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World Economic Forum 2008

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It's the economy, stupid!

  • Tim Weber
  • 22 Jan 08, 08:26 PM

It's snowing in Davos. As the first delegates arrived this afternoon the town was barely visible, hidden behind clouds and swirling snow.

But it's not the winter wonderland that's keeping the attention of the forum's participants. It's the economy, and the .

Everywhere phones and blackberries started ringing to alert stunned business leaders to the dramatic events.

At this evening's welcome reception, there was talk of little else.

For many, this is a difficult call: Should they be back in their offices in Wall Street, the City or Frankfurt to help sort out the mess, or would it make more sense to stay here, and have a good think and discuss how bad things are, how to sort them out - or how to survive them.

One session on Wednesday night is called "Just in case ... " and top executives will discuss what they can do to shelter their businesses should the global economy really head for a nasty recession.

It may well be worth attending. Just in case.

Comments   Post your comment

  • 1.
  • At 12:42 AM on 23 Jan 2008,
  • Wilson Learmonth wrote:

They are called economists, bankers,financial advisors,stock brokers,dealers,treasury advisors,government ministers etc. but what they are is the most disgraceful of bookmakers. They gamble with our money and can't lose. If the market is good they take the profits and give us the scraps. If the market is bad they say 'tough'. It's a disgrace. Ordinary people might lose their life savings but these people couldn't care less. They can earn many thousands of pounds,even millions without risking any of their own money.The governments of the world need to take a long hard look at themselves and fulfil the promises on which they were elected.

  • 2.
  • At 10:59 AM on 23 Jan 2008,
  • Liam Farnsworth wrote:

The previous posters ramblings are beyond me. First of all the notion that there are all so many millionaires in financial advisory and the like is just nonsense. As in every profession there are very few people who do very well. Your standard investment banker/broker/whathaveyou mostly works 90+ hour weeks and if you contrast that with his salary and quality of life he isn't doing especially well.

The second thing that people forget is that the first pass through securities and CDOs were issued by government sponsored corporations, such as Ginnie Mae and Freddie Mac, in the 70s and 80s and the liquidity influx in the housing markets was strongly supported by the state, in fact it has been a priority. Also, crises in the housing markets are nothing new - government laws, such as Regulation Q, lead to frequent busts in the 60s to the 80s.

The interplay between government regulation and the housing markets therefore has never been smooth. The recent crises just makes clear that stricter regulation to account for the incentive problems that hampered markets was necessary.

And the third misconception is that governments certainly are not there to protect people with an unhealthy risk appetite - their single job is to ensure market stability. Up to now they failed.

What Mr. Cheng was too polite to say was that the Americans have already spend other peoples' savings today and still want to borrow more !!

Just look at who holds the most US National debt instruments !!

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