Davos Doldrums

Davos, Switzerland. Why does just the name conjure sickening images of Richard Branson in a shiny new ski outfit, maybe being lowered from a helicopter while juggling machetes? Oh yeah, because that's what happens; ever since 1971, world leaders have been meeting in this Swiss village to share ideas and promote capitalism. First the good news: the theme of this year's gathering is "Shaping the Post-Crisis World", meaning there's going to be an end to the crisis and a world to live in. The bad news: most of the people meeting are the very ones who have put us in the crisis to begin with!

Over 2,500 participants from 96 countries will gather in Davos for five days starting tomorrow. Over half are business leaders representing the 1,000 foremost companies from around the world and across economic sectors. More than 1,400 chief executives and chairpersons from the world’s leading companies are participating this year, the highest ever since the World Economic Forum was founded in 1971. Additionally, there will be 250 public figures, including 41 heads of state or government, 60 ministers, 30 heads or senior officials of international organizations and 10 ambassadors. Finally, more than 510 participants from civil society, including 50 heads or representatives of non-governmental organizations, 225 media leaders, 215 leaders from academic institutions and think tanks, 10 religious leaders of different faiths and 10 trade union leaders. We're talking about concentrated wealth and power.

When last they met in Davos a year ago the theme was "The Power of Collaborative Innovation". It seems like a pleasant memory now, doesn't it? Globalization and the financial masters were on the verge of lifting the world out of poverty by renewing their committment to the UN Millenium Development Goals - with a little prodding from Bono. Sure, the 'r' word was being bandied about, some mentioned the possibility of the US housing crisis spreading, but they we're just gathering storm clouds. Oh yeah, there was that little scandal involving the rogue French trader and $7.2 billion in losses breaking just then. Still, it wasn't enough to convince those gathered that a new way of regulating the financial system was necessary, self-regulation was still the best way to go according to 2/3 of the attendees. Sure credit was tightening, but the capital of the Sovereign Wealth Funds (SWF) of the oil rich countries in the Middle East and Russia, along with the economic engines of China and India and the decoupling of the world and US economies would be more that enough to keep the global economy growing. Why, there was even talk of Russia joining the WTO by the end of the year!

A year on and the world has changed. Financial chaos has descended upon us, Russia is the bad guy again and it's being whispered that even the Chinese economy is beginning to follow the rest of the world's example of the past 12 months. Trade barriers are beginning to pop up as nations start to feel the pinch of double digit economic contraction. America has elected a new president and is printing money as fast as it can to slow the hemorrhaging, while Europe has seen everything from national bankruptcies to street riot protests. So, this year we're being told that we'll see a much more sober Davos gathering. They'll be no Lehman Brothers delegation, Goldman Sachs has cancelled their legendary party and of course Merrill Lynch's John Thane's power-breakfast scheduled for this Friday has been tossed in the garbage (no not the $1,200 one). More interesting than who will be there, the Angela Merckels and Gordon Browns, should be the conspicuous absence of conspicuousness. No Bono, Claudia Schiffer or Angelina Jolie and Brad Pitt; even many Asian businessmen will be absent due to the timing coinciding with the Lunar New Year. Other no shows will be B. Ramalinga Raju, former chairman of India's Satyam Computer Services Ltd., who was to have been on a panel this year at the Forum, but instead is in jail, arrested in connection with a massive fraud. One banker scheduled to attend who won't be is Edgar de Picciotto, chairman of Union Bancaire Privée who lost big, to the tune of $700 million, for clients by investing in Bernard Madoff's Ponzi scheme.

Speaking of conspicuous absences of conspicuousness, whatever happened to the legions of protesters that such economic summits once seemed to draw? Maybe we thought that Bono and Bill Gates were taking care of everyone's interests, so we just left it to them. Perhaps we've entered the post anti-globalization age, where we simply accept the new economic order of private profits and socialized losses. Most of the attendees in Davos have enriched themselves while driving the world economy into the ground, leaving a bill that tax-payers are now expected to pick up. The greed of the eighty's left us with such legacies as Michael Douglas in Wall Street or Tom Wolfe's The Bonfire of the Vanities: A Novel. This time all we may have to show for it are memories of Russian oligarch billionaires' drunken parties and bankers hitting on Naomi Campbell. One thing's for sure this year in Davos, many of the bankers are staying home but more political leaders are going to be there, 40 heads of state, up from 27 last year, including the first Chinese leader to attend, Premier Wen Jiabao. German novelist Thomas Mann called Davos "The Magic Mountain" back when it was a center for tuberculosis cures, I somehow doubt it's where this new world order of politicians running the show will find the miracle medicine to end the financial crisis.

