Off piste
Although the general mood was more upbeat than last year, there was an air of self-doubt among Western delegates. The financial crisis has shaken the Davos consensus on the supremacy of free market capitalism and the benefits of globalisation. There were fewer doubts among delegates from emerging economies, which have come through the crisis largely unscathed. While there was a good turnout from China, including Li Keqiang, the First Vice-Premier, and South Korea, other Asian countries were less well represented, with some observers saying that Davos had become too focused on the concerns of the West. Apart from President Sarkozy, there were few “big name” Western leaders, with President Obama staying at home to give the State of the Union address. Lloyd Blankfein, head of Goldman Sachs, won the prize for most-talked-about person not actually at the conference.
Piste bashing
The bankers were again the favourite target for attacks, with Alistair Darling, the Chancellor, telling them to “stop feeling sorry for themselves”. Hector Sants, chief executive of the Financial Services Authority, suggested that the banks still did not grasp that fundamental regulatory reform was essential: “If they get it, it’s not obvious.” Lord Turner of Ecchinswell, his chairman, hinted at a crackdown on the dollar carry trade, which several delegates identified as an accident waiting to happen. The banks hit back, attacking reforms proposed by President Obama last week. Bob Diamond, head of Barclays Capital, took the lead, warning that the plan would hamper economic recovery and undermine the attempts to achieve global agreement on regulatory reform. Josef Ackermann, chairman of Deutsche Bank, criticised politicians and regulators for failing to recognise their responsibility for the financial crisis. But both Mr Diamond and Mr Ackermann offered an olive branch by backing the idea of a global tax on banks that could be used to cover the cost of failures.
Much of the talk among bankers was not of Davos but of Zug, one of the Swiss cantons offering very low personal tax deals to attract highly paid Brits. One leading banker said that his workforce “was desperate to exit London” because of the bonus levy and the increase in the top rate of tax to 50 per cent. The heads of some non-financial British companies also said that some of their highly paid staff were likely to move. Some banks tried again to raise the idea of a pact to limit pay, but the effort did not come to much. Several senior bankers said they half-regretted that the G20 had not imposed the cap proposed by President Sarkozy.
Deep powder
Many delegates said that one of the biggest risks for the financial system was sovereign debt crises — and along came the Greeks, right on cue. As Greek bonds tumbled, George Papandreou, the Prime Minister, and George Papaconstantinou, his Finance Minister, scurried around Davos trying to prop up crumbling confidence in the country’s public finances. The pair drew some criticism for not being at home. Other eurozone politicians tried to calm the panic without implying that Greece would be bailed out. Mr Papandreou’s parting shot to Davos was: “Wish me luck.”
continued>>>
http://business.timesonline.co.uk/tol/business/economics/article7010422.eceThey're so upset about bonus taxes, they're all going to move to Zug! We should be so lucky! LOL
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