Davos Conference

Ed Conway

January 24, 2012 3:32 PM

• 
  
  
  Recommend post (1)
  

Well,
to be strictly accurate, the title should read "day zero" - after all,
most of the participants and delegates to the World Economic Forum don't
show up until tonight, and in some cases tomorrow or Thursday. So, as
you can see from the picture, the place is, for the moment at least,
eerily quiet.
Which makes it a good opportunity to ask what the
point of Davos really is. It's a strange occasion. It's part political
summit, but unlike most other events which draw so many world leaders
it's privately organised. It's part think tank, in that the official
sessions are designed to be fora for exchanges of ideas. It's part a
business hobnobbing event where chief executives meet to chew the fat
and discuss the next big deal.
By the same token it plays host to
some of the most glamorous corporate parties of the year as companies
from around the world compete to put on the glitziest show (though this
side of things has been notably less obvious since the crisis), and it
offers a platform to worthy causes and NGOs (though it helps if they're
fronted by a famous face).
Davos is all of these things, and you
couldn't make it up if you tried. Perhaps this is because, when Klaus
Schwab founded it back in the 1970s, neither he nor any of the initial
attendants had any inkling of what it would become. It was originally
intended as a kind of mountain retreat for management thinkers and
businessmen. It was only as time went on that, gradually, world leaders,
academics, businesspeople and charities realised that it was the ideal
place to rustle up interest in their projects.
It's still a place
where the rich and famous come to hob-nob, where you can't help but bump
into one luminary after another, where you might look up from your
coffee to see Bill Gates alongside you. It's a haven of privilege.
But
over the years, Schwab has cleverly invited in select groups of
potential critics: every major global charity is afforded a place.
Bishops and faith leaders who usually rail against privilege are invited
along. Although they're not technically invited, the Occupy Movement,
which is building an igloo near the main conference centre, are being
treated with civility. It wouldn't surprise me if Schwab himself or
another of the prominent WEF delegates were to pop by.
The rule
with Davos tends to be the same for everyone: there are plenty of things
to be wowed by, there are plenty of things to be disgusted by. You may
love it or hate it. But the one thing you can't afford to do is ignore
it.

Merkel La Garde and Geithner will be speaking later today on World Economy.

Prengi, Chairman of Wipro with a net worth of $13 Billion in 2011 says Merkel should step aside , she has no concept on what should be done and the
Euro crisis could damage India"s economy.

Guess The Unexpected Star Of The World Economy

• 
  
  
  
  
  
• 
  
  
  
  
  
• Share
  
• Comments (5)
  

Ed Conway

January 24, 2012 3:04 PM

• 
  
  
  Recommend post (0)
  

The most striking thing about the IMF's new, updated forecasts
for the world economy, released this afternoon, isn't what immediately
grabs you.
The obvious story, which will presumably dominate the
news today and for the coming week, as world leaders discuss the economy
here in Davos, is that the world economy is once again heading for the
doldrums.
In the face of the euro crisis, the Fund has cut its
forecast for global growth by three-quarters of a percentage point. The
euro area is forecast to go into recession, shrinking by 0.5% this year.
Italy's economy, which only four months ago the Fund thought would grow
by 0.3% this year, is now expected to contract by an extremely nasty
2.2%.
Moreover, the IMF for the first time questions the survival
of the euro, asking what it will take to restore "confidence in the
viability of the euro area".
Britain is directly affected: the IMF
cuts the UK growth forecast this year from 1.6% down to 0.6% - shy of
the Office for Budget Responsibility's 0.7% forecast. Next year's growth
forecast is also cut from 2.4% to 2% - which is again 0.1% points below
the OBR's forecast. This doesn't imply Britain will definitely face
recession, but suggests we will skirt pretty close.
These forecast
cuts also beg the question of whether the IMF believes the UK
Government should be changing its fiscal plans. When it presented its
previous forecasts, the IMF economists said they were happy with the
Government's spending plans - but added that if the economy weakened
beyond their forecasts at the time some further fiscal stimulus might be
necessary.
All of this, plus the increased vulnerability the IMF
points to in the financial system in its accompanying Global Financial
Stability Report, is interesting but relatively unsurprising.
What
is more intriguing is the identity of the one country whose growth
forecast this year is not cut. You might guess this would be one of the
emerging powerhouses of the world - China, India or Brazil. In fact, the
one country whose growth forecast this year is not cut is none other
than the United States, which will, according to the IMF, grow by 1.8%.
The IMF says: "For the United States, the growth impact of [euro crisis]
spillovers is broadly offset by stronger underlying domestic demand
dynamics in 2012."
Whether President Obama can make much hay of
this in the elections this year will remain to be seen. But the fact
remains that while Europe and most of the world stumbles, the one major
economy to put in decent growth this year will be the much-derided,
often written-off economic superpower of the world.


