Day Three: Friday's Newsweek lunch hosted by Lally Weymouth and Fareed Zakaria was, unfortunately, off-the-record. So I cannot fully recount all the bon mots uttered by central bankers, trade ministers, presidents and former presidents -- each focusing on their own slice of the crisis pie.
But, after the lunch, I caught up with the two men who had given expression to the most diametrically opposed perspectives on the economic meltdown.
The prevailing Davos pessimism had been brilliantly summed up by Niall Ferguson, a history and business professor at Harvard. So I asked him to elaborate on-the-record. He called what we are going through not a Great Depression but a "Great Repression." He was referring to measures taken by governments to repress the symptoms of the greatest financial crisis the world has ever faced. "Our leaders," he said, "are in a state of denial, turning to a 1936 book [Keynes' The General Theory of Employment, Interest and Money] to save us. They've convinced themselves that the world can save itself from excessive leverage with more leverage."
I asked him what he thought should be done to deal with the Great Repression. "It is time to start new banks," he said. "The old banks need to be completely restructured so that they stop trying to protect equity holders and let the bondholders know that they have to 'take a shave' -- something around 20 percent. "It's what happened in Argentina," he said. When was the last time anyone compared the largest economy in the world to Argentina's?
It was time to go find Henry Kravis, who, not surprisingly, presented a completely different view, focusing on a number of recent equity offerings -- including a $2 billion offering by Goldman Sachs. So while Kravis was seeing "cracks" of light breaking through the darkness, Ferguson was seeing a state of denial.
During the lunch itself, I was in "Facebook Heaven," seated between Mark Zuckerberg, Facebook's founder and Sheryl Sandberg, its COO. For a change, we talked about everything except the economic crisis. We even talked about the Greeks, since Mark had studied the classics at Harvard. "Homer didn't actually exist," he said. So, I wondered, since Homer's stories were shaped as they were passed from person to person and generation to generation, were The Iliad and The Odyssey the first examples of User Generated Content?
My night started with a really special all-women's dinner on top of the Davos mountain, hosted by Wendi Murdoch and Pepsi CEO Indra Nooyi, to raise awareness, pledges, and support for improving maternal health and infant mortality around the world. Sarah Brown, Britain's first lady, who spoke, called it the "new face of feminism," while Melinda Gates spoke passionately about the fact that "at the end of the day, what matters is not how much money I gave, or how much I cared but what kind of impact I had... how many lives did I lift up?"
The evening, which began on a personal note from Wendi Murdoch, recounting how her grandmother had died while giving birth to her mother, ended on another personal note when Sarah Brown turned to Cheri Blair and, from the podium, lauded the work and example set by the woman she succeeded at Downing Street. There was a hush in the room, as many of those present were aware of how the two women had barely been on speaking terms. So altogether a great evening, demonstrating both the need to take action to help women around the world and the value of setting aside grudges closer to home.
My night ended at the Google party at the Belvedere hotel. Those who wanted to dance and listen to the music were inside the party. Those who wanted to talk, including Al Gore and the party's hosts, Larry and Lucy Page, were in the hallway outside. Not only was I solidly in the hallway group, but I even found a windowsill where I sat to talk with Marc Forster, director of Monster's Ball, Finding Neverland, The Kite Runner, and the latest Bond movie, Quantum of Solace. Forster was actually born in Davos and, growing up, had watched the World Economic Forum from the outside. This was his first time as a participant. He had, not surprisingly, taken part in a few art and politics sessions -- and came away wishing there had been more sessions on the arts. Come to think of it, more sessions on the arts would probably have given us more insights than more sessions on economic models and theories.
Read More Davos Notes:
Contrition, Paralysis, and the Embrace of Faith and Philanthropy Take Hold
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 BigNews page for the latest news, commentary, and video coming out of the World Economic Forum.
People of the US... notice how many developed countries have risen and collapsed while we seem to keep humming along (aside from this current government-induced meltdown). Argentina was a socialist basket case... which is why it's economy crumbled. The US just elected a guy who sympathizes with these policies... and thinks he can tinker with them so that they do not fail this time around.
blind folly.
Since with the ICB the middle men, the Bankers who charge USURY, are Bypassed and automation is used, the ICB can offer Low Rates and Fees and simple Easy to Understand Contracts without "TRICKS&TRAPS" over the Internet without the waiting lines of branch banks.
Using Debit/Credit Cards and ATMs allows for almost complete automation of consumer and business services.