What countries DO I like?

Awhile back I wrote a post about the best country to live in. I danced around the question, came up with subjective and objective measurements and in the end decided to go on vacation. Then the other day I was asked by someone who had enough of my US (and Canada) bashing and asked me what country I admire and why. Pause. Hmmm. Well, it's hard to give an answer...you see, um, there's lots of countries, uh, good and bad...so, well, er... So, without further ado, here's tonight's top ten list of countries I admire.

#10. Spain - Easy choice. They've done a little of everything in the past. From repressors to repressed, conquerors to conquered and all points in between. You gotta love the country responsible for financing Columbus' voyages to America, even if he didn't discover anything. Dominated by the muslims for 700 years, the reconquista, empire, Spanish Armada, Napoleon took his shots too. Don't forget the Spanish Civil War and the ensuing nearly 50 years of fascism under Franco. Now, we see the past and present being blended in a way unimaginable in the past, with South Americans flooding back in reverse colonialism.

#9. Denmark - Can't say too much about the place, only visited for a couple of weeks, and it was COLD, around Christmas time. It did come out as number one on the world map of happiness and Copenhagen is a beautful city, plus, good or bad, everyone speaks English. They've given us Hans Christian Anderson and Kierkegaard along with Kronborg Castle, dramatized as Elsinore in Shakespeare's Hamlet, "Something is rotten in the state of Denmark": Not anymore, with universal health care, low poverty and crime rates. They're also the world's largest producer of power-generating windmills.

#8. Poland - Gotta have them on my list, I do live here you know. Lovely cities such as Krakow, Wroclaw and Gdansk. Home of Solidarity and the prettiest girls on Earth. For centuries they've been the buffer between powers and at one time we're the largest country in Europe. They were wiped off the map for 123 years only to come back for the interwar period only to be dominated once again, this time by communism. They've shrugged off the bleak, grey image of those years and are working hard to get onto the world stage.

#7. Chile - First, take a look at the world map, Chile looks pretty cool down the Pacific coast all the way at the bottom, even has claim on some of Antartica. It'll be home to the world's early warning meteor device if Bill Gates has anything to say about it. They make some tasty wine. They've managed to move forward despite Pinochet, the CIA and Milton Friedman's 'economic miracle', building a fine democracy and even managed to sneak into the top 20 on the global peace index. This 'pais de poetas' has also produced Pablo Neruda and Gabriala Mistral.
Chile ranks high regionally in freedom of the press, human development and democratic development. It holds the status as the region's richest country in terms of gross domestic product per capita.

#6. Canada - The Great White North has only been around for 141 years but they've given us more than maple syrop and me. Somehow managed to carve out a seperate identity from their southern neighbour (by keeping some Britishness like the 'our' ending to words like neighbour and we've still got the Queen). Could also be the sense of humour, you need it when its so cold. Good standard of living, universal'ish' health care (the slow move towards privatization) and Pamela Anderson.

#5. Norway - Probably should rank higher, they seem to have it all. Natural resources, which they use responsibly, saving for the future have created one of the world's largest sovereign wealth funds. In 2007 they were at the top of the global peace index, 3rd for 2008. High taxes, but look at the quality of life.

#4. USA - Rock and roll, Hollywood, Coca-Cola, McDonald's, Levi's, Microsoft and Google. You might think I'm trying to say something about evil corporations but I'm not! Really, where would we be without all these things? Hypocritical, maybe, but I eat Big Macs and drink Coke while railing against American hegemony because I can, which is partially due to the freedom I enjoy thanks to the USA.

