No answer at Davos forum to global meltdown

US blamed for starting the financial crisis now turning into a global recession.

By
February 2, 2009 10:58
3 minute read.
No answer at Davos forum to global meltdown

Davos protest 88 248. (photo credit: )

 
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Mired in indecision and uncertainty, the world's foremost gathering of the best and brightest in government and business failed to come up with any new plan to stem, much less reverse, the global financial meltdown. The five-day World Economic Forum in this Swiss alpine resort wrapped up Sunday in the same atmosphere of doom and gloom that it began, with a realization that the depth of the crisis is still unknown and the solution remains elusive. "Everybody's lost in Davos," said Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy in Singapore. "No one seems to have a clear understanding of how big this crisis is and what we need to do to get out of it." he told AP. "My own view is that you really need to do a fundamental reexamination of the whole global system to see what went wrong, and nobody here is yet ready to ask these kinds of fundamental questions in Davos." There was widespread agreement that there's plenty left to do, starting at the April meeting of leaders of the 20 largest economies in London. "Now the hard work begins," the forum's founder, Klaus Schwab, said, calling for a redesign of the global systems of banking, financial regulation and corporate governance. Cautioning that the G20 wouldn't be able to solve all the issues, Schwab announced that in a few weeks the forum would start a "Global Redesign Initiative," which, he said, was supported by almost every world leader who attended this year's forum, including China's Premier Wen Jiabao and UN Secretary-General Ban Ki-moon. Previous celebrity guests such as Angelina Jolie, Sharon Stone and Bono were not invited to this year's forum; the spotlight fell instead on world leaders like Wen, Russian Prime Minister Vladimir Putin, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and the few bankers who showed up. The most talked-about world leader - President Barack Obama - didn't come to Davos, but many here had advice on what he should do on issues including the financial crisis, promoting Mideast peace and dealing with Pakistan, Afghanistan and Iraq. Tensions over the recent war in Gaza flared, with Turkish Prime Minister Recep Tayyip Erdogan stalking off the stage after a moderator insisted on cutting off his attempt to respond to President Shimon Peres's impassioned defense of Israel's air and ground attack. Business and government leaders blamed the United States for starting the financial crisis that is turning into a global recession. "Davos just sort of encapsulates the broader global debate," said Stephen Roach, chairman of investment bank Morgan Stanley in Asia and one of the few to warn last year of the global ramifications of the US sub-prime mortgage problem. "We're now moving into the ugliest phase of every crisis, the blame game." "Wall Street made mistakes. Regulators made mistakes. Rating agencies made mistakes. Central banks made mistakes. Politicians made mistakes - we all did it," he told The Associated Press. "So let's be careful that we don't let this blame game get out of hand." Last year at Davos, there was a widespread belief that the major emerging economic powers - China, India, Russia and Brazil - could survive a slowdown or recession in the US because of their growth potential. But that has proved to be wrong, many said. John Chipman, head of the International Institute for Strategic Studies in London, told the AP that no session in Davos examined "the links between the global economic downturn and financial difficulties, and the prospects for geopolitical conflict and conflict resolution." "Intuitively, one would think that with the current economic situation, there would be countries whose social stability would be a threat unless they were able to maintain growth levels," he said, citing China as one example. China's Wen forecast 8 percent economic growth this year, and India's trade minister, Kamal Nath, forecast a 7%-7.5% growth rate, but some economic experts here were skeptical that either would be reached. Nobel Peace Prize winner Muhammad Yunus, founder of the Grameen Bank in Bangladesh and the father of microcredit, saw a silver lining in the financial crisis. "It's not just disappointment and frustrations," he told AP. "This is the greatest moment we have because things need to be changed - it's as simple as that. We don't want to go back to the same normalcy that we're coming from. We will create a new normalcy which will stay and keep on moving and change the world."

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