Davos 2009

Just returning from the World Economic Forum in Davos, Switzerland. Wow, what a sea change from 2008. Rampant pessimism, gloom, worried faces, a stunned, humbled crowd.

Here’s my quick personal summary. I will have a few more Davos posts later this week.

Vladimir Putin was very impressive. Cocky, defiant, confident, quick, smart, tough. He blamed the U.S. investment bankers and the American system for the financial meltdown, “…it wasn’t supported by reality, it had to collapse.” He made Russia sound great — “We’re cutting taxes, cutting regulation, firing up innovation, looking to work well with our neighbors.” One of the few (the only?) investment bankers in attendance turned to me during Putin’s speech and said, “Hey, I’m moving to Russia — it sounds great over there!” When Michael Dell offered to extend his company’s help in IT, Putin slapped him down, replying that Russia had superb and superior IT — they didn’t need Dell’s or anyone else’s help.

Oh, and by the way, Putin wants to dump the dollar as the world’s reserve currency.

The panel of “economic geniuses” convened to give their view of the future. This was the same stellar group that last year said that we would have a mild recession, if one at all. Steve Roach (last year’s only prescient pessimist) from Morgan Stanley said that, “…you cannot underestimate the dangers of the economic moment.”  He said that 2009 would be the first year since World War II that worldwide GDP would have negative growth. There is a “Multi-year adjustment coming.” He said that we would have recovery later in 2009 with anemic, 2.5% growth in worldwide GDP in 2010, 2011, and very likely 2012.  The economists believe that the big factor is consumer confidence. That will only bounce back if we get: 1) a way to sort out the asset mess and get pricing back, 2) quick fiscal stimulus, and political action.

Some of the socialist-minded Europeans were in heat about how nationalization is the only way out of this mess. There was a hell of a lot hand-wringing about four conflicting topics: Too much nationalization, not enough nationalization, inflation, and deflation. Clearly, no one knows what the hell is going on…

Where on else in the world can you go to a small cocktail party and hang with Peter Gabriel, Jet Li, and Mark Zuckerberg?

Maria Bartiromo from CNBC had a staged economic debate. Lot of yelling and screaming for the cameras. The head of the NYSE, Duncan Neiderauer,  was excellent — he said that we should use existing regulations and just extend them to formerly unregulated worlds like hedge funds and private equity — we don’t need new regulation. Steve Schwarzman, private equity whipping boy, looked lost, was incoherent. Steve made the argument that capital limits should be lowered, adding more leverage to the system. I wonder what the weather’s like on Steve’s planet. He kind of reminded me of that squirrel in one of last year’s Super Bowl commercials that screams in the middle of the road as a car speeds up on him. The banking types on the panel haven’t grokked the situation yet -– we’ve gone from a world controlled privately to a world controlled by public policy makers, and their defacto bosses –- the voters. That’s why you can’t buy new jets, pay yourselves big bonuses, and remodel your office using antique Chinese parchment. Because you’re now working for Mr. and Mrs. Jones from Topeka Kansas.

One of my favorite moments. Howard Lutnick of Cantor Fitzgerald ridiculed the bail-out, saying: “What, do you want the banks to go back to being boring and plodding?” At which point the CEO of Lloyd’s Bank in the UK said, “Hey, we almost went bankrupt 10 years ago. We brought the bank back by being boring and keeping risk in check. That’s why we’re in better shape today than most banks in England.”

Why is it that famous bloggers who are bathing in social are so sour face-to-face? With the exception of Robert Scoble who is a great, funny guy, I’m not sure I’d like to have a drink with most of that lot…

File it under, “Standing on the deck of the Titanic with 30 minutes to sink-time screaming for a waiter to bring you dinner and a martini” A session of old media types (Steve Forbes, the editor of the FT, others) talked about where they are headed given demographic changes, the death of print ads, social, etc. The room was full of old-line reporters (and one out of work reporter) who want the clock turned back to their old, comfortable world of daily deadlines and classified-padded budgets. Jeff Jarvis, who teaches at the Columbia School of Journalism jumped up and said, “Hey, that world is gone forever. Grab a camera, a blog, Twitter, and whatever new technology becomes available to deliver the news and stop whining. If you want to be a journalist from now on, that’s what it’s going to take.”

I asked Shai Agassi, the guy who’s trying to convince governments to fund his electric car infrastructure plan, when the economy is going to turn. He said that it will be 2025, unless his plan gets rolled out. Glad to see that Shai’s arrogance hasn’t flagged since he left the IT business…

Tom Friedman of flat earth fame hosted an MIT energy initiative breakfast on green. I’ve always found this guy to be ego-control challenged, but he had some good points. My favorite: When he’s in China, audiences say, “Hey, you guys in the U.S. and Europe burned CO2 for centuries to improve your lives, now it’s our turn.” Friedman’s comeback is: “OK, go for it. But while you’re building coal-fired power plants, we’re going to be innovating in clean tech. And we’ll get a big head start – we’ll dominate the next 100 years of energy, way beyond oil and coal. And you’ll have to buy it all from us.”

With all of the gloom, venture capital appeared to be shining through. I bumped into a bunch of VCs (Benchmark, Accel among others) who are successfully raising big pots of money and believe that this downturn will be a great time to invest. Prices will be low, great people will be available, companies will be looking for new innovations to turn themselves around.

A Davos scene. Banker comes out of the Jamie Dimon dinner. Reporter runs him down and demands to know the brands and vintages of wines served. JP Morgan is the only major bank at Davos and the press wants to try and catch them in an “AIG moment.”

IT/BT emits 2% of the total CO2 into the environment. But the goal is for the rest of the industries (power generation, cars, construction, etc) to use IT/BT to become more efficient and reduce their emissions by 80% over the next 20 years. So IT/BT emissions may go up, but it will help everyone else to go down.

Davos is expensive, ego-deflating (especially if you’re a nobody like me), exhausting, maddening (everyone wants to talk, a lot), exhilarating, time consuming, educational, and mind-expanding. I hope I was able to give a flavor…

Please post if you have any comments or questions regarding Davos.