Davos: Is Capitalism, as We Know It, Dead?

Davos: Is Capitalism, as We Know It, Dead?
Video Marketwatch
As a record number of heads of state gather with business moguls in Davos, WSJ's Andy Jordan wonders whether the World Economic Forum's focus will be on finger-pointing or collaboration to halt the current global financial-markets slide.

'Significant' Risk of Protectionism: Globalization Backlash as Markets Crumble

'Significant' Risk of Protectionism: Globalization Backlash as Markets Crumble

The failure of Wall Street to police itself has put capitalism on trial and prompted a "huge shift" in the debate over globalization, says Leo Tilman, president of strategic advisory firm L.M. Tilman & Co. and author of Financial Darwinism.
Indeed, although the debate over immigration seems to have died down in the U.S, a backlash against globalization is growing; notable examples include:

* The anti-U.S., anti-capitalism rhetoric of the Davos summit, most notably from Chinese Premier Wen Jiabao.
* Protectionist measures being discussed as part of the U.S. stimulus bill.
* Protests in the U.K. against legal immigrants and Spain's "voluntary return plan," whereby legal immigrants are paid to return to their home countries.

Against this backdrop, and with politicians worldwide scoring points with anti-globalization comments, Tilman says there is "significant probability" of overzealous regulation and/or protectionist policies that exacerbate the current economic malaise.

The Markets in the beginning of February 2009

The Markets in the beginning of February 2009

January 2009 turned out to be one of the worst months for the stock markets for years (or ever until now). Dismal results and predictions from large companies, rising unemployment, and a dire outlook everywhere. News about a global recession almost ever day.
The Obama Inauguration seems to be the only real changing news for many, although the quarrel about the Stimulus Plan between Democrats an Republicans is gathering momentum. Wallstreet and the Banking sector are despite the bailout money keeping on their large bonusses with showing few responsibilty for the social implications for their personal or corporate greed.
Social unrest was on the rise worldwide.
According to the latest news, incomes in the U.S. are falling and saving is on the increase.
An analysis from last months figures show a rise of inventories, the holiday retail sales in December were pretty bad as well.
All together no reason to expect an upsurge in the markets or a prolonged bear market rally, but more bad news for the first quarter of 2009.

Today, February 2nd, Far East Market were depressed with losses of 1.5 and 3 percent.
China is coming up with a second Economic Stimulus Plan, the unemployent situation is getting grimmer.
Europeam Markets were losing ground with losses of 2 up to 2.5 percent. (Amsterdam 16.00 CET).
At he same time U.S. Markets were slightly off with the Dow losing less than 1 percent and the Nasdaq turning green again, the S&P 500 just over a half percent in the red.
(Update 16.35 CET) Stocks pare losses after better-than-expected reading on manufacturing activity from the Institute for Supply Management. Markets in Europe and U.S. going up on this news.

From the WEF in Davos not much ground breaking news this year, the famous 'Davos man' seems to suffer a bit from an upcoming depression and a lack of creativity.

Global financier George Soros says the world needs to push faster to clean up the bad debt problem with a creation of a "Bad Bank" to absorb toxic assets.

Obama to Move On CEO Pay Plan, 'Bad Bank' Delayed
In an interview aired on NBC Monday, Obama said, "I don't want to pre-empt an announcement next week," when asked if the administration was committed to the bad bank idea.
The President added that "we're going to have see some of this debt written down."'

Soros has a new book, The New Paradigm for Financial Markets, I haven't read it yet, however, books of George Soros are usually worth reading and recommending.



There's an old saying on Wall Street: "So goes January, so goes the year."

If the so-called January Indicator holds any water, 2009 is going to be another rough year as January 2009 was the worst January ever for both the Dow and S&P, which began February in retreat as well.
Leo Tilman, president of strategic advisory firm L.M. Tilman & Co. and author of Financial Darwinism, is not a big believer in January's predictive capabilities. But he does expect 2009 to be another "difficult year for sure" for stocks, based largely because of the ongoing deterioration of the economy.
Because of the "unprecedented uncertainty" regarding the timing and composition of both a stimulus bill and the next phase of bank bailouts, Tilman's "best-case scenario" is for the economy to stabilize by year-end and financial markets to be range-bound.





Tilman about Wallstreet's survival
* The "strategic vision" of Wall Street executives, a group Tilman says is still largely ignorant of what levels of risk and leverage are (and aren't) appropriate. (Figuring out how to rethink the business models and reengineer the parts that aren't working is a big part of Tilman's consulting work and the focus of his book. )
* The structure of the U.S. economy. If it remains based on consumer borrowing and spending, don't expect Wall Street to change its securitzing ways, he says.
* The future regulatory environment.

Regarding the latter, Tilman is a believer in the need for more transparency and regulation that enables capitalism to "function in a more constrained, responsible way." But there's a "huge danger" regulation will be enacted very quickly in this current anti-Wall Street environment that will end up " choking the financial services industry and choking capital markets."

Davos Annual Meeting 2009 - Klaus Schwab

Davos Annual Meeting 2009 - Klaus Schwab (Video on YouTube)

Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum has given his views on how the Forum's Annual Meeting should respond to the global economic crisis, saying in an interview that "the first task is to help to manage the crisis and the second is to shape the post-crisis world because only if we look at longer term perspectives can we recreate trust, in the economic system and the future." Professor Schwab was speaking ahead of the Forum's Annual Meeting in Davos-Klosters, Switzerland, 28 January – 1 February 2009.

Annual Meeting 2009
Davos-Klosters, Switzerland, 28 January - 1 February 2009
"Shaping the Post-Crisis World"

The World Economic Forum Annual Meeting 2009 promises to be one of the most important events in the Forum’s history. The significance of the Meeting is such that 42 heads of state and government have already confirmed their participation in Davos-Klosters where they will join business leaders as well as NGOs, Trade Unions and experts from a wide range of fields. The Meeting will be focused on managing the current crisis and shaping the entire post-crisis agenda, from economic reform to climate change.
Participation is by invitation only and strictly limited to the criteria and quota of each stakeholder group.