Posts Tagged ‘WEF’
World Economic Forum 2008 – long on rhetoric, short on options
The Forum is an intense 4 days, and this year probably more so than most – even folowing it by written word and video as I did was intense. There were some clear themes, and some clear leadership from surprising sources. The surprise was the Asian contingent and their discussion of global co-operation. Prime Minister Aso of Japan, Premier Wen of China, and Prime Minister Putin of Russia all summarised the crisis well, and spoke clearly about solutions comprising both domestic programs to boost GDP and consumption, and global co-operation to re-arrange global finance
Tony Blair was another bright spot as he spoke about the need for not just regulation to solve for the last crisis, but sets of principles and values that would help us to avoid or minimise the next crisis..
The abject failure in my mind was Gordon Brown who showed no understanding of how things work, choosing to quote Churchill, classic artists and Latin to make points but they only served to emphasise his sticking to a clear “on message” that was designed to divert attention from the British economy to one of a “broken banking system”. Not once did he achnowledge the consumer debt issue in the UK and US, nor does he acknowledge UK has an economic problem. He stuck to his usual refrain of regulation that transparency, disclosure, cross border approach, but it came out sounding as buzz words, with little depth. On a side note his comments on government ownership of banks left little doubt he is prepared to completely nationalise them.
The presence of country leaders from all over the world thihs year, highlighted the belief in revised global structures. This could be the silver lining in the crisis by highlighting the international interdependence that is driven by the worlds banking system. Clearly the intricacies of those connections mean that no one country can regulate and manage itself out of this crisis. Just to pick on Brown again, he made the mistake of speaking of unwinding the Chinese current account surplus as part of the solution. Clearly solutions and deficits will always exist, and taking a broader view of that matter might make better sense that focussing on one country only. This would be one difference between regulating the last crisis, versus regulating for now and the future.
It was nice to see Mike Arringtons session on digital life style and moble internet going mainstream. One a side note, his show of hands survey showed diverse mobile devices, with blacknberry #1, iphone #2 and others a distant 3rd.
In general though the forum was a good reflection on where the world is at, and it is clear that banks will come out of the regulations to come, looking different that they do today. There was no discussion on the merits of regulation, the form of regulation, scenario’s on IMF 2 or Bretton Woods 3 which surprised me. The conference was in summary an acceptance of the problem as a global one, but it appears that the G20 meeting in April may be the first time we will get closer to specifcs. However it was a good snapshot that covered every continent of the world and highlighted the breadth of issues that must be addressed. I fear though that the focus will knee jerk shift from last years’ focus on poverty and environment to one of economy. It might be some time before we see comprehensive planning.
The Values required for Capitalism | Enlightened self interest – Tony Blair
The Values Behind Market Capitalism
Tony Blair, Stephen Green, Indra Nooyi, Shimon Peres, James J. Schiro, Jim Wallis with Maria Ramos
Tony Blair – introductory remarks on the Values of Capitalism
- tendency to want to staate at this conference – “The End of Capitalism”
- it is normal and intelligent to reflect on the system
- New world, but we have been taught old lesson – that values matter
- we will build new regulation that will solve for the last crisis because that is what we do
- Old lesson was enlightened self interest, sense of long tgerm value, transparency – financial system at the service of the wider economy, and society. Old lesson that we have re-learned again
- free enterprise has not failed – financial system has failed
- The concept that the wider interest is as essential as the narrower shareholder interest – enlightened self interest
- This ciris is global in nature – this is new and not seen in earlier crises
- globalisation has moved ahead of the capacity of the political system to manage
- it would be bizarre to speak about the G8 – in the space of a few months the G8 is unthinkable unless broader membership
- important – getting the right strategic relationship between US and China – big challenge for US administration
- 2nd thought: increased globally – shared purpose and shared values
- need enlightened self interest
- we need stakeholder capitalism – wider interest – not narrow shareholder interest
- important – getting the right strategic relationship between US and China – big challenge for US administration
- 2nd thought: increased globally – shared purpose and shared values
- need enlightened self interest
- we require shared purpose and shared values including justice
- Africa is important is not just about Africa – it is an essential expression of our belief on the global community
- revive a concept of free enterprise that has enlightened self interest and stakeholder broader view of success
- target would be a prosperous and just world
Stephen Green, Chairman HSBC
- How do we deal with the incentives in the system that do not addess the ;points raised by Tony
- the system allows the value of a transaction to be the only measure
- need to overhaul the regulatory environment, Basel2, Accounting – but no amount of rules will enforce good behaviour. Rules will not institute values.
