Print

Email story

Comment

Letter to the editor

It was a different forum in Davos this year

By STEVEN PEARLSTEIN, Washington Post
Published January 30, 2008

Over the years, the annual meeting of the rich and powerful at the World Economic Forum in Davos, Switzerland, had been a weeklong celebration of global capitalism. But there was a nagging sense this year that a new business model might be needed for Globalization Inc.

It surely didn't help that as the rich and powerful were making their way to the annual gabfest, stock markets around the world were in a free fall. Instead of being at Davos to participate in a discussion on ways to overcome systemic financial risk, Treasury Secretary Hank Paulson and Tim Geithner, president of the Federal Reserve Bank of New York, were stuck in the United States actually dealing with it. But not even a $7-billion trading scandal at one of Europe's biggest banks could keep Jean-Claude Trichet from showing up at Davos to declare that he and his colleagues at the European Central Bank had no intention of following the Fed's lead in lowering interest rates - which had the effect of immediately sending European stocks into another tailspin.

Top trade officials like Susan Schwab of the United States, Peter Mandelson of the European Union and Pascal Lamy of the World Trade Organization were there once again trying to stir up enthusiasm for the Doha round of global trade talks that even business types at Davos have long since given up for dead.

Sunny John Snow, the Treasury secretary turned private-equity investor, was on hand to tell anyone who would listen that the U.S. downturn would be "short and shallow." But it was Nouriel Roubini, the bearish New York University economist who had warned at last year's Davos of the bursting of the credit bubble, who drew the standing-room-only crowds with his prediction for a long, deep recession.

Although Paulson never made it, several of his deputies were in Davos with the reassuring message that Americans really do welcome cross-border investments by companies and investment funds controlled by foreign governments. But not all were buying it.

In the past, what made Davos so exciting was the relentless dealmaking in the corridors, over lunch and in the private hotel suites. But now that financing has dried up, the deal talk was subdued, confined mostly to whether previously announced deals could be saved.

Even Davos' billionaires were sporting some doubts about the capitalist's moneymaking creed. David Rubenstein, the managing partner of the Carlyle Group, cited Andrew Carnegie's admonition that the ambition of rich men should be to die with no money. And Bill Gates, who has made a similar vow, declared himself "impatient with the shortcomings of capitalism," urging companies to put their most innovative people on the task of finding ways to make money by serving the poorest of the poor.

[Last modified January 29, 2008, 23:52:30]