Davos09: The Davos vacuum

Maybe in some session at Davos or over some dinner table, someone’s discussing substantial ideas and plans for ending the mess. But I haven’t been there. Instead, I was in a CNBC debate this morning as representatives from business, government, markets, and multilaterals were supposed to argue the point. And this most complex of subjects was turned into 2-D cable TV as we in the silent audience were supposed to vote – interactivity’s all the rage, you know – on each of four propositions delivered in about a minute before an irritating clock cut them off. It’s as if we were supposed to say, “Yes, that’s it: Let the stock exchanges take care of it all. Good. Our work here is done. Let’s go skiing.” The snow here is much thicker than the discussion.

We heard protective self-interest, as many of the leaders preemptively argued against what they fear most. Howard Lutkin of Cantor Fitzgerald was the most growly on the point. “Let’s just make banking boring and we’ll go back to a better time, like the 1920s,” he sneered to discussion about regulation. “Boring is good,” said the chairman of Lloyds. It took a long time before we even heard the word transparency as part of a fix and then the representative of corporations snarked that “transparency is OK in principle.” But who’d want to try it in practice?

This was all foreplay. The consummation came when Montek Ahluwalia, a government official in India, listed five reasons why only government can take the lead:
* recapitalizing banks, which only government can do
* fiscal stimulus, which only government can provide
* avoiding protectionism, which only government can have the courage and will to do
* working with the developing world – government again
* cooperating among nations: government.
He pointed out how well India’s regulation and banking systems are working. Government.

Finally, the heads nodded all around, most of them resigned. It’s government’s day. There’s a session here on the the new dawn of government. Even Lutkin knows that’s where it’s headed — his head nodded, too — but he still snapped that once government gets involved in banking, it won’t get out. I wonder why CNBC didn’t start the session with the proposition that governments are in charge now and ask what they should do; it would have saved us and the viewers at home a hot mountain air with little oxygen.

Martin Sorrell made the most important point in the discussion: It’s our money being used now and we must have more of a voice in how it is being used. Someone else pointed out that at least politicians — unlike CEOs or nongovernmental commissioners or market bosses — are answerable to their publics every few years.

And that’s supposed to make us feel better — somebody is in charge now — until we remember everything that government fucked up. It didn’t watch, didn’t regulate, and encouraged the madness. Once disaster came, governments have squandered billions — soon trillions — of our money without goals or accountability, with our money going to dividends and salaries for those who already skimmed too much off the latte that was our economy. Where’s the plan? I haven’t seen it here.

I’m talking with other people who are getting more depressed as the day goes on and here, I think, is why: We are surrounded by the leaders who fucked it up: bankers, marketeers, regulators, and the press. They were in charge. That’s what Davos is: the people in charge. So who’s to say that we’re going to find the answers in Davos? Well, the people in Davos will. But I think the evidence is strong that the answer is not here.

I’m going skiing.

  • Jeff, I’ve read your blog for years and I think this is your finest point. Well done.

  • Jeff, spot on…. It’s depressing to hear these talking heads who were (are) in charge decline responsibility and don’t have a way to go forward. It’s all about playing the blame game while the situation goes from bad to worse.

    As for government control, I certainly wouldn’t take the Indian version as the model for progress!

  • Robert

    The press was in charge of the world’s economy? Really?

    That may be your biggest revelation yet.

  • Yes, Jeff, we need more transparency but also more prominent and strong voices in the media to demand right solutions.

    The Guardian did today very well in this matter.

    In the leading editorial:


    And with a superb column of Simon Jenkins:


    Pure Journalism Caviar!

    Carefull with the snow.

    Don’t break your bones, we need you,

  • Jeff,

    really great, though sobering, summary. I think you have the best description of Davos I have read so far: a lot of “hot mountain air with little oxygen.”

    The dismissal of transparency is not surprising, but it is frightening — transparency is “ok in principle” but not in actuality because the affected might then actually see what the banks and corporations are doing.

    enjoy the slopes, but please do keep up the reports.

  • Good posting, Jeff. It reinforces a take-away from having lived in Washington, DC for several years: how can such smart people be so dumb?

