VINCENZO PINTO/AFP/Getty Images
By Esther Bintliff and Claire Jones in London, with contributions from FT writers and editors in Davos.
All times GMT. This post should update automatically every few minutes, but it may take longer on mobile devices.
19.32 NEWS JUST IN. Lifen Zhang, editor-in-chief of FTChinese, writes that World Economic Forum officials are open to moving the date of next year’s event so that it does not clash with Chinese New Year.
The absence of Chinese senior officials – who stayed away from Davos this year due to the forum’s clash with Chinese lunar new year festivities – has been something of an embarrassment for organisers.
Especially this year, when there will be the once-a-decade leadership shuffle in China, it made sense for senior Chinese officials to stay home and celebrate the new year at home, where they can be be seen with the people during the festivities.Now it appears that the World Economic Forum is open to moving the annual Davos gathering to an earlier date, possibly in mid-January, to ease the way for Chinese leaders to attend.
18.50 That’s it for our coverage of day 3 of Davos.
We’ll be back tomorrow morning with more from the sessions, and the slopes.
18.37 Lionel Barber, the FT’s editor, talks to President Felipe Calderón of Mexico about the “timebomb” that is the eurozone.
I’ve just had a fascinating, if brief, conversation with President Felipe Calderón of Mexico, who is finishing his single six-year term this year. Mr Calderon told me that the eurozone faces “a timebomb” which must be deactivated fast. He is worried about the lack of growth amid austerity, particularly in southern Europe.
That sounds very like the warning David Cameron gave to the Davos VIPs yesterday, but it sounds all the more credible from a neutral Mexican leader.
Mexico's President at Davos 2012. Image by Getty.
President Calderón, a conservative, has spent most of his term waging a bloody struggle against drug lords who have rendered swathes of cities and towns no-go-areas. He claims he is making progress – 22 out of the 37 most wanted killed or arrested – but he concedes that rooting out corruption and building police and security forces from the top down is a monumental task.
More optimistically, he points to impressive progress in areas which, in the long-term, may help in the struggle. In healthcare, 105m people are now covered compared to 44m in 2000. In education, the Mexican state has been on a rapid-fire university building programme. Mexico, says Mr Calderón, is producing 100,000 engineers a year, more than Germany and Brazil, the rising power in the region.
So does Mexico feel it is being squeezed by its southern Latin American rival? The President smiles: Mexican interest rates and inflation are lower than Brazil and this year its growth may outpace the giant to the south. Watch this space.
18.12 Simon Evenett of the University of St. Gallen thinks that Gideon Rachman’s overheard German conversation (see post at 12.16) struck a chord.
As an Anglo Saxon-trained economist who lives in the German-speaking world I can attest to contempt in which Keynesian ideas are held.
John Maynard Keynes. Image by Getty.
In the US and UK you can have serious fights between Keynesians and economists with other macroeconomic viewpoints. In contrast, in much of the German-speaking world I get the strong sense that Keynesian ideas are beyond the pale, not even worth discussing.
Perhaps these intellectual blinkers account in part for the positions taken by the Merkel government?
18.00 What is the World Economic Forum anyway? A good place to start is the FT’s Lexicon entry (the Lexicon’s a handy tool if you’re looking to understand the meaning of financial jargon, acronyms and phrases – things like EFSF, eurobond and too big to fail).
17.53 Jean-Claude Trichet may have waved goodbye to the world of central banking last October, but the stability of the financial system remains a concern for the former ECB president. This from Bloomberg:
Jan. 27 (Bloomberg) — The technology-driven jump in trading volume has been of little discernible benefit to the real economy and must be more closely watched by regulators, policy makers said at a debate at the World Economic Forum.
Jean-Claude Trichet in his former role. Image by Getty.
Jean-Claude Trichet, former president of the European Central Bank, Adair Turner, chairman of the U.K.’s Financial Services Authority, and Guillermo Ortiz, ex-governor of Mexico’s central bank, told the debate today hosted by Bloomberg Television in Davos, Switzerland that high-frequency trading should be scrutinized as a source of systemic risk.
