Turning the tables: Can you help Davos leaders?

By Reuters Staff
January 27, 2009

Klaus SchwabDavos is a well-rehearsed event and everyone knows the part they should play. Business and political leaders gather each year to tackle the major challenges of a global economy while the rest of the world, or those of its citizens who are interested, look on from afar. But this year, for obvious reasons, things are different. The notion of leadership has been coupled in the public mind with that of responsibility. The tone here is a little more humble and the attitude more open-minded. There’s a recognition that new thinking is required.  A suitable time, perhaps, to turn the tables on convention and have Davos delegates ask the questions they can’t answer and for global citizens to offer solutions.

Gamefully opening the discourse is Professor Klaus Schwab, Founder and President of the World Economic Forum.

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If you’ve got suggestions for Klaus then use the comments section below.

282 comments

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The solution is rather simple, just as simple as the problem. However, no answer is available for free. Hint: The trail. I’ll tell the solution when payment for the information is received.

Posted by Miguel | Report as abusive

Good bank, bad bank. Shove all the toxic assets into the bad bank and keep the good, sensible assets in the good bank. Next, examine the management at these banks for criminal negligence related to irresponsible and reckless lending practices that led to this crisis. If found guilty of negligence, such parties should be made to pay their ill-gotten bonuses back to the tax payer and serve some time in lockup. Good old-fashioned “if you do the crime, you do the time”. This will set a good example to ordinary citizens and our children, as well as act as a deterrant for future generations thinking of entering into such speculative ventures while putting the tax payers’ hard-earned, honest money and the whole economic system at risk. Bank managers should NOT be rewarded for this blatantly bad and reckless behaviour.

With the first round of the “bailouts” complete, the govts around the world have wasted enough taxpayers’ money by throwing good money after bad already. These measures need to be taken swiftly and decisively. Now is a time to lead by example. The world is watching and waiting for you to act.

Posted by P_Morgan | Report as abusive

- Government should encourage banks and people to start saving money instead of living beyond their means.
- Unfortunately the developed countries are the worst example of saving. They still want to borrow more money to keep their economies going. They are digging a deeper hole if they don’t spend that money in Infrastructure, Health and Green technologies and convince China and India to do the same.
- Credit should not be so easy to obtain. Doesn’t make sense to buy a house with no money down. Not every body can afford a house. The US Government promoted this and even bragged about it for a while thinking that risks were being kept manageable. People need more education regarding using credit.
- As a society we expect quicker returns faster than ever before. It took 40 to 50 years (from the 50′s to the 90′s) for the DJI to go from 1000 – 2000 points. And 3 years to go from 10,000 to 14,000 between 2005 and 2008. Even banks which used to be conservative in their decisions took bigger risks in the last few years seeking better returns. We are bailing out these banks and not scrutinizing them enough. Where have the 350 billion give to banks gone?

- Some of the CEO’s and elite should follow the example of millionaires like Warren Buffet and Bill Gates , who are using their clout and financial resources investing in worthwhile long term investments like education and health and contributing to society in the process.

Posted by Gerardo Gutierrez | Report as abusive

1. rethink the consumption = prosperity model
2. redistribute – no multi million or even billion exec comp packages when laying off thousands
3. dramatize good news, why does the media have to focus on a drop off in new home sales and unemployment when there was an increase in total home sales? Why do we have a dot bomb bubble driven by unfounded optimism in the 90s and now our recession is partially over-reaction?
4. make love not war, it is cheaper to pay for education and health care and it employs people more than killing, bombing and rebuilding, by the way when people hate us less, they terrorize less
5. engage as many people as possible with as many ideas as possible
6. streamline healthcare in the US, 1 of 5 people work in the industry, there are so many inefficiencies, we spend more on marketing for drugs to consumers than on marketing Coke, hospitals only collect 40% of what they bill, we have the worst health outcomes of any developed nation
7. identify points of light and pockets of growth, who is still making money and why?
8. employ people helping people, think micro loans, think barter
9. share information, collaborate, cooperate – don’t reinvent the wheel,
10. educate, sustain
11. don’t freak out – actually the US has seen much worse unemployment in the past and much worse inflation.
12. stop greed, pay it forward, foster good karma, care share and love, think of the whole more than selfish greed – live simply so others can simply live – help each other. I love to ski, but one day’s ski pass at Davos could buy 4 mosquite nets which could save 4 families from malaria. Prosper by helping, maybe Davos could donate a mosquite net in Burma or Africa for each lift ticket. Be grateful and thank God for people you love, health and what you have. Crush Negativity Now!

There is no solution until the world changes it’s thinking. Greed must be controlled. Banks, better regulated. A better distribution of wealth to avoid the pyramiding of world wealth. I’m sure this guy really knows the answer, and he knows who’s responsible and what the agenda is.

Posted by James | Report as abusive

The weapon of mass economic destruction- CDSs -will comletely destroy what’s left of the world economy unless it’s neutralised. Effectively the’re betting slips. So, let the principal governments of the world together issue a simple declaration; ‘all these bets are cancelled, the stakes so far paid to be returned, the contracts voided, and no case can be brought to oppose this decision under any jurisdiction.’ At a stroke the huge overhang of CDSs would be swept away,and the banking system might have a chance of recovery.

Next, use rescue money to pay the the interest due on sub-prime mortgages in default, declaring the houses involved to be social housing. leave the ex owner in place as a tenant, paying a protected rent. with the governments committed to paying the interest, the toxic securities would cease to be toxic, and could then be valued. The banks’ balance sheets would begin to look realistic, and credit start to flow again.

Posted by David Wilson | Report as abusive

In my humble view , the problem really is globalization
until all nations accept standardized environmental
labour and financial laws , we will continue to have this disconnect , I think all the western world has been
doing is exporting inflation to the emerging markets,
a redistribution of wealth on a global scale
and a rethinking of what constitutes success needs to be
addressed, think of it, that pan handler or homeless
person is more succesful then any one of the latest high profile econocide victims because at least the homeless person is still alive, anyway a CEO like Fuld or anyone else who needs to make 100 million or more a year
to feel properly compensated is sick ,what happened to the people who worked for the benefit of everyone,
the whole problem is greed and social unrest will
be the ultimate undoing if today’s the leaders do not
take the lead, just look at France and Iceland
it could be just the tip of the Iceberg so to speak,
and it’s not meant to be a joke!

