It’s amazing how much has changed in one year. This World Economic Forum in Davos is substantially different than last time around. The mood last year was cautious, restrained, but still optimistic. There was talk about President Bush putting together a fiscal stimulus package and how far the Federal Reserve and other central banks would cut rates. This year the forum is about as pessimistic as I have ever seen it in its 39-year history. Perhaps that’s why Klaus Schwab, founder of the World Economic Forum, called this the most important forum in its history.
The mood is bleak and predicting the length and scope of a global recession is the number one topic, but the constructive dialogue about how to fix the financial crisis is equally as important. Niall Ferguson has called it a “repression.” Most have argued it is by far the worst recession anyone has seen since the Great Depression and could be worse.
No talk of corporate jets and $8,000 helicopter rides into the Davos ski resort. More talk about the commercial flight they took. The endless hours of meetings to justify the visit.
It is clear that the world is very unhappy with the United States. Opening comments by Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin highlighted a widely held belief: The US got us into this mess and the US will have to lead us out of it. Former President Bill Clinton echoed that theme.
It is not just the rhetoric that has changed, but also the glitz and the fanfare. The parties and late-night dinners are still taking place, but with a much more humble and subdued approach. It is clear that the hosts want to acknowledge the difficult times. Some are holding small, private dinners where executives, economists, and heads of state can share ideas about the state of the global economy and how to fix it.
Some of the bigger parties are going on as planned, but caviar could only be found at the Russian prime minister’s private party. Google’s famous Friday night party was once again the place to be seen. Former Vice President Al Gore, Mark Zuckerberg of Facebook, Michael Splinter of Applied Materials, Sir Martin Sorrell of WPP, and Larry Page of Google were all in attendance.
The conversation at cocktail parties is about President Obama and the work ahead. There is a mutual feeling that he will not be able to cure the US’ sickness with one large stimulus package but that the world is watching, perhaps praying, that his good will will bring about a global return to growth in 2010. Most people have written off 2009 and have decided to look ahead to 2010. I have heard no mention of Bernie Madoff and the pending scandal. No mention of the billions lost. Just a recognition that everyone is in this together.
The risk to further US job losses hasn’t garnered quite as much attention as several other key issues. Most of the US-based executives and economists predict a loss of another 2 to 3 million jobs with unemployment reaching a minimum of 9 percent. Corporations acknowledge the need to retain their top talent. Some tell me cutting jobs is the last thing they intend to do. They would rather cut capital expenditures and expenses, and reduce internal control costs than be forced to layoff key talent. I could sense some pain when talking to several executives about the layoffs.
Most of the attendees have lost a small fortune. No talk of corporate jets and $8,000 helicopter rides into the Davos ski resort. More talk about the commercial flight they took. The endless hours of meetings to justify the visit. Almost everyone wants to keep their credentials on during the interviews to show that they are hard at work. Truth be told, they are. It costs tens of thousands of dollars to be here, and they realize in this economy that one trip here could cost someone their job. They’re tightening their belts, preparing for extreme volatility, a shock or two along the way, and hoping that when they return here one year from now the future will look slightly more promising.
Alexis Glick is vice president of business news and an anchor of Money for Breakfast and Opening Bell at FOX Business Network. Prior to joining FOX, Glick served as an anchor and correspondent for NBC’s Today show. Before NBC News, Glick provided live daily updates for CNBC’s Squawk Box from the New York Stock Exchange floor and contributed to Street Signs and Closing Bell.