17.40 Martin Wolf, the FT’s chief economics commentator, mourns the loss of Philipp Hildebrand, the former Swiss National Bank chairman (who resigned over controversial currency trades by his wife). Martin also says Japan should learn from the SNB’s decision to cap the franc’s gains.
More than one senior official here has mentioned to me how much Philipp Hildebrand, former head of the Swiss National Bank, will be missed: he was a brave and brilliant central banker.
The so-called “Swiss finish” on capital requirements in banking was one of his important contributions. It made the work of the UK’s Independent Commission on Banking, on which I served, far easier. It indicated, among other things, that countries have the ability to set their own rules on banks. Thank you, Mr Hildebrand.
An at least equally important decision was that to set a ceiling on the Swiss franc’s gains against the euro. In the presence of unstable financial markets, this idea is both sensible and feasible.
Setting a ceiling works because a central bank can expand its monetary base without limit; as monopoly issuer of the domestic currency, it can always turn on the printing presses in order to create funds for foreign exchange intervention. A central bank can expand its monetary base without limit. So long as the policy is symmetrical – that is, the central bank returns the foreign currency to the market, and so reduces the monetary base, when the market turns against the domestic currency – it is also not inflationary. But it should eliminate the possibility of deflation, provided the anchor currency has a sufficiently positive rate of inflation.
For a rich country with low growth potential, and so modest equilibrium real interest rates, that is very valuable. It eliminates the danger that monetary policy would be trapped at the zero bound for nominal interest rates.
The policy also eliminates the shock of an unsustainable spike in real exchange rates. Manufacturing, in particular, is path-dependent. A huge and sudden loss of competitiveness may well lead to a permanent loss of valuable capacity.
What was most interesting to me about the Swiss foreign exchange intervention is that it is a policy I recommended strongly to Japan in the late 1990s. I then suggested that the simplest way to eliminate deflation was to announce a ceiling of 100 yen to the dollar, which would be set – and defended – by the Ministry of Finance and the Bank of Japan, acting together.
This remains an eminently sensible policy, though the yen’s ceiling would now be higher. Mr Hildebrand showed the way. The Japanese authorities should now follow.
The irony is that it was this eminently sensible policy which, indirectly, deprived Switzerland of Mr Hildebrand’s services. Please, governments of the world, do not learn from this sad story that you should only appoint bureaucrats to run central banks. We need innovators in public services, too.
17.20 A late contender for best hat at Davos 2012 (and worn indoors no less):
Pascal Lamy from the World Trade Organisation ERIC PIERMONT/AFP/Getty Images
16.08: S. D. Shibulal, the chief executive of Infosys and one of our guest bloggers, has sent over his thoughts on day 3 at the World Economic Forum:
The discussions on the third day at Davos centered on possible developments in the US and the eurozone. Business leaders are confident that financial regulation in both regions is only getting stronger. This should serve as a good deterrent to the events similar to the ones that led to the recent financial crisis.
I attended the UN Global Compact LEAD luncheon where the discussions reaffirmed our own belief as an organisation, that the concept of sustainability has evolved beyond resource consumption and green innovation. Sustainability is today about being sustainable as an organisation and about fulfilling our unwritten social contract to give back to the societies that we operate in. Finally, the political, as well as the business community, is more optimistic about the future and is determined to work together to emerge stronger out of the current crisis of trust.
15.50: Ehud Barak, the Israeli defense minister, told reporters at Davos that he believed Iran was “deliberately drifting into what we call an immunity zone where practically no surgical operation could block them”, reports the Associated Press:
Ehud Barak talks during a session entitled "What if Iran develops a nuclear weapon". ERIC PIERMONT/AFP/Getty Images
“We are determined to prevent Iran from turning nuclear. And even the American president and opinion leaders have said that no option should be removed from the table and Iran should be blocked from turning nuclear,” Barak told reporters during the annual meeting of the World Economic Forum.
“It seems to us to be urgent, because the Iranians are deliberately drifting into what we call an immunity zone where practically no surgical operation could block them,” he said.