    I learned that many people become leaders because they are the alpha males, the loudest voices in the room. But that does not mean that your voice carries the weight of a great idea. It’s just that your force of personality is more powerful than others.

    Happy skiing, Jeff. Maybe that’s what the leaders there should do too. It’s amazing what ideas you can have talking with someone on a chairlift.

  • All this made me thing of an apropos quote:

    “When ideas fail, words come in very handy.”

    –Johann Wolfgang von Goethe,
    poet, playwright, novelist and statesman

  • Great post Jeff, and yes, ensure that your trip was worth the flight by hitting the slopes.

    The Economist has been on top of (or in front of) the crisis for years, and this week they had a great 14-page survey on the future of finance.


    While they hit their normal points on roots of crisis and potential remedy, the part that stuck out for me was not just the culpability of people inside the financial and regulatory firms, but to a lesser extent the culpability of the investing public as a whole.

    Leaving aside fraudulent mortgages or people overextending themselves, bubbles are built on innocent — but not innocuous — mass optimism. We all demanded perfect safety for our money, while simultaneously demanding huge returns — oh, and also great service and low fees.

    There were certainly people at Countrywide, Fannie, Bank of America, etc. who stood up and said “this is madness”. They may have even been believed; they were they either told to sit down, or perhaps they even sat themselves down. In a wave of mass optimism, no one likes a pooper. The behavior of many firms was borderline criminal, and no one can excuse it. At the same time, any rational firm would have been driven out of business here before the crash happened.

    It’s a terrible choice to have to make: ride the wave of hysteria and hope you survive the wipeout, or just give up and drown at sea.

  • Jeff, you could not have made the point much stronger, the CNBC debate at Davos make you wonder why world some leaders pay $80,000 – $200,000 to attend the event, to only find out they got fired once they return home on their private planes. At least I hope you got in free of charge as a journalist.

    Agreeing with Martin Sorrell, which I have encountered myself in Davos attending as a technology pioneer for ((truphone)) as one of the brightest minds, I am very worried about the involvement of government in particular when they spend so much of our money lending to the same banks which paid out bonus to managers to drive up house prices of my London borough to levels where normal people had to move out. I thought banks should be in the business to lend to us. As an entrepreneur I have always believed in value creation through hard work, focus, stamina and technological innovation. But maybe this is a time to think about some of our principles, working habits, incentives. It seems lot’s has gone wrong in many industries, in family affairs, in personal habits, in our treatment of our environment and how we treat other species on our planet, so maybe it is time for a revolution and rather than a small paradigm shift. It seems Obama is such a revolutionary personality, but I wonder if it goes far enough, considering what we already mutated into.

    However governments like the Obama administration got lots of things right, first they did not waste 96 hours to trip out to Davos, Instead they are getting on to get the job done to get us out of this mess. Would I be Obama I would have given strict order to stay home and get work done to everybody in my administration. Is the US again on the forefront and why in difficult others leaders give keynote speeches instead of getting the job done.

    Isn’t it much smarter to watch and read the speeches by Putin and other so called world leaders on your PC or Blackberry back home at the fireplace in the White House over a cup of tea. The advantages are huge, you wake up relaxed without jet lag the next day, you can kiss your kids good night and enjoy a lovely innocent smile, you can relax and consider the all important content of Davos and formulate action items for your next meeting to change the world for a better world tomorrow.

    Good night!

  • I just ordered Jeff’s book – its preamble looks like it will be a great read. Jeff’s blog, and your comments above, made me think in the opposite direction. Sometimes, it’s in the dark moments like these that is when the great ideas are born.

    The day after the Crash of 1987, a couple of people decided to start a company at the bottom of the market. It was Cisco Systems. And if I recall correctly, in 2000, shortly after returning to Apple (and at a time when the company’s viability was still in question), I heard Steve Jobs say near the end of a MacWorld keynote, an aside that I never recall reading anywhere, but something so poignant that it rings in my head today:

    “We’re going to invent our way out of this.”

    Fast-forward a few years later, and it was clear what he had in mind.

