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Davos: A new reality

Stephanie Flanders | 07:49 UK time, Thursday, 27 January 2011

Davos: Twelve months ago, the world leaders who gathered here were still in shock - counting the cost of the financial crisis, and breathing a sigh of relief that their economies were starting to recover. A year later, the focus has shifted, to the new global economic landscape that the crisis has left in its wake - and the threats which it could face in the future.

For the Russian president, who gave the opening address, the threat has been tangible - and not in the future at all. He spoke here yesterday, barely 48 hours after the terrorist attack at Moscow's main international airport. For the big advanced economies, the threat seems more existential.

True, all seems well on the surface. Even the notoriously downbeat Nouriel Roubini found some upbeat things to say about the global recovery in the first major economic discussion. The Americans are feeling less nervous, after a string of decent economic statistics (though I'd still be plenty nervous about the state of the US housing market). Globally, the IMF's updated growth forecasts - released at the same time as Britain's dire GDP figures - painted a fairly strong recovery for 2011.

Except, there's no getting around the fact that some here are recovering a lot faster than others - indeed, they didn't really have to recover at all. The Russians have long had a major presence here. Far more visible than usual, this year, are the delegations from China and, especially, India. At a dinner I attended last night, one US-based economist predicted that India would be the next bubble - basing his forecast partly on the amount of hype and exuberance about the country this year in Davos.

The theme of this year's meeting is "shared norms for a new reality". A big part of the new reality - written about enough times in this blog - is that these countries are leaping ahead - while the major advanced economies are still struggling to get back to where they were. On one estimate, the UK would need to grow by more than 6% a year for the next two years to get to the path we would have been on, if the crisis had not happened, and growth had continued as before.

Most Davos men and women from the "old" world want to take pleasure in the success of the new. They really do. But if they're honest, most will admit that there is still a zero-sum part of their brain, warning that the newcomers' gain will be our loss.

Even those who have got rid of that nagging voice may wonder how on earth, in this new global economic order, we are going to get anything done. The buzzword doing the rounds is that the G20 has turned into the "G-zero". The idea is that everyone is now responsible - and no one is in charge.

The odd sense of limbo may explain why the subject of commodity prices has raced up the agenda. The rising price of oil and other commodities has all the requirements for a perfect Davos issue: the problem is immediate and easy to identify; no-one in Davos can be directly blamed for it; and, crucially, developed and developing countries are nearly all suffering the effects.

The same cannot be said of the eurozone crisis, or even the battle to build a more stable global banking system. This time last year, I couldn't understand why the impending crisis in Greece - and the eurozone - was not being discussed. I was told that it was not a good subject for Davos: the disagreements between countries were too intense, and the problems too close to home. A lot has changed since then, but I suspect the European reluctance to wash their dirty linen here has not.

Comments

  • Comment number 1.

    Even I can tell you that India will not be the next "bubble". It has fundamental social and demographic issues that will prevent it ever being anything more than a sweatshop provider.

  • Comment number 2.

    Sounds like a riot.
    Isn't is supposed to be a jolly?

  • Comment number 3.

    Stephanie,

    ' Globally, the IMF's updated growth forecasts - released at the same time as Britain's dire GDP figures - painted a fairly strong recovery for 2011.'

    We did everything that was asked of us by the IMF (bailout, stimulus, squeeze etc.) and we did it first, why are we still stagnating ? Are the interests of the UK and the IMF aligned or are we just following an agenda not of our making and not in our interests ?

    With regard to the link to the BoE document I linked to yesterday, Trends in Lending (a bit like a box of chocolates, everyone gets something different) I found interesting the part about the contraction of the money supply, which would normally imply deflation (or dis-inflation if you like), due to the paying down of debt.

    If we still have internal inflation then that would imply we are consuming stuff (reducing asset value) at a faster rate than than the supply is being squeezed (which is why Merv can't increase interest rates)

    Normally only policy wonks, students and those paid to read these reports that have an influence on all of us, it is better if 'many eyes' read these reports as someone might spot things that others miss.

    (Dempster, I didn't understand all of it either)

  • Comment number 4.

