The Bankwatch

Tracking the consumer evolution of financial services

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.

Written by Colin Henderson

February 2, 2009 at 11:21

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