Thursday, January 26, 2012

Davos 2012: Day 1, as it happened

World leaders, economists and thinkers gather in Davos for the first full day of the World Economic Forum meeting

8.41am: Welcome to the Guardian's liveblog from the first day of the World Economic Forum summit in the Swiss resort of Davos.

The centrepiece of today's schedule is Angela Merkel's opening speech, scheduled for 16:30 UK time. Beyond that, there will be meetings and sessions throughout the day ?�that curious mix of the official and the fringe for which Davos is famous.

We'll be taking in the highlights with help from Guardian writers and editors at the event: Alan Rusbridger, Larry Elliott, Jill Treanor and Jane Martinson.

Orientation first: Larry's Davos A-Z on the summit goes all the way from anti-globalisation to Zoellick. And there's our Davos keyword page for all the latest news articles.

Jane, Jill and Larry also gathered together the thoughts of delegates including Cherie Blair, Bill Gates and Pascal Lamy on the eve of the summit. Read them here.

And if you're interested in the ongoing eurozone crisis, my colleague Graeme Wearden is anchoring a liveblog with all the latest developments here.

8.43am: News yesterday that the IMF was revising its growth figures drastically downwards have cast a pall over Davos, as Larry Elliott explains.

It will focus minds at the summit, which is the fifth since the global crisis began. The health of European economies will be a major preoccupation. Writing in the Wall Street Journal, Stephen Fidler says:


The travails of the eurozone seem likely to dominate discussions among the politicians, bankers and senior company executives.

Some will have questions of great moment, seeking to ascertain, for example, whether the German chancellor, Angela Merkel, is softening her opposition to further strengthening of the eurozone's bailout fund.

Some will seek enlightenment on narrower matters, such as whether they can expect struggling eurozone governments to delay payments for goods and services their companies provide.

On a more positive note, he adds: "The general gloom about Europe should be tempered by the more positive mood in emerging economies ? even if growth has slowed slightly from recent years."

9.06am: The TIME magazine debate is underway in Davos (live feed above). Its title ? Is Capitalism Failing? ? once again chimes with the mood among global policymakers, who are�shaken and casting about for solutions.

Below is a live feed of the debate, which is chaired by the TIME international editor, Jim Frederick. Panellists include Sharan Burrow, the general secretary of the International Trade Union Confederation in Brussels, and Brian T Moynihan, the CEO of Bank of America.

9.18am: My colleague Jane Martinson, the Guardian's women's editor, sends a blogpost from the summit. Despite efforts to increase diversity, it seems "Davos man" still dominates.

To register for this week's World Economic Forum in Davos, delegates fill in a profile page pre-set with the silhouette of a shadowy man. A year after imposing a quota on the biggest companies to encourage more women to attend, the image still fits the gender profile of more than 80% of delegates.

Despite the quota, just 17% of the gathering of world business, political and campaign are women. This percentage is the highest yet in the 40-odd years of the event, up from 16% in 2011 and just 9% in 2002, but it still gives a handy guide to the headway women have made in penetrating the top of the business, political and media elite.

9.32am: A quick write-up from AP of that TIME debate on capitalism. Apparently David Rubenstein, the co-founder of the Carlyle Group, said:

Capitalism may be the worst form of systems, except for every other system.

His co-panellist, Sharan Burrow, said "we've lost a moral compass" and warned of social unrest.

9.35am: And we've just had UK GDP figures in for Q4 (the last three months) of 2011: -0.2%. Jill Treanor, in Davos, tweeted the following reaction:

It's very unwelcome news for British politicians at the summit, including the chancellor, George Osborne.

9.52am: Larry Elliott's sent us his initial thoughts. The full story's here, and below are some excerpts. The theme that seems to be emerging is one of profound self-scrutiny by the global elite, but doubt that any serious change will be implemented.

Four years into a brutal recession that has left 200 million unemployed around the world, and with protest movements occupying public spaces in western cities, there is clearly some soul-searching going on.

Today's programme in Davos kicked off with a debate on whether 20th century capitalism is failing 21st century society. A report on the risks facing the world in 2012, to be debated later today, is titled The Seeds of Dystopia. It notes that many of the indicators of economic and societal health are going in the wrong direction.

So, the good news in Davos is that the right questions are starting to be asked. The extent of the unease about today's toxic mix of unemployment and inequality was demonstrated in a straw poll of those attending the debate on capitalism . It showed that 40% thought it was failing 21st century society and 20% thought it wasn't.

The bad news is that the appetite for reform is not really there.

10.16am: Nouriel Roubini will be making a much-anticipated speech at midday ? 11am UK time.

