Focus on the first day, amongst other things, is on the high levels of unemployment and consequent risk of more protectionism. As unemployment is already at a very high level – an average of 10 per cent in most western economies and youth unemployment at least double that rate – social stability and long-term social damage are major issues.
As a jobless recovery kicks in, particularly in mature economies, the problem is likely to worsen and, as a result, protectionism will rear its head even more.
Organisations such as the ILO and WTO are pushing for more social programmes to cushion structural unemployment. Business generally argues that Western European economies, in particular, are not flexible enough. In America, although structural change is equally difficult and unpleasant, there is a mobility and flexibility that is absent from Western Europe, where higher taxation and social charges make plant location and similar investment decisions more difficult. Read more
I spent my day being interviewed by other media organisations and preparing my Friday column. So I did not attend any sessions. I rely on the excellent reporting of my colleagues to tell me what is happening in Davos, just like all the other readers of the FT and ft.com. But I have still managed to learn something from chance encounters here.
So what have I learned so far?
First, my criticism of the “Volcker rule” in banking, subject of my column this morning, is controversial. The desire of many non-bankers to cut the bankers down to size is, even here, quite noticeable. Have I gone soft on bankers? I do hope not. But this new addition to the already pressing weight of uncertainty worries me greatly. Read more
By Chris Giles, the FT’s economics editor
I have a terrible problem when I listen to chief executives talking about what they do for the world:how they give people livelihoods; how their fine management has given thousands of people jobs; how families would be destitute were it not for them. My problem is that I thought slavery had ended – quite some time ago. Read more
It was a sprightly and cheerful George Soros who addressed journalists at a lunch today in Davos on the aftermath of the financial crisis.
The crisis has been good for the credibility of Mr Soros and he drew a notable group of editors to listen to his recommendations, including John Micklethwait of The Economist, James Harding of The Times, Jacob Weisberg of Slate and Marcus Brauchli of The Washington Post. Read more
No doubt, the Global Competitiveness Forum in Riyadh was an excellent curtain raiser for Davos. The agenda for the latter seems set – management and timing of the withdrawal of the short-term economic stimulus, cutting and funding deficits in the longer-term, concern about co-operation over regulation, following President Obama’s recent unilateral moves, Paul Volcker’s new role, G2 or G7 or G8 or G20, American/Chinese relations (tyres and Google), protectionism, the environment, Palestine, Iran, Afghanistan and terrorism, energy policy, some cathartic banker-bashing (why not have some symmetrical regulator-bashing too!) and last, but most important, support for the Haitian tragedy.
Don’t get the feeling that much of the Obama administration will be present. Nor the presidents or prime ministers from Russia or Turkey or Japan, mostly as last year. No prime minister Brown, but UK shadow leader David Cameron will be there and the British lunch on Friday will be the first ever in six to host a conservative leader. There is, however, great representation from Latin America – Lula, Calderon and Uribe. In the developed world, President Sarkozy is left centre stage, for the opening big session with Professor Schwab. Read more
By Gideon Rachman, the FT’s chief foreign affairs columnist
Jesus drove the money-changers out of the temple. Now the World Economic Forum has driven the wine-tasters out of Davos. In previous years, one of the highlights of the forum was a small but spectacular tasting of fine wines. But last year Klaus Schwab, the forum’s mastermind, decided that guzzling first-growth clarets was an inappropriate way of celebrating the global economic meltdown - and the wine-tasting was cancelled. We all hoped that this was a temporary abberation, but apparently not. The new Puritanism is here to stay – Davos wine-tastings are off the menu until further notice. Read more
By Chris Giles, the FT’s economics editor
One of the joys of the World Economic Forum is the occasional real-time deflation of egos that you can witness. I am sitting in a session on asset price bubbles where one private sector speaker insisted that you can’t spot bubbles and you should not. I can’t name him because Chatham House rules apply. Then one econmics professor (not hard to guess who) and a prominent regulator, went through all the reasons why you can spot bubbles, and should think about using tools, such as capital requirements or loan to value ratios to limit the size of bubble. Back came a rather deflated first speaker, completely contradicting his earlier point, and arguing that there are some bubbles that can be spotted and need to be addressed with credit restrictions. Did he realsie his views had reversed? Sadly, I doubt it, but his ego was not what it was.
It can be hard to find an actual disagreement at Davos, given the social effects of sticking a lot of people in workshops and asking them to flesh out the future of the world convivially.
So it was encouraging (for a journalist) to come across a clear and important divide in the first session I attended this morning, on internet social networks. Read more
By Chris Giles, FT economics editor
Let’s face it. The Davos mood at the World Economic Forum is almost always wrong. In 2007 it was euphoric; 2008 was consumed by a fear of inflation; 2009 was apocalyptic. What about 2010? Read more
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
This blog is about to change form for a week.
I’m in Davos with a group of FT writers including Gideon Rachman and Gillian Tett to cover the annual World Economic Forum. You will be able to read my posts about the event here along with those of other FT journalists and our guest bloggers. Read more
Ed Whitacre has solved the problem I noted last month of finding a chief executive who could work under him at General Motors – he has adopted the Dick Cheney tactic of appointing himself.
This solves one problem but it leaves me with an uneasy feeling about the way that Mr Whitacre, the former chairman and chief executive of AT&T who was appointed by the Obama administration to oversee its own investment in the restructured GM, has interpreted his mandate. Read more
Perhaps the auto industry can learn something from Steve Jobs, in addition to building pieces of technology that attract admiration and premium prices.
David Carr discusses in the New York Times this morning Apple’s ability to build suspense before one of its launches, typified by the commotion over the unveiling of its tablet on Wednesday. Read more
I write in my news column for the FT on Friday about the “Volcker rule” – Barack Obama’s attempt to repeat some kind of Glass-Steagall structural reform – that Goldman Sachs would almost certainly be caught by it, along with commercial banks.
But I had second thoughts after listening to CNBC interview with Barney Frank, chairman of the House of Representatives Financial Services Committee, and reading what my colleagues Krishna Guha and Paul Murphy had to say. Read more
Anyone who is really, really interested in online paywalls can find my reply to Felix Salmon’s extensive critique of my column this week in the comments on his blog post.
Before Barack Obama said anything today about his second Glass-Steagall, the story was evident from who stood next to him, and who was banished down the row of public officials.
To President Obama’s right was “this tall guy”, the 6′ 7″ Paul Volcker, who has until today been a lone voice in his administration calling for structural reform on Wall Street. Further along was Tim Geithner, the Treasury secretary, who has until now resisted it in favour of tighter regulation. Read more
Back to Irene Rosenfeld, who despite her degree in psychology, appears to have upset an awful lot of people with Kraft’s £11.6bn takeover of Cadbury.
Having made herself unpopular in the UK by acquiring the maker of Cadbury’s Dairy Milk and the Curly Wurly, she has alienated Warren Buffett, her biggest shareholder, who regards it as “a bad deal”. Read more
My Thursday column in the FT is on the travails of newspapers.
One can hardly fault Irene Rosenfeld of Kraft for her nerve and tactical sense in what looks like a successful effort to take over Cadbury.
Ms Rosenfeld has yet to demonstrate, however, that she knows how to meld disparate corporate cultures and soothe the bitterness caused by a hostile takeover battle. Read more
Yahoo may have hoped that Google had turned itself into the target of the Chinese government, allowing other US companies to thrive unhindered, but it does not look like it.
By expressing its support for Google’s stand against Chinese censorship, and cyber-attacks, Yahoo has now been drawn into a dispute with Alibaba, the Chinese company to which it in effect outsourced its business there in 2005. Read more