Davos Notes: Contrition, Paralysis, and the Embrace of Faith and Philanthropy Take Hold
Day Two in Davos and some dominant themes are taking hold: contrition, paralysis, and the embrace of faith and philanthropy.
Yesterday, I wrote about the aura of contrition surrounding the financial types here, wafting off them like cheap cologne on a disco Lothario.
Today, at an off-the-record gathering of international editors and reporters, the contrition had spread to financial journalists. There was the sense that many had missed the boat, failing to ask the tough questions -- and, even when they did, failing to stay on the story until it broke through the static.
That sense dominated discussions even after the session had ended. The mainstream media's ADD -- the desire to always look for the new hot story, instead of digging deeper into a complex one -- was deemed partly responsible for the failure.
And since there were those who got it right -- including Nouriel Roubini (who was there) and financial analyst Steve Eisman (who wasn't) -- there was the feeling that many more in the media could have gotten to the truth before it was too late. And if they had, who knows what could have happened?
The widespread contrition permeating Davos is matched by an unnerving feeling of paralysis. The people here -- and we are talking about some of the most influential people on the planet -- seem confused, at a loss about how to attack the financial crisis. No one seems to think that the steps being taken are sufficient. It's as if we are watching things unravel -- how many times, for example, are we gong to hear that layoffs have exceeded expectations? -- but are powerless to stop the unraveling.
If bankers and politicians were stocks, the people here would be shorting them (although there is definitely still a "buy" on Barack Obama, as the warm reception for Valerie Jarrett, who spoke here on his behalf, shows). But attendees would be gobbling up shares in philanthropy and faith. At today's conversation about how new catalysts -- such as the innovative use of technology and social media -- can be used to stimulate new forms of interfaith dialogue, religious leaders of all persuasions, including Jim Wallis of Sojourners, Jonathan Sacks, the chief rabbi of the United Hebrew Congregations in the United Kingdom, and Mustafa Ceric, Grand Mufti of Bosnia, talked about how they are seeing a surge in people turning to faith. It was interesting to watch as our moderator, Jonathan Zittrain, the Harvard law professor who wrote The Future of the Internet and How to Stop It, surfed MySpace and Facebook, pointing out on a big screen group after group dedicated to faith and interfaith dialogue.
The embrace of philanthropy has also infused much of the conversation at Davos. Like yesterday's panel on "Philanthrocapitalism," today's lunch discussion, "From Philanthrocapitalism to Philanthrocrisis," attracted an overflow crowd. Of course, that may have had something to do with the makeup of the panel: Tony Blair, Bill Clinton, Bill Gates, Richard Branson, Nobel Prize winning microfinance pioneer Muhammad Yunus, and Jet Li. Not a bad little group to have lunch with.
I, unfortunately, had to leave before the end of the philanthropy discussion to take part in the interfaith discussion (that's my problem, whenever I have to choose between this or that, I always choose this and that). But before I left, Blair, who has been working through his Tony Blair Faith Foundation to help eradicate the million deaths a year resulting from malaria, spoke about philanthropy filling, with innovation and vitality, the gap "between state action and individuals acting on their own."
Earlier in the day, I had made it to CNBC's mountaintop studio to do a segment on "Squawk Box." While I was in the green room (which, incidentally, has some of the best food in Davos), I was chatting with Bill Brodsky, CEO of the Chicago Board Options Exchange, and his lovely wife. "We did well," he told me, explaining how exchanges had escaped the fate of the banking industry. "There are real regulations we abide by. Regulatory consistency and coordination have made all the difference." A word to the wise for all those unregulated-markets dinosaurs still roaming Davos and the rest of the Earth.
Read More Davos Notes:
Blackstone's Schwarzman "Walking with His Head Still On"
Contrite Bankers, Overflow Interest in Philanthropy, Mistrusted Americans
Davos '09: Less Glitz, More Anxiety
And be sure to keep checking our Davos Big News page for the latest news, commentary, and video coming out of the World Economic Forum.
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The reason "some of the most influential people on the planet seem confused" is that they operate in a bubble - a distorted view of "economic reality" that just shattered because it was never real in the first place. Greed works very well - but only for a short time.
