The World Economic Forum has opened in Davos, Switzerland, and it seems almost as subdued as last year’s event.
This is the international conflab of gods of investment and finance that allows the world’s most confident economic forecasters be even more confident than they usually are. The problem for the past two years is that the finance gods have lost much of their confidence, which makes sense considering the way most of them entirely missed anticipating the world economic collapse. For many years the World Economic Forum had a mood like Woodstock, the 1960s hippie rock festival that was all about love, optimism, the Age of Aquarius and various other platitudinous projections. The finance gods would revel in their innocence, rolling about in the mud and getting high on the fumes of their prognostications.
But then the market turned down in 2007, and collapsed in 2008. And they had some ‘splainin to do. Which they didn’t do very well or convincingly. Instead of sounding all Age-of-Aquariusy, they started channeling confusion. As Tom Keene of Bloomberg radio noted yesterday, last year the economic luminaries at Davos sounded “bewildered.” This year they seem to be putting a braver face on it, something easier after an eight month rally than during a year of slump. Their theme this year is: Rethink, Redesign, Rebuild. The bankers are cheerily if tremulously looking forward to some sort of recovery.
The economists are more dour, and Nouriel Roubini is adding a darker tone. Roubini is the economist who was virtually alone among mainstream economists in calling for a major financial crisis and economic slump four years ago, well before the crisis, so lots of people now listen to him. He’s calling for another economic contraction in the second half of this year, which isn’t the sort of chatter that helps keep conflab’s all happy and lighthearted. He’s playing the role of the Rolling Stones at Altamont, that end-of-the-60s hippie concert that descended into violence, bad feeling and eventually murder during the playing of “Under My Thumb.”
Fora like this have to deal with the mood of the time, and this week the world’s markets have turned back down, Greece appears to be going the way of Iceland and Ireland, and Obama’s been beating up on bankers. So how much Rethinking, Rebuilding and Redesigning they do probably depends on how confident they feel right now.
While Roubini has been dark this week, he’s not pitch black like my favorite fringe prognosticator, Robert Prechter of Elliott Wave International. About 10 days ago he issued an emergency warning that the “third wave down” was about to begin and everyone should bail out of the market and get ready for financial Armageddon. He’d be playing the role at Davos of the Hell’s Angels at Altamont, beating the attendees with sawn-off pool cues to the music of Roubini/Rolling Stones, but I expect he wasn’t invited.
I don’t think the bankers’ ctonfidence could have handled that. Or they would have ignored him. Many are saying Roubini’s being too pessmistic. Well, it’s only a few hours until Barack Obama’s State of the Union Address. Maybe that’ll cheer up everyone in Davos. (That last sentence, by the way, was a joke.)