He's the economist widely seen as having predicted the global crash (and dubbed 'Dr Doom' as a result).

10.24am: The Occupy movement is making its presence felt at the summit, albeit 20 minutes walk from any of the conference venues.

The protesters, many of whom are drawn from the Swiss Young Socialists party, have built igloos rather than pitch tents. Reuters filmed them inside their chilly-looking shelters.

10.34am: Here's digital journalism guru Jeff Jarvis's take on the apparent lack of contrition from the global financial elite.

As dire economic news continues to roll in, the summit is likely to become a lightning rod for resentment ? more so given that the effects on real economies have been felt much more keenly by ordinary people over the last year.

10.56am: A snippet here from Jill Treanor, who has been at the summit's opening press conference. In constrast to Jeff Jarvis, she says:

All the participants here in Davos are keen to prove they are doing their bit to behave 'responsibly'.

At a press conference, Vikram Pandit, the boss of Citigroup, reckoned that only yesterday the bank had turned down a customer looking to do a deal with "excessive amounts of leverage" and "in a Darwinian world" the client was now looking for other banks to take on the deal.

11.14am: Commenter DWearing reminds us that there's another global forum taking place right now, designed expressly to provide an alternative to Davos.

The World Social Forum, in the southern Brazilian city of Porto Alegre (no snow there), has attracted around 15,000 activists. The forum co-ordinator told AFP: "The forum was born to challenge the arrogance of the neo-liberals in Davos. We said clearly that we wanted another world. Now we must build the ways, the alternatives."

The Brazilian president, Dilma Rousseff, is expected to attend.

11.17am: We're still waiting for Roubini to take the stand. In the meantime, Richard Quest found him living up to his nickname, Dr Doom:

11.40am: More Roubini: he's just given an interview to CNBC, and the results are here.

The headline is that Europe needs 'massive monetary easing' to get out of its debt crisis ? in other words, the European Central Bank needs to step in and effectively print money, something that Angela Merkel has been lobbying hard to prevent. If this doesn't happen, Roubini suggests, Greece will be likely to abandon the euro in a year and a half.

11.44am: Delegates are now enjoying a lunch session with George Soros.

Let's hope what he has to say doesn't provoke indigestion:

The Euro must survive because the alternative, a break-up, would cause a meltdown that Europe and the world can't afford.

Larry Elliott is in attendance and sent my colleague Graeme Wearden his reaction.

12.14pm: Jill Treanor has been attempting to buttonhole delegates, though lots of them are remaining tight-lipped. She managed to catch up with one or two people with reasonably upbeat takes on the crisis:

Lots of high profile business figures to bump into here in Davos, but not all of them want to quoted. But John Studzinski, the senior managing director of venture capitalists Blackstone, one-time HSBC banker and 15-year Davos veteran, was happy to talk about the state of the economy. It turns out he is relatively upbeat. 'The global economy is at a point of enlightened inflection,' he said. He reckons things will turn out relatively positively for the US economy, Brazil will grow at 6% and that Siemens results show that the backbone of the eurozone economy, Germany, is strong.

It is impossible to get away from the significance of the Greek restructuring talks, even in Davos. Dionysia-Theodora Avgerinopoulou, here as a young global leader, is a Greek MP who reckons the talks are 'going pretty well'.

'The critical point is how high the coupon [interest rate] is going to be on the new bonds,' she told me. As we know, 3% is the key level. 'We're going to be very close to that. The point is that we also really want voluntary participation [from the existing bond holders].' She's looking forward to tomorrow when there is a debate on the Olympics ? she is from that part of Greece.

12.33pm: Delegates are now engaging in a 'World Economic Brainstorm' in the main congress hall. Here are some of the one-liners:

12.39pm: Who isn't at the Davos summit? There's been some comment that the Chinese government has failed to send any high-level officials for the first time in 30 years. But neither the Bank of England nor the Federal Reserve have booked rooms in the Belvedere either.

So how important is actually being there?

"If China can miss Davos, why can't others?" asks Professor Simon Evenett, of the University of St Gallen, in Switzerland. Evenett makes a tongue-in-cheek call for Merkel to forget the opening speech this evening and withdraw from the summit.

Like the Chinese, perhaps Mrs Merkel will want to skip her keynote speech to Davos. She's bound to get tons of unsolicited advice, especially after the IMF endorsed measures far beyond Berlin's latest thinking. Perhaps Mrs Merkel will signal a further evolution of her position, making a little clearer what the real deal is on the table between eurozone governments.

