It is becoming something of a cliche here to say the mood at this year’s Davos is so depressing that it is feeding the recession, rather than building a consensus on how we escape from our predicament. CEOs who arrived a little anxious about their prospects are now very worried. Those who arrived worried are now deeply depressed. Those who arrived depressed may not go home at all.

I began to wonder if this Spenglerian gloom was a financial sector phenomenon. Two invitations to talk to the automotive sector, and the Tourism and Travel group, gave me an opportunity to test that hypothesis. Sadly, it quickly folded.

I took part in a luncheon discussion on the ‘post-carbon’ economy. This very term, ‘post-carbon’, is an obviously optimistic, future-forward theme in a time when oil and coal consumption is surging. Finding consensus here towards far-reaching solutions feels like a distant hope. In fact, our looming ecological crisis mirrors our present economic crisis in disconcerting ways.

Both these crises, for instance, happen to be triggered by market failure. The absence of any accounting when it came to environmental costs, and our failure to price natural resources into the economy have brought about the climate crisis. The financial collapse represents the same case of ‘disastrous optimism’ – our overlooking of ‘negative externalities’ in financial reporting, balance sheets and risk assessment. And in both these cases, we have tried to privatise profits and socialise losses.

It had to happen. Every crisis invariably gives rise to finger pointing. This one is no exception. Sooner or later, the scapegoating had to break out in the open. It didn’t take long. At a dinner I attended on the first night of the World Economic Forum, the blame game erupted with full force.

There is a lot of gloomy talk about the recession but there is another conversation here that perhaps points to some green shoots desperately pushing their heads through the Davos frost.

The narrative goes something like this. Yes, we are facing one to two years of recession followed by a slow recovery. But during this period the opportunity exists to make major strides in certain areas, the main one being climate change initiatives, and that’s getting people excited. It’s giving people something to focus on and when two thousand global influencers focus on the same thing, you get the sense that something might just happen.

A funny thing happened on the way to the Forum. In December 2008, according to global internet research firm comScore*, the world reached one billion online users. The country with the single largest online audience is now China with 180 million users, which surpassed the U.S. with 163 million connected users. North America now represents 18.4 per cent of the global online audience compared to 28 per cent for Europe and 42.3 per cent for Asia Pacific (Latin America represents 7.4 per cent and the Middle East and Africa make up 4.8 per cent). To put this in perspective, 66 per cent of the world’s online audience was in the US in 1996. Today, 83 per cent of the world’s online population is outside the US and able to track what is being said in Davos in real-time.

The remark by Tim Geithner, president Obama’s new treasury secretary, that president Obama believes China is manipulating its exchange rate has, it can safely be said, not gone down well in Beijing.

On the contrary, it is condemned as presumptuous blame-shifting by the originator of the catastrophe. This is clear from several discussions I have heard in Davos. But I did not need to go to Switzerland to learn that.

There is little question that China is sensitive about public criticism of any kind. Nevertheless, this is not a question to be avoided. It is far too important for that.

One of the central themes in discussions about the global economic crisis is that we need more checks and balances, both at the national and the world levels, in order for capitalism to work effectively to enhance human well-being.

Reflecting the widespread political sentiment in the United States, it would appear that just about everyone at the World Economic Forum embraces the need for greater, more far-reaching government regulation of economic activity.  Making that consensus concrete will, of course, be enormously complicated, and contentious, perhaps mirroring the revolutionary changes in public regulation of private activity that defined the New Deal era.  Right now there is a kind of soothing collective agreement that “something must be done”.

The latest recipient of a bail-out seems to be Matthew Bishop, the author with Michael Green, of Philanthrocapitalism: How the Rich Can Save the World, a book about the new wave of philanthropy by business leaders and billionaires.

Matthew, who works for The Economist, had the misfortune to publish his book last August, at precisely the moment when the financial bubble popped and the notion that the such people were benefactors from whom traditional foundations and governments should learn lost its appeal.

There has always been a certain tension between the World Economic Forum’s slogan – “Dedicated to improving the state of the world” – and the fact that many of the delegates are in Davos to network and go to parties. That is particularly awkward in a year when many of the people here have arguably done quite a lot to mess up the state of the world – by, for example, flogging toxic debt.

Davos has reacted by toning down the parties this year. The closing gala, which usually features dancing and loud music, has been re-branded as a “cultural event” – which sounds really dismal. The tasting of fine wines is not taking place. The investment banks are keeping a low profile.

The Davos annual gathering has an uncanny knack of being able to both predict and understand future waves of investment and growth. The wisdom of this particular crowd has been adept at capturing the zeitgeist. Two years back for instance, at Davos 2007, the reigning superstars were the wizards of private equity. These men and women, who Tom Wolfe had called the ‘Masters of the Universe’, were welcomed everywhere with applause and appreciation, and they fascinated audiences with their war stories of multi-billion dollar acquisitions. There was widespread speculation surrounding when they would break the US$ 100bn mark. There was no public company in the world that seemed beyond them.

Davos blog 2009

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