Mykola Azarov (c) Getty Images
How humiliating for a political leader to be in Davos – but to be kept away from the Congress Centre itself. That is the fate that has befallen Mykola Azarov, the prime minister of Ukraine, who is in Davos – and was hoping to speak at the forum. Unfortunately, for him, his government’s reputation has now sunk so low that Mr Azarov did not make it inside the security perimeter.
Instead, he is holed up at the Hotel National, about a mile down the road. Among the visitors he received yesterday were Lakshmi Mittal, the steel magnate; Jorma Ollila, the chairman of Shell – and me.
When I asked him whether he regretted being unable to speak at the WEF, Mr Azarov replied stiffly – “The forum had a unique opportunity to listen to the head of government of Ukraine, to get a wider point of view – it’s hard to tell who lost more in this affair.” And why was he in Davos, anyway – given the chaos back home? The Azarov spin was that his presence shows that the government of Ukraine continues to function normally. Read more
Lawrence Summers (c) WEF
On Thursday, I moderated a fascinating lunch-time discussion on “secular
stagnation” with Lawrence Summers, former US treasury secretary,
who has recently propounded this idea.
Other participants were Motoshige Itoh of Tokyo university, Edmund Phelps, Nobel laureate, director of the Center on Capitalism and Society, Columbia University, Adam Posen, director of the Peterson Institute for International Economics, Helene Rey of the London Business School and Kenneth Rogoff of Harvard. This was a notably heavy-weight panel.
The discussion was rich and complex. But here are some conclusions.
First, since the crisis in 2007 and 2008, the equilibrium long-run real interest rate in the high-income countries has been ultra-low and the equilibrium real short rate has been negative. There is no disagreement on this. This was an obvious indicator of sustained and chronic weakness of demand.
Second, the main instrument we have used to deal with condition this has been hyper-aggressive monetary policy. But this creates substantial problems (in some views, at least, including mine): it distributes income towards both the financial sector and the rich, while also generating bubbles. Read more
According to the Kübler-Ross model, there are five stages of grief: Denial, anger, bargaining, depression and acceptance. Jamie Dimon still seems a long way from acceptance.
The JPMorgan Chase chairman and chief executive waded into controversy again at the World Economic Forum in Davos on Thursday by saying that the $20bn legal costs the US bank has paid for alleged wrongdoing before the financial crisis were “unfair”. Read more
FT senior foreign affairs columnist Gideon Rachman reports on his meeting with Ukraine prime minister Mykola Azarov who has not been invited to the main events at Davos. They discuss the violence in Kiev and the sanctions threat.
By Jasmine Whitbread, chief executive officer of Save the Children
This years findings on the low levels of trust in government, with business faring a little better, provoked a serious debate, moderated by the FT’s Gillian Tett. Richard Edelman highlighted the risks and opportunities for business, including partnering with better-trusted NGOs. But unless companies and CEOs put purpose and responsibility at the core of their business instead of seeing this as an add-on, it will backfire on the trust front. NGOs won’t want partners who undermine trust. Being honest about challenges such as supply chain standards, or social impact of products, and transparently taking steps to fix them is the only option that will be trusted.
By Joe Leahy in São Paulo
Team Brazil began its charm offensive in Davos on Thursday with Finance Minister Guido Mantega reasserting the primary role in global economic growth of the so-called Brics, which also include Russia, India, China and South Africa. Read more
Simply by coming to the World Economic Forum, President Hassan Rouhani of Iran is sending a message. He is the first Iranian president to have spoken in Davos for a decade. In a public speech at the forum and in private meetings with journalists, the president has sought to present a smiling and conciliatory face.
Certainly his personal style is a marked contrast to that of Mahmoud Ahmadi-Nejad, his predecessor. While Ahmadi-Nejad was all staring eyes and confrontation, Rouhani has a ready laugh and listens carefully to questions. Read more
FTChinese.com editor-in-chief Lifen Zhang says the focus is not just on China’s economic power but its foreign relations. He also says Chinese business remains cautious about spending its cash piles.
The great and the good are gathered at Davos this week and “committed to improving the state of the world”. But what else could they have done with the money spent on entry to this exclusive event?
The average cost of Davos entry, at $20,000, buys…
One of the benefits – and pleasures of Davos – is the chance conversations that strike up among strangers, either in the fringes of meetings or on the shuttle buses that ferry people around town.
On Wednesday evening, I was in a shuttle bus with three other people. One of them introduced himself as Kumi Naidoo, head of Greenpeace in South Africa.
Sitting opposite him happened to be Tulsi Tanti, chairman of Suzlon, an Indian wind energy company that has an operation in South Africa. They started to talk about wind and solar energy in Africa. Read more