Message from Davos

Stephen Adler is Business Week’s editor-in-chief and he has these observations about Davos:

The key messages that seemed to flow from four days of speeches, panels, “bilaterals” (i.e., chatting with someone), cocktail parties, and press briefings were these:

1. Everyone stupidly failed to see the financial calamity coming except roughly four economists who now must be heeded in everything they say and all they predict.
2. The private sector has ruined the global economy and can no longer be trusted.
3. Government is ascendant, with regulation closest to godliness.
4. These conclusions are correct and will stand the test of time…

The conventional wisdom at Davos in 2007 was that private equity and hedge fund managers were the new power players and therefore knew more than everyone else. The conventional wisdom in 2008 was that sovereign wealth funds were ascendant and would be exerting enormous influence over global businesses…

Those who predicted collapse are now doubling down and predicting deeper collapse. Their reasoning turned out to be right in 2008. But investing and team sports remind us that last year’s winners are often this year’s losers. Just ask commodities investors or New York Giants fans.

Predictions are often a fool’s game, but it’s a near certainty that the government is going to use this occasion of woe to extend its influence, probably with as many harmful unintended consequences as in its last foray of this magnitude.

One Response to “Message from Davos”

  1. gs Says:

    1. Everyone stupidly failed to see the financial calamity coming except roughly four economists who now must be heeded in everything they say and all they predict.

    Ouch. I thought the shoe would drop at some point, but didn’t expect it in 2008. I made decisions on the basis that the establishment had the minimal competence to duct-tape together a decent election-year economy.

    I’m pretty sure that some economists who were correct last year have been wrong for many prior years. Hopefully sooner rather than later, the pessimists will go back to being wrong. That is not to say that their views are without merit.

    Speaking of wrong economists, Alan Greenspan was just about the only major culprit with the intellectual integrity to admit he was mistaken. I wish he would resume speaking out. His thoughts have value and the derision they would attract would be appropriate penance.

    2. The private sector has ruined the global economy and can no longer be trusted. 3. Government is ascendant, with regulation closest to godliness.

    I don’t mean to shug off a dangerous and inexcusable situation, but it remains true that risk is a cost of progress.

    IMHO the people who are shocked shocked to discover they can’t trust the private sector have, in fact, never had much good to say about it. Since we can’t trust the private sector, apparently it follows that we should trust the government.

    Regulation keeps us brutish greedy peasants to a semblance of civilized behavior. Regulation is not intended to waste the invaluable time of the extremely busy idealists who serve as regulators. (/sarc)

    4. These conclusions are correct and will stand the test of timeā€¦

    Per Jack, my fear is that these conclusions are incorrect but will stand the test of time.

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