Tuesday, February 03, 2009

The Mood

The theme of the World Economic Forum’s annual meeting was “Shaping the Post-Crisis World.” Unfortunately, the assembled executives, policy makers and do-gooders were stuck in the here and now.

The search for scapegoats and the worst economic prospects since World War II resulted in a gathering marked by fear, anger and bitterness, a far cry from the usual search for consensus.

Turkish Prime Minister Recep Tayyip Erdogan stormed out of a panel discussion and Russian Prime Minister Vladimir Putin hectored the U.S. as the font of the world’s economic woes. Almost everyone blamed the few bankers who showed up for the near-collapse of the financial system.

Attendees were “less reluctant to criticize, and sometimes very vocally criticize, the U.S. and its capitalist system because of the problems we’re having,” said David Rubenstein, co-founder of the Carlyle Group, who first came to Davos a decade ago. “Maybe that’s deserved, but it’s a big change.”

“Everyone I spoke to says it’s the grimmest Davos they’ve ever been to,” said Kenneth Rogoff, professor of economics at Harvard University and a World Economic Forum regular since 2002. “The mood has been very depressed. It’s a low-burn depression.”

Another big change was the virtual absence of Wall Street figures among the 2,500 delegates at the conference, which ended yesterday.

‘Stupid Things’

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was the only U.S. banking chief who showed up. He made a concession to the mood of this year’s event by accepting some blame for the collapse that has led to more than $1 trillion of writedowns. He deflected the rest at regulators.

“God knows, some really stupid things were done by American banks and by American investment banks,” Dimon said. “To policy makers, I say: ‘Where were they?’”

That attitude was tough for some to swallow. At one session, a call for curbs on bankers’ bonuses was met with applause by sections of the audience.

“We should not trust these bankers,” said Nassim Nicholas Taleb, author of the best-selling book “The Black Swan.” “Look at their track record. The only way to stop the process is for the government to own those banks.”

With the world’s elite nursing a collective hangover after the greatest era of global prosperity came to an end, there was enough bile to go around.

Erdogan’s Walkout

Erdogan stunned a packed house on Jan. 29 by walking out on a debate on last month’s war in the Gaza Strip. He claimed that the session’s moderator didn’t give him equal time with Israeli President Shimon Peres and vowed never to return to Davos. By the time he met the press an hour later, he promised to reconsider.

Anyone who thought Barack Obama’s election as president would temper criticism of U.S. policies would have been disappointed. Economists questioned his $819 billion stimulus plan, urged him to deliver another rescue package for banks and fretted about soaring national debt.

“People are looking for the solution but don’t yet have the question formulated,” Arif Naqvi, chief executive officer of Abraaj Capital Ltd., which manages $7.5 billion, said.

The need for action wasn’t in debate. Away from the slopes, U.S. stocks capped their worst ever January, the International Monetary Fund forecast the weakest global growth in 60 years and companies from Starbucks Corp. to Caterpillar Inc. cut jobs.

Deepening Recession

That led many attendees to predict they’ll still be in a funk when they return in 2010.

“We’re in a multi-multi year problem,” Howard Lutnick, chief executive officer of Cantor Fitzgerald LP., said. “We’ve weathered horrible times before. That’s what lies ahead of us now.”

Delegates also took turns bashing America’s policies and its role in the world.

Chinese Premier Wen Jiabao and Putin cited the U.S. for leading the world into recession in back-to-back speeches on the opening day.

“Just a year ago, American delegates speaking from this rostrum emphasized the U.S. economy’s fundamental stability and its cloudless prospects,” Putin said.

To cap it off, Putin dismissed a query from audience member Michael Dell, head of personal-computer maker Dell Inc., about what the technology community could do to assist Russia.

“We don’t need any help. We are not invalids,” Putin said.

Balanced Tone?

The spats gave this year’s conference a more balanced tone, said Bahraini banker Khalid Abdulla-Janahi, who remembers then- Vice President Dick Cheney “hammering the Russians, the Iranians and many others” during his 2004 visit.

“This time, it was a two-way street,” said the chairman of Ithmaar Bank BSC. “We heard Putin hammering the West and Erdogan standing up to Peres. That’s how it should be.”

Those who made it to the five-day Alpine retreat insisted that they weren’t wasting their time or their money --and they really didn’t mind the muted tone of the event’s party circuit.

“People are conscious about throwing parties or even smiling this year,” said Martin Sorrell, chief executive of WPP Group Plc. “It’s become a little too big, but it’s never been more relevant.”

Source - Bloomberg


Post a Comment

<< Home