Posted by Robert Hinz | Report as abusive

By definition the credit crisis/freeze means banks are not lending money, so why is the interest rate at around 5%? With a lower supply of credit the cost of credit should be higher given demand, if demand is high and supply is low, the cost should be higher. Lets say to have equal supply and demand the interest rate should be at 10%, now anybody with good enough credit and can afford the 10% interest rate can get credit. This is what is known as decreasing the demand, alternatively you can increase the supply. To do this the fed would have to increase the money supply to the banks to such a point that banks could do whatever they need to do with the money and still have enough to lend out at 5% to people with good enough credit. But this still might not be enough to stop the root cause, which is the fall in home values. For that you would have to both increase the supply of money and increase the demand for money, which would mean lowering the interest rates, now the fed already lowered the interbank interest rate about as much as it could to .25%, what needs to be lowered is mortgage rates to say 3.5%, again for people with good credit (don’t need to create another sub prime problem). Okay, so how can they do this? One way is to stop selling government bonds for a while and even buy some back, this has the effect of raising bond prices and in turn lowering interest rates. Another way is to artificially lower interest rates by injecting even more money into the banking system, now I’m not talking about just giving the money away, but all the fed has to do is say to the banking system that any money the banking system needs, the fed will lend to them at the discount rate, then the banks should feel free to loan it out to just about anybody (again with good credit). But you say, if the fed is injecting all this money into the money supply, won’t that increase inflation? Well that is to be expected, after all we cannot possibly be sending around 500 billion dollars a year out of the country in the form of the trade deficit, and not expect higher inflation, in fact, this is the real root cause. This is why foreign countries like China buy our government bonds, they want to keep our inflation rate low, so that the exchange rate will stay high for them, that way we will be able to keep buying their products. In a real free market world economy the inflation rate should be allowed to float, that way over supply from other countries will eventually balance out. China is not only holding their currency artificially low, but at the same time by buying our government bonds, they are holding our currency value artificially high. This has the effect of creating a very large national trade debt that (I don’t have any numbers) could be comparable to the nation debt itself of around 11 trillion dollars. There is no way this could possibly continue indefinitely, especially given the effects of compound interest, though it might continue for quite a while longer. Something will eventually spook this bond market (like the threat of hyper inflation), and the whole system will come crashing down (then there really will be hyper inflation as the system tries to rebalance itself). Government bonds at that point will become totally worthless, iBonds might be a little safer. At this point the dollars value will be much lower than it would have if the inflation rate was allowed to float. The real weapon of mass financial destruction is the amount of our nation debt that other countries own. Biggest example being China. Of course, they could never unleash this weapon, because it would have the effect of not only destroying our financial system but at the same time also destroying their own financial system (since we would no longer be able to buy any of their products). So in effect, the US government bonds that China holds are already worthless (since they can never sell them without causing this mass financial destruction). The trick here would be for China to hold massive amounts of iBonds, now if China were to sell off the regular bonds it holds, inflation would skyrocket, in turn causing those iBonds to explode in value, then if China decided to try to redeem those iBonds, the government might have to default, since even more money would have to be created to pay those iBonds, further increasing inflation and further increasing the value of the remaining iBonds, in a viscous never-ending cycle. Now this could be a real national security problem, since China would be very upset if we had to default on our national debt, which could cause real mass destruction, not just financial mass destruction.

In conclusion, the two main problems are, the fed is trying to manipulate interest rates instead of letting interest rates float and controlling the money supply. And the government is holding the dollars value artificially high by maintaining a high national debt, which in turn causes a high trade debt.

One solution, like I say, would be for the fed to allow the banking system to borrow as much money as they want at the discount rate, and let them use it for whatever they need it for, including using the money to buy government bonds, such as 30 year treasury bonds (I think those are around 3%), so they would be able to borrow the money for 2% and buy bonds for 3%, making 1% on the difference, this would have the effect of injecting huge amounts of money into the bond market, and therefore lowering real interest rates, by at least 1%.

Posted by Roger Perkins | Report as abusive

Davos is supposed to be finding a solution to an economic problem in a capitalist system.

As there are a lot of solutions already on this page, I thought I could put down some “not solutions”.

Ten things which are NOT a solution:
1) Policies designed to reverse climate change.
2) Positive karma production.
3) Mass redistribution of CEO paychecks, or other socialist experiments.
4) Trying to formulate peace and goodwill among nations.
5) Donating more money to the third world.
6) Trying to replace the economic market with a fantasy hippy economy.
7) Renewable energy.
8) Blaming the republicans.
9) Buzz words such as “listen to the people”.
10) Anything based on the assumption that the crisis represents a failure of the capitalist system.
11) Reducing the exploitation of natural resources.
12) Anything which opposes or ignores basic economic or financial theory.

Though they are important issues, they are not directly relevant to the economic problem.

People are just trying to push their own issues on the agenda, for fear that these issues will be ignored. In order to end the crisis, they may well be ignored.

Posted by John Smith | Report as abusive

Do the leaders really want to fix the system or do they want to game it so that they and the fat cats end up on top as usual?

If you want to fix it, start initiating more local business and manufacturing and give the less wealthy people money with which to buy the goods.

Otherwise continue to throw money at fat cats and talk about globalization. Hope the corporate masters continue to donate to your political campaigns with their hidden bribes.

Well, 12 things actually.

Just as well I am not an accountant…

Posted by John Smith | Report as abusive

As far as a way to use the global community to help solve the problem, why not create a wikiforum.com where good ideas could be expanded upon, and bad ideas will get lost in the shuffle.

Posted by Roger Perkins | Report as abusive

Collaboration of the masses to solve the problems of the masses. This blog isn’t working for me as there are way too many comments to go through (sorry). And I will project my feelings onto the rest of us when I say that it probably isn’t working for the others as well, as the last comments don’t seem to be on how we can work together to solve this problem; instead, the comments are specific solutions for perceived problems.

Collaboration succeeds when there is the ability to converge on facts (like a good Wikipedia entry), when there is some organization asking a specific question and that organization has the ability to determine the validity of the answers (the mining example from Wikinomics), and occasionally the crowd vote can determine a good solution.

I believe that for this complex situation, that collaborative answers on specific questions should be elicited. Perhaps there can be a collective vote on culled suggestions. This probably means that the whole problem needs to be broken down into smaller pieces, and a guided collaborative effort be undertaken for the smaller pieces. For instance, one piece might be what to do with the banks that took the risks associated with mortgage backed securities. A web site could be set up that contains all the known data about these banks and the mortgage backed securities (a Wiki). Then parties could submit solutions (email to searchable database) and the interested party (the US Treasury Department) could review the solution suggestions, perhaps with the help of the web audience. As a motivation for the web members, some sort of point system could be set up to recognize those with the best suggestions or clearest explanations for or against the proposed suggestions.

One key piece of this process is to produce accurate data for people to review. The banks’ actions are still not clear (motivations, understanding of risk), the inability to untangle the securities (what else are computers good for), etc. are all questions that seem to be repeated in the press. As they say, garbage in garbage out. This information, in the case of the mortgages, will remain hidden while banks fear being penalized for revealing it. Maybe we need an anonymous reporting mechanism for those parties (a good internet ability).
Another key piece is to be able to objectively evaluate the solutions. This is problematic because everyone brings bias (sorry) and these problems are very complex. I would again recommend making the problem as simple as possible by breaking it into smaller pieces or by isolating a particular aspect of a problem. For instance, smaller banks in the US that typically held their mortgages were not as exposed to the initial problems. Their problems are less complex than the “too big to fail banks” (I think, or is that just my bias?). Or one could look at Wells Fargo as a large bank that did well through the initial period to perhaps isolate some of the practices that led to the downfall of the other large banks. Again, accurate and detailed information needs to be obtained.