But while Barak called it “a challenge for the whole world” to prevent a nuclear-armed Iran, he stopped short of confirming any action that could further stoke Washington’s concern about a possible Israeli military strike.
15.05: This time last year, the protests that had broken out in Tunisia, ousting President Zein al-Abidine Ben Ali, had only just begun to spread to Egypt and Yemen. The full scale of what the Arab Spring demonstrators would achieve by the end of the year could hardly have been imagined.
Today at Davos, a session took place in which the prime minister of Tunisia, Hammadi Jebali, and two of the presidential candidates for Egypt – Abdel Moneim Aboul Fotouh and Amre Moussa – engaged in a discussion entitled: “From Revolution to Evolution”. Here are some of the most interesting quotes from that session:
-
Egyptian Amre Moussa, (L), Secretary-General of the League of Arab States, Abdelilah Benkirane (2L) Chief of Government of Morocco, Prime Minister of Tunisia Hammadi Jebali (2R) and Egyptian presidential candidate Abdel Moneim Abul Futuh (R). VINCENZO PINTO/AFP/Getty Images
Hammadi Jebali: “I do not believe the new regimes should be called political Islamist regimes. We must be careful with our terminology… For the first time in the Arab world, we have free and honest elections that led to democratic regimes”
- Mustapha Kamel Nabli, governor of Tunisia’s Central Bank: “One year ago, when the revolution starts, I think we were dreaming, and we were dreaming with our feet in the sky. Now we are still dreaming, but we are dreaming with our feet on the ground”
- Amre Moussa: “We have all embraced democracy. The question is whether the West will be able to deal with a democracy that is Arab… The West wants democratic elections, but it wants elections in which the parties that they favour win.”
- Hammadi Jebali on the role of women: “We cannot have an amputated democracy. We need to take into account the entire population. We cannot ignore women.”
14.45: US treasury secretary Timothy Geithner used his speech at Davos today to call for a bigger firewall to protect the eurozone (see our 11.22 post). Bloomberg notes that this was his sixth trip to Europe since September.
What else did he have to say?
On the US economy: “Profitability across the American economy is very high, higher than the pre-crisis peak… What is holding the US economy back still is the aftershocks of the financial crisis and the fiscal pressure on governments.”- On US growth, which he said would reach between 2 and 3 per cent this year: “I think that’s a realistic outcome as long as we don’t see a lot of risks coming out of Europe”.
- On Chinese subsidies:“It is very important to get China to move comprehensively on [trade and subsidies], not just on the exchange rate… They are moving, we would just like them to do more”.
- On Iran:“Even over the last 6 months you’re seeing a substantial intensification in (reducing) dependence on Iranian oil, and my sense is that China wants to be part of that effort, because it is in China’s interests not to see Iran undo the delicate balance in the Gulf”
- On whether he will stay on as treasury secretary after the next US election:“Generally anybody who takes these jobs serves at the pleasure of the president… When [President Obama] asked me to stay when I thought it was the right time to leave, I agreed to stay and I agreed I would stay to the balance of this term. He accepted that aspiration of mine, and that’s where it’s going to come out, I think.”
14.15: David Cameron earned the wrath of a few eurozone leaders in December – and risked annoying them even more by giving them a bit of a telling-off in his speech yesterday at Davos. But guest contributor Sir Martin Sorrell, chief executive of WPP, was a big fan of his performance:
A sparkling session for the UK prime minister at the International Business Council (over 100 leading CEOs) and WEF Plenary Session. One leading venture capitalist suggested, on the basis of his performance, a reverse takeover of the EU by the UK, with David Cameron as the CEO. The head of a leading accounting/consultancy company supports it.
The Mayor of London, Boris Johnson, was everywhere, pushing the Olympics and cheering everyone up. Some question the result of the upcoming mayoral election in London. Will Boris win? One journalist says the centre of London may be with him, but what about the suburbs?
The issues of inequality and Iran are much talked about but rarely dealt with in sessions. Maybe because they are too difficult to answer?
