Tit-for-tat as world leaders take over Downturn Davos
Updated on 29 January 2009
Davos was the high temple of free markets and free trade. Not any more. Not in Downturn Davos.
There are parties, free pastries and the odd celebrity. But it's not the fear I would be worried about.
It is the bewilderment from the world's corporate leaders. They don't actually know how to get out of this. They don't know how long it will last. There is no rulebook to this current situation. The financial system is breaking new ground.
In Downturn Davos the question is not: 'How big is your bank?', but 'How big is your bailout?'.
Watch Faisal Islam from Davos
A Russian bank floated the idea of a state bailout today. In this world it is country leaders not corporate leaders calling the shots.
That was evident in the display from the Chinese and Russian prime ministers yesterday. Indeed both may think they own some useful intellectual property on state-guided capitalism.
The Russian leader railed against Wall Street, and suggested the dollar should lose its place as world reserve currency. The Chinese leader squarely blamed the US, and its imbalanced debt-fuelled economy for the world's economic problems, a coded response to the new US treasury secretary referring to China as a "currency manipulator".
Both China and Russia talked the language of international cooperation. But public smugness and blame games do not bode well.
Niall Ferguson, the economic historian, was almost apocalyptic about this, talking to me yesterday. He said the upheavals in the financial system reminded him not of the 1930s but the 1940s.
"It's like World War 3 without the war," he noted. We didn't broadcast that section of the interview, because it would require a documentary to explain it. But the concept gets across the gravity of the situation.
As do the shrugged shoulders of the super-elite.
Their challenge is to prevent this year's 'Downturn Davos' turning into 'Depression Davos' in 2010.