So, in conclusion, the web can be a useful tool, if the problems and all the data about the problems can be posted in a way that is verified and accurate. Then, good mass collaboration can occur.

Posted by Mark Johnston | Report as abusive

Davos 2009 Conference Shows The World At An Economic Crossroads……
http://wcgfairfield.blogspot.com/2009/01  /davos-2009-conference-shows-world-at.h tml

Posted by Anonymous | Report as abusive

Use a portion of public money to buy ‘troubled’ assets. Nationalize a portion of the banks and/or create new federal banks. Aim for a bank entity count that is proportional to GDP. Prohibit mergers/acquisitions of these ‘core’ banks. Separate the assets that these core banks may use. Place an artificial limit on the size of the core banks. Limit which banks may/may-not deal with external entities outside the relevant GDP zone.

Temporarily lower any tax placed on common transactions. i.e. lower GST, VAT, duties, Sales tax, whatever your GDP zone calls it. Put money directly into the hands of people who are currently still able and most likely to spend.

Have a really close look at how the CDS market is constructed, regulated, and monitored. (It’s the next bomb to go off)

Have a close look at your insurance industry participants and how their current practices are affecting business. Consider more state run insurers.

Posted by Richard | Report as abusive

I believe the problem is in us, in people themselves, i.e. that human nature is prone to greed and excess in all areas. The only solution to rampant greed and excessive spending is for ALL nations to turn in a true heart repentance to God. This is the way to bring help to a dying world.

However, because there is the continuance of a refusal to acknowledge that we can’t take it (riches) with us, we continue to want more and more to be “satisfied and to have the American dream.” Mankind seeks more and more to be self-fulfilled, while God, in the Person of Jesus Christ His Son, has proclaimed that all who will come to Him in repentance can be filled full of His Spirit, by simply accepting His free (no money required) redemption from the bondage of corruption.

Whether we possess anything on this earth or not, we can be wealthy through eternity in all spiritual blessings in heavenly places in Christ, simply by turning to Him and accepting His finished work in dying on the Cross for the sins of the world. HE is the answer!

Also, the Lord promises that if we seek FIRST the Kingdom of God, all earthly things (that we NEED, not all we may WANT) will be added unto us.

The US (and Europe at one time) sought the Lord in prayer and repentance for their sins. Now we quickly take away the rights of a helpless unborn child and we destroy the sanctity of the home, so that we can sacrifice our lives to the gods of sex, illegal drugs, convenience, money, and popularity–and we wonder why these problems come to us and cannot be solved? Cry out to God, He is waiting for all of us to exercise faith in Him alone.

I DARE YOU TO PRINT THIS. HOWEVER, IF IT REACHES THE EYES OF ONLY THE PERSON WHO READS IT, IT WILL BE WORTH THE TIME SPENT. May God bless you by giving you the true gift of His Son.

Posted by Dorie Jordan | Report as abusive

Quick fixes are needed for the worst of the symptoms of the downturn – in particular rescuing banks sufficiently to re-engage their leveraging capability. But a longer term solution to regain confidence internationally and by households and industry needs to tackle the causes of the problems.

Greed, short-sightedness, and poor information reflect the human condition. Three factors enabled the blow-out:
1. Loose monetary policy based on a narrow focus on CPI, rather than also looking at debt ratios and asset price inflation.
2. Loose regulation which assumed professionalism, far sightedness and trustworthiness of financial players, such that their self-interest would ensure the market was self-regulating. The complexity of assets, the size of rewards and perceived guarantees (e.g. in relation to Freddie Mac) ensured that greed et al undermined those assumptions.
3. The role of the U.S. in providing both the world’s reserve currency and reserve source of demand provided a very long rope for the first two factors to work.

Some of the quick fixes are in danger of reinforcing factors (1) and (3). Trying to reflate to former levels of demand and asset price levels invites a re-run of the 2008 debacle.

Assume – optimistically – that domestic and international working parties can resolve (2) without strangling the banking sector with red tape and politically driven decisions. The difficult work is in tackling (1) and (3).

On (1): With household wealth having taken a big hit, portfolio rebuilding will require more saving and thus less consumption than hitherto in many countries, notably the U.S. Central banks (or Treasurys) need to compensate for the reduction in the supply of (broadly defined) money resulting directly from banks’ deleveraging – replacing bad money with good. Central banks should not attempt, through the “printing press”, to compensate for reduction in the velocity of circulation (V) of money resulting from changes in household or industry behaviour. This risks hyper inflation both through growing debt to fund this and through upticks in V. (This can be simply illustrated by modelling shifts in the Hicksian IS-LM curves – sometimes the old tools are the best!) For the future, central banks – possibly with other financial regulators – need to develop monetary policy to encompass changes in real asset prices and debt ratios.

On (3): After the greatest waste of funds in history by the U.S., global fund movements should not effectively prioritise the U.S. by preferential lending to it. This also exacerbates, rather than reduces, global exposure to the U.S. economy. Such lending and such exposure can be reduced by three means.

First, the world needs to reduce its reliance on the U.S. $ before the U.S. reaches unsustainable levels of debt. A common trading currency does not require a uniform issuance of less fungible forms of debt instrument. This is illustrated in the Eurozone where the ECB issues Euro cash but different governments issue their own bonds which are then priced differently by the market. Thus, it should be possible to accommodate a common trading currency across a number of large economies with separate sovereign debt continuing to be issued in separate currencies.

Second, non-U.S. markets should be developed as a priority (the obvious case being China). Third, other countries’ sovereign debt should be supported by pooled insurance arrangements, thus reducing the risk. Potentially, these second and third strategies could be joined together by developing large scale cross-national pooled funds for the development of new markets.

In sum, a radical change in the economic scenery is needed to stymie the drivers of economic destruction.

I like the idea of a “bad bank” to clean out the bad debt which could in turn be profitable at a later more favorable time.

Start small and rebuild within respective states. I believe the United Nations applauded a system called microcredit to generate the system to create jobs in poor countries. Same system could be used especially to generate renewable green jobs and companies.

The only way we are going to survive this economic situation is to see it as an opportunity to change direction.

Good luck to all.

Posted by Eva | Report as abusive

To create a global forum on issues, first break things up into segments..social, economic, health, transport, etc.

Then you’ll need some sort of translation service so that people in one country can read the suggestions of people from other countries. Sort of like U.N. translators.

You’ll need moderators obviously, but this could be combined with translation, make sure that it goes through two translators though to proof read.

Then have the posts vetted by people who are experts..obviously not all suggestions will work.

