Word on the web: Spotlight on Davos

The World Economic Forum was held this week during particularly strained times for the global economy

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All eyes were on the tiny Swiss town of Davos this week as political and financial leaders from around the globe returned once again for the annual World Economic Forum. But this year, the forum was set against the gloomiest outlook for the world economy since before the last recession. Commentators have been considering the role and context of Davos 2016.

Confusing, volatile and dangerousSimon Kennedy and Matthew Campbell writing for Bloomberg Business set the “jittery” scene of the gathering. They quote David Gergen, an adviser to four US presidents and now a professor at Harvard’s Kennedy School, who says: “We have a coming-together of events that are confusing, volatile and dangerous.” 

The article goes on to list the current struggles that the world’s most powerful people are facing and that have formed much of the basis of conversation this week, from China’s low GDP growth rate and the oil price slump, to the US federal reserve raising interest rates and Donald Trump’s political rise making key investors in US assets more than nervous. 

But the article ends on a more positive note. Ray Dalio, Founder of hedge fund Bridgewater Associates, who Kennedy and Campbell describe as a “veteran attendee”, was expecting “vigorous discussion”, which is “the whole point”.

Dalio is quoted as saying: “I’ve been to so many Davoses and when it’s quiet, that’s when you should panic.” 

Bloomberg Business opinion 

New model needed?In The New Yorker, John Cassidy takes a similarly bleak view of the current economic landscape, saying that it “isn’t looking very healthy”. He says that typically at Davos, the common point of view is one of optimism, and suggests that many attendees consider that “the response to the market gyrations has been overdone”.

But Cassidy’s main thrust is that the ‘Davos Man model’ or the ‘post-Davos model’, which he describes as one whereby there are “some hiccups along the way … but [where] the logic of the free market and consumerism ultimately wins out”, possibly isn’t working anymore. 
“The foundations of the post-Davos model have been wobbling alarmingly”Cassidy says: “Over the past year, and particularly during the past couple of weeks, the foundations of the post-Davos model have been wobbling alarmingly. What was once seen as a historic transformation in emerging economies now looks suspiciously like a global bubble in commodities and credit, which will end the way bubbles usually end: by bursting.

“It is conceivable that the optimists will be proved right, and that this is just a passing phase. If so, the post-Davos model will survive for another while. It is also conceivable that the pessimists will be proved right, in which case there are rough times ahead for the world economy, and someone will eventually have to construct a post-post-Davos model.”

The New Yorker comment

Winners and losersWriting for Quartz, Kevin J. Delaney and Jason Karaian focus on individual high-profile attendees. They say that amid the hustle of billionaires are a select few – “the winners of Davos” – who stand out for being “thought-provoking, courageous or simply ubiquitous”.

That said, they also point out that: “In the end, what is actually said at Davos is rarely remembered after the private planes take off and normal life resumes.” 

Among their list of ‘winners’ are film actors Leonardo DiCaprio and Kevin Spacey (the aforementioned ubiquitous) alongside Canada’s new Prime Minister Justin Trudeau, British Prime Minister David Cameron, and Director of the IMF Christine Lagarde. 

Of Lagarde, Delaney and Karaian ask: “Can the frank French lawyer, who has fans for her direction of the IMF, provide the thought leadership Davos attendees are looking for on these issues?”

Well, Lagarde, who spoke at the forum on Wednesday, was quoted in the Wall Street Journal on 20 January as saying: “[The risks are] bigger on the horizon than what we would have thought.” As Cassidy said might happen in The New Yorker, Lagarde went on to play down the concerns over China’s economy, saying she thought they were “a little bit overdone” and that the nation was moving toward a “more stable and more sustainable model”.

Quartz article

Wall Street Journal coverage
 
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Published: 22 Jan 2016
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