Unilever captured the “Corporate and Social Responsibility” space at Davos, with the launch of its new foundation focussed on safe water-drinking, acute respiratory infection, infant mortality, and chronic hunger. Paul Polman – Davos co-chairman and Unilever CEO – neatly linked social purpose and corporate success.
If we are really facing a European balance of payments crisis, if the essential European issue is really about competitiveness, unit labour costs will have to adjust. Is this really politically possible? At the end of the day, if it’s about competitiveness, politicians may not take the necessary actions quickly enough. In those circumstances, business has no option but to go on expanding into the BRICs and consolidate further in western Europe.
13.39: The US growth figures are in. This from the FT’s Shannon Bond:
The US economy grew 2.8 per cent in the final three months of 2011 as consumers ramped up spending and businesses boosted production.
The commerce department’s first reading of gross domestic product growth in the fourth quarter was slightly below economists’ expectations of a 3 per cent annualised pace but an acceleration from the third quarter’s tepid 1.8 per cent increase.
Growth was lifted by a 2 per cent rise in consumer spending, compared with 1.7 per cent in the third quarter, but that was lower than the 2.4 per cent forecast. Futures on the three leading US stock exchanges were slightly lower following the news.
13.25: With the eurozone crisis the predominant theme of this year’s Davos, you’d expect the 1,500 capacity Congress Centre to have been packed to the rafters for ECB president Mario Draghi‘s speech today. Not so, says the FT’s banking editor Patrick Jenkins.
Given the intensity of focus on the eurozone and the ECB at the moment, it is odd to say the least that only a few dozen people gathered for the 2.15PM (1.15PM GMT) scheduled start of Mario Draghi’s star turn on the main stage at the Congress Centre. Have everyone’s fears really been eradicated after a couple of days in a pretty snowy landscape?
13.16: Chris Giles, the FT’s economics editor, reports that George Osborne has done a U-turn on the UK government’s position on lending to the IMF to support a eurozone bailout.
George Osborne has just outlined the conditions he would put on giving more money to the International Monetary Fund. Speaking to British business leaders on the fringes of the Forum, he said: “The world needs to see the colour of their money before it contributes more”.
So much, so well known from the British.
But in questions later, he struck a much more supportive tone, arguing that if the eurozone runs the ESM and EFSF in parallel, which appears likely, “that may well be the way forward and once we see that we can move to the question of whether the IMF needs more resources”.
It sounded like a big shift in Britain’s position from “no” in December to “almost certainly yes” today.
13.01 Critical voices at the World Economic Forum want more action and less advice from Germany. Financier George Soros led the way with a warning that German austerity could push Europe into a deflationary spiral.
FT editor Lionel Barber, and European business leaders and policymakers give the FT’s Seb Morton-Clark their verdicts on how the eurozone crisis is being handled in this FT video clip.
12.49 George Osborne has chosen to unveil his proposals to overhaul Britain’s financial regulation in Davos. This from the FT’s economics correspondent Norma Cohen on the proposals:
George Osborne. Image by AFP.
Britain has announced the most sweeping overhaul in over a decade of the way it regulates its financial services sector, giving greater protection to customers including those using payday lenders.
The draft financial services bill makes it clear that if taxpayer funds are at risk in a crisis, the chancellor of the exchequer has the power to act unilaterally.
The legislation, as widely expected, creates several bodies, including a Financial Conduct Authority to look after consumer interests, but which will also have a mandate “to promote effective competition in financial services in the interests of consumers”.
The FCA will take over responsibility for oversight of consumer credit from the Office of Fair Trading.
The legislation will also create a Prudential Regulation Authority to oversee the conduct of banks and a Financial Policy Committee to oversee control of systemic risks.
However, it falls short of what had been urged by the Treasury Select Committee for the independence of the Bank of England, under whose authority all the new bodies will operate.
12.27 Want to know how to fix the global economy? FT.com’s latest video clip sees Martin Wolf, chief economic commentator, debate with Laura Tyson, dean of Haas Business School, and Dr Jacob Frenkel, chairman of JP Morgan, on problems and possible solutions for the global economy’s current predicament. Chris Giles, economics editor, chairs.