- sustained economic development in the world requires an international capital market system
- need profit growth, but we need to think about the broader responsibilities
- translates into compensation issues
- things will not bounce back to the way things were – need to bounce to something
Theme: Capitalism is required, and well functionaling international markets are rewquired. Regulation in and of itself is not adequate to provide for the riht kind of system.
World Economic Forum Davos | Summary day 1 themes
Themes I have picked up from the World Economic Forum on day one from blogs, speeches, and other comments. Anyone attending in person and reading this, I would love to hear your observations and perspectives in the comments.
- government | the worlds orientation towards government economic support and regulation is at once welcomed and a concern. A powerful sub concern is that of untended consequences – there is a general sense that the level of government support towards bailouts will create problems in the near future that we do not understand. [my contribution - there will be rampant inflation during 2010/2011 as interest rates are ramped up significantly and home currencies revalue in consequence. This in response to refinance of bonds printed to ease credit crisis and bailouts]
- small business | support is directed at large business yet the engine of world growth is expected to be small business, especially in developing countries.
- bankers credibility is shot | typified in the comment “Do I really want to hear a banker tell me about the financial mess?”
- Crisis | will get much worse before it gets better. “First we had the financial crisis. We still have that plus an economic crisis. Now we’re getting both plus a political crisis. This is getting ugly.”
Reference material | New economic documents – world economy with country specifics (close to 1,000 pages here)
For your reading pleasure | very credible stuff here with the latest on statistics and reference. Keep handy for that next strategy powerpoint. I will add to sidebar for later reference too.
IMF World Economic Outlook oct 2008
IMF World Economic Outlok – update Jan 2009
The Future of the Global Financial System – World Economic Forum 2009
Annual Report 2008- World Economic Forum
World Economic Forum – Opening Plenary – Vladimir Putin | Jan 29th
Opening Plenary of the World Economic Forum Annual Meeting 2009
Opening address by Vladimir Putin, Hans-Rudolf Merz, Klaus Schwab, Peter Brabeck-Letmathe, Michael S. Dell, Carlos Ghosn
Live blogging through the Plenary session that includes Vladimir Putin
- Schwab is opening, speaking of the world wide imapct on the economy on people, institutions and countries
- Putin:
- speaks of the notion of a perfect storm of circumstances that have affected the entire global economy
- majority of countries especially the US that ignored the problem – 1 year ago representatives of the US stood at Davos and indicated the economy was strong. Now without apportioning blame we must accept reality
- insufficient regulation is a cause of the crisis
- one centre prints the money while the other part of the world makes the goods and saves the money they make. Clearly aimed at US and China
- degenerated wealth was not distributed equally
- inflated expectations both consumers and business. Consumer prosperity was borrower prosperity.
