domingo, febrero 01, 2009

Humbled Masters At Davos

By David Ignatius (THE WASHINGTON POST, 01/02/09):

“How could we have been so stupid?” That was the refrain of several experts at a session of the World Economic Forum last week about “What Went Wrong” to produce the global financial crisis. Not that they had been wrong, mind you. It being Davos, the chosen commentators had mostly been right in warning several years ago of disaster ahead. But there was at least a note of collective chagrin.

Davos doesn’t do humility, normally. These are the masters of the universe, after all, whose gathering each winter has come to symbolize the process of economic globalization. But this year, with the global economy in the tank, there is a kind of corporate self-examination. Beyond the panel discussions, you could hear a collective sigh of “Oops!” and a plaintive “Now what?”

One reason for the tone of self-reflection this year is that U.S. officials, who can’t seem to resist being pitchmen at such global gatherings, have mostly stayed away. The Obama administration’s absence gave a “post-American” feel to the session, but that’s deceiving. Barack-o-mania is as strong among the global titans as it is everywhere else.

The most upbeat presentations here were from the capitalist “newbies,” Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin. Wen said that he saw small signs of “hope” in China’s increased bank lending and domestic consumption. Putin talked like a born-again capitalist, saying that Russia had seen the damage caused by too much government control of the economy and that it would never go back to the policies of the Soviet Union. He sounded most enthusiastic when he talked about tax cuts in Russia.

Putin couldn’t resist taking a few shots at the United States for creating the “perfect storm” that hit the global economy —citing the happy talk from U.S. officials at Davos a year ago- and the “low quality of management” at U.S. banks. “Such a pyramid of expectations should collapse,” said the former communist, now a true believer in free-market discipline.

Wen and Putin appeared entirely at home in the Davos CEO club. The Chinese leader, dressed in a dark blue suit, even seemed to have mastered the modern chief executive’s vocabulary of warm insincerity, sprinkling his remarks with phrases such as “I just want to tell you frankly” and “from the bottom of my heart.” He talked several times of China’s “openness and transparency,” qualities not often ascribed to the People’s Republic.

Putin, dressed in a red tie and a sharply tailored suit, displayed an ex-KGB man’s prickliness at questions from business leaders. He blew off a well-meaning offer from Michael Dell to help Russia market its computer skills with a surly: “We are not invalids. . . . Pensioners should be helped. Developing countries should be helped.” Putin and Wen talked like men who, if anything, are more confident now than a few years ago that the world is moving their way.

How could the giants of capitalism have been so stupid? That was the question that ran through Davos all week, and the bluntness of the discussions was, in its way, reassuring. The global economy may have gone to hell, but people haven’t lost the ability to think critically about it. One of the most articulate critiques came from Niall Ferguson, a professor of history at Harvard, who repeated an argument he has made in several recent books that the American “debtosaurus” is following Britain down the path of imperial exhaustion and decline.

The rock stars here this year, surrounded by adoring fans, were two economic analysts, Nouriel Roubini and Nassim Nicholas Taleb, who saw the disaster coming before most everyone else.

Roubini argued that the skewed incentives of the old system had almost guaranteed the eventual crackup. Mortgage companies had offered dubious subprime mortgages, for a fee; banks had underwritten them, for a fee; investment banks had turned them into exotic securities, for a fee; rating agencies had given them artificially high marks, for a fee. The system “worked,” you might say.

Taleb, a former trader who wrote the book “The Black Swan,” argued that Wall Street’s models —supposed to prevent bankers from taking excessive risks— were actually a big part of the problem, since they created a false sense of confidence about the future. Rather than seeking reassurance in models, he advised anxious traders to go have a drink or take up religion.

“It’s easier to say ‘God knows’ than ‘I don’t know,’” said Taleb, in what might be a motto for this year’s Davos meeting.

Fuente: Bitácora Almendrón. Tribuna Libre © Miguel Moliné Escalona

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