    While some are suffering others are prospering. How do they do it? It's very simple - they just print money. Government deficits are new money to the economy, and for example US. government is printing 1.5 trillion dollars a year. That's enough to recover their economy somewhat, although at slow pace, and others are trying to recover by exporting to US. That's the talk about 'competitiveness', how competitive are you to export real resources to US, to get freshly printed paper dollars in exchange. But money has to come from somewhere, even if it is US govt. deficits.

  • Comment number 5.


    Just out of curiosity Ms Flanders, how many BBC staff are in Davos at the moment ?

  • Comment number 6.

    India won't be the next bubble because India is not stupid enough to open up their markets to destructive speculation, unlike some other suckers over the last 30 years.

  • Comment number 7.

    Just a big quango - a lot is said , nothing is done .

  • Comment number 8.

    I am known for being a harsh realist, but unfortunately by many I am seen as a pessimist, I’m not, I just really see things as they are. The problem is, when I talk to my friends and family, they are more interested in “big brother”, “I’m a celebrity get me out of here”, “x factor”, etc. They are not interested in Politics or economics, cannot blame them really as the subject matter is rather dull, and to be quite honest, it is in the elite’s interest to keep us in the dark.

    I consider myself to be an independent fact finder, it means doing a lot of research, and then to logically put the pieces together. I see many posts from people who simply moan and not really understand the problem. They moan about our Government and really think they are in change, well they are not and sooner people understand that the better, they are puppets for the small elite bankers; if people read their history they can see that this has been the case for many hundred of years. There have been some true statesmen like Thomas Jefferson who in the past have confronted the bankers, but following John Kennedy’s assignation, there was a change heart and many of today’s Politicians are simply career politicians in it for themselves, just look at the expenses scandal.

    The truth is, our financial system works on “fractional reserve banking” money is loaned into the economy as debt, therefore money is debt, again by far the majority of people do not understand the process, trust me they need to, only then can they understand the scam that is going on. The banking elite can inflate and deflate the money supply at will and make a hefty profit in the process at the ordinary person’s expense, they are no better than the mafia, at least with the mafia they are overt with their actions. The following quote from Nathan Rothschild really sums it up “I care not what puppet is placed on the throne of England to rule the Empire, ...The man that controls Britain's money supply controls the British Empire. And I control the money supply.”

    It’s time for people to wake up and understand the fundamentals, not just to moan and watch one of the biggest robberies in history, i.e. a redistribution of wealth from the average person to the ruling elite, Victorian Britain is only just around the corner if we are to remain passive and in the dark. Mind you it will take a lot for us to wake up; after all we have been softened up with political correctness and crazy health and safety legislation.

  • Comment number 9.

    Sounds to me that some of them are totally lost - deep in some Swiss forest.

    And the 6% a year sound-bite indicates just how deep in the woods they are ...

  • Comment number 10.

    I must agree with what was said by the US Economist, something I would not do too often. But I would include both China and India in the bubble scenario. For both are having to look at double digit growth just to stand still, although India is not as committed as China with its infrastructure programmes. India however does have food issues and the turmoil may well come from this area.

    As Far as India being no more than a sweat shop I think you do them great injustice and obviously never been there and never been engaged with any of their major organisations. They do have an issue with class but this is what is driving the bubble as it is in China.

    Both of these nations are drifting towards the model not through desire but necessity. You just have to look at the underlying inflation in both countries along with the ballooning property prices. An Ex colleague of mine recently looked at a flat in Beijing for the company he is working for. It is now more expensive there than in London per square foot and it was not even in a good area, prices in what is seen as a "safe" area were almost double.

    The aspiring middle classes in both countries have had a taste of what is on offer and want more and don't care who or what they have to crawl over to get it.

  • Comment number 11.

    If, to paraphrase, "I was told that it was not a good subject for Davos" then what is the point of such a forum?

    Do governments, industrialists and bankers not communicate through regular day to day channels? What real, practical use is this event? (Other than an expensive junket.)

    The only reality that should be apparent to those attending Davos is the now global rioting. This is a sign that a ruling elite living in luxury and the continuing transfer of wealth from the poorest to the richest is becoming no longer acceptable.

