Davos World Economic Forum: A Viewer’s Guide

The big annual economic meeting at Davos opens next week (Jan 28-Feb 1 are the official dates), and the discussion there – in both formal and informal interactions – is worth scouring for indications of the current situation around the world and where we all may be heading.

Given the likely composition of the main players this year – world corporate leaders and the non-US policy elite (with the new US policymakers stuck at home, doing real work; update: this is now confirmed by Bloomberg for Summers and Bair) – I would suggest viewers at home and on the ground keep watch for answers to the following.

  1. Are we on the same planet? It is not unheard of for Davos participants to appear as if they are living in their own bubble.  Watch for opulent parties and excessive consumption, particularly if the people involved have nominated themselves for any kind of government handout.  If you meet someone from Merrill, ask if their attendance fees came out of 4th quarter earnings – or if there is still more bad news to come.
  2. Who doesn’t have their hand out?  It would be nice to see a corporate leader or, ideally, more than one, stand up and make a categorical statement along the lines of, “we don’t need a bailout of any kind, nor will we seek any kind of additional government assistance however clandestine, and the idea of pseudo-protectionism to goose profits and jack up my bonus is quite repellent.”  Remember that the slippery slope to global trade wars is not the product of irresponsible politicians alone – they get a lot of assistance from business and lobbyists of many stripes.
  3. Are they really in trouble or do they just want to fire us because it’s in fashion?  More than a sneaking suspicion is arising that many of the firings, layoffs, and pay reductions around the world are not actually necessary.  Somehow corporate leaders have formed the idea that this is what they must do, rather the investing more in their people, looking for ways to innovate our way out of the crisis, or generally doing things that are hard work for executives and pay off only over time.  No doubt someone will do very well by bucking this trend.  But who?
  4. Who didn’t overspend in the good times?  Some self-appointed intellectual and financial leaders – including universities, venture capital, and private equity – previously prided themselves on having deep pockets, a long-time horizon, and recession-proof strategies.  Now we find that they overcommitted to things they couldn’t really afford, just as if they were No Income No Documentation borrowers.  And if you actually hear someone admit personal responsibility for anything at all – however small – in the boom or the crash, write me at once.
  5. Is the G20 at all relevant?  The G20 grouping of leading industrialized and emerging market countries has a great opportunity to establish itself as the preeminent forum for addressing the world’s problems, pushing aside the G7, IMF, etc, and rising to the top of the global alphabet soup.  The current chair is Gordon Brown and he will be in full voice.  But what exactly is the agenda? Some of his re-regulation points make sense and will help preempt problems in the future, but we need more.  Where is the recovery strategy, how are really poor people going to be helped, and what – if anything – does global cooperation offer that you can’t do with a smart unilateral approach? 

You may have thought that denial, arrogance of power, and profound irresponsibility left the world stage around noon on Tuesday.  If so, Davos will likely prove you wrong.

Update: WSJ’s preview of Davos gives details of fee structure, attendees, and attitudes.  Only Valerie Jarrett will attend on behalf of the Obama Administration.

6 responses to “Davos World Economic Forum: A Viewer’s Guide

  1. A very scathing opinion of Davos indeed. Well, this is politics and I think probably every one knows that this is the case. Politically, it is good for all the leaders to get together in one place. Sort of removes isloation a bit.

  2. I totally agree with #3 above. We have been hearing SO many stories of workers’ hours being cut back or layoffs occurring with no coincident dropoff in business. I know you are fond of saying that the plural of “anecdote” is not “data,” but this is more than just a few cases.

  3. Quite a surprising (at least to me) and broad condemnstion of a very wide swath of people, many of whom are honest, hardworking, and committed to doing the “right thing”. Perhaps anyone who was in the fortunate position of being able to understand the issues as they emerged over the last several years, had a responsibily to clearly and consistently communicate the nature of the crisis that was coming if nothing changed. There is no doubt that many senior people in business, government, academia failed to understand and address the critical issues but that does not mean business people “just want to fire us because it’s in fashion” or ask “Are we on the same planet” or imply everyone is getting a handout “Who doesn’t have their hand out?” These are really unfortunate statements when there are far more people/companies/non profits/etc who are still trying to do their best to survive without government help in difficult conditions

  4. Comments on points 1 thru 5.

    1. If you are in Davos and you see John Thain there standing next to a pool, slowly sidle up to him and push him in. The same goes for anybody who is associated with AIG, currently or formerly.

    2. Speaking of handouts, if any CEO of any company in the world states that “no exectutive should receive more than a $1,000,000 in compensation per year because no individual is worth more than that”, then that CEO should receive a Nobel prize for Honesty (a new category!).

    3. Steve Ballmer, CEO of Microsoft, has decided to part with 5,000 of his employees. It is not like Microsoft has to do that since they have bundles of cash in the safe. It would be more reassuring to see Microsoft actually write some worthwhile code for once, rather than the dregs they sell as operating systems and application software.

    4. As a BAC stock holder (extremely small time) I promise to forgive Ken Lewis if he states to anyone, “You know, I really f__ked up!”

    5. Even if the G20 is presently largely ineffective (I don’t know if they are), it is refreshing to see a broad based group which dilutes the power of America and Western Europe with regard to international policy of any type.

  5. 19th Century Credenza

    Main topic will be how to maintain “private profits, socialized losses” (points 1, 2, 3, 4).

    Sideshows: G20. UN security council membership. Exchange rates. Finance regulation. Global warming. LOLcats & etc.

    Cheers,
    $68,179

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