    Depending on big government handouts for the hubris and excess of the last 10 years won’t fix this mess. Depending on government to remedy our ills won’t be enough. Unless you anticipate with glee the possibility of high inflation that could follow. Instead, I think it will take a collective effort of all of us to turn the ship around. The innovation that we are seeing as the result of the Internet has created many jobs and opportunities that never existed before. As Jeff stated in his book, “What Would Google Do” shows that people who think different, be it Sergei Brin and Larry Page, or Mark Zuckerberg, Steve Jobs, Jeff Bezos or others, don’t see the world ending. In fact, some voices not heard at Davos might see this time as an opportunity.

    So here’s to the two guys in the garage. To the Indian man who saw a future in microloans. To the Tim Berners-Lees of this world, who had a simple idea and acted on it. And to any angry young man or woman impatient with the status quo, and with the guts to think different.

    THAT is what will get us out of this mess. Not the overstuffed platypuses proffering puffy platitudes over plates of hors d’oeuvres in Davos.

  • Jeff, this is your best post I’ve read yet.

    The thought today that we should look to Davos for leadership seems laughable. I think this is the end of Davos. Enjoy the slopes.

    (BTW Your book has got the top spot in the COOP bookstore at MIT)

  • Jeff,

    Your post showed a great deal of integrity. Getting an invite to Davos has got to be glamorous and gratifying. Nevertheless, you’ve just smacked them one upside the head. I wonder if you’ll get invited back next time.

    Kind regards,

  • Bob Sullebarger

    All I know is that when I look at the meltdown, I have a very hard time finding any market players who don’t have some culpability. Bankers, investors, managers, government, and consumers, all failed. It was a classic compound failure.

  • “Someone else pointed out that at least politicians — unlike CEOs or nongovernmental commissioners or market bosses — are answerable to their publics every few years.”

    And the number of incumbents who get voted out is . . .

  • Hi Jeff,
    Great post. Glad for sure that I didn’t take the time (and incurred the costs) to make it to Davos. Just finished your book I’d picked up at DLD. full of great insights. Now.. what would Google do about Davos and the WEF? :-)

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  • Wonderful post. Well done.

    I hope this brings us to the clear understanding that we can’t rely on leadership to get us out of this – after all, they’re responsible for the gluttony that led us here. There is no leadership. There is no guru. Time to stop outsourcing that…

    Rather, it’s up to us. Unbridled and bootstrapped productivity. The best thing our “leadership” can do for us is to get out of our way and maybe even knock down some barriers. The best thing we can do is to communicate that to them loudly and clearly. We don’t need their leadership – because it’s not what it markets itself to be.

  • Andy Freeman

    > recapitalizing banks, which only government can do


    > fiscal stimulus, which only government can provide

    Govts aren’t the only ones who can spend money, but they are the ones most likely to “spend dumb”.

    > avoiding protectionism, which only government can have the courage and will to do

    Jesus H Christ on a pogostick. It takes self-serving govt agent to say something so blatantly false. Protectionism is entirely a govt action. My neighbors can’t stop me from buying something from elsewhere, only govt can.

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  • Davos needs more entrepreneurs. Were they in attendence, Jeff? Entrepreneurs don’t like rules and regulations, are always optimistic and are skilled at bringing innovative solutions to very hard problems. Isn’t that the point of What Would Google Do? What would Bezos, Dell, Schultz and hundreds of their brethren do?? – Jeff Busgang, Flybridge Capital Partners.

  • Thomas Turner

    Bravo! Well done, Jeff!

  • jacky

    I think it just all about populism. Can be the end of Davos?

    you should watch this video;


  • Andy Freeman

    > Someone else pointed out that at least politicians — unlike CEOs or nongovernmental commissioners or market bosses — are answerable to their publics every few years.”

    Said someone is full of it.

    CEOs and other employees are answerable every day to their boards.

    And, if govts would stop giving them money, the only money that they’d risk is money given to their care by folks who can take it away at any moment.

    Until govt got involved, GM’s follies weren’t my concern.

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  • Jeff,

    I haven’t followed all your coverage at Davos, but did you get to attend this panel? This is the one I would have wished newspaper owners attended. http://www.metaprinter.com/?p=1738

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