At Davos, Wen and Putin blame US for crisis
DAVOS, Switzerland (AP) — The Chinese and Russian prime ministers indirectly criticised the United States for the worst financial crisis since the Great Depression, citing the drive for profit in the opening session of the World Economic Forum.
Both China’s Wen Jiabao and Russia’s Vladimir Putin said Wednesday the crisis seriously impacted their countries’ economies.
But while Jiabao expressed cautious optimism, telling participants that China would meet its target of 8 percent economic growth for 2009, Putin refrained from specific forecasts.
Wen conceded that the growth target was "a tall order" but obtainable, saying growth in China remains "on the track of steady and fast development".
Wen offered implied criticism of the United States and Western financial institutions when he listed the causes of the financial crisis as "an unsustainable model" of low savings and high consumption and a "blind pursuit of profit". He also cited "a lack of self-discipline" among financial institutions, and the failure of regulators to keep up with new financial instruments.
Putin, who called the crisis a "perfect storm" that was harming the global economy, refrained from blaming the US directly, but noted that just a year ago at Davos, American delegates emphasised the US economy’s fundamental stability.
"Today, investment banks — the pride of Wall Street — have virtually ceased to exist", a fact that he said spoke louder than any public criticism.
The annual meeting of politicians, business leaders, activists and celebrities gathered under the gloom of reduced personal fortunes, closed companies and hundreds of thousands of lost jobs.
People are "depressed and traumatised", Rupert Murdoch, chief executive of News Corp said on the first full day of the World Economic Forum in Davos, adding that worldwide some "USD 50 trillion of personal wealth" vanished since the crisis worsened with the 15 September collapse of US investment bank Lehman Brothers.
"The size of the problem confronting us today is larger than in the 1930s", said billionaire philanthropist George Soros.
The scope of the decline was evident even among the gift bags that attendees, who pay thousands of dollars to participate, received this year. Instead of loaded personal digital assistants, fine Swiss chocolates and gadgets they got basic pedometers instead, suggesting walking instead of limos as a way to travel to meetings.
"There is a modesty, even a humility of confidence and certainty", Michael Useem, a management professor at The University of Pennsylvania’s Wharton School of Business, said of the 2009 conference. "This year, because of the events of the last nine months, everybody has a sense of being a little bit knocked off their perch, and thus more modest about their own confidence and about their own certainty".
Capitalism still had its supporters despite the stunning failures of 2008, as participants debated ways to make it more responsible as well as the role of government in easing the way toward recovery.
"Profit is a major driver of business, but it is clear that it cannot be profit at all costs and it is also clear that self indulgence cannot replace reasonable competitive remuneration", forum chairman Klaus Schwab said.
Still, the failure of the world’s financial community and of regulators to detect and avert the crisis left many seeking answers.
"Today, people from every corner of the globe ask how it was possible that decisions could be taken, led by greed or incompetence or with no effective oversight, decisions that had terrible consequences, not only for the global economy but also for real people, who have lost their pensions, their homes, their jobs", Schwab said. "They may not understand what went wrong, but they are clear that their leaders have let them down".
Laura Tyson, a former Clinton administration economic adviser now working with President Barack Obama, was blunt in her assessment of why government needs to take a lead role in the recovery, and why financial institutions are discredited.
"Governments can borrow. Banks cannot. The reason they cannot is because no one trusts them. Why should they trust them? They weren’t transparent. They lost trillions of dollars. They created instruments even they didn’t understand", Tyson said.
[AP / Angela Charlton, Edith Lederer, Matt Moore, Bradley S. Klapper / Expatica]