12.16: Overheard in Davos. Gideon Rachman reports on a conversation that offers a snapshot of a certain perspective:
That elusive thing – “the mood of Davos” – is not captured only by the remarks on the stage. A friend trudging through the snow reports hearing these fragments of conversation between two Germans: “Stiglitz …Roubini … Keynesian bullshit… Bankrupt us all.”
11.50: This morning’s session on the “future of the eurozone” yielded some interesting comments from the various finance ministers and policymakers in attendance – the most immediately relevant being EU economics chief Olli Rehn’s statement that he expects the Greek PSI deal to be resolved by the end of this weekend (see our 10.10 and 10.55 posts).
EU economic affairs commissioner Olli Rehn (L), Spanish Minister of Economic Affairs Luis de Guindos Jurado (2ndL), French Finance Minister Francois Baroin (2nd R) and German Finance Minister Wolfgang Schauble (R) attend a debate on " The Future of the Eurozone " during the World Economic Forum. VINCENZO PINTO/AFP/Getty Images
11.40: A timely job advert from the European Central Bank:
The European Central Bank (ECB) is looking to recruit two experienced Economists for its Risk Management Office.
The Office is responsible for proposing and maintaining the risk management framework for all of the ECB’s financial market operations and for monitoring, assessing and proposing improvements to the Eurosystem’s operational framework for monetary and foreign exchange policy from a risk management point of view…
11.35: An update on twitter from Occupy_WEF, who we did a Q&A with earlier in the week:
11.27: David Cameron ain’t getting much love from Wolfgang Schäuble, the German finance minister, reports our banking editor Patrick Jenkins:
Mr Schäuble is the latest to take a swipe at David Cameron over the UK prime minister’s hands-off approach to the eurozone in recent weeks, including walking away from talks on proposed treaty changes in December.
Asked by a Swedish MEP in a Q&A session why Europe was bypassing proper governance procedures, Mr Schäuble said: “I would like to give you the mobile number of David Cameron. That’s not a joke.”
11.22: Chris Giles has this update to Gillian Tett’s 11.15 post:
On US support for IMF funding, he added that Europe must commit more resources first. “If Europe is able and willing to do that, then we [the US] believe the IMF can play a constructive role”.
11.15: One issue that has been bubbling under the surface in Davos is the thorny question of the American attitude towards the IMF, reports Gillian Tett – and its role in the eurozone:
Senior IMF officials have made it clear in the last week that they think the IMF has a bigger role to play in Europe – and some Asian members agree. At a session that I participated in Davos on Wednesday, one Asian central bank governor stressed that it would be naīve to think that the eurozone could solve its woes without some help from third parties, such as Asia, and expressed a hope this would be via the IMF.
However, the American delegation in Davos are firmly resisting this idea: their message to Davos delegates is that Europe already has plenty of cash, and the US will fight hard against additional IMF aid. “We do not see the need,” a US official stressed; stand by for some tense behind-the-scenes debates.
10.55: The remarkable thing about this year’s World Economic Forum, says our economics editor Chris Giles, is that everyone came “expecting to hear about the woes of the eurozone, wallow in the start of a new crisis and sign the death warrant of the euro”… but something else happened – eurozone ministers appear surprisingly optimistic:
In the session on the eurozone with finance ministers of Germany, France and Spain along with the European monetary affairs commissioner, the consensus was remarkable. Five things stood out for me.
- Greece has comprehensively been put in the sin bin. Everyone says it is a special case and Olli Rehn, the commissioner, predicted a deal on private sector write downs in the next three days. It was quite a punt and he must have had knowledge that the negotiations are close to concluding positively.
- Everyone agreed with Wolfgang Schäuble, German finance minister, on rejecting eurobonds as a short-term solution. Sure, they said, eurobonds might be a reasonable long-term objective once eurozone economies and policies are fully integrated, but agreeing to eurobonds now would amount to putting the cart before the horse. Only Olli Rehn showed any dissent, praising the German council of economists back-door eurobond suggestion as something akin to the 1790 US decision to move towards federal debt.