Then open the refined idea for additional comment and discussion.

Set up a “deal breaker” criteria to discard ideas..EX. if the solution would work, but would involve war..that’s a deal breaker.

Set up an incentive whereby the best idea in any category for that week gets a plaque that says ” I helped save the World”

Posted by Theresa Smith | Report as abusive

Sir, Each country should buy up all home mortages. I mean all. Place them in a Existing unit like in the USA Fannie Mae and Freddie Mac. The good home loans will provide postive income for the business dealing with the bad loans.
Plus with all the bad loans in one place Law Enforcement can have all the paper work in one spot and save money while looking over the bad loans for Illegal Activity.
The Government from then own should be the sole holder and maker of homeloans. This great wealth in realestate will eventually repay all losses and build equity that will support you countries curreny value.
I would suggest the banks and the fiancial markets deal with the Credit Swap losses on their own. The Fiancial Industry created that problem let them solve it. I would however put law in place that would require paper work for swaps. In the USA they have Swaps written on cocktail napkins and scrapes of paper without any real way of telling what or how much it actually is worth.

The Commerical Loans ignor and let the banks and the courts deal with it.

At the end of the day Banks would be left with a truck load of cash and no income stream from home loans. So they will have to loan money for people to buy homes, cars,and other things. Since you the only game in town for housing you can also control the building of new homes and how land is used then too. Possible nipping the loss of farm land to subdivisions in the bud.

Posted by James Wilson | Report as abusive

Government or tax payers shouldn’t bear the huge mess created by irresponsible banks/investors. Let the recession do it’s clean up.

It’d be useless to pump more money into them, which will result in bigger fishes eating up smaller ones. More retrenchments will occur. More job losses will result in more sour mortgages.

Whatever the stimulus package has done for now is enough. Need more to help small-medium enterprises and medium-lower income groups.

And should imply temporary restrictions to companies having retrenchments when they are still profitable.

Government subsidies for companies who doesn’t retrench, and more incentives to companies who hires.

Posted by weiss | Report as abusive

It’s appropriate that the “anti-spam word” that I had to type in order to post this was “TOAST”, because that’s what the world economy is.

There is no “solution”, any more than there was a “solution” for Titanic once it struck the iceberg.

The idea that somehow the consumer debt-driven economy is going to be magically revived is pure fantasy.

Governments had better quickly prepare for feeding and caring for their populations. We are going to devolve into localized, small-scale, village-type economies. The present system’s complexity and interconnectedness is what has doomed it.

Posted by Scorpio69er | Report as abusive

All the banks are crooks and cowards. They are holding the world hostage, demanding governments succumb to macroeconomic pressures that will force governments and ultimately taxpayers to take the trillions of dollars worth of bad assets off their own balance sheets so they themselves can go unscathed. Do not let them win!!! Create a national bank (just one is enough) to lend to those most in need. The cowards will fall inline when they see that they cannot hold the world ransome.

Posted by Fook Yau | Report as abusive

Look closely at how big banks and big corporations have handled small businesses and individual people. There is an egregious pattern emerging. It’s on a massive level. Trust is lost. And those that don’t count are speaking and pulling out: Customer service doesn’t exist anymore, the airlines charge a 15 dollar baggage handling fee that assures they will lose your luggage. Credit card companies will be sure to let you go over your credit limit so that they can charge you 60 dollar over the limit fees and rack up absurd interest against you. In keeping with the overvaluing of property so banks could rake in profit while families are about to go homeless. Don’t get me on moving companies, they loved the demise of the interstate commerce commission. Better to throw your possessions in the garbage than to try to ship interstate. Then we have the major companies claiming to do and finance home improvements. The interest starts accruing before the job is done, if you are lucking enough to get a corporation like sears to finish a job. And the big guys raked in mega bonuses for adhering to a bottom line philosophy of screw you.

Posted by sarah levine simon | Report as abusive

Let the banks rot. Why should the public pay for these greedy incompetant’s mistakes. Too many odious people in positions of powerful wealth. Let’s have some integrity restored to the world.
Observed in a newspaper the other day a list of the twelve topmost bankers/money manipulators that had been involved in and caused all this tragic problem with world economies and ten of them were jewish. Many people believe that this is a jewish heist of the American economy and the financial rewards concommitant. A British bank was given £39 billion, where has it gone? It has vanished!
The elephant in the room syndrome exists here, about time it was exposed.

Posted by Leah | Report as abusive

The only solution to solved this worldwide financial mess were in, is to implement the policies used in the late 1930′s and early 40′s. Let’s start World War 3. It worked for the US.and helped solve our unemployment problem.The US only lost approx. 500,000 lives, only this time my butt won’t be in some muddy dirt hole somwhere in Europe..

Posted by Bill P | Report as abusive

Dear sir,
Although I am an economist with a lot of experience and knowledgeable of the financial system,i think that it will be very difficult to deal with this crisis with a conventional thinking because the world had changed
dramatically since the 80′s in term of media ,financial instruments and globalization.
Each country should deal with this own problems because the reasons of the crisis are different.for example what is happening in the USA in terms of credit thightening was needed and is needed and will be needed for a few years in order to cure the american economy and make it prosperous again on a sound basis.Americans will learn the hard way to spend less and save more.this way the economy recovery will be on a sound basis and not on a temporary”credit air pillow” that will desinflate with the firs blow.
i think this time the people in the street knows what is right for him and he cut spending and debt. it will be difficult to change this positive attitude overnight.
I think the administration should only focus on umproving the rate of employment ,help the undustrial,energy,construction and agricultural buisness directly and stop pouring money in the financial system.
trust the financial system that he will find ways to survive the crisis on his own once he knows that no more money will come from the government.

Posted by yaffa | Report as abusive

If there was more of a motivation to repay debt, rather than walk away when times got hard, we might see less foreclosures in the housing market of the U.S.
Consideration should be given to an overhaul of the personal Bankruptcy statutes so that this option is one of last resort rather than economic convenience.

An extension of this, into the corporate realm could see trailing penalties deducted from Corporate bonus funds that are held in trust for a period of time. Entering into risky deals for short term gain could then be tempered by evaluation of the longer term consequences of the deal. Jumping out of the door before the deal goes bad would then be a less favourable option.

Dealing with global climate change needs to be the economic stimulator for the future. Climate change will stimulate the need for new products and services. However, this effort needs to be done in a systematic fashion, not hit and miss. Only government has the ability to stimulate this kind of systematics.

For example, fossil fuels are finite and at some point, through choice or inevitability, they will disappear. Electricity is the easiest energy source to produce sustainably, however, national electric grids are based on point-source power production, whereas, sustainable electricity production, such as wind and solar, are distributive by nature. This requires a very different power grid. Power grids should be nationalized and supported through user fees, so that coherent, systematic changes that prepare for future production capabilities can be put in place.