---------------------------------------
Davos has just recorded it's biggest snowfall in 50 years......5 feet of snow fell yesterday!!!

America Should Beware 2013 Warns Sorrell

• 
  
  
  
  
  

Ed Conway

January 25, 2012 7:12 AM





archetypical "Davos Man" -
someone who epitomises the international, economically-literate mindset
one tends to find here at the World Economic Forum - you could hardly do
better than Sir Martin Sorrell.Which is why we should all pay
attention to what the WPP chief executive has just told Sky News about
the tone of the meetings this year.
Predictably, that tone is
hardly a hopeful one: the major themes this year include youth
unemployment (which he describes as "shattering" in the US and Western
Europe), inequality, unemployment, the prospect of a recession
throughout much of the developed world and, of course, the collapse of
the euro.
It's on this latter issue that Sir Martin has perhaps
the most counterintuitive point. Although he concedes that we can't rely
on the notion of Greece surviving within the single currency, he says
that he is even more concerned about the medium-term fate of the US
economy. Although he sees it enjoying a reasonably punchy 2012, his
concern is hits a wall in 2013, after this year's Presidential
elections, as the new administration starts to cut debt in the world's
biggest economy.
This is quite a contrast to the analysis provided
only yesterday by the International Monetary Fund, for whom the US was
the only major economy not to merit a major cut in growth prospects next
year. Remember, though, that advertising is widely regarded as one of
the best bellwethers for the broader economy: when a company needs to
cut costs (or spend more) one of the first bits of its budget that get
affected is spending on ads. And given WPP is the world's biggest
advertiser, Sir Martin's comments should cause significant concern on
the other side of the Atlantic.
He is perhaps less obviously
worried about the prospect of a recession in the UK. He says that he
doesn't expect the economy to shrink for two quarters in a row - the
technical definition of a recession. Though the Government will still
have a tough time, he adds, saying: "we've got to lift peoples' eyes; to
give the electorate the belief that taking the pain is worthwhile and
that we'll get jobs and growth in the end."
But despite the
widespread concern in Davos about inequality; about excessive executive
pay; despite the igloos erected outside the security cordon by the
Occupy movement, Sir Martin is adamant that top executives should be
paid generously if they merit it.
As he says in response to the
various efforts to tackle high executive pay, including new measures
unveiled by Business Secretary Vince Cable earlier this week: "It's a
little bit of a paradox that I should have to apologise for being
successful because that's what I thought you were supposed to do."
So there.

UK, Thursday January 26, 2012



David Cameron has described European Union plans for a financial transactions tax as "madness" in a speech in Davos.


The Prime Minister called for a target for reducing Brussels red tape that he said was holding back business.


He accused the EU of "doing things to make life even harder", despite the need for businesses to grow.


Unnecessary regulations "can destroy jobs," Mr Cameron added.


He said the European Commission's own analysis of a financial transactions tax could reduce the GDP of the EU by 200bn euros.


"Even to be considering this at a time when we are struggling to get our economies growing is quite simply madness," he said.

Tinkering here and there and hoping we'll drift to a
solution simply won't cut it any more. This is a time for boldness not
caution - boldness in what we do nationally, and together as a
continent.

PM David Cameron











He urged Europe to be "bolder" in its attempts to shake off its economic woes.


The Prime Minister suggested exploring the possibility of free trade
deals with other major trading blocs, such as the US and Africa.


He delivered the speech to world leaders, economists and business
chiefs at the World Economic Forum in the Swiss ski resort of Davos.


The annual gathering comes amid renewed gloom about the economy after
the International Monetary Fund this week downgraded its forecasts for
global growth.


Britain is facing the prospect of a return to recession after the Office of National Statistics reported a 0.2% contraction in the UK economy in the final quarter of 2011.


