Aside from continued vilification of bankers, key issues coming out of the World Economic Forum included the question of which country has the capacity to lead us out of the global economic crisis and the palpable but unspoken tension between the U.S. and China. Just days after the conclusion of the 2010 annual economic summit in Davos, Switzerland, Nasdaq OMX EVP Bruce Aust earlier today co-hosted a debriefing with a team of editors from The Wall Street Journal that included Rebecca Blumstein and Gerard Baker at the Nasdaq OMX Marketsite in Times Square.
Aust, who heads up the global corporate client group at the exchange and was among the business leaders attending the confab, said China is most likely to help lead the recovery. “There’s no company out there that’s not trying to market to China,” he said.
Blumstein, deputy managing editor and international editor of the WSJ, cited the ease in which China recovered from its own recent economic downturn. “An authoritarian government is much more efficient than a democracy,” she said, during the discussion which was webcast. However, the relationship between the U.S. and China is tense. “It wasn’t discussed publicly in Davos, but people were troubled with that relationship,” said Blumstein. Playing by China’s rules when doing business with them can pose a threat to Western companies.
On the imperative question of what country could lead the economic recovery, the consensus was Brazil. All eyes are on the South American country as Rio de Janeiro, its capital city, was recently selected to host the 2016 Olympic Games. Preparation for the games as well as the event itself could jumpstart Brazil’s economy, according to the panelists.
On another front, corporate chieftains outside of the financial services sector vilified bankers. “There was a lot of hostility toward the bankers,” said Baker. “We heard corporate leaders getting very, very angry about banks, about how banks have essentially betrayed their trust over the year…they felt that they had handled the PR of the economic crisis poorly.”
And yet, the biggest economic concern, according to the group, was debt. “This issue of sovereign debt clearly is a huge transfer of risk from the private sector to the public sector around the world,” said Baker. He questioned where the demand for growth would come from in the future. “Consumers are still trying to work off their debt and the housing market is still relatively uncertain. It is obviously very bad news for demand,” he said.
Alan Murray, deputy managing editor of the WSJ and executive editor for wsj.com, who mediated the Davos debriefing, expressed a different concern. “Last year was the first year we really saw fear and uncertainty in Davos,” he said. However, Murray believes that even without government action, there is still a great deal that can be done to improve the economy. “Companies still seem to be engaged,” Murray said.
There was optimism coming from Davos, too. “Although the American CEOs definitely had some uncertainty about where we are headed, emerging markets were much more enthusiastic about what their futures were,” said Aust.
The overall conclusion at the end of the four-day talkfest, according to the panelists, was that there needs to be a solution to the economic crisis. While fingers are being pointed at bankers, Baker advised everyone to take a step back. “To quote Shakespeare,” he said, “‘First kill all the bankers.’ But, an overly aggressive response here could actually end up being more detrimental to the economy.”