    I only hope they pay attention....

  • Comment number 12.

    From http://www.bbc.co.uk/news/business-12294332 Why economists get it wrong.
    "the senior economist of a large banking group, speaking off the record..... said, economists - just like investors - were suffering from a very bad case of "group think" where "everybody is unwilling to stick their nose out" and challenge the consensus."

    And here is Stephanie Flanders subjecting herself in Davos to more group-think, or is it sheep-think, or sheep-dog think?


    Stephanie says,

    "This time last year, I couldn't understand why the impending crisis in Greece - and the eurozone - was not being discussed. "

    And then Stephanie doesn't say what impending crisis this year is not being discussed.

    For which, you must guess. Could it be a global loss of faith in currency? Therefore could it be that global interest rates are moving up, because even China has made the move? Could it be that even China has become aware that protecting the value of its currency for its citizens is more important for its economy than a temporary resurgence of GDP growth in manufacturing? Could it be that one of the oldest civilizations where money was invented (either by itself, or concurrently with one of the other ancient civilizations around), and the civilization that suffered for more than one generation in the twentieth century (because it politically experimented with eliminating money from its economic system), might actually be indicating...

    Look you guys, perhaps you think we just copy your technology and make and sell everything cheaper than you just to beat you at your game, but believe it or not, we have our own lives and history here, and our own intelligence, and guess what? When money goes, there goes the economy. We didn't let Robert Mugabe come shopping in Hong Kong just to indulge his wife, you know... We wanted visiting rights so that we could send the younger generation to learn what we grew up with.

  • Comment number 13.

    " 3. At 08:37am on 27 Jan 2011, BobRocket wrote:
    With regard to the link to the BoE document I linked to yesterday, Trends in Lending (a bit like a box of chocolates, everyone gets something different) I found interesting the part about the contraction of the money supply, which would normally imply deflation (or dis-inflation if you like), due to the paying down of debt.

    If we still have internal inflation then that would imply we are consuming stuff (reducing asset value) at a faster rate than than the supply is being squeezed (which is why Merv can't increase interest rates)"

    Inflation is just an labor market phenomenon, apart from tiny bit that is due to imported goods, and since it's customary to have X percent of pay raises every year that is what usually happens despite state of the economy. Wage negotiators, whether individuals or labor unions don't easily accept pay cuts, and that is why deflation is so rare case.

    But this idea that prices move in sync with money supply is just wrong.

  • Comment number 14.

    The Davos fiasco jolly again!

    I keep reading that the UK is the 6th largest manufacturer in the world.

    Nonsense! This is one of the worst bent stats ever to be produced by the New Labour govt and now still used by the Coalition.

    No way ... it's another politician's lie ... if actual manufactured goods in the UK ... made substantially in Britain... are measured properly by say 80-90% + on UK process value ... adjusted properly for e.g. import rigging and multi-national figures and fuel processing omitted etc ... then the UK is unlikely to make the 'top twenty' or even the 'top thirty'. Remember that our primary productive industries include agriculture, fishing and forestry ... so the figures are not being very well explained as the '6th largest manufacturer'.

    Perhaps the media could ask some of the delegates to explain to our politicians in the UK how to create real growth in UK jobs, output, sustainable production etc ... as currently they have 'no idea'.

    Well not absolurtely ... How does a British politician enable UK growth ...

    He/she asks a 'friendly donor etc' who asks a banker who asks for an 'opportunity'/favour from govt and then the new money is printed with BOE acquiescence ... very powerful privilege in all of that?

    This is 'rotten inception' for 'growth' and needs to be reviewed as much of this politician's growth does not benefit the UK domestic economy.

    Perhaps some of the delegates can explain to the UK govt how their political system would deal with the UK monopolies. vested interests and flatten them out ... most will avoid answering this questions as is a global problem and a big problem in emerging markets where global trade has an ugly face of 'unfairness and inequality' as global spivs exploit unprotected natural resources and poor countries not having human rights or any employment rights and then produce goods to flood the UK market and our dustbins with junk that puts and keeps British people on the dole.

