As you climb the mountain to Davos (the train via Landquart is my demotic route of choice – eschewing the expensive corporate Audis) you tend to think you know what the Forum’s financial talking points will be. This year the names Bernanke and Volcker will be on every lip – at least until the Senate vote on the former is known. If the answer is no, which seems less likely after the President’s weekend on the White House switchboard, there will be no other topic of conversation. The markets are likely to react badly, whoever is proposed to replace him, and whatever participants think of his pre-crisis record.
There is no simple yes/no answer to the Volcker question. His Rule remains opaque. In a discussion with a private equity panjandrum today we concluded very firmly that it would either not make much difference, or would change everything, taking the markets back to pre-Big Bang days, but we couldn’t decide which. And the two sentence summary put out in Washington last week doesn’t help a lot. Read more