In a message to his European counterparts, Mr Cameron said: "This is a time to show the leadership our people are demanding.


"Tinkering here and there and hoping we'll drift to a solution simply won't cut it anymore.


"This is a time for boldness not caution - boldness in what we do nationally, and together as a continent."

Consider
yourself a chilled-out, equality-loving character, rarely intimidated
by the self-important? Well, I'm afraid even for someone who's never
suffered from status anxiety, the World Economic Forum in Davos would be
a rude awakening.

Read Ed Conway's Davos diary











He warned that competitiveness remains Europe's "Achilles heel", with the single market incomplete.


In the absence of a conclusion to the Doha free trade round, Mr
Cameron proposed that a "coalition of the willing" could "forge ahead
with more ambitious deals of their own".


Free trade agreements with India, Canada and Singapore must be completed by the end of 2012, he said.


He also called for the EU to "look at options for agreement" with the
US in a deal that "could have a bigger impact than all of the other
agreements put together".


"And why not an ambitious deal between Europe and Africa?" he continued.


"This is a bold agenda on trade which can deliver tangible results
this year, and I am proposing that we start work on it immediately.


"All these decisions lie in our own hands. The problems we face are
man-made and with bold action and real political will we can fix them."


Labour leader Ed Miliband, however, said the Prime Minister should focus on the domestic economy instead.


Also speaking from Davos, he cited recent GDP figures and called on
Mr Cameron to work on "measures at home to get the economy moving".

ut at Germany and France



27 January 2012


Press
Financial Times, 27 January 2012









“Cameron attacks Eurozone,” headlines the Financial Times,
after the British PM has delivered what the London daily terms “a firm
rebuke” to Germany at the World Economic Forum in Davos, Switzerland.

Calling on Berlin to contribute more resources and guarantees to
help solve the eurozone crisis, Cameron was particularly blunt about
the introduction of a financial transaction tax – an initiative he
described as “quite simply madness”.

His speech, the Financial Times continues –

…reflected British officials’ long-standing and deep frustration
with Germany’s leadership of the single currency area and called for a
much stronger firewall to prevent contagion within the eurozone, common
European sovereign debt and for powerful countries committing to
reduce their trade surpluses as much as the struggling countries seek
to minimise their deficits.

In the meantime, notes The Times, the PM is also caught up in a “new round of cross-channel tensions” with France.

Cameron and Mayor of London Boris Johnson fear that French socialist
François Hollande, tipped to win power in the May presidential
elections, could “scupper the EU’s economic rescue plan and undermine
the City,” writes The Times.

In a sixty-point manifesto published on January 26, Hollande
“promised to rip up the EU’s fiscal treaty, which is due to be approved
on Monday,” the London daily notes. He also made the financial
industry –

… his main target, with promises of a 15 per cent increase in taxes
on bank profits, the banning of trading in “toxic” financial
instruments, a ban on stock options, caps on bonuses and a swift tax on
“all financial transactions”.

The Mayor of London accused Hollande of “short-term political vindictiveness.”

George Osborne is expected to reinforce his message to the eurozone that
Britain is "ready" to help boost IMF resources to bail out struggling economies
- but only if strict criteria are met.


The Chancellor is due to deliver a speech at the World Economic Forum in Davos, Switzerland, later
today.

Speaking in Davos on Friday at an event organised by
the Confederation of British Industry, Mr Osborne said eurozone countries must show "the colour
of their money" in shoring up the single currency before any IMF funds are given
to members.

Britain is expected to be asked to increase its
contributions to the IMF as it seeks to raise an additional $500bn (£320bn) -
which could mean an additional liability of around £17bn.

Mr Osborne said the eurozone economy "has sufficient resources to put the
credibility of the firewall beyond doubt".

"All that is required is the political agreement to make those resources
available on a credible timescale," he said.

"At the same time the global community - through the IMF - should always be
ready to support individual countries that get into trouble and need temporary
financing while they adjust.

"The UK is a long-standing supporter of the IMF - indeed we were instrumental
in its creation - and we stand ready to play our part in that global effort if
certain conditions are met."

Those included a stipulation that there were "no new vehicles or funds
specific to the eurozone", full IMF conditionality and the participation of
other G20 countries.