Economics is a master status for humans. Wars are always about control of resources. Economic development in chronically war-torn areas, such as Afghanistan, the Horn of Africa, the Congo, the Middle East, can do more to reduce or eliminate conflict than military activity. In these areas, war is the economy, for lack of a better alternative stimulus. Poverty, combined with a fungible commodity, such as diamonds in West Africa or poppies in Afghanistan, allow a war-lord culture to develop which provides employment to young men. Here is the priority sequence of required development: first, all-weather roads and rail, for without transportation, there is no economy; second, electromagnetic infrastructure – electricity production and distribution, communications infrastructure; third, school/clinics (the two functions co-located) and a network of teachers colleges. This will generate economic activity and at lower cost than military expenditures. The way to end war is through a full belly.

A third issue is executive compensation. On the economic Marginal Rate of Return curve, executive compensation reached the extreme right end of the scale, where more input results in a rapidly decreasing level of output. Executive bonuses did not improve management function but damaged it by rewarding greedy behavior and short term thinking, damaging to the entity as a whole. Under the U.S. farm program, disaster benefits are based on the concept of Proven Yield, where a farm’s per unit area production potential is calculated by taking the last five years’ production, dropping the high and low years and averaging the middle three. This process, adapted to executive compensation would reward behavior that favors good long term planning and the financial health of the company over that of the individual.

Posted by fred schumacher | Report as abusive

First of all, there needs to be a market for these complicated and so called “toxic” assets that financial institutions currently hold. The inability to assess the value of these assets is the primary cause of the credit crises. These organizations must be forced to reveal all of these investments and have them valued in some way. Without a private market, governments must create the market by creating a calculation of value and then purchasing them for later resale. In return, the institutions will receive either government guarantees or capital investment (with accountability.)

Next up is the unsustainable economic model of an artificially valued Chinese currency and “rest of the developed world” consumption. Globalization may well be here to stay but it cannot continue in this manner. When third world nations join the developed world on the back of cheap labor, they must join the developed world in not manipulating their currencies. The WTO must enforce fair trade practices that prohibit this kind of manipulation. This would “spread the wealth” to other developing nations as a source of labor and a target of investment. This cycle would continue until equilibrium is achieved. A level playing field is a must for the future.

Third is the problem of finite fossil fuels. The US and Europe are net importers of these resources and this model is, again, unsustainable. Therefore it is in America’s and Europe’s best interest to collaborate on investment in research and development of alternative energy and transportation solutions. If this collaboration can agree on fair sharing of the benefits, this kind of joint venture will do more to create a secure and wealthy future for all involved than any other measure under current consideration.

Finally there is the obvious and simple solution of greater regulation. Never again can we let so very few hold the economic well being of the world in their hands. Transparency MUST rule the day. No need for a long essay here. The solution is simple and obvious.

The current problem is an inevitable result of globalization. It could have been slow and manageable, but that would have required long-term planned readjustment, worldwide. The ‘crash’ is due to short-term thinking and this year’s bottom-line priority. The current paradigm is view people as consumers, not producers. Until that changes, any ‘solution’ will be extremely temporary, every ‘boom’ shorter and every ‘bust’ more extreme.

All ‘profit’ is the result of human productivity. The extension of credit, to compensate for decreased productivity, as manufacturing and ‘soft services,’ such as programming, were moved from ‘developed countries’ to places labor is cheaper, regulation is laxer and profit is higher, created ‘the bubble,’ and concentrated the ‘wealth’ of the world.

The only solution is long-term investment in productivity, but that requires a truly long-term view, and reasonable expectation of profit, based on actual productivity growth, worldwide. Currently, it’s based on the ‘looting’ of resources, not creation of something. The very term “consumer” defines it as such. Use it up fast, so you have to buy more, on credit.

It is a philosophical problem. As long as ‘net worth’ is viewed as the primary factor in judgment of a person’s value to society, we will be trapped in the boom and bust cycle. It is at the root of short-sighted investment. Judging every investment by what it will do to the bottom-line, right now, will always cause disaster in the future. Nowhere is that more obvious than in our dependence on fossil fuels. Technologies for reducing it are not only not supported, they’re discouraged.

The price of oil should be much higher and its use much more limited. It shouldn’t be cheap and its use should be primarily synthetic materials and organic chemicals used in their manufacture, not to produce power and for personal transportation. Basically, not just being burned. Until and unless we move beyond the ‘fire age,’ the growth of human civilization will be limited and the ‘industrial revolution’ will not raise the standard of living of all people. If the goal is limited to ‘me making money now,’ not widening prosperity, by investing in the potential of human creativity and resulting productivity, we don’t have a future.

Posted by Sharon | Report as abusive

Debt forgiveness. Start Again.

Posted by Howard Carpenter | Report as abusive

Sir,

Everybody talks about fixing the problem but nobody talks honestly about the causes. Without fixing them it is impossible to resolve this crisis which I predicted and see continuing for a long time. Fact is all the bail outs, stimulus packages, elimination of ineterst (zero rate), all filed to reignite the world economy. And why?The reasons are simple. Let’s be honest. This is a socio-economic problem. Economy is second to social problems, and what are they and how to fix it? Unlike older generations people today are irresponsible regardless of their social status. Case in point is that people got mortgages, jobs, diplomas not because of their perspiration and intelect but tehir color of skin. Banks had to loan money even if people had no education and jobs to repay. Billions were loaned all across America. These people were unable to repay and did not intend to do it. On the other spectrum, CEO’s earn 500 times what their employees make and they took more away from their employees and cut their benefits and merit raises to a point that when the crisis happened, those who are responsible and productive are afraid to loose what they succeeded to save despite all this and so they stopped consuming and spending. The irresponsible loan policy triggered this latter effect and now we have a group which caused the problem, bankers and borrowers, and anotehr group whcih is afraid to spend because it looses jobs and has little to fall back. How can an average hard working person be blamed or expected to act differently if he has little savings, no job security, no guarantee of health care or pension?? These are the causes and all this throwing zillions of dollars at the problem won’t help, because it doesn’t reach the average person and calms him down. Wall Street CEO’s got more bail out money and what did they do? They renovated their offices, took luxary Las Vegas trips, gave themselves billions more in bonuses but nothing reached the average Joe, who needs to spend money to restart the engine. So my proposal is to immediately change laws, such as elimination of any discriminatory laws, such as affirmative actions, so people will be accepted to work based on their true talents and skills, so they will create and produce and not just be another burden on employer and society. Reduce and limit wellfare and other programs which encourage people not to work. Limit executive compensation, now, to not more than 5 times the average employee compensation, including benefits. Stop throwing money at pet projects which are not benefiting us in short term at all. Limit health insurance companies to 10% overhead so they will be more efficient like in Canada, and limit, yes, limit doctors compensations which is outrageous and is the primary reason for driving the cost of medical care up astronomically. Doctors in US can make a decent living like in many other counrties, even if they do not become millioners. After all, those who go to study medicine should do it out of love for medicine and helping the sick and not out of greed. These are real issues which will not go away and the problem will not be resolved, unless these issues either will get addressed on their own due to misery and exhaustion, which follows human catastrophy and major wars, as it happend in the past or if we are barve to be honest and do soemhtign about it now. We have a choice of doing basic fine-tuning or face major upheavals and prolonged pain to a point of exhaustion. Only then people will become mroe repsonsible and the system will readjust on its won. However, why should we suffer? It is not too late to fix it now if we show honesty and leadership. Are there any intelligent people left to comprehand this?

