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Davos: Where the risk averse revel in the gloom

By TIMES WIRES
Published February 1, 2007

It's become almost obligatory for the world's most important economic people, at the beginning of each year, to travel joylessly to the base of a Swiss ski slope and worry. And to worry not privately, with dignity, but publicly, to anyone who will listen.

"The system is becoming very complex. The risk of some crisis happening is rising," says Nouriel Roubini, chairman of Roubini Global Economics.

"The world isn't pricing risk appropriately," says Steven Rattner, co-founder of Quadrangle Group.

"The last time we talked," says William Rhodes, senior vice chairman of Citicorp Inc. (in case you didn't hear him the first time), "I mentioned we're going to get some adjustments some time in the future. So this is a time to be prudent." To which Stephen Roach, chief economist of Morgan Stanley adds, "What's occurring right now in markets and policy circles is a dangerous degree of complacency."

Actually, it was last year that Roach said that at Davos. But does it really matter? Examine the public statements extruded by the World Economic Forum any year and you'll find the same warmed-over prudence, the same dreary feeling that someone is about to punctuate the nebulous tedium with a proposal to create a commission.

In 2004, former International Monetary Fund chief economist Kenneth Rogoff, newly arrived in Davos with a brain full of positive economic data, was asked about sentiment of his fellow elites. "I was surprised when I got here," he replied. "The mood is surprisingly cautious given the data we're seeing from around the globe."

Surprised? A man of Rogoff's stature should have known better - just as he should have known that Davos has little use for positive economic data or global financial health. Davos is where people with no talent for risk-taking gather to imagine what actual risk-takers might do. Davos Man needs to sit in judgment; Davos Man needs to brood. So great is this need that he will brood about virtually anything, no matter how little he knows about it.

So why do these people waste so much of their breath and, presumably, thought, with their elaborate expressions of concern? Even if these global financial elites knew something useful that you and I don'tthey would be unlikely to do anything about it.

Is perhaps the only point of standing in the snow and expressing your doubts to a television camera to prove that you are the sort of person whose doubts matter?

[Last modified February 1, 2007, 00:09:35]