- The economic strategy is structural reform plus fiscal austerity. France, Spain and (not surprisingly) Germany all said fiscal stimulus did not work and Mr Schäuble attributed Germany’s strong expansion in 2010 and 2011 to fiscal discipline creating confidence. He even said Tim Geithner (on stage next) agreed with him and was seeking to adopt German fiscal policy in the US. It was a confident display.
- As Patrick has said there is disagreement over the size of the necessary firewall to protect the eurozone from market pressures as austerity and reforms are introduced. François Baroin, French finance minister, said: “France considers the higher the firewall, the less it has to be used”, while Mr Schäuble insisted that incentives matter and high firewalls dull incentives for reform and austerity. “No firewalls will work if the real problems are not tackled,” he insisted. This disagreement will clearly run for some time longer.
- There was lots of talk about structural reforms, but no talk about the fact, as Martin Wolf points out all the time, that competitiveness is a relative concept. Spain, Greece, Ireland, Italy and Portugal can only improve competitiveness through structural reforms or wage cuts if they do so against Germany. My view on why this difficult subject did not come up: it is the crux of the eurozone problem and it is still too difficult to discuss.
10.40: Wolfgang Schäuble, speaking in the session on ‘The future of the eurozone’, has some stern words for Greece:
German finance minister Wolfgang Schäuble during today's session. VINCENZO PINTO/AFP/Getty Images
“We don’t expect a default in Greece. I know many markets have priced this in for a long time. But I don’t expect a default in Greece. If all partners do what is expected of them, we can avoid and we will avoid a default in Greece.
“Now we are discussing the concrete figures and I’m quite optimistic we can avoid it, but Greece has to meet its commitments.
“Greece has not only to commit itself, Greece has to deliver. Because Greece has committed itself two years ago and not all of the commitments have been delivered. We must not give them the wrong incentives.”
This chimes with separate comments made by Christine Lagarde, head of the IMF, in an interview with Bloomberg TV this morning: ”We’re not terribly positive about what has been done but we want to put together a program for the country,” she said.
10.35: Davos Deville is out and about, and, as ever, capturing the zeitgeist:
10.15: Patrick Jenkins, our banking editor, has more from that eurozone finance ministers session:
Signs of tension evident between the French and German positions on the size of European stability mechanisms – German finance minister Wolfgang Schäuble wouldn’t be drawn on how big the ESM, (successor to the EFSF) should be, saying it didn’t matter how big it was.
“It can be any size. It will not work if the fundamental problems have not been addressed.”
His French opposite number François Baroin took issue with that, saying the whole point of the firewall was as a deterrant and confidence boost to markets. “We think the higher the firewall, the less it will have to be used.”
10.10: Olli Rehn, the EU’s economic chief, just said that the next three days will be crucial for the eurozone, reports Chris Giles:
Mr Rehn predicted a deal on private sector voluntary writedowns of Greek debt by the end of the weekend and said this should boost confidence further. It is the latest in a trend of growing confidence, but not yet swagger, among eurozone officials here in Davos.
Mr Rehn is taking part in a session on ‘The future of the eurozone’, together with French finance minister François Baroin and German finance minister Wolfgang Schäuble.
10.00: Comments by Irish prime minister Enda Kenny that Ireland’s economic crisis was caused because “people went mad borrowing” (see our 17.04 update in yesterday’s blog) have provoked a furious political backlash, says Jamie Smyth, our Dublin correspondent:
Opposition politicians and civil society groups have strongly criticised the comments, saying they completely contradict Mr Kenny’s statement in a TV state of the nation address last month, when he told the public: “You are not responsible for the crisis”.
Enda Kenny, prime minister of Ireland, at the session chaired by Lionel Barber yesterday. AP Photo/Michel Euler
During a panel discussion at Davos on rebuilding Europe, chaired by FT editor Lionel Barber, Mr Kenny said: “The extent of personal credit, personal wealth created on credit, was done between people and banks – a system that spawned greed to a point where it just went out of control completely with a spectacular crash”.