1.05pm: More from Jill Treanor, who's been listen to Dr Doom (or, if you prefer, Mr Gloom). That's Nouriel Roubini, the professor of economics at New York University's Stern School of Business, to you and me.

Need a bit more gloom? Where else to go but a session on the "seeds of dystopia". Mr Gloom himself, Nouriel Roubini, is concerned about the disagreements among the world's nations on solving the crisis. His list is endless but begins with 'Europe says austerity. US says stimulus'.

On the eurozone, he warns: 'The policy response is making the recession worse. What Europe needs is less austerity and more growth.'

Philip Jennings, the leader of the global union UNI, is blunter: 'The eurozone is going too far'. His concern is not just about austerity but about the attitude to workers, particularly in those states where unelected politicans are in charge.

'Technocrat governments are playing with political gunpowder. This is a warning,' says Jennings, who also warned that there needs to be a wake-up call about the levels of inequality around the world. The American dream is over, he aruges, because workers have been denied their rights ? just 6% are covered by collective agreements. 'If you take away a worker's voice from the table, don't be surprised by the consequences you see,' he says, adding that one in three of the people on the planet are unemployed.

Salil Shetty, the London-based secretary general of Amnesty International, agrees. He warns of 'explosions' of people furious at the inequalities. 'The biggest risk' is failed leadership, says Shetty. 'Seems as if they've been sleeping at the wheel'.

Jennings reckons that, to many, society 'looks like a winner take all with the rules rigged to favour the few'. He is also concerned about the levels of homelessness ? 'if you can't provide education, the seeds of dystopia have aready been planted'.

'We are anxious to break out of this ... ' says Jennings, adding the lack of union recognition is '1984 and Brave New World?ish'

1.21pm: Protesters from Occupy WEF, who have captured international attention by building igloos near the site of the global gathering in Davos, have pulled off another eye-catching stunt.

They've released large red balloons carrying a banner that reads: "Hey WEF! Where are the other 6.9999 billion leaders?" which they hope will float over VIPs gathered inside the summit cordon.

1.56pm: Peter Mandelson, former UK cabinet minister and EU trade commissioner, is exactly the kind of person you'd expect to find at Davos, at home among the elite. But it seems he didn't get the kind of reception he'd been hoping for at an event hosted by law firm Clifford Chance. Juliet Samuel, a banking reporter at City AM tweets:

Quizzed by my colleague, Graeme Wearden, she followed that up with:

There's more on this mini-spat from Kamal Ahmed, Sunday Telegraph business editor, who was at the same session:

2.21pm: Angela Merkel's speech, due to begin at around 16:00 UK time, is likely to be the pivotal moment of this year's Davos summit, given the looming European debt crisis. What's she going to say? The BBC reports that she will "urge the 17 countries that use the euro to deal with fundamental problems underlying the crisis". Further clues come in the interview Merkel gave to six European newspapers, including the Guardian, today. In it, she underlines the need for closer political and fiscal union, the so-called "fiscal compact":

We will only be able to strengthen our common currency if we co-ordinate our policies more closely and are prepared to gradually give up more powers to the EU.

2.44pm: An interesting post over on Reuters from finance blogger Felix Salmon in which he says "by far of the most-talked-about-person-in-Davos ... at least when it comes to people in my earshot, is George Soros". In articulating some of the delegate's worst fears, Soros is turning into the emblematic man of Davos 2012, which is shaping up to be a rather discomfiting event. Salmon writes:

The financial crisis concentrated minds and was seen as a big problem to be addressed and even maybe solved. But the current breakdown of trust in global institutions cuts at the heart of the World Economic Forum's founding principle ? that if you get a bunch of important people together in the same place, they can actually make a difference.

There are fewer heads of state here than there normally are; even Bill Clinton is giving Davos a miss this year. And a theme running through many of the discussions so far seems to be the question of how one manages chaos, in a world where the risk of a chaotic breakup of the European Union can be ignored no longer.

3.03pm: However politically unacceptable it might be to raise the prospect of a breakup of the Euro (though Merkel came near to admitting it would be a close run thing today), hard-nosed financiers aren't willing to simply cross their fingers. Economist Megan Greene chillingly tweets:

3.21pm: Nobel-prize winning economist Joseph Stiglitz has been talking to delegates about the future of his discipline.

He's urged economists to learn from the insights of other fields: political science, sociology and psychology, rather than the other way around.

Economics has behaved as an imperialistic science by trying to impose its models to other fields.

He's also said that 10 years is an optimistic estimate of how long it will take to recover from the current crisis.