Posted by leon leventhal | Report as abusive

Much of my comments are based on interviews and commentary on Tech Ticker and Davos.

It is clear that the major banks are insolvent (but most smaller banks are quite healthy). The usual procedure would be to place the insolvent banks in receivership under the FDIC. The shareholders would be wiped out but that is the risk taken when investing. It appears that political considerations prevent this.

Other countries have nationalization insolvent banks but that is contrary to the culture in the US. Nationalizing banks is probably not the best answer as it unlikely that the US government could effectively run the banks, and it would be unfair competition against the many smaller well-run banks.

The provision of TARP money to the troubled banks was a major error as it did not address the underlying problems first. Providing more TARP money would be ineffectual and a waste. If the intention was to provide the troubled banks with money so that they could loan it out, then that has clearly failed. The banks have to hoard the money, as the money (apart from the money used to provide obscene bonuses) is needed to meet the losses announced each quarter and to meet capital adequacy ratios. The problems will probably escalate as the loan portfolios are marked to market at ever decreasing values.

A suggestion that marking to market should be suspended should not be countenanced. That would not solve the underlying problems. It would have the unfortunate consequence that bank balance sheets could not be trusted as they would clearly be fictitious. Improved standards are required if these problems are to be prevented in the future. The opposite policy is clearly inappropriate and dangerous as it would crystalize the lack of confidence in the banks.

The proposal to establish a “good” bank and a “bad” bank from each insolvent bank is probably the only solution that would work and have wide-spread acceptance.

This should be done before any more TARP money is injected into the troubled banks. The toxic assets of a troubled bank should be transferred to a newly establish “bad” bank.

George Soros has suggested that the capital of the troubled bank should also be transferred to the bad bank. I think this would be the best approach.

The shareholders in the troubled bank should have their shareholding transferred to shares in the bad bank. This would be equitable as their position would be roughly unchanged. They might be granted a nominal shareholding in the remnants of the troubled bank to reflect the tangible assets of that bank. Intangible assets would be deemed to be zero.

The shell of the troubled bank could then be re-capitalized. I understand that there would be great demand to invest in a bank that has no toxic assets – one that is essentially starting with a clean sheet.

These now “good” banks would be able to start lending money immediately. Higher capital adequacy ratios and stricter lending practices should be imposed on these banks for a period of say 5 years. That should be a necessary condition of the rescue. During that period, improved financial practices could be debated and regulated, and then these good banks could adopt those policies, which might well be less restrictive than the policies imposed on them during the 5 year period or part thereof.

The boards and the top-level managers of the troubled banks should be fired. No doubt some of the directors and top-level managers would have performed well and might not deserve to be fired, not everyone has necessarily failed in their duties, however like the toxic assets, the boards and the top-level managers should be regarded as being toxic and should be removed. The good bank should start with a completely new board and new CEO and second-tier managers. It might be suggested that an experienced board of directors and top-level management is required, however the existing boards and top-level managers have clearly failed.

Salaries and director fees and bonuses should be regulated by the federal government for say the first 5 years until the financial system has recovered. They should be reasonable, possibly tending towards the austere. There will be plenty of talented people who would jump at the opportunity. There would be a large pool at the smaller well-managed banks. After that 5 year period, regulation of renumeration would cease and would be opened to market forces.

Capital adequacy ratios would not be required at the bad bank as that would be under the control and management of the federal government.

Trading in shares of the bad banks would be suspended for 5 years. During the first 3 months of that period, the real value of the toxic assets would be determined. I am not clear how this would best be done, however it might be possible to take samples of the mortgages, determine the current values of the properties and the ability of the borrowers to repay the loans, possibly take into account market trends, estimate a value for the samples and extrapolate that to the entire loan portfolio. The real value of the shares could then be determined. It will probably be negative. Whether it is positive or negative, it would be used as a benchmark to measure improvement in the financial position of the bad bank at the end of the 5 year period. Any improvement in the value of the bad bank from this benchmark would then be shared between the shareholders and the federal government, that is the taxpayers, on a split determined when the bad bank is formed. The federal government could take its share as a “management” fee, or it could issue itself shares in the bad bank and take dividends and capital gains on the shares. The hope here is that the housing market will improve over the next 5 years sufficiently that the bad bank will have positive value at the end of the period. And if it doesn’t, the shareholders will simply be wiped out.

It is essential that people are encouraged to stay in their homes and not give them up, even if they are under water. Foreclosures increase the inventory of houses for sale and thus drive house prices down.

With interest rates having fallen so low, it is likely that interest payments on mortages might be comparable to rental payments. If the house is under water, the owner may as well stay as they would not be any better off renting. And if the housing market recovers, they might end up having equity in the house eventually.

If the value of a house is greater than the mortgage, the owner might wish to sell in the expectation that the value will continue to fall. It is imperative that such sales be limited. If the mortgage is held by the bad bank, the federal government could value the house and agree that it would make up any fall in value over the next 5 years as long as the owner retains ownership for at least one year. To clarify, suppose that the house could realistically be sold now for $300,000 and the mortgage is $270,000. If the owner sells now, they will pocket $30,000. If they believe the housing market will continue to fall, it would be sensible for them to sell now. But that increases inventory and continues to force valuations down. If the federal government agrees on the $300,000 valuation, there is no longer any incentive for the owner to sell. If they have to sell say 2 years time, then the federal government will make up any shortfall to the agreed $300,000. They pay off the mortgage and still have $30,000 in pocket. If they don’t sell, they might well find that the value of the house falls in the short term but rises in the long term, and the hope that that happens would be an incentive to retain ownership of the house.

Posted by Robert Scolaro | Report as abusive

Guys, I understand you moderate this board, but the idea I posted was actually a solution. Most of this stuff is just opinion, and reprints. I would love to know what it was that got it deleted.

Posted by Brenton Smith | Report as abusive

Reprioritize: Football players, baseball players, etc. being paid millions of dollars a year to do something as silly as a bunch of men/women running around chasing a ball. So called “movie stars” being paid millions for “acting”. CEOs of corporations being paid a gazillion dollars a year while farmers that produce their food do real work. I think that we should shut the food supply off to places like New York City and the other major metroploitan areas and show these urbanites and suburbanites that all of their glamour and glitter does not amount to a hill of beans when they can no longer put food in their bellies.