Banks must automate and use the Internet to compete with an automated government Bank.
Martin S. Friedlander, Esq.
www.freedompost.typepad.com
We need to roll back all of the liberties we have given to banks, savings and loans, and all other lending institutions over the years. Banks can no longer be part of the free market.
1. Bank employees should make about what government workers make. No bonus, no commission.
2. The amount banks earn on interest should be restricted to about 4% and they should pay out no more than 3%.
3. The purpose of a bank should be similar to the role of government. Government does not exist to make money but it exists to help John Q public and the business climate do well.
4. Credit Card companies should fall under the same restrictions as banks. There should be no interest rates above about 3% for credit card companies. no repackaging debt. no changing terms and conditions - ever.
5. Lending institutions and wall street should not be telling the attorney general what they are going to do, just the opposite. The attorney general tells the banks what they are going to do, how money will be lent.
6. Adjustable rate mortgages are illegal.
7. The Federal Reserve really should be part of the government that way money that is earned by the banks stays in this country and in our system which can be and must be loaned out again.
So, what do 'they' do now?
Princeton President Samuel Stanhope Smith, circa 1812 taught future bankers…
From his "Lectures on Moral and Political Philosophy, Vol. II we read:
“The institution of banks, when properly restricted, is beneficial to trade, by facilitating a reasonable credit to merchants, by which they are enabled to encourage industry, and to extend the useful enterprizes of commerce. "
"On the other hand, the multiplication of banks beyond the real necessities of trade, or unsupported by an adequate capital of bullion, becomes a pernicious evil, …at length defrauding the credit which had been reposed in them. ”
“This medium, [ gold, silver ] in order to subserve the various purposes of trade, and to render it, at all times, a safe and convenient mean of exchange ought to possess the following properties. pp. 343 ff.
Maybe those despondent bankers at Davos will 'Google up' Smith's Lectures for some desperately needed help...Lets be glad the Mr. Page put those 'old books' out there for us...it's not too late...
Exactly right!
President Bush, the US congress and Now President Obama are trying to minimize the damage they've done by spending their way out of it. $700 Billion under Bush and now $825 Billion under Obama.
I say, let them fail. Some entrepreneurs will buy up any assets and build stronger smarter financial institutions. And Congress might just learn something (though I doubt it)
Particularly with companies listed on a major exchange, the astronomical cost of getting a firm listed is passed on to consumers. The same goes for returns per share. That all comes out of our pockets, even when we own zero parts of the pie.
I believe the original idea of the "exchange" monster was to raise capital, and then repay it a little at a time via dividends - without dipping into the principal (stock price). And I seem to recall that the earliest "public trading" models did not turn on consumers to pay the tab. It was a clubby thing and you were either in the club buying shares (plus overhead) or you were on the sidelines.
So, in my mind, publicly traded companies have taken liberties with the exchange concept that they should be prohibited from doing. If stopped, there would be far fewer "bonus" jackpot winners and we would have a healthier economy.
But Reform of the Entire way Banking is delivered to the American People and our government must be Questioned!
We are in a High Tech Era that industries around the world us to streamline and remove uncertainty and limit corruption!
Banking, other than the Curd ATM, has done little to provide FAST LOW COST services to Americans and also control corruption. Perhaps it is time for a new competitive FORM of Banking offered directly from the government, where the funds reside, to be offered and let the Banks that followed a "path of corruption and greed" fall by the wayside if they can not compete
"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."[4]
"See in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed. I feel at this moment more anxiety for the safety of my country than ever before, even in the midst of war"
Abolish both of these private central banks that operate on collecting interest from people in debt and replace it true national government run central banks that issue credit without collecting interest. When that is done, World affairs return to normal.
And Mr. Lincoln was perfectly correct in his assessment. But since history is corrupted regarding those two private central banks, none know of their corruption and none know how to publicly protest them.
Why give them $4 Trillion More when they are the ROOT Cause of this Crisis?
Do our leaders have the strength of character to admit the obvious? That we're addicted to spending other people's money and should intervene for our own good before they cut us off? Probably not. Where were all these deficit hawk Republicans when Bush was spending us into this mess? They may be doing the right thing now, but for all the wrong reasons...
All discourse seems directed at maintaining an outdated and unworkable status quo. We need true visionaries who can see beyond the band-aid approach. Extreme positive change is impossible without extreme thinking leaders.
I am so fed up with what I hear.......