3.57pm: Here's an opportunity for you to ask some questions: Associated Press are hosting a debate tomorrow at 14:30 UK time. The motion is 'Are the democratic institutions of the 20th century fit for the 21st?' ? very much in keeping with the summit's humbled, reflective mode.

They're using Facebook to ask for ideas as to what they can ask panellists including Tunisian politician Rachid Ghannouchi, Republican congressman David T Dreier, Pakistani foreign minister Hina Rabbani Khar and executive director of Human Rights Watch Kenneth Roth.

4.06pm: The official opening of the World Economic Forum summit is now underway, introduced by Professor Klaus Schwab, who created WEF 40 years ago.

The live feed above will bring you all the action, including the much-anticipated speech from German Chancellor, Angela Merkel.

4.24pm: Angela Merkel is now speaking, so keep an eye on that live feed below. In his introduction Klaus Schwab called the German Chancellor a "tower of strength". Merkel, for her part says:

What is needed is a big rethink. Let us take a moment to reflect what lessons we have learned from the global financial crisis. Is it sufficient what we have learned? There's still room for improvement.

Meanwhile, here's a typically acerbic comment from Harvard Business Review blogger, Umair Haque, on Twitter-sycophancy at the summit:

4.37pm: Merkel is calling for austerity measures to be balanced with structural reform aimed at boosting employment, particularly for Euro-area countries. All of this points towards full-throated support for political and fiscal union, as we expected. "We have to be ready to transfer more competencies to Europe," she says. "We will have to make more progress [on integration] in the interests of competitiveness and job creation."

My colleague Jill Treanor tweets:

My colleagues on the business desk suggest this might be better translated as "They don't think much of the Euro and frankly I'm not surprised".

5.03pm: Merkel has now left the stage after fielding questions from a few minutes from Professor Schwab. All in all her comments generated few surprises. She expressed the widely-held view that Europe lacks the "political structures" to make the Euro work properly, and emphasised the need to build some. She also pleaded for patience from the business community:

Please realise that when you're working in a democracy, that it is a beautiful thing, and please take the long drawn out processes with a certain degree of acceptance.

And on behalf of Europe as a whole, she ended, a little plaintively, with: "Please don't forget us when you're thinking of investment."

I hope to have more reaction from Jill Treanor, in Davos, soon.

5.23pm: Here's Jill Treanor's take on the German Chancellor's speech:

Angela Merkel's interview with the Guardian, and other papers, set the tone for her address to the world economic forum in Davos. She warned that while Germany was big it could make promises that markets could pounce upon and attack if they were not kept. She pointed to more cooperation in Europe ? more mobility of labour and portability of pensions and such like. She also reiterated that the union could "dare" for "more Europe" in 2012, and set out a vision whereby the European Commission becomes "more and more like a government". Her acknowledgment of the high level of youth unemployment was telling. If she and her eurozone counterparts can't create jobs ? while imposing austerity ? then the Euro project will have no meaning for the upcoming generation.

5.29pm: And now for the other side of Davos ? things picked up on the fringes of the summit, rather than in the grand surroundings of the conference hall. Jane Martinson sent me this interesting tidbit, having bumped into media maverick Arianna Huffington.

Arianna Huffington, at Davos 'til the bitter end' this week spent time in the Belvedere Hotel's Google bar defending her eponymous media company's controversial decision to hire Anne Sinclair, the wife of disgraced politician DSK.

'Just look on Facebook in France. She had a huge impact. All the women praising her, saying things like 'you helped me get thru my divorce'.

I'm making no comment on her decision which led to a very public ordeal. But she is an amazing woman and journalist and she's loving Huffington Post.'

She added that the two women share a birthday ? 15 July.

7.43pm: Apologies for the delay in posting this ? we've been having some technical problems. Here's a summary of the main developments:

? Commentators were almost completely in agreement: this is a sombre, subdued Davos. The mood is one of trepidation, with the global economic crisis far from over.

? Two early stars of the summit were economist Nouriel Roubini and veteran investor George Soros. Roubini was unequivocal: "The policy response is making the recession worse". Soros warned "The Euro must survive because the alternative, a break-up, would cause a meltdown that Europe and the world can't afford".

? Protestors from the Occupy movement made sure their message was heard, despite being banished from the summit site itself.

? Angela Merkel used her speech to echo themes she raised in an interview published by six European newspapers, including the Guardian. She called for closer political union in the EU, and urged that austerity must be accompanied by structural reform.

Thanks for reading and for your comments below. We'll be back again tomorrow.

David Shariatmadari

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Source: http://www.guardian.co.uk/business/2012/jan/25/davos-summit-growth-gloom-live

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