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The Truth About The World Economic Forum Agenda.

Posted by: Bruce Nussbaum on January 26, 2008

The Saturday night Soiree is the traditional conclusion to the World Economic Forum and this year it swell. An amazing Turkish Night with throbbing music, a dance floor full of people and a delicious dish called the “Swooning Imam” because it is so good, an Imam is said to have swooned over it years ago (told to me by a Kuwaiti friend of a colleague as we stood there eating).

But the contrast between caviar and conversation this year was striking. The talk of Davos was all about recession, not if the US was entering recession but how deep and how long the economic downturn will be. There only debate was between those who were pessimistic and those who were downright depressed.

The pessimists think that the US economic decline will be bad but mitigated by strong growth in China and India. This is the group led by C. Fred Bergsten. They argue that Asia will save the US from a major decline.

Then there are the really, really pessimistic thinkers, led by Steven Roach, who believe the US is in for a major recession. Why? They think economic growth for the past 10 years has been based on borrowed foreign money and rising assets (mostly houses) and this is no longer sustainable. Money was incredibly cheap. There was no premium for any sort of financial risk. The subprime financial meltdown is making it impossible to continue to grow this way. Risk is being repriced and will go much higher.

This could mean a very long period of low or no economic growth for America. It -happened to Japan in the 90s-it could happen to the US today.

There is even a more gloomy group of people at Davos who say the US is increasingly looking like a Third World country. Weak currency, huge foreign and domestic debt, wealth and ownership goes overseas, loss of power to foreign countries, etc. Throw in bad cell phone service, horrible air travel, politicians receiving the popular vote not getting into office, terrible health care system, etc. You get the picture.

Which group of pessimists is right? Probably none of them. Davos is great at capturing the moment but its record of predicting the future isn’t great. In 2007, an army of slice-haired private equity people from London and Wall Street were all over the World Economic Forum preaching the wisdom of no regulation, the creation of SIVs and CDOs, and the miracle of hedge funds. The WEF embraced them. This year, it is pummeling them. Next year? I hear some smart folks are buying dollars.

Reader Comments


January 28, 2008 5:05 PM

like i stated more than 7 yrs ago since
bush was appointed.all manfacturing fell from 45% to 11%,the dollar fallen 40% in value.all growth was contained to housing loans and that money was sent to china,usa manfactures nothing no decent vehicles,appliances,electronics. all americas do is go in debt and eat.
25k per person debt has been added to 300 million people,not like japan in the 90s their interest rate was at zero for years..but as the green expert stated america is now no longer a world leader.
currently identified as the lost decade under bush. 20 million illegal immigrants,usa rated not in the top 10 in health,failure of upper education.all kuaites get a 4 yr degree
at no charge.bush will be held accountable for the next 50 yrs and new platforms will rise to hold bush accountable it will not be pretty.


November 25, 2010 10:43 AM


February 26, 2011 2:19 AM

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