“The mood of Davos is always a counter-indicator,” says Harvard University historian Niall Ferguson. “It’s a consensus not to be believed in. The more complacency there is, the more I’m worried.”
So what did we glean during five days at the World Economic Forum’s annual meeting in Davos last week? Well, everyone agrees that China and India are really important, though no one seems to have a clue whether to rejoice or despair as economic power shifts to the East.
Investment bankers would like us to pretend the credit crunch never happened so they can go back to bonus as usual. And for the clever people able to look past the middle of next week, worrying about the outlook for food and water security is enough to keep them awake at night.
Frankly, though, we knew all of that before the threat of global warming was exacerbated by transporting thousands of executives and associated gawkers to Davos. (Though we did learn that when you trap the great and the good in a small Swiss ski town, the Audi taxi drivers - and they were almost invariably driving Audis - can charge $2 per minute and more to get you from under-nourishing conference centre to your overpriced restaurant or accommodation.)
More compelling were the flashes of heat revealing the tensions that lurked beneath the surface. An attempt led by JPMorgan Chase & Co CEO Jamie Dimon and Barclays Plc CEO Robert Diamond to lower the curtain on the financial crisis backfired. Dimon’s warning about the risk of “bad policies” prompted a lecture on “moral values” from French president Nicolas Sarkozy.
And when Diamond expressed “very heartfelt thanks” for government bailouts of his industry, French finance minister Christine Lagarde retorted that “the best way to say thank you is to start lending, keep compensation reasonable, and improve your capital levels.” (The previous day, Goldman Sachs Group Inc had announced a $12.6m stock bonus for CEO Lloyd Blankfein in 2010, and raised his base salary to $2m this year, from $600,000.)
The jobless recovery might just be the spur that politicians need to finally get tough with the banking community. “There is a high level of public anger,” said Robert J Shiller, an economics professor at Yale University. “There’s a sense the good guys are coming last. Those who had a job and bought a house are now losing that job and being foreclosed on. That’s why people’s animal spirits are so down.”
Europe’s sovereign-debt crisis is reaching its endgame, judging by the mood music emanating from the private lunches and off-the-record briefings at Davos. Spain and Greece are earning plaudits for belatedly tackling their swollen deficits. That’s giving German politicians the ammunition they need to hustle a bond-backed bailout past their taxpayers and the courage to bankroll a shock-and-awe solution.
As evidence of the newfound optimism that default can be averted, the yield premium that investors demand to lend to Greece rather than Germany has slipped to its lowest level in about three months.
The corners and coffee bars of the conference centre illustrated how the mobile-technology wars were panning out. Apple Inc’s iPad has obliterated the laptop among note-takers and web surfers, while the iPhone is the favoured confidante of the chattering classes. Research in Motion Ltd’s BlackBerry, though, is still the e-mail device of choice.
“The iPad is the gizmo of the year,” said Joe Saddi, chairman of global consulting firm Booz & Co. “I have a BlackBerry, iPhone and iPad. They all have different uses.” Jim Balsillie, Research in Motion’s co-CEO, displayed his BlackBerry Playbook tablet prototype slated for release later in the year. He kept mum, however, on his battle plan for engaging with Apple.
Bill Clinton stole the Davos show. The 64-year-old former president wowed the crowd with the revelation that his wife, Hillary, wants a grandchild more than she wants to be president. No pressure on Chelsea there, then.
My personal highlight was listening to Bono of U2 and Peter Gabriel debating with Daniel Ek, co-founder of the Spotify music service, about whether musicians will ever get paid a fair price for digital distribution of their songs.
Trekking halfway up a mountain to get to a party was made worthwhile after persuading Bono to serenade us with an up- close-and-personal rendition of “Two Shots of Happy, One Shot of Sad,” a song he co-wrote with U2 guitarist, The Edge, hoping that Frank Sinatra would record it - and one that seems to sum up Davos quite well.
(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)
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