In an upbeat finish to the World Economic Forum in Davos, the European Central Bank president and the Goldman Sachs chief executive expressed optimism about conditions later this year.
Mario Draghi said he expected the Eurozone economy to begin its recovery in the second half but that further “fiscal consolidation” was inevitable.
Goldman’s Lloyd Blankfein said: “The worst worrisome problems that everyone talked about last year seem to be off the table.” He told the BBC: “I think the moment of crisis is over… there are a lot of things to be optimistic about.”
The year’s event was generally reported as being more sober than previously but there was still lots of celebrity spotting to be had and big parties to attend. Celebrities were of both the financial type, such as JP Morgan Chase chief executive Jamie Dimon, or of the artistic type, such as Charlize Theron.
Dimon’s exchange with hedge fund manager Paul Singer was an early highlight. Singer, the head of Elliott Capital Management, accused the big banks of “completely opaque” disclosures, making it difficult to tell which were risky and which were sound. Dimon countered that JP Morgan’s accounts, at least, were clear and that, “with all due respect, hedge funds are pretty opaque too”. Singer said derivatives positions of the banks were difficult to assess and the banks did not always collateralize their positions. Dimon said his bank did for all major clients, to which Singer responded: “Well, we’re a minor client then.”
Wall Street Journal columnist David Enrich noticed Dimon was wearing FBI cuff links and wrote that “he wouldn’t let me take a picture of them”.
Celebrity journalist and publisher Arianna Huffington was rather more thoughtful in her posts from Switzerland. She took heart from the longer-term initiatives to lift poverty levels and reduce disparities, for instance.
She also quoted Rockefeller Foundation president Judith Rodin who said: “What distinguishes today’s threats from those of the past are the escalating rate at which they are occurring, and the growing interconnectedness of our planet.” Our burgeoning interconnectedness has given the world many gifts, but has also created many challenges. The consequences of a crisis in one area of the world are no longer contained by borders or language or currency or oceans. No longer can one nation that’s doing relatively well afford to ignore problems in other nations. In a sense it’s like the converse of the old saying “a rising tide lifts all boats.” Now, one leaky boat can have the power to actually lower the tide — and cause all the other boats to run aground.”
Rodin writes that decades of research at the Rockefeller Foundation have shown that there are five core characteristics that resilient systems have in common:
Flexibility — the ability to change, evolve, and adapt in the face of disaster.
Limited or “safe” failure, which prevents failures from rippling across systems.
Rapid rebound — the capacity to reestablish function and avoid long-term disruptions.
Constant learning, with robust feedback loops.”
The five-day meeting ended early Saturday evening with the “Davos choir” and then carried on until late for many. Until next year…