The main opposition party, Fianna Fail, accused Mr Kenny of taking one approach when abroad and another when at home. Sinn Fein said the comments were clichéd and showed an appalling lack of economic knowledge. Seán Healy of Social Justice Ireland said the remarks were “amazing and extraordinarily lopsided.”
Two years ago, the late Brian Lenihan, former finance minister, provoked outrage in Ireland when he said “Let’s be fair about this – we all partied”.
The political furore reflects the fact that no-one has yet been held to account for the economic crisis. Almost four years since the banking crisis began in Ireland, a criminal inquiry into suspicious transactions at Anglo Irish Bank- the lender at the centre of Ireland’s banking crisis- still continues. No one has yet been charged.
The Irish parliament has been prevented from holding an inquiry into the banking crisis due to constitutional restrictions. A report into the economic crisis, commissioned by the previous government, did not name anyone responsible.
09.50: Can we afford not to invest in the poorest? That’s the question being asked by one of our guest contributors from Davos, Jasmine Whitbread, chief executive of Save the Children:
However the debate about inequality plays out at Davos, many still argue that the priority has to be on growth and that development assistance can’t be afforded in a downturn, or that increased domestic investment in social sectors needs to wait for growth.
I’m arguing for health and education investments in the next generation – not just as a moral obligation or political necessity but because it’s smart economics. The evidence is there – between 30-50% of Asia’s growth between 1965 and 1990 has been attributed to improvements in reproductive health, and reductions in child mortality and fertility rates, while malaria alone costs Africa $12 billion a year in lost revenue.
It’s always a tough argument to make, especially as Save the Children (a bit like a chocolate company arguing that chocolate is good for you!) but fortunately, increasing numbers of business leaders are getting behind this message.
Bill Gates has become the champion of this cause, and kicked off a debate on how to keep pushing on the central tenets of the Millennium Development Goals such as saving children’s lives, while learning the lessons to set the agenda to 2030.
embed1
09.45: Some sobering news from Spain this morning - the number of Spaniards without jobs rose by more than half a million last year to reach 5.27m, or 22.85 per cent of the workforce, in the final quarter, according to the National Statistics Institute (INE).
As Victor Mallet, our Madrid bureau chief, reports, the figures confirm Spain’s jobs record as by far the worst among big eurozone economies following the collapse of the Spanish housing construction bubble from 2007. Read the full story.
09.15: What happens in Davos stays in Davos… or not? Gideon Rachman attended a session yesterday on Russia, and part of the conversation there – while ostensibly “off the record” – is reverberating outside the meeting room:
The most gripping exchange came right at the end when Bill Browder of Hermitage Capital – once the biggest foreign investors in Russia and now a bitter critic – asked the panel about the notorious death in police custody of Sergei Magnitsky, his lawyer and auditor.
The response of Igor Shuvalov, the deputy prime minister was – I think – meant to sound reasonable and reassuring. He described the case as “horrendous” and said that some people had already lost their jobs and been charged over it. But it was very difficult to get to the bottom of the case, because the “system” was protecting some guilty people.
The assembled business people did not seem impressed. One told me that – on the basis of that answer – he had decided not to proceed with a big potential investment in Russia.
09.00: Time for a round-up of the Davos coverage worth reading in the FT and elsewhere:
- Iran’s nuclear stance is ringing alarm bells at Davos – Gideon Rachman notes that today’s session on “What if Iran Develops a Nuclear Weapon?” was one of the first to be booked out. So why are the prospects of war being taking so much more seriously this year?
