As markets fall like snow, politicos and business big wigs meet at Davos
Signs of a possible US recession hang over upcoming World Economic Forum as leaders arrive in Davos.
22 January 2008
DAVOS - Politicians and business leaders arrived in Davos Tuesday ahead of the start of the World Economic Forum, a five-day event clouded by ominous signs that a possible US recession could result in a worldwide economic slowdown.
The impact of the sluggish economy, and what it may portend for other nations, hung over the event, even after the US Federal Reserve Bank cut its benchmark refinancing rate to 3.5% from 4.25% in response to the latest in the global market meltdown.
The Fed's surprise was aimed at fears that trouble on financial markets from the US subprime crisis was spreading to the broader economy. Asian stocks fell on fears of recession in the United States while European stocks were down but later rebounded after the US rate cute, which was quickly followed by Canada, which lowered its rate by a quarter of a percent to 4%. The European Central Bank held its rate steady at 4%.
Some 2,500 world political and business leaders are coming to the Swiss Alps for the annual meeting that starts Wednesday and aims also to foster real dialogue on issues such as pursuing a lasting peace in the Middle East and stemming terrorism worldwide.
Andre Schneider, chief operating officer and managing director of the WEF, said economic developments would be a big part of the agenda.
"Now, a major recession or a stock market downturn has a lot of implications beyond pure economic reasons so frankly if we would not be debating this here then we would not be doing our job, either," he told AP Television News.
A year ago, Davos attendees predicted that the economy would move ahead with confidence. But after the credit crisis brought on by massive exposure to subprime mortgage securities, the prevailing mood instead is one of caution.
The forum said that this year's meeting will have the theme of "the power of collaborative innovation."
Klaus Schwab, founder and executive chairman of the Geneva-based WEF, said the meeting's "unique combination of the world's top business and political leaders, together with the heads of the world's most important NGOs, and religious, cultural and media leaders allows us to approach the problems that face the world in a systematic way and with an eye to tackling the major issues that face us all."
Schwab said that the forum would focus on addressing economic insecurity, as well as helping businesses compete with each other by collaborating. The event will also look at how science and technology have expanded the frontiers of nature, and how the values of different societies can help people gauge emerging cultural trends.
The opening session, which will be addressed by US Secretary of State Condoleezza Rice, will focus on climate change and terrorism.
The topic of the global economy, though, won't be far away.
Billionaire philanthropist George Soros, arriving later Tuesday, made waves when he was quoted by the Vienna-based newspaper Der Standard on Tuesday as saying the US was headed for a recession and that other regions, notably Europe, would not be able to escape unscathed.
"The situation is much more serious than at any time since World War II," he was quoted as saying.
His remarks were telling given that a survey conducted by the WEF ahead of its 38th annual meeting found a profound lack of faith that the next generation of humanity would be living in a safer world.
It also found that business leaders were held in better regard than their political counterparts, but many criticized them both.
"This survey shows that if we are to restore confidence in the future, we need to take concerted, global action," Schwab said.
The meeting itself will feature participants from 88 countries, including Pakistan President Pervez Musharraf, British Prime Minister Gordon Brown and Microsoft Corp. co-founder and chairman Bill Gates.
Protecting the leaders will take hundreds of police and other security forces, as well as up to 5,000 soldiers from the Swiss army and flights by the Swiss air force for a total security tab for the government of about 8 million Swiss francs.
(Copyright ap 2008)