- during the crisis simple and populous recipes were tempting, but made the situation worse – we should avoid any steps that we will regret later
- we cannot be economically egotistic
- protectionism – must be careful [ I think to avoid]
- temptation to expand the state into the economy with anti crisis – result in concentration of government within the economy. Russia had that and I believe “no-one is willing to repeat our mistake”
- should have personal responsibility – not state responsibility
- tempting to use the government money – not inexhaustible and not necessarily efficient way
- we are far from understanding the real state of the crisis
- critical to identify the results of our actions [moral hazard]
- bonuses and prestige are too important
- together with cleaning up balance sheets – get rid of virtual money – illusionist money
- basis for the reform based on accounting, fudnamental of assets – ability to generate value added – not some subjective notions
- an economy of real value – ik do not have the full answer- that is why we are here
- we need a number of reserve currencies – smooth transition
- mutual interest and mutual trust required – more openness between economies
- macroeconomic disciplines
- a system based on global international regulators within international law
- more just and efficient architecture
- all countries should have a guaranteed access to this new central architecture
energy
- future problems – energy shortgages
- global energy security
- mutual dependencies based on sharing of assets
- countries forget about agreements when it suits them
- done properly could bring economic benefit
- tie together producers and consumers based on partnership
- fluctuations in prices is bad for everyone, and produces irrational use of resources
- return to balanced prices, balanced between demand and supply
- commonly acceptable market prices, re hydrocarbons, nuclear and electricity
- energy security of Europe – speaking of Black Sea and Baltic capacity – considering increase in capacity with Mitsubishi at Sakhalin (contested island near Japan)
- talking a lot about pipelines and what Russia has built to offer energy to the Europe
- in the course of projects we must consider the programme related to the environment
Crisis impact on Russia
- Russia has reserves
- expanding technology and innovation in enhancing energy usage
- listing a few items Russia is doing internally to become more efficient
- highly educated nation but we would like Russians to get the education they need to keep improving
- looking to attract foreign students and academics
other
- military expenditures does create jobs, but it is short term
- in reality militarization does not help us
- investment could be used better
- i hope that we can develop this point of view and get disarmament agreements to be able to realign this investments
- Mumbia, Gaza Georgia -reflective of inability for governments to help ethnic and local problems
- provoking regional conflicts is a way of distracting people attention from real economic issues
- we need global agreements on this
- join efforts
- reduce the repurcussion on the world food crisis
- Russia willing to help with our world partners
- wish success to new administration in US
- pleotora of problems is extremely complex – seek support in moral vlaue, honesty, responsbility, spiritual and material resource – mutual trust
banking sector
- I would expand – confidence in banks and countries – required to achieve prosperity in 21st Century
UPDATE: Micahel Dell mentioned he was struck by Putin speaking less government involvement.
Wen Jiabo, Premier of the State Council of China is speaking right now at the WEF |live blog (via video)
Wen Jiabo, Premier of the State Council of China is speaking right now at the WEF.
Wen Jiabao (simplified Chinese: 温家宝; traditional Chinese: 溫家寶; pinyin: Wēn Jiābǎo; Wade-Giles: Wen Chia-pao) (born 15 September 1942) is the Premier of the State Council of the People’s Republic of China, leading the country’s cabinet.
He began with a bit of a lecture on western excesses of over-consumption. He goes on to speak of China’s approach to the crisis.
- need balance between consumption and saving
- balance between regulation and innovation
- challenges in China and business environment
- Shrinking demand
- overcapacity
- difficult business conditions
- unemployment rising
Actions being takengrowth reducing
- active and responsible
- designed to boos domestic demand
- timely adjustment to macroeconomic policy
- systematic/ programmed steady fast growth
- increased government spending 4 trilion rmb (16% of GDP)
- tax cuts
- increased government housing rural investment
- railway and infrastructure
- earthquake reconstruction
- 2 year stimulus programme
- improve competitiveness
- innovation in science and technology through 16 key projects including coal, and environmental projects. Sustainable growth
- GDP 9% growth/ CPI steady
World
- hope to improve world economy through above (no specifics here?)
- advantages contributing to Chin’as growth remain in place
- healthy fiscal balance/ adequate funds
- can undertake big projects.
- scientific approach to development that puts people first
- committed to reform and win win progress
- people are hard working and resilient
- maintain fast steady growth and contribute to world growtgh
- financial crisis is responsibility for whole world
- confidence is source of strength
- confidence in markets is essential
- confidence in leaders and in countries
- financial crisis is test of world financial co-operation
Ideas
- deepen international cooperation to solve crisis
- trade protectionism will prolong the crisis
- move forward trade liberalisation
- support Doha
- advance reform of financial institutions
- new international financial order
- exposed deficiencies in governance structure of major financial institutions
- enhance responsibility
- developing countries – greater say
- regional liquidity assistance
- financial supervision to guard against build of financial risks
- supervision of reserves and oversights – (lots of emphasis on regulation and supervision)
- promote interests of developing countries
- lots of support for developing countries
- assistance to developing countries
- “build a better home for mankind”
- no country is insulated from challenges
- reaffirm – China’s abiding commitment to peaceful and co-operative development and promotion of world economic growth and stability
Summary: very optimistic with solutions based on a government controlled and programmed approach to “managing the world economy”.
UPDATE during Q&A:
- domestic consumption growing by 20% annually
- despite the enormous growth being experienced he is basically saying additional growth remains their focus
- Klaus asking now about global Climate Change: – answer – multi year plan, meeting targets, emphasis on coal