#3. Czech Republic - It appears on many of the lists here as a country with high literacy rates and as one of the most secular countries, coincidence, hmmm. Great beers, great writers and great film directors. Again, coincidence? Kundera, Hrabel, are just so Czech, there must be something great about the culture.

#2. Iceland - One word, Bjork! Really, that girl is wacky. The entire nation in powered by geothermal energy, now that's thinking out of the box. They are the happiest people in the world too according to some surveys. Why? Again, the Scandinavian socialist system just seems to work despite those evil high taxes taking away everyones motivation to work (wink, wink, nudge). They replaced Norway at #1 in the global peace index for 2008.

Before you look down at number one, I'd like you to take a second a go back over the previous nine. Some pretty good arguments, but I'm sure you can think of a couple countries that are missing and why. So, after reading number one, be sure to click on the comment tab below and tell me what country or countries are missing and why, heck, give me your own top ten if you'd like. Now, without further ado...

#1. Mauritius - It has no standing army and was the only natural habitat of the dodo bird. Period.

Now, post your comments, tell me what countries you respect, admire or love and why, go on.

The Russians are Coming! The Russians are Coming!

A quarter century ago these words would have struck fear into the heart of any westerner. Ten years later, those same westerners would have laughed at the possibility. Today, they're coming for real, but it's not the Red Army that's advancing, it's the financial oligarchs who are coming to buy out western institutions, beating the west at their own game, capitalism. A friend of mine was telling me the other day of his difficulties trying to find someone who spoke English when he first visited my current home of Poland nearly a decade ago. Today, nearly everyone here speaks some English, many nearly fluently, but then it was far more likely that your request for English would be met with "nyet, Ruskij?" Maybe it's time we all took a crash course in Russian if we want to talk to our future boss.

The latest flexing of the new-found Russian financial muscle has come via the person of billionaire Suleiman Kerimov. Financial reports on Wednesday indicated that Kerimov was selling many of his Russian investments, including $15 billion in Gazprom, and looking to increase his holdings in western financial institutions such as UBS, Morgan Stanley and particularly Deutsche Bank. At the end of 2007, he owned 3% of the bank; sources said he was looking to up that to 9%, which would easily make him the biggest investor in the bank, well ahead of such financial heavyweights as French insurer AXA and British bank Barclays. On it's own this may not seem important, however, taken together with Kerimov's call for other Russian tycoons to join him and the emergence of Russia's first Sovereign Wealth Fund, we could be witnessing the start of a large-scale financial invasion. Kerimov is estimated to be only the 8th richest man in Russia, if the others were to join him along with the state fund (the orders of the Kremlin are usually followed by all, unless you want to wind up like Mikhail Khodorkovsky or worse yet, Alexander Litvinenko)they could end up controlling some of the west's crown financial jewels.

On the other hand, this move can be seen as a tiny drop in the bucket when compared to the financial power that is wielded by other Sovereign Wealth Funds. SWF's are state owned investment funds, the first of which was the Kuwait Investment Authority born in 1953 and the largest being the Abu Dhabi Investment Authority, with assets approaching $1 trillion. Many of the funds are the result of commodity wealth, mainly oil, but there are non-commodity based funds such as the Chinese Investment Corporation that are also growing quickly. Rapid economic growth in some developing markets, huge trade surpluses with the US and rising oil prices are the main engines of these funds' growth. A Morgan Stanley report issued last year estimated that the value of these funds will grow from around $3 trillion today to over $12 trillion by 2015. Their influence on markets have become so pronounced that the US held a joint subcommittee hearing into the impact on the US. Ron Paul's comments can be found here.

As is often the case these days, it's the Chinese that people in the west are most afraid of. In all probability they will have the largest SWF by 2009 to go along with the largest corporation in the world (PetroChina), the most people and eventually the largest economy (yes, I know, it still has a long way to go). There was a lot of attention given to the threat of the nuclear option by the Chinese last year in reference to their ability to bring down the dollar through the mass sale of their over $1 trillion in US debt if the US applied trade sanctions on Beijing for not allowing the yuan to appreciate. Funny how every time I start writing about Russia I end up in China. Without doubt the financial centre of the world has shifted dramatically east. Maybe it's Mandarin that we should all be studying?