There couldn't be a more illuminating juxtaposition of "realities" as 2009 begins than to look at the World Economic Forum right next to the World Social Forum. The one populated by those who are rich, powerful and deluded, and the other by those who are largely poor, quite a bit more powerful in recent times, and prone to looking at the world with their eyes wide open.
The future of a healthy world economy rests on companies that will calculate their ROIs in a triple/quadruple bottom line model, and pay attention to the returns they are able to deliver to their capital investors (shareholders), labor investors (workforce), customers & society at large. The ones that are doing this already are surving the current economic crisis quite nicely. And the health of society will depend upon the extent to which we finally "get it" that we are all connected, and that my well-being, growth, prosperity and happiness cannot flourish in the absence of yours. We've been shown this lesson over and over and over again. Perhaps it required that we get whacked upside the head with a 2x4. That just happened. Let's hope it doesn't require anything bigger.
Interfaith dialog is a good thing. Faith, not so much. The belief in things that cannot be true and cannot even be tested, and whose philosophies are mutually exclusive with each other and are in fact antagonistic to each other, will do NOTHING to get us out of this mess. We do NOT have an existential crisis. We have a financial crisis, an environmental crisis, an education crisis. We have an ethical crisis, we have a greed crisis, we have a public trust crisis. We do NOT need more god. He has done nothing for us so far but divide us against everyone who doesn't believe one particular perversion of ancient texts written by superstitious mortals with agendas.
In Davos, Mr. Erdogan apparently became incensed during a panel discussion after a moderator curtailed his response to remarks by Mr. Peres on the recent Israeli military campaign in Gaza. “When it comes to killing, you know well how to kill,” he told Mr. Peres before scooping up his papers and leaving the stage. Commentators in Turkey said Mr. Erdogan appeared provoked by the fact that Mr. Peres was pointing his finger at Mr. Erdogan and raising his voice in an unusually aggressive manner as the two men argued.
According to Turkey’s semiofficial Anatolian News Agency, Mr. Peres called Mr. Erdogan by telephone five minutes after the walkout to apologize for any misunderstanding, saying that his remarks about Israel’s Gaza offensive had not been directed at the prime minister personally. In Jerusalem, a spokeswoman for Mr. Peres, Meital Jaslovitz, described the telephone conversation as “positive.” But, she said on Friday, there was no apology from Mr. Peres, contrary to the Turkish news agency report.
Mr. Erdogan did not seem apologetic, either.
“I only know that I’m responsible for protecting the honor of the Turkish Republic, the Turkish nation from A to Z,” Mr. Erdogan said as he returned to Istanbul in the early hours of Friday. “I am not a leader of a tribe. I am the prime minister of the Republic of Turkey . I do whatever I need to, so I did it, and will continue to do so. This is my character. This is my identity.”
While an anecdotal series of reports of increased interest in religion is in the news these days, I think that the forces of rational thought are growing too. We will eventuially divide up into those who believe in fairy tales and those who believe in themselves and other people.
Perhaps the fairy tale is the stock market and that's where they're getting stuck. Like the cancer that if cut out, fear that we will bleed to death.
The problem is- Wall St fat cats caused much of this crisis-yet they do not suffer for it. Instead they get huge bail-outs., and continue to give 10 mil bonus's to their CEO's.. When will this stop !! Our economy is sinking. We're in uncharted terroritory -no one seems to know what the answers are. Help !!
I see a bigger picture where we have a tiny minority hoarding our treasury to themselves. Waiting to buy massive chunks of real estate cheap after watching the rest of us get flushed down the toilet. Unless we as a country can find some way to blow the doors right off the vaults of the C E O's off-shore accounts, and redistribute all the capital you and I created with the sweat of our labor, which the big bosses have sucked up for themselves; until that happens we will continue to suffer, to under-fund our common, social network, schools, childcare, healthcare, elderly assistance, etc. We socialize medical research by giving out huge government grants to "help find the cure". Then all the profits for the new drug are squirled away for golden parachutes, repeated ad naseum in all the big industries. Why else do you think oil companies which make multi-billion dollar profits, still receive billions of dollars in tax payer dollars, all the while handing out billion dollar bonuses? We need to realize these as criminal acts against you and me. If they didn't work for it, didn't really earn, or deserve it, and they're not really worth it, then they are thieves and have robbed us. They have in some cases been handed this money directly form the treasury dept and have therefore transfered OUR money, yours and mine, straight into THEIR accounts and been asked to do nothing for it. IT'S A CRIME!