Posted by Sunbeam Dimension | Report as abusive

Dear Sirs,

Debt forgiveness….across the board…..to individuals, institutions, governments, one and all, etc. Complete debt forgiveness….balance all accounts to zero (0), and start again, with reasonable, common sense laws in place.

It\’s the only way. Throwing billions of dollars of the taxpayers money/any currency at the problem only continues to line the pockets of the fat cats, once again, and does not help EVERYONE. It only lines the pockets once again of the greedy ones, as evidenced in the news every day. The few are STILL making millions in bonuses and despicable, unethical, obscene profits. Stop lining the pockets of the few THROUGH DEBT FORGIVENESS.

DEBT FORGIVENESS….total….for EVERYONE…put the counter back to zero(0). Viable AND doable. If you can throw money at the problem, you can put the ticker back to zero (0). Thank you.

Kitadawn

I believe the issue of massive regulatory failure needs to be addressed much more explicitly. I am a former bank regulator (a Director of Research of the New York State Banking Dept.) and I have spent many years in the investment banking world involved in risk management, risk reporting and risk technology. Lately there have been several proposals for revising the regulatory process, including establishing a clearing house for credit-default swaps. consolidating regulators, new reporting requirements, etc. But there seems to be a failure to recognize that the regulatory process can only work if there are good regulatory people looking at the matters every day. If I may let me offer the following comments:

1. The bank regulators have had the authority to examine any aspect of a bank’s activities. They had the authority to figure out what was going on at the banks and to limit it. The regulators did nothing. So all the new regulations on paper will mean nothing if the regulators cannot or will not do their jobs.

2. Mr. Timothy Geithner recently said “First, the multitude of overlapping regulators must be rationalized into a coherent few, the communication between them improved and their turf battles ended”. Unfortunately consolidating the regulators will produce some streamlining but will not likely achieve the desired goals. Sending a regulator who makes $50,000 dollars a year to examine the activities of sophisticated financial traders who make millions of dollars a year is not a fair battle. And if you have ever worked in a government agency, as I did for over 4 1/2 years, you will be intimately familiar with the viciousness of the turf battles among the senior officials. There is a lot of deadwood at the top of the agencies and it needs to be cleaned out. A Herculean task if there ever was one.

Posted by S. Hellinger | Report as abusive

There must be a recognition that the extreme diversification of the financial instruments, CDS, OTC derivatives, etc, have advanced beyound all logical relation to the underlying investments. These losses must be acknowledged, not swept into the future by massive injections of fiat currency that further set the stage for inflation and devaluation of the same. Major financial institutions must be allowed to fold, not kept on life support by governments afraid of riots in the street. Past mistakes must be acknowledged and responsibility accepted by those responsible. There is a consensus among the average person that the banks and financiers responsible for this mess, in colusion with politicans, are doing thier best to cover up and postpone the inevitable. Businesses cannot begin creating or sustaining jobs when staggering losses are being hidden behind mazes of financial shenanigans until they become too much to hide.
Governments, employees and those on government assistance must all share a portion of the blame. Governments for spending beyound thier means on programs that they do not need to be involved in. Employees for demanding ever more money and spending easy credit, following the government lead into debt. Those on Government assistance for not expending the effort to fend for themselves. We have become used to a certain level of existance which we must temper if we wish to see a true light at the end of the tunnel

Posted by Ed Zimmer | Report as abusive

1. Abolish the Federal Reserve.
2. End the fiat currency so that our money represents actual value.

Posted by Alex | Report as abusive

World leaders need to change the mindset of the global growth model. The world is much smaller now. Endless growth is not sustainable and cannot continue to work. Look at sustainability. We have a growing population, dwindling resources and global climate change. An economic model that ignores these facts cannot be resuscitated.

Stop trying to boost consumer confidence. Economic contraction is a good thing right now. Focus the economy on how to retool for sustainability – energy efficiency, sustainable agriculture, etc. Promote regionalism where people consume and produce locally. This will increase small business growth. Rethink the urban/suburban model that requires commuting that eats energy and time.

This global economy is killing us. Sure, we get cheap goods from China, but we’re not including the costs of environmental degradation, both in lax environmental control in developing countries and all that shipping. I’m not talking about protectionism, but it simply doesn’t make sense to import goods when people that are unemployed can produce goods locally – it is not sustainable.

Quit trying to privatize social functions that are best served by government – health care, utilities, prisons.

Any economic system needs controls. Quit fighting regulation.

Posted by DeeDee | Report as abusive

I read about the idea of a “bad bank” currently thought of by the US Treasury in order to free the banks of the toxic assets and enable them to reinstate the credit lending and kick-start the “Main Street” economy.
However, is it possible to do the opposite i.e. create a “good bank” instead? The Treasury could set up a bank in charge of lending to the Main Street economy and allow the credit facilities to flow again. In such a scenario, the US government can allow the market forces to determine which of the financial institutions to survive the ordeal and save the worries of using taxpayers money to rescue the banks that involve further regulations in e.g. executive remunerations etc since it would have full control over the new “good bank”. And when some of the banks do fail, the good bank could take over the depositors liability (i.e. equivalent to guarantee deposits) to protect the common folks deposits in the bank. And the borrowers that such failing banks may force to foreclose their properties may be rescued by the “good bank” i.e. offer a fresh new loan. The taxpayers’ money that are used to to support the good bank can then be directly pumped to revive the Main Street economy. And finally, after some years when things stabilize i.e. the Wall Street had cleared its excesses, the US government could then issue shares or simply sell the assets of the “good bank” (hopefully at a premium to earn a return for the taxpayers) to the financial institutions who survived.
Hope this is a worthwhile suggestion for the US Treasury to ponder over.

Posted by Peter | Report as abusive

Dear Sir,

The current problem is defined as Credit Crisis because Banks are not willing to give credit. The reason is simple enough. The Banks have already given enough credit and cannot issue more credit. They need to get the credit paid back.
The US Government have issued cash infusion for Banks to stay alive. but technically Banks still cannot issue more credit without risking failure.

The world needs to calm down and focus on identifying the debtors and all these debtors to pay back. This is going to be very painful because most of these debtors bough inflated assets that are not worth as much today.

If Banks push for Bankruptcy of these debtors and write off the debts, Then the Banks themselves will go into Bankruptcy.

The guys who sold the inflated Assets are the ones who should be helping here. But they will not. They are the winners. why should they?

Printing more money as US is suggested to have done. is actually the best way to go forward and introduce inflation.

However, the best way to introduce inflation is through salary increases for the common man earning less then US$20,000 a year. Only that will increase consumption, inflate Housing prices again and allow economy to climb back to health.

Providing more money for Construction projects as Obama has proposed will only send more money to Developers and not common man. This Construction Corporations are the companies who sold inflated houses and earned all the money. Why is another Trillion is allocated for them. The construction workers on this projects will earn less then they earned during the good times. It will not boost the economy.

