Davos Man has reemerged from the ashes, and it looks like the World Economic Forum’s party is back on for the global elite, but will the fun carry on, asks William Cash
Last year, I wrote a piece saying that Davos Man was dead. Like the rackety stage set which fell to pieces at last October’s Tory Party conference, which used to be where big business schmoozed with ministers in hotel suites, the World Economic Forum looked to have collided with some treacherous Alpine iceberg and become a metaphor for the sinking luxury cruise liner for the liberal elite.
There was certainly no sign of Donald Trump, the new American president – putting the finishing touches to his inaugural address in Washington – and Theresa May certainly didn’t need to go shopping for a new pair of snow boots. She was only there for a few hours before dismissing the Swiss gathering as a self-congratulatory and irrelevant holiday camp for ‘Citizens of Nowhere’. She had better things to be doing than taking the funicular to the mountain top chalet where Matthew Freud usually hosts a glitzy late night party, so that she could hang out with Eric Schmidt, former head of Google, Bono, Peter Mandelson, Larry Fink, the editor of The Economist and, oh, yes, I nearly forgot, the editor-at-large of Spear’s.
The obituaries for Davos were led by the magazine Politico which announced with confidence: ‘As with most fashions, it’s difficult to pinpoint the exact moment Davos began to lose its mojo. Was it when Brangelina showed up? When Mick Jagger strutted onto the scene? Whatever the trigger, there’s no denying the grandly titled World Economic Forum has lost much of its cachet. And with the global backlash against elites likely to intensify as we enter the age of Trump, Davos is the last place many elitists want to be seen.’
And yet Klaus Schwab’s mountain circus tent for world leaders and the global elite – so important is ‘attendance’ that some CEOs have the cost of the delegate passes written into their contracts – seems not to have blown away after all. We are now hearing that far from having turned to slush, Davos Man has been re-born and his views on such subjects as ‘Saving Economic Globalisation’ was not so much dead as merely cryogenically frozen.
Donald Trump – a figure of politically incorrect ‘populist’ hate for many of those attending – is scheduled to address the conference on Friday. He will be the first ‘sitting’ US president to attend the ‘WEF’ ( which is what you call it by the way, not ‘Davos’. Theresa May – Queen of British Brexit – is speaking tomorrow. Even Emmerson Mnangagwa, the oily new leader of Zimbabwe, otherwise known as the ‘Crocodile’ (and implicated in the killing of tens of thousands) will have a shiny VIP pass.
As an amuse-bouche to this week’s round of parties and panels on the subject of how to ‘make the world a better place’, President Macron hosted a summit at Versailles for 140 global CEOs where he bragged about investments totalling over £2 billion. This was praised by Goldman Sachs chief Loyd Blankfein who tweeted that it was a ‘great meeting: gincere and effective. Feels like a new day has dawned in France’.
This was widely perceived as being evidence of a ‘new dawn’ for Davos as well with Macron anointing himself as not so much the European dauphin to Angela Merkel (whose power has eroded now that Germany has no government) but as the new political emperor of Europe. That is a Europe that doesn’t recognise nation states but wants European integration to build a new world economic order.
But is this really the case ? I wonder. Yes, I am reading that 1,500 bottles of champagne and some 1,350 chocolate covered strawberries will be quaffed down over the next few days at 320 parties at the Hotel Belvedere, which towers above the high street of Davos like a vast wedding cake wrapped in more advertising – last time I went it was KPMG – than a Grand Prix track.
But if you scrape away the snow from the private jet windscreens, and forget about the worthier-than-thou feel-good PR posturing by the likes of Bono and Cate Blanchett, and take a closer look at some of the actual subjects being discussed this year at various panels, you see that this new world order is not so secure. Far from it.
Many talks have a note of a looming financial Armageddon, with many bankers – behind closed doors – talking of a second crash. The talks include the following subjects ‘Could 2018 Be the Year of the Next Financial Crisis?’, ‘How is Rentier Capitalism Aggravating Inequality’ and ‘Global Markets in a Fractured World’. The undercurrent is not talk of global harmony, or the world as a better place but rather of more inequality, more division, and sheer fear that the markets – with equities currently at a record high – might tumble like a Swiss avalanche.
After the initial first 24 hours of back-slapping and self-congratulation, the talk in Davos, so I am told, has quickly turned to such grim and gloomy predictions as that global financial regulators have ‘run out of ammunition to fight the next financial crisis’ with the likes of Citi and leading economists issuing ‘warnings’ about ‘the sustainability of current market conditions’.
Amid the champagne and chocolate strawberries reception parties, Anne Richards, chief executive of M&G Investments, warned that the guardians of global financial stability would ‘struggle’ to deal with another crash, according to reports. She said: ‘We have far fewer tools to deal with any event that happens.’ She then added – cuttingly – that the upset could occur ‘somewhere where none of us are looking’, giving peer-to-peer lending as an example.
I say ‘cuttingly’ as this was clearly a veiled reference to the fact the smug bankers, investors and the world’s soi disant ‘greatest’ economists utterly failed to see the last economic crash coming in 2010/11; nor did they see the financial crisis of 2007/8 coming. In fact, in terms of economic predictions the tack record of the WEF to look into the future has been dire.
Jes Staley, chief executive of Barclays, has also said this week in Davos: ‘There’s something out there in the capital markets, given that equity markets are at an all-time high, volatility is at an all-time low,’ he said. ‘That’s not a sustainable proposition’.
You have to give Schwab credit for realising that the smart way to keep the Davos circus on the road is simply to invite anybody and adopt an all ‘inclusive’ policy to his VIP guest lists. This was always part of the secret of the success of the WEF. So at a time when the world was in Cold War lock down between West and East, he kept the invitations flowing to leaders from all over the world – however odious or sinister their regime.
This is ‘neutral’ Switzerland, after all. Just as Swiss bankers didn’t – at least then – tend to ask too many questions about the source of a client’s money, so Schwab adopted a similar approach to Davos, which became a place to announce you had ‘arrived’, that you were ‘legit’ and were open for business, not least if you were the economics minster of an emerging market country with a reputation for endemic financial corruption and dodgy business. Schwab, cleverly, didn’t ask too many questions and simply copied the Swiss banker model. Anybody could use Davos as a forum for self-promotion so long as they paid the VIP delegate or corporate fees (which can run up to £450,000). And they still do.
My advice to any bankers, HNW investors and Spear’s readers out there is enjoy the party. While it lasts.
William Cash is editor-at-large at Spear’s