It's just white collar crime.
So they don't know what to do to stop the crash eh ? Then I'll tell them ; Get as much money as can be to the working class who will spend it as fast as they can . Put people to work by contracting the things that need to be done to all the construction companies or let the federal government begin hiring and designating work that need doing.
The news media, it seems, is incapable - with a few exceptions (the NYTimes and PBS) of asking intelligent and difficult questions. It seems they are paid by the advertisers not to ask questions and challenge the status quo. In other words they are useless as guardians of the truth.
The role of the media should not only be to ask pointed questions but to DEMAND good governance from our political elites. Whether it be to challenge the assertion that Invading Iraq is in the interests of the United States, or demand that the that insanely stupid banking policies that have wrecked the American economy and international economy be stopped immediately.
And there are many other issues that continue to be swept under the rug, to be blithely ignored by politicians and the media. And these will turn into future crises which we will wring our hands and asking ourselves how we allowed such a calamity to unfold. For instance, the lack of political will to do something about Global Warming, the reckless overfishing and exploitation of our seas, the destruction of the planet's natural habitats and rain forests. The slaughter of over 100 million sharks by a agonizing and inhumane death.
Yes, the media has a lot to atone for. They have failed in their duty to educate the public and demand that stupidity, ignorance, arrogance greed and indifference should not be tolerated.
It did not take a genius to make money during the recent boom years in the US. Similarly, it did not take any intellectual gift to report on said events. Now that some level of critical and creative thinking is required to analyze the situation, the weak have no choice but to concede their deficit. Of course they are baffled. They should have never been in the driver's seat in the first place. We hope they have the wisdom to listen to someone with genuinely original thoughts. I'm betting they are too self-absorbed to hear a word.
Nothing's changed. We're still waiting for a bailout from either the Government or some trillionnaire philanthropist, so we can go back to borrow-and -spend business as usual. Which doesn't work. Can't. Not on an overpopulated, warming planet with shrinking resources. The only new approach that would work is to stop doing what doesn't work.
Roosevelt's New Deal created a mortgage trust that dealt directly with the foreclosures because he rightfully believed that the bank's and Wall Street policy's led to the crash. The public works the government financed put millions to work, and it was only after Roosevelt's Republican adversaries pressed him to cut the programs substantially, did the recovery slow down. Now Obama is telling Wall street to play fair instead of writing a law that details Wall Street's fiduciary obligations to the "common" taxpayers who are currently paying their multi-million$$ bonuses. Instead of writing a strong stimulus package, Obama accepted more Republican tax-cuts even though they've been proved ineffective and created our crippling deficet. President Obama does not seem to realize that the country needs truly bold actions and a new visionary ethos that rejects absurd fears about "socialism." Our nation's and our children's future is on a precipice. Do we move forward fearlessly with a new understanding based on facts, or do we continue to discuss the senseless economic ideology, which created this disaster in the first place? Universal health-care would help businesses and relieve families who are losing their jobs. Massive investment in public works, education and sustainable technologies, would create new home grown industries. Unfortunately, if Obama continues to "compromise" away my children's and my grand-children's future for the sake of some esoteric idea of bi-partisenship with "stuck-in-the-past" ideologues, our hope of a new and better way will be lost.
Every level of government was in on it. They allowed the corporations to take all of our Country’s money and put it in their pockets with no taxes. Then they cut all our school programs and social programs and let the corporations gouge us till they took our pensions, all the while telling us to tighten our belts.
The worst part is they put our precious WWII generation into abject poverty and let the medical industry bilk them of their life savings. One veteran died just the other day because the city he lived in turned off his electricity in the middle of winter.
The government is you. You the people. You let them do this by voting for people who take money from corporations and not voting for third party candidates. For decades now. You let them take over your ability to govern yourselves by making laws that empowered corporations over people while bobbing your heads every time someone said that free market democracy capitalism is the superior system at all times. Super size it!
