversation which completely changes the way you think about a subject -- and I just had one of those standing next to Dan Barber, the chef of Blue Hill Farm. He's a very smart, very funny guy, who's passionate about food on every level from preparing the ingredients of the dishes in his restaurants to the logistics of feeding the planet.

I bumped into Barber as we were milling around the Davos conference center, waiting for the panel on "rethinking how to feed the world" to begin. I asked him what he thought of the food in Switzerland; he compared in unfavorably to what he was fed by the airline on the way over here. "I haven't seen a vegetable since Thursday," he added, looking a bit overwhelmed by the number of things that the Swiss seem to be able to do with bread, cheese, and bit of veal.

When the panel started, I could almost see the steam coming out of Barber's ears. It featured two heads of state; two agribusiness CEOs; a representative from the World Bank; and Bill Gates. All of them looked at food mainly as a matter of logistics and problem-solving, and they seemed to do so with real good will and good motives. (Well, maybe not the CEO of ADM.) But they were all very much bought into a model which looks, to Barber's eyes, incredibly shaky.