"And crucially, IMF resources to support individual countries cannot be a
substitute for further credible steps by the eurozone to support their
currency," he added.

"In other words, the world needs to see the colour of their money before it
contributes any more."

Several senior Tory MPs are angry at suggestions the Government will meet the
IMF's request as they fear the additional contributions will be used to prop up
the eurozone.

Parliament has previously approved around £40bn in support for the IMF, of
which about £30bn has already been committed.

Any new request going beyond the £10bn "headroom" still available to Mr
Osborne would require a fresh vote by MPs.

8:07pm UK, Friday January 27, 2012

Ed Conway, economics editor


Lord Turner, the man who famously pointed out that much of what bankers did
was "socially useless", has gone one step further.


In an interview from the World Economic Forum
(WEF), he told Sky News that excessive bonuses are "not good for
society", adding that the inequality they fuelled was seriously
undermining the "legitimacy of capitalism".


Given Lord Turner's position as the chairman of the
Financial Services Authority and his prominence in
British policymaking circles, the warning is likely to be taken extremely
seriously.


:: Read the latest news on the row over RBS chief Stephen
Hester's bonus

Inequality is proving to be the most significant of all discussion points
here in Davos - a sign that the world's richest people and most powerful
politicians are aware of the genuine threats it could pose to them.





More From Our Journalists









In most countries in the developed world, the gap between rich and poor has
yawned to the largest level since the late 1920s, before the world succumbed to
the Great Depression.


But whereas the difficulties of the 1930s sparked an assault on wealth that
narrowed that gap, this time the financial crisis has actually increased the
divide.


Many of the wealthy have benefited from bank bailouts and policies such as
quantitative easing, while middle and lower income families have faced an
unprecedented squeeze on their disposable incomes.



FSA chairman Lord Turner says big bonuses are bad for
society



Lord Turner raised the prospect that the Government may
consider setting up an independent board to tackle excessive pay.

It came ahead of a speacial debate on Sky News about whether
bankers really are worth the huge bonuses.

But Lord Turner's implication, however, was that despite the Business
Secretary Vince Cable's recent proposals on executive pay, more remains to be
done.


He also pointed out that although the European Central Bank's emergency cash
injection into the euro system would give the policymakers "breathing space",
they still needed to do more to confront the crisis.


He added that he was actively encouraging banks to consider their plans in
the event of a country leaving the euro.


The comments echo many of the major voices here in
Davos, where the fate of the euro and the problems of
income inequality remain the most prominent issues.

The great thing about Davos is it provides the neutral observer with
an amazing opportunity for catching celebrities and powerful politicians
off-guard.
If it isn't the prospect of being caught on camera
slipping over on ice, it's the risk of being snapped or spotted at an
overly lavish party catastrophically dancing to DJ Norman Jay MBE or
chatting up a celebrity.
One senior European policymaker said
today that he had banned himself from skiing at Davos in case he got
snapped and found his picture in the papers: "The hairshirt, the
hairshirt," he told me disconsolately.
If there's one person such strictures don't seem to apply to it's the Mayor of London, Boris Johnson. There he was last night, allegedly partying with Mick Jagger (who cancelled his appearance at a "Tea Party" event with David Cameron today after being accused of politicking).
Beforehand he found time to party with, perhaps unexpectedly, Australian starlet Holly Valance, on the basis of her rather enthusiastic tweet
about the event. She was there at the Barclays Davos party with her
husband Nick Candy, he of the Candy & Candy property empire. Both of
them (and Jagger) were presumably in the "unofficial hotel badge" category I covered in my last blog.
Anyway,
Boris was on fine form this morning, unveiling an ice sculpture
commemorating the 2012 Olympics. You can see his rather amusing speech
on my very amateurish video above. His best line came just after I
switched off the camera.
"Now," he said, pointing at the London
skyline which, bizarrely, included Canary Wharf, the Gherkin and Tower
Bridge in close proximity, "you do know this isn't geographically
accurate?"
Another Boris anecdote came from the Barclays dinner.
It emerged that the mayor's response to Barclays' complaints that the
blue rent-a-bike cycles had become known as Boris Bikes rather than
Barclays Bikes was to offer to change his name by deed poll to
"Barclays" - provided they gave him another £30m.
At the rate the Olympics budget is stacking up, there's no doubt he could do with the cash.