There was plenty of documentation about this crisis, starting in 2006. The New York Times' Gretchen Morgenson wrote in depth articles about the dangers of CDOs and hedge fund collapse. The financial times has written a great deal about it. If your only source of financial news is the Wall Street Journal or CNBC then you willingly concentrated all of your assets in one allocation. You should have diversified.
Why isn't Rush Limbaugh's comment about wanting to see Obama fail, deemed seditious and traitorous. Wanting to see Obama fail is saying he wants to see America fail. It can be claimed that the country is at war and Rush wants to see the president fail. He refuses to apologize because he claims he wants liberals to fail. But the last election spoke to that issue. Rush may not like it but liberals won. Wanting to see Obama, a liberal, fail is wanting to see America fail. That's anti-American and he should be called on it. Why is he allowed to get away with such seditious statements on the air no less.
If experts at Davos, or those advising Congress need an effective, fast-acting, simple plan to stop the crisis, I have one! It's not a Wall Street bailout, or a Main Street bailout, it's both, The AllStreets Bailout at http://www.themortgagenews.info.
The financial crisis is that the drop in home values has left some 25% of all homeowners with zero or negative equity in their properties, so many home equity loans are worthless, and many first lien loans are upside-down, causing negative net worth among mortgage lenders and mortgage investors. Onwers can't refinance or sell without a short sale. The AllStreets Bailout Plan provides 30-year, 3% fixed-rate loans by the federal government to individuals and their lenders to reduce mortgages by 80% of the drop in the value from 2006. The loans are not secured by the properties. It would take about $2.5 trillion in loans, but cost taxpayers less than nothing, since they will be repaid with interest. Government lending, not government borrowing is the best stimulus plan.
The borrower's payment is also reduced based on the new principal. Americans who don't have a mortgage get equal access to loans to convert credit card debt, to finance a business, as second mortgage purchase money, or as a personal loan.
The plan mandates a foreclosure moratorium for one year, modifies existing subprime ARMs by government fiat, and offers federal loans to states to replace lost property tax and sales revenue.
This site on the history of money is a very interesting read...
http://www.xat.org/xat/moneyhistory.html
By no means am I anyone's idea of an economist. But I've grown up in a con man's economy, and have learned some survival skills along the way. First and foremost, always remember: those smooth-talking serpents who promise to give you the inside scoop on how to get rich selling outhouses; or how to retire to Tahiti via "working in the comfort of your home" have, as Objective One, getting rich off your wanting to get rich. Logically, if their schemes are such easy, sure-fire methods of achieving riches, why would they teach them to YOU? They'd then be increasing competition, and lowering their own profits.
dagmaclugh39,
Or, as I've asked out loud to my wife several times, if these guys have gotten so wealthy from what they do and are now so well off that they feel they have the time to impart their wisdom to us, then why aren't they giving that wisdom away at no charge. You would think if they were wanting to be so magnanimous as to help you get wealthy like they did then they would do it free of charge. But they don't because now they can be lazy and make the money the easy way by pretending that they are now distributing their knowledge. What they are distributing are expensive books, CDs and of course the lectures. Half the time or more you will find out that the methods they are using are either already available for free to anyone who bothers to do a little research or are quasi legal.
Microfinance is the way out.
Smaller scale, wider distribution. Give the entrepreneurs a chance to create our way out of this.
Let the worst of the mismanaged banks go into bankruptcy. Break them up. Regulate foreclosurse.
Tie foreclosure mitigation success rates to bailouts. No mits NO MONEY!!!
Watch out for sweetheart deals for the big developers.
AND Make sure we're not moving from BIG BANKS to a NATIONWIDE BIG DIG in the worst sense of the words. Put strong cost controls and corruption oversight in before money goes out. Tie money to performance and management.
Maybe the financial experts should revisit Alexander Hamilton's 1791 report to Congress on manufactures. He wrote that "the aggregate prosperity of manufactures, and the aggregate prosperity of agriculture are intimately connected."
Then they ought to ask themselves, why is hemp not being used for it potential of 50,000 manufactured products?
If the financial experts read further into Hamilton's report, they'll find he had this to say about hemp: "This is an article of importance enough to warrant the employment of extraordinary means in its favor."
If Congress cares anything about the economy and the environment, then they'll take the extraordinary means, and remove all things hemp from the Controlled Substances Act.
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