Davos Notebook

Bouncing back

Figure 0.1

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.

from Felix Salmon:

Against the optimists

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.

What (not) to wear in Davos

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.

from Felix Salmon:

Howard Davies, man of the people

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.

from Felix Salmon:

Security at Davos

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.

from Felix Salmon:

Why it’s safe to ignore Davos

Lawrence Delevingne has got Davos completely wrong: his list of "The Only 12 Davos Panels Worth Paying Attention To" is in fact a list of the 12 panels which can be safely ignored by just about all the delegates here. Larry Summers is more likely to turn up with only one chin than he is to commit anything approaching news in his Saturday discussion with Charlie Rose. People looking for interesting investment ideas would probably be better served by something like the "What is Life?" panel on Wednesday -- and they'll certainly find it much more interesting.

As Davos has embraced increasing numbers of journalists over the years, the alpine gabfest has developed a public face where CEOs and VIPs give us all the benefit of their best thinking on issues of global importance. But that's not really what Davos is about. At its best, Davos is a way of learning a great deal about things you didn't know you had any interest in; of meeting people you'd never otherwise meet or even know existed; and of giving human three-dimensionality to people whom you'd previously thought of just as simplistic caricatures. (At its worst, of course, Davos is a malign enabler of systemically-damaging hubris, but that's a different story.)

In any case, if you think of Davos as some kind of Sunday-morning talk show where you passively sit back and listen to Important People talk about international capital flows and the global macroeconomic outlook, you're pretty much missing the point. When Davos works, it does so by bringing interesting people together and sparking conversations. But those conversations usually happen on the sidelines, on couches in the conference center or in hotel bars around town. They rarely happen in the formal sessions, and they never happen in the big formal sessions with heads of state and other marquee names.

Davos VIP dropouts

The world’s top politicians are dropping out from the WEF‘s highly publicised list of top VIPs.

wefprepareLast-minute cancellations happen more or less every year, but this year it’s at an alarming rate.

Japanese PM Yukio Hatoyama, mired in domestic political turmoil and facing busy Parliament sessions at home, has pulled out of  the forum and is sending his strategy minister Sengoku instead.  Afghan President Hamid Karzai  has decided not to make a detour from London where he’s due to attend a conference on Afghanistan this week.

from Felix Salmon:

Looking for contrition in Davos

So I've arrived in snowy Davos, where with typical modesty the miscellaneous moguls will attempt to "Improve the State of the World: Rethink, Redesign, Rebuild". (Seriously, that's the official slogan this year.) The official "purpose" page is full of claptrap of the highest order -- a "Network of Global Agenda Councils" "driving the rethink" over here; "an unprecedented multistakeholder dialogue " over there; and on top of it all, naturally, "a collaborative platform that integrates Web 2.0 technology".

Or, to put it another way, there's no indication whatsoever that anybody at the World Economic Forum actually Gets It. Davos is great at throwing a couple of archbishops onto a panel with Niall Ferguson entitled "Restoring Faith in Economics" (geddit?) -- but what I see none of in the programme is an indication that much if not all of the crisis was caused by the arrogance of Davos Man and by his unshakeable belief that the combined efforts of the world's richest and most powerful individuals would surely make the world a better, rather than a worse, place. Excitement about the opportunities afforded by the Great Moderation (as the credit bubble was known before it burst), financial innovation, the rise of the bankers -- Davos was ahead of the curve on all of them. And as the annual symposium of smug sermonizing became increasingly established, it served as a crucial reinforcement mechanism.

It's not like CEOs and billionaires (and billionaire CEOs) need any more flattery and ego-stroking than they get on a daily basis, but Davos gives them more than that: it allows them to flatter and ego-stroke each other, in public. They invariably leave even more puffed-up and sure of themselves than when they arrived, when in hindsight what the world really needed was for these men (it's still very much a boys' club) to be shaken out of their complacency and to ask themselves some tough questions about whether in fact they were leading us off a precipice.

Davos 2010 live coverage

Five themes for Davos

Top (L-R): Steve Clarke, Natsuko Waki, Gerard Wynn, Martin Howell
Bottom (L-R): Peter Thal Larsen, Felix Salmon, Ben Hirschler, Krista Hughes

Reuters will have a multimedia team of 20 journalists plus editors and three columnists on site covering the Jan. 27-31 World Economic Forum annual meeting.

This year we are focusing our news coverage around five global themes that are shaping economics, politics and investment opportunities in 2010.  Our in-depth reports will draw on the expertise of our specialist correspondents from around the world to help inform the Davos conversation. These reports will be complemented by on-the-ground coverage, exclusive text and TV interviews, as well as a live blog aggregating the best Davos coverage on the web and on Twitter. We’ll be exploring the probing questions behind efforts to rebuild the world economy and financial system two years after the credit crisis.