    Perhaps the BBC can ask a better range of questions on these issues ... than I can put forward?

    P.S. Besides a jolly and ski-ing etc what are these guys actually doing at Davos other than networking their own careers?


  • Comment number 15.

    "economists - just like investors - were suffering from a very bad case of "group think" where "everybody is unwilling to stick their nose out" and challenge the consensus."

    Verano
    That is why the 'armchair internet economists' (much to the disdain of the media, city, political class and academia) are ahead in the 'field of economics' ... because we 'challenge the consensus' and many of us are genuinely independent?

  • Comment number 16.



    Our problem is that the banks are still being run by the wrong type of people.

    I'd give them one month to tell us how they intend changing their attitude so they begin working for the benefit of the nation. If they fail to do that I'd seize their assets and nationalise them.



  • Comment number 17.

    "On one estimate, the UK would need to grow by more than 6% a year for the next two years to get to the path we would have been on, if the crisis had not happened, and growth had continued as before." The path we were on was within the six year period that King told us was the longest since 1922 of falling real wages. So who actually benefited from the growth in that part of the six year period just before the recession?
    Stephanie any take on why G Sorros would not talk to Justin Web on "Today" today about the British economy because he said it was too sensitive?

  • Comment number 18.

    The financial coven that meets at Davos have destroyed the goose that lays the golden egg - they just don't know it yet. It is impossible for most individuals to take on more debt - indeed most are repaying debt - you the financial community can only survive by lending more and more debt. The last thing society or the World or society needs is more debt. Yet that is the only way that the old men at Davos can make more money.

    Debt has reached a high water mark and the only way now is down - this must be recognised by the banks if they are to survive. The decline in debt will take a quarter of a century or more and what this means is that banks will make progressively less and less money! The regulators cause the bubble and the markets will re-balance the situation as the regulators are incompetent (and should be sacked).

  • Comment number 19.

    " 15. At 09:51am on 27 Jan 2011, nautonier wrote:

    "economists - just like investors - were suffering from a very bad case of "group think" where "everybody is unwilling to stick their nose out" and challenge the consensus."

    That is why the 'armchair internet economists' (much to the disdain of the media, city, political class and academia) are ahead in the 'field of economics' ... because we 'challenge the consensus' and many of us are genuinely independent? "

    It's even worse than that, because many of the mainstream concepts are deliberately invented lies. Milton Friedman invented this doctrine that you have to choose underlying assumption very carefully to arrive at preferred conclusions as a result.

    "... he argued that economists who want to “win” an argument of analysis must first establish the assumptions of the debate, regardless if they are reasonable, which are necessary to validate logically his hypothesis."

  • Comment number 20.

    Is it just me? I thought people called a meeting when they perceived a need to discuss something.

    What seems to have happened here is that there was going to be a meeting whatever, so the participants needed to find topics.

    They perhaps could have chosen better.

  • Comment number 21.

    16. At 09:53am on 27 Jan 2011, Wee-Scamp wrote:

    Our problem is that the banks are still being run by the wrong type of people.

    I'd give them one month to tell us how they intend changing their attitude so they begin working for the benefit of the nation. If they fail to do that I'd seize their assets and nationalise them.

    ...................

    Many of these bankers are not UK nationals!!! ??? uggh!

    Unless someone is properly taught and tested on ethics, moral values and fair trade and given a code of conduct and contract of employment insisting upon British interest business criteria to be followed in all aspects of their work... How ever can these 'opportunists' ever be expected, at all times, to act fairly and properly in the UK national interest?

  • Comment number 22.

    Paul Krugman blog Jan 22 2011, "Emerging economies are well above previous peak, and arguably more or less back to trend. Advanced economies, however, are still well below pre-crisis output, let alone the pre-crisis trend. No wonder, then, that we’re seeing inflationary pressures in the South even as disinflation remains the rule in the North. But what this says is that if global aggregate demand were redistributed, so that more of it fell on advanced countries, we could expand further without putting pressure on capacity worldwide. And there’s a simple way to get such a redistribution of demand: an appreciation of emerging-market currencies against advanced-country currencies. It’s the fact that the emerging nations aren’t willing to let this happen that is causing them to face inflationary pressures, even as it helps keep the advanced economies depressed."