- JPMorgan considered pulling out of the eurozone’s most troubled periphery, Jamie Dimon tells a Davos panel
- Venus in Furs at the Bull and Bear - Gary Silverman tells the true story of what happened to him when the World Economic Forum came to New York (NB: it involves a dominatrix)
- The UK leads the launch of green energy fund - international organisations and the UK government will launch a new public-private investment fund today to provide seed finance for at least £3bn of green energy projects in emerging and developing countries
Best of the rest:
- Tech Dispatches from Davos: the Jeans and Hoodie Class – a brilliantly fresh perspective on the WEF from Matthew Prince, CEO & co-founder of CloudFlare
- Davos: Taking back globalisation - Olivier De Schutter, the United Nations Special Rapporteur on the right to food, argues that global leaders need to heed warnings about the imbalances caused by unfettered globalisation
- The time for reaching a Greek debt deal is fast running out – the BBC’s Stephanie Flanders on the one thing everyone can agree on at Davos
08.30: Duncan Niederauer, chief executive of NYSE Euronext, yesterday admitted there was a “low probability of success” for his exchange’s attempted tie-up with Deutsche Börse, in a video interview with the FT’s Veronica Kan-Dapaah in Davos. Watch the video here.
08.20: Ali Babacan, deputy prime minister of Turkey, has told Bloomberg TV in Davos that his country’s growth may come in below the forecast 4 per cent in 2012 if the situation in Europe worsens.
07.45: Spare a thought for those Davos attendees now wandering bleary-eyed into the Congress Centre after a late night at one of the many parties held last night. Let’s hope the WEF organisers have laid on copious amounts of easily accessible coffee and haven’t put the heating on too high. Or that delegates have the constitution of Gillian Tett, the FT’s US managing editor, who attended no less than 4 parties, and *still* managed to report back at 6am this morning:
One of the great traditions of Davos is that by the second night everybody is frantically asking each other at late night parties what they have “learnt from Davos this year.” So too this year.
On Thursday night I attended a clutch of events, including the JPMorgan party in the Kirchner Museum (more stylish than the previous years’ events at Davos’ infamous Piano Bar, but less jolly); the TIME party in a bar on the Promenade (low key, but friendly and fun); the McKinsey Party at the Belvedere (as always, loud and crowded, with a particularly good band and dance floor); and the FT’s very own party, held jointly with CNBC (tightly packed with business leaders, bankers, academics and officials, some escaping from the dance scene at McKinseys.)
Judging from the conversations there, the top issue on everybody’s mind remains the eurozone. Right now, the short-term mood seems modestly upbeat: most bankers and business leaders think that the ECB has bought Europe breathing space, via its LTRO. And hopes are high that this will enable Europe to muddle through for another year – staving off an immediate crisis.
But nobody I spoke to thinks that the underlying issues have been resolved; on the contrary, the speeches from Angela Merkel and David Cameron in Davos this week have highlighted the vast gulf in policy views.
And a hot topic of debate last night is what will happen if Nicolas Sarkozy is removed from the French political scene this spring. Would Hollande be able to work with Merkel? Might Sarkozy step aside before an election in favour of Alain Juppé, France’s foreign minister? Could a new French-German breach erupt later this year?
The late-night champagne-fuelled speculation was intense – particularly since the WEF will host a debate today between eurozone finance ministers.
07.30: Angela Merkel had her say on day 1 of the World Economic Forum, David Cameron lobbed the ball back in her court on day 2, and today it’s the turn of Timothy Geithner, US secretary of the treasury, who is due to speak on “priorities for the US economy” at 11.30 Swiss time (10.30 GMT).
But before that, there are no less than 17 separate sessions for delegates to choose from. Our personal highlights include:
- China’s economic outlook – why is there pessimism in China when its economy is forecast to grow more than 9% in 2012? (featuring, among others, Stephen Roach of Yale University, Hu Shuli, editor-in-chief of Caixin Media and Zhang Weiying, professor of economics at Peking University)
- What if Iran develops a nuclear weapon? Moderated by John Chipman, chief executive at the International Institute for Strategic Studies (IISS)
- The future of Tunisia- a special address by Hammadi Jebali, prime minister
- Fixing Capitalism – a conversation with Angel Gurria, secretary general of the OECD
- The future of the eurozone – featuring French finance minister François Baroin, Luis de Guindos Jurado of Spain and Ollie Rehn, the EU’s economic chief
For views and opinions on the European Union from Peter Spiegel, Joshua Chaffin, Alex Barker and Stanley Pignal, follow the 