Davos Live 2010
Saturday, January 30th, 2010 Uncategorized.
Published: 6:05AM GMT 28 Jan 2010
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New bubbles
George Soros, the billionaire hedge fund manager, is worried about new bubbles developing and right now gold is his fear. “When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment,” Mr Soros said. “The ultimate asset bubble is gold.”
Despite the great brains gathered in the ski resort, Jeremy Warner is sceptical that anyone has a clue where the next crisis will come from. Here’s his blog.
China
Like every Davos gathering for the past decade, China’s a hot topic. Soros used the first day to pile the pressure on China to let its currency rise, a proposal that was quickly rebuffed by Zhu Min, the deputy governor of the People’s Bank of China. A stable yuan, he claimed, is “good for China. It’s also good for the world.” Zhu also downplayed the idea that China will drive a recovery. There isn’t a “strong growth engine.”
Davos blogs from the Telegraph:
Ed Conway: Davos, tuberculosis and a history lesson
Jeremy Warner: is it really a sign of the times?
Jeremy Warner: bankers get out their defences
Jeremy Warner: Nouriel Roubini actually gets it wrong
Bankers, their pay and our problems
French President Nicolas Sarkozy (above) used his address to assail the “frenzy of financial markets,” arguing that “it all comes back to taxing financial transactions.” Yes, banks are a central theme of the five days at Davos. There’s pay, regulation and whether they should be split up just for starters. Peter Weinberg, one of Wall Street’s most influential bankers, admitted on Wednesday that paying mega bonuses for generating short-term profits caused “systemic instability.”
Earlier that same day Josef Ackermann, the boss of Deutsche Bank, made it very clear that splitting banks into smaller ones will damage the economy. Bob Diamond, the President of Barclays Capital, has urged Governments to ensure that any moves on regulation are co-ordinated. Check out Jeremy Warner’s take on Diamond’s defence .
Lord Turner, the head of Britain’s financial regulator, blasted more buckshot at bankers. He wants a new body to limit bank lending in specific sectors, such as housing, to avoid bubbles. Speculator George Soros joined the bank bashing when he backed President Obama’s radical break-up of banks that are “too big to fail”.
Videos from CNBC
Ex-BT boss Ben Verwaayen on how we’ve lost the definition of success
Lloyd’s of London chief Lord Levene on why regulators get it wrong
Nouriel Roubini, Axel Weber and Zhu Min
Recovery or double-dip?
If the delegates aren’t talking about the banks, you can bet they’re discussing the economy. Soros, who made billions betting against the pound in the 1990s, warned that resistance to more government borrowing could hamper much-needed spending and push the global economy into a double-dip recession in 2011.
Who are the pessimists?
It will come as no surprise to those already familiar with him that Professor Roubini (right) hasn’t got any cheerier. He told Bloomberg that “down the line, not this year or two years from now, we could have a breakup of the monetary union.” The mounting problems in Spain, he says are a potential “disaster.” Before you sink into depression, read Jeremy Warner’s look at the predictions that Roubini made last year. They haven’t all come true.
And the optimists?
David Rubenstein, the co-founder of private equity group Carlyle, has put his hand up first. “There are a lot of great opportunities we see in the United States and abroad.” Rubenstein has little time for Roubini & co, arguing that “sometimes generals fight the last war, economists fight the last recession.”
The internet
The opportunities provided by the web are always a key part of the agenda at Davos. Evan Williams, the man behind Twitter, and nGenera chief Don Tappscott say businesses are failing to understand social networks because they still think of them as a way of communicating to customers rather than listening to them.