  • Comment number 23.

    @17 - Like I said -They are lost deep in the woods.

    The men in grey suits have now stuffed up the global financial system to such an extent that they have lost all credibility. Davos could announce that they have found a way of turning base metals into gold - it would make no difference. The rest of the world believes that they haven't a clue and are simply in Davos to enjoy the food and wine. World Economic Forum my foot. World Economic Shambles is what it looks like.

    They'd be better employed deciding exactly where the Greenwich Meridian should be; off the coast of India or somewhere in the South China Sea.

  • Comment number 24.

    1. At 08:17am on 27 Jan 2011, Nick wrote:
    Even I can tell you that India will not be the next "bubble". It has fundamental social and demographic issues that will prevent it ever being anything more than a sweatshop provider.
    -----------------------------------------------------------------------
    Don't dismiss India.

    When everyone started talking about China and what they MIGHT do, India was quietly getting on with it.

    India's population will soon outstrip China's. India is now starting to lift their poorest out of poverty much faster. There is still a long way to go on that of course. India is better integrated into globalisation than China, where the years of isolation have deprived them of the academic, business and social reach of India.

    If this world is still trundling on in ninety years time, then I would expect India to be world's No.1.

  • Comment number 25.

    14. At 09:36am on 27 Jan 2011, nautonier wrote:
    P.S. Besides a jolly and ski-ing etc what are these guys actually doing at Davos other than networking their own careers?
    -----------------------------------------------------------------------
    Lobbying politicians.

    Lobbying the media.



  • Comment number 26.

    SF: 'The odd sense of limbo may explain why the subject of commodity prices has raced up the agenda. The rising price of oil and other commodities has all the requirements for a perfect Davos issue: the problem is immediate and easy to identify; no-one in Davos can be directly blamed for it; and, crucially, developed and developing countries are nearly all suffering the effects.'
    ---------------------------------------------------------------------
    So attendance is down this year, Stephanie, with all the investors and speculators staying away ...

  • Comment number 27.

    De Ja Vu - it's just like the 1980's all over again....

    http://www.bbc.co.uk/news/business-12291527

    Wan't that a Tory Government too? - one which thought it knew about interest rates but was proven totally wrong?

    Some people never learn do they...

  • Comment number 28.

    I’m not an economist, or a monetary expert.
    I’m a self employed working Joe, husband and father of three.
    So whilst I post comments on this site, I freely admit that I do so with limited knowledge.

    However there is one ‘topic’ with which I have experience, namely commercial and domestic property.

    I have spent my working life working in the construction and property sector.
    And in the 1990’s I made countless visits to homes, before, during and after the repossession process, I still do in fact, albeit to a much lesser extent.

    And based on this, and not on the little economic or monetary knowledge I have I make the following observations:

    I have noted that a young family engaged in the purchase of a home, are reliant on reasonable financial stability to enable them to meet repayments on the mortgage secured on the home.

    I have noted that is usually the lack of financial stability that results in the failure to meet mortgage payments as they come due. And such failure necessarily results in repossession.

    I also note that the demise of a family’s finances and resultant repossession is often a contributory factor to the disintegration of the family unit.

    And finally I note that during my working life, this country has been trapped in an economic cycle of boom and bust, caused by a massive expansion of credit and the resultant contraction of the same.

    So whilst I am unable to directly attribute the disintegration of many families to the economic cycle, I am most certain, that it has played a not insignificant part.

    Families, and more particularly young families, benefit from financial stability. And our current monetary system throughout my working life has not provided it.

    Many families, my own included, have weathered the cycles of boom and bust, but I have been involved in the repossession of many homes where other families have not been so fortunate.

    It is my belief that financial stability would promote economic stability, which in turn would reduce repossessions and the likely disintegration of families caught up on the same.

    And it is for this reason I post the same link I usually post:
    http://www.positivemoney.org.uk/

    And whilst I cannot say they have all the answers, I do believe that an alternative to the current debt based monetary system is worthy of some discussion.

  • Comment number 29.

