MONEY CULTURE
Daniel Gross
Cutting Through Global Concerns
At Davos, the Fed's rate cut is set to dominate discussion
The appeal of Davos for financiers and businesspeople is to get away from the world of SEC filings, subprime write-downs, and EBITDA, and a chance to indulge the inner wonk/public intellectual. It takes some doing. There's the eight-hour flight to Zurich followed by another couple of hours in a car, bus or train, chugging slowly up a narrow snowscape, through stands of 200-foot pines. But it's worth the trip. Instead of sitting through sales meetings, placating investors, or scanning bar charts, they can ponder the implications of the human genome project for cancer research, or listen to Tony Blair, or sit in on a panel discussion with food pioneer Alice Waters.
The early buzz at Davos this year was about the megatrends transforming the global political economy. Anticipated sessions included breakfast with Pakistan Prime Minister Pervez Musharraf (get there early for security clearance and buffet), sovereign wealth funds, and, naturally, conversation about sustainability, China, energy and the promise of medical technology (a topic of increasing salience to Davos's aging baby boomer stalwarts). This being the World Economic Forum, economics were issues of paramount interest. But the predominant feeling was that while the United States is slowing, and may be in for a rough time, the rest of the world is doing quite well. The United States has clearly sneezed, but the rest of the world has yet to catch cold.
But in the last few days, as conference-goers packed their boots and business cards, Atchoo! Inspired by continuing troubles in the United States, and concerns over the stability of the new financial architecture built up in recent years, global markets have cratered.
And the whiff of panic is palpable, even high up here in the Alps. When I alit from the train in the Davos Platz, jostled by young Swiss headed for a day on the slopes, my primary concerns dealt with croissants and chocolate, and whether the Jakobshornbahn lift led to easy slopes. But my travelling companion, a fellow financial columnist, quickly put the kibosh on my schussing plans. Whipping out his blackberry, he noted: "They're talking about a coordinated rate cut." In the press center, one of the Swiss army of greeters asked excitedly if I had heard the news? No, not Condi Rice's impending address. The Dow looked as if it was going to open 500 points down, and the Fed was cutting interest rates another 75 basis points.
The conference hasn't formally started, but as I attempt to take the temperature at Davos (cold and snowy), one thing is evident. Usually, the world (or at least a well-heeled, nicely dressed chunk of it) comes to Davos every January. This year, the world is intruding on Davos. With global markets falling in concert and an unease penetrating the rarefied air here, all those banking executives, finance ministers, portfolio managers and private equity grandees won't find it so easy to focus on their presentations and break-out sessions.
At the Knowledge Concierge, (basically laptops provided by PricewaterhouseCoopers) where I'm sitting, enjoying the third espresso of the day, an American investor is furiously multi-tasking: chatting with a broker on the phone, checking e-mails, reviewing his portfolio. I ask if he's worried that the market turmoil will ruin his Davos. "Not really, this is mostly technical." Meanwhile, it looks as if the Federal Reserve has saved the day-again. As night fell in Switzerland, the Dow was down only about one percent. At the computer next to me, 10 minutes before the opening reception is set to start, my fellow Web-surfer in the Knowledge Center is still looking at stock charts.
© 2008
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Member Comments
Posted By: eddiewhere @ 01/30/2008 3:31:57 AM
Comment: http://www.newsweek.com/id/97041
Posted By: eddiewhere @ 01/23/2008 1:24:23 AM
Comment: : Sometimes we have to let PRICES RISE it is a healthy thing. A Person who never gets sick can never build up an immune system to fight future more devestating viruses. It is not good to get sick all the time but it part of our biological developmet. PRICE CONTROLS ARE BAD WHY? Any price control below market rates and/or the expenditure of national savings (financial reserves) to hold down monetary devaluation are inflationary. Price controls and the expenditure of financial reserves subsidize inflationary levels of demand and prevent increases in supply. They make it much more difficult - much more painful - to bring inflation to a halt and restore healthy and sustainable economic growth.
Monetary inflation is a TAX used by governments to expand the money supply and transfers wealth from its people to itself.
Even when there is little "price" inflation, stable prices just mean that governments, by printing more money or otherwise expanding the money supply ("monetary inflation"), has appropriated for itself all the benefits of each year's increase in productive efficiency.Therefore the measures used to hold down price increases are actually additional forces or causes behind inflation, that will cause even further price increases in the future.
"Our country is too large to have all its affairs directed by a single government. Public servants at such a distance, and from under the eye of their constituents, must, from the circumstance of distance, be unable to administer and overlook all the details necessary for the good government of the citizens; and the same circumstance, by rendering detection impossible to their constituents, will invite public agents to corruption, plunder and waste." --Thomas Jefferson to Gideon Granger, 1800. ME 10:167
"I consider the foundation of the Constitution as laid on this ground: That "all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people." [X Amendment] To take a single step beyond the boundaries thus specifically drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition." --Thomas Jefferson: National Bank Opinion, 1791. ME 3:146
Posted By: arvindchhatwal @ 01/24/2008 2:48:12 AM
Comment: He is Pakistan's President and not Prime Minister.
Posted By: eddiewhere @ 01/23/2008 1:24:23 AM
Comment: : Sometimes we have to let PRICES RISE it is a healthy thing. A Person who never gets sick can never build up an immune system to fight future more devestating viruses. It is not good to get sick all the time but it part of our biological developmet. PRICE CONTROLS ARE BAD WHY? Any price control below market rates and/or the expenditure of national savings (financial reserves) to hold down monetary devaluation are inflationary. Price controls and the expenditure of financial reserves subsidize inflationary levels of demand and prevent increases in supply. They make it much more difficult - much more painful - to bring inflation to a halt and restore healthy and sustainable economic growth.
Monetary inflation is a TAX used by governments to expand the money supply and transfers wealth from its people to itself.
Even when there is little "price" inflation, stable prices just mean that governments, by printing more money or otherwise expanding the money supply ("monetary inflation"), has appropriated for itself all the benefits of each year's increase in productive efficiency.Therefore the measures used to hold down price increases are actually additional forces or causes behind inflation, that will cause even further price increases in the future.
"Our country is too large to have all its affairs directed by a single government. Public servants at such a distance, and from under the eye of their constituents, must, from the circumstance of distance, be unable to administer and overlook all the details necessary for the good government of the citizens; and the same circumstance, by rendering detection impossible to their constituents, will invite public agents to corruption, plunder and waste." --Thomas Jefferson to Gideon Granger, 1800. ME 10:167
"I consider the foundation of the Constitution as laid on this ground: That "all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States or to the people." [X Amendment] To take a single step beyond the boundaries thus specifically drawn around the powers of Congress, is to take possession of a boundless field of power, no longer susceptible of any definition." --Thomas Jefferson: National Bank Opinion, 1791. ME 3:146