Stop credit. Stop spending.
Start issuing cash to corporations who employ workers. I am saying issue cash not provide further credit.
It should be similar to subsidizing farmers.
Start giving the money.

Ford, GM, and all manufacturers should all be provided subsidies. and Unions should be encouraged to provide better salary.

Blind Globalization which is depressing wages worldwide should be put on hold for a while.

Laws which provide equal pay for man and women should be amended to include clause for equal pay for all world citizens. So that Corporations cannot find cheap worker from Asia to work in America but find ways and means to improve real productivity.

Posted by VelShan | Report as abusive

First if you want retail sector to pick up: Eliminate Sales Tax nationwide. Secondly make it more affordable to get to the places by Eliminating the tax on Gasoline.

Give businesses a tax break. NO TAXES in hard times. But they must plow the money saved into providing incentives for customers to spend money with them.

Reduce tax burden for a flat tax of 10% across the board for everyone worldwide. No need for accountants, taxpreparers. Easy to calculate your tax also. It should be taking out once a year for simplicity sakes. Get rid of payroll social security taxes in favor of the individual in charge of their retirement savings. Social security is a failed institution under the federal government.
Allow individuals to take out of their retirement for whatever reason they need to without penalties.

Governments worldwide must consolidate their functions. Example: The town where I live got together with 9 other towns are now only one town. They closed municipal building, sold them and consolidated services saving the average taxpayer over $3,000USD yearly. Now that is a true stimulus to boost the economy, not a measely $500 or $1,000(Thats a joke).

Banks: Top management need to be rewarded based on profits and losses. If the company losses money, the executives need to receive only $1 and give up their stock options. If the company makes money, yes they deserve a small portion for doing so but only after the employees who work hard receive their profit sharing for putting them thru the ringer.

Posted by Rupen Shah | Report as abusive

The economy is closly tied to the integrity of its peoples. There is no way for it to prosper and grow without an authority that has strength in itself as well as morality and integrity.
The only way to change the economy to a long, sound and long lasting, satifying state is to change its government and authority; but beware which authority you choose.
The choice is always between life and death!
Ask these questions:
1. Who rules the world and
2. Who has the final authority?
These are two different systems alltogether.

Posted by Madeleine Catussatto | Report as abusive

I think that the question is how people can be more involved in the solution creating process. The idea being that three heads are smarter than one and 1m heads are smarter than 100.

I would say that considering 2008 marked the first time in our history that more than 50% of the population of the world is living in urban areas we can assume that internet usage will continue to grow. The information and communication gateways that Prof. Schwab mentions in his question are important but they mean nothing if there is no way to filter the quality content out of them.

For example, the Professor poses a simple and open ended question in this video, but I went through three pages of comments and suggestions, none of them addressing the question. I would suggest creating a small advisory group to the WEF that would focus on developing a backend information gathering system that will focus on “listening” to the internets users. This way you can anticipate new trends in the way people interact with each other.

In addition the new campaigns should take advantage of systems that allow users to find content that they are interested in. Web 2.0 allows users to connect to like minded individuals without looking at all the other information that is unrelated to their interests. This way you can have a more natural exchange of ideas over the virtual platform that simulates the way we gravitate towards people with common interests in the flesh for a lack of a better word.

Posted by Wojciech Tusz | Report as abusive

NOW IS THE TIME TO RE-INVENT OUR MONETARY SYSTEM FROM THE GROUND UP.

Central banks create money OUT OF NOTHING…OUT OF THIN AIR, like a magician pulls a rabbit out of a hat. They loan it INTO EXISTENCE and charge interest on it as though it actually represented some sort of risk assumed by the bank.

Our current system of money creation GUARANTEES perpetual inflation and guarantees collapse. This has been predicted by monetary theorists such as Bernard Lietaer, Thomas Greco and others for ages.

Our current monetary system also guarantees perpetual accumulation of wealth by those who create money. As Anselm Rothschild put it, “Give me the power to issue a nation’s money; then I do not care who makes the law.”

Like a cancer that eventually consumes its own host, this system will eventually kill our planet if allowed to continue.

Borrowing more deficit money from banks to stimulate the economy may provide short term help but will only exacerbate problems in the future. That money will still be owed, plus interest, back to where it came from. Future generations will be reduced to indentured slaves, with their tax dollars gobbled up by futile attempts to pay off that gargantuan interest.

(Hmmm…What’s the annual interest on a trillion dollars?)

For a solution to the problem, create regional business to business mutual credit networks, such as the very succesful WIR Bank in Switzerland, which has been credited with stabilizing the entire Swiss economy.

Through such networks, business do not have to rely solely on interest-bearing bank credit, but can offer interest-free credit TO EACH OTHER in the form of goods and services.

In this way, such networks act as shock absorbers to the global casino economy, creating stability, prosperity and regional self-sufficiency.

For a detailed explanation of how modern money is created, Google “Money as Debt” in Google video. You can watch the whole film there. In my opinion it is one of the most important films ever made.

For a detailed explanation of the WIR Bank, and how to get us out of this mess, PLEASE go to the website of Bernard Lietaer, http://www.lietaer.com/

A wealth of information on monetary reform is also available on the website of Thomas Greco at http://www.reinventingmoney.com.

In 1919, Woodrow Wilson stated,

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit.We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

He was referring to the creation of the Federal Reserve Act of 1913.

Now is the time for President Obama, and the rest of the world to turn this around, before it’s too late.

Posted by Lori Heath | Report as abusive

A message to CEO’s and Boards of Directors.

How much money do you need? How much house do you need? Stop the rewards for failure. Stop Enroning us. Stop the bonuses. Stop behaving as if you are above the law. Pay your fair share of taxes. Stop the miscellaneous fees you take from share holders to pay upper managements taxes. Your work is not more important than the work of others. You are committing crimes against humanity.

Sincerely
Paula Grieb
School Nurse

repeal bankruptcy laws.

eliminate banks lending to other banks.

Eliminate short selling on wall ST. or put 36hr freeze on short selling.

create or increase incentives for farmers growing grains, vegetables and livestock.

Increase or eliminate income limit for receiving food stamps and WIC. Increase amount of WIC and food stamps given.

Build additional oil refineries within the US.

universal health care.

Posted by Victor | Report as abusive

First, thanks to Prof. Schwab for letting the little folks offer their 2 cents. I think that rather than bailing out failing institutions, business or governmental, we need to think about smaller markets, smaller growth, and locally relevant economics. I’d say that in the short term pulling the plug on quarterly dividends, paying down outstanding debt, and refusing to invest in hybrid securities ought to be in every corporation’s play book. Decentralization of businesses, looking toward local or regional co-operatives rather than global corporations would be a better model in the near term. And focusing on manufacturing and construction in local areas with local resources with human appropriate technologies would be a good way to restart the economy.

Thoughts?

Posted by Marc Kivel | Report as abusive