    19. At 10:15am on 27 Jan 2011, zfvr wrote:

    " 15. At 09:51am on 27 Jan 2011, nautonier wrote:

    "economists - just like investors - were suffering from a very bad case of "group think" where "everybody is unwilling to stick their nose out" and challenge the consensus."

    That is why the 'armchair internet economists' (much to the disdain of the media, city, political class and academia) are ahead in the 'field of economics' ... because we 'challenge the consensus' and many of us are genuinely independent? "

    It's even worse than that, because many of the mainstream concepts are deliberately invented lies. Milton Friedman invented this doctrine that you have to choose underlying assumption very carefully to arrive at preferred conclusions as a result.

    "... he argued that economists who want to “win” an argument of analysis must first establish the assumptions of the debate, regardless if they are reasonable, which are necessary to validate logically his hypothesis."

    ...................

    The 'axiom of choice' .... Ernst Zermalo had earlier been attributed with/had covered the groundwork ... Friedman and many others know/knew that its is possible to construct very impressive economic and other thories that are capable/incapable of being proved/disproved ...

  • Comment number 30.

    Isn't it interesting. The sum of all of the posts so far, run along the lines of "Davos - Who Cares". The people of the world now know that:

    The Bankers and Financiers will only work in their own short-term interests.

    The Governments cannot, will not, or do not know how to rectify their own positions let alone cooperate to rectify the global position.

    The economists have become so transfixed by their own mathematical models that they cannot define what is truly going on and have no answers that demand respect and further investigation - let alone implementation

    Hence we have an over-blown and over-priced talking shop where the blind are leading the blind. Pity that they are not all struck dumb!

  • Comment number 31.

    What a bunch of clowns....

    http://www.bbc.co.uk/news/business-12295841

    So Sarkozy "won't let the Euro fail" eh? - Well France certainly can't afford it and I don't think he's going to be in power for much longer anyway.
    It's all talk, claptrap and bogus nonsense from moronic imbociles.

    Remember this one folks - for when the Euro fails we can all have a laugh at the 'short man' who thought he could hold back the sea. (and we all know what happened to the last man who tried that..)

  • Comment number 32.

    25. At 10:50am on 27 Jan 2011, Up2snuff wrote:

    14. At 09:36am on 27 Jan 2011, nautonier wrote:
    P.S. Besides a jolly and ski-ing etc what are these guys actually doing at Davos other than networking their own careers?
    -----------------------------------------------------------------------
    Lobbying politicians.

    Lobbying the media.

    .............
    Yeah ... who is 'lobbying' who?

  • Comment number 33.

    28. At 11:15am on 27 Jan 2011, Dempster wrote:

    I’m not an economist, or a monetary expert.
    I’m a self employed working Joe, husband and father of three.
    So whilst I post comments on this site, I freely admit that I do so with limited knowledge.

    ....................
    You make much more sense, to me, at least, on economic issues, than most of the academically trained and/or professional economists.

  • Comment number 34.

    29. At 11:16am on 27 Jan 2011, nautonier wrote:
    19. At 10:15am on 27 Jan 2011, zfvr wrote:

    I'd say the army of internet and armchair economists are superior to the clowns who advise Government with their impressive credentials...simply because WE ARE THE ECONOMY!

    Economics is all about behaviour, not mathematics. You cannot mathematically predict what John will buy next week for his wife's birthday - and yet this is what Economists claim they can do.

    In addition most Economists have never experienced poverty, low paid jobs or the real economic decision making that goes on in our daily lives - they go straight from academy to employment. This is why they will always be wrong - assumptions that market participants are 'rational' allow them to make further assumptions based on this incorrect premise.

    Rational consumers don't queue outside banks for their money, rational consumers don't spend like crazy and then completely stop due to media stories, rational consumers don't spend more on something that's worth less than an adequate substitute.

    Please don't be surprised that we're being led by fools - it wouldn't be the first time there was a massive and general misconception about something vital to all our lives.

    Let us not forget that in the early days of tobacco we had doctors actually telling people smoking was HEALTHY and good for you!

    Professionals will often tell you whatever they are paid to tell you.

  • Comment number 35.

    #13 zfvr

    'But this idea that prices move in sync with money supply is just wrong.'

    they don't move in sync but trend towards equilibrium.
    All else being equal, a reduction in the supply of money will reduce the price of a representative item.
    (the opposite also being the case)


    note: the link I gave at #3 doesn't work (bug in the blog software), the actual link to the BoE Trends in Lending is

    http://www.bankofengland.co.uk/publications/other/monetary/trendsinlending2011.htm



  • Comment number 36.

    34. At 11:50am on 27 Jan 2011, writingsonthewall wrote:

    29. At 11:16am on 27 Jan 2011, nautonier wrote:
    19. At 10:15am on 27 Jan 2011, zfvr wrote:

    I'd say the army of internet and armchair economists are superior to the clowns who advise Government with their impressive credentials...simply because WE ARE THE ECONOMY!

    Economics is all about behaviour, not mathematics.
    ....................
    Maths and behaviour? I've seen that you are keen on both?

  • Comment number 37.

    I am 47 yrs old and look back like so many with great affection to the 70s and the period of "STAGFLATION" when Maggie came in and took horrendous measures to sort out Labours mess(somethings never change).It was tough but we came out of it okay for the most part but there were fundamental differences back then during the days of Disco.For starters we had family,friends,neighbours and community that stuck together and helped each other.Sadly Not any longer.We had council housing we could sell off.Sadly Not any more.We had industry that we could sell off to privateers.Not any more.However what we had most was the advent of computer technology that has serviced us well for 30 years now.Unfortunately it infested the whole financial system(hence we are now where we are).We do not even have technology to fall back on now as we appear to be all technologied out and if by some miracle a new must have item appears on the market most of us no longer have the cash to purchase it.So my question to all the highly paid experts at Davos is simply"What ya got to fill the void?"If you are relying on China and India dream on because without our purchasing in the west they are in the same boat as us all.With all of this about to be exasperated further with the real cuts that are coming and a very real shortage of food supplies due to natural disaster where do we go now?War perhaps!I see no other option than the ultimate get out clause from economic ruin."One must understand ones past to understand ones future".

  • Comment number 38.

    31. At 11:32am on 27 Jan 2011, writingsonthewall wrote:
    What a bunch of clowns....

    http://www.bbc.co.uk/news/business-12295841

    So Sarkozy "won't let the Euro fail" eh? - Well France certainly can't afford it and I don't think he's going to be in power for much longer anyway.

    =======================================================================

    I put this link on RP blog - your comments are funnier though. How is he going to make sure it doesn't fail? Besides if for whatever reason Merkel decides she wants to downsize the Euro Club then he won't have any choice but to agree. Muppet

  • Comment number 39.

    "35. At 12:09pm on 27 Jan 2011, BobRocket wrote:

    'But this idea that prices move in sync with money supply is just wrong.'

    they don't move in sync but trend towards equilibrium.
    All else being equal, a reduction in the supply of money will reduce the price of a representative item. "

    That happens only if wage-negotiators bargain reduction in unit labor costs. It's not customary to compete on prices this way, so normally it won't just happen. Businesses see falling sales and cut costs by laying people off. After that, profitability remains at good levels. Why should labor accept pay cuts? As far as they can see, price level is not the problem. So price level may not fall, at all, even if there is a contraction in the money supply.

  • Comment number 40.

    Stephanie says:

    "The buzzword doing the rounds is that the G20 has turned into the "G-zero". The idea is that everyone is now responsible - and no one is in charge."

    So while everything is going fine, the G7/G8/G20 self appoint themselves as rulers of the world dictating to all the other countries how the world economy is going to work, usually in a G countries favour, at a poor nations expense. But now it has all gone belly up, no-one is taking responsibility and everyone is to blame.

    Forgive me for being cynical, but that idea is remarkably like the banking sectors idea of privatising all the profits and socialising the losses.

    I don't expect Davos to come up with any solutions to this crisis and actually I am beginning to wonder if it has all been planned. I find it impossible to believe so many leaders, supposedly highly educated individuals can collectively be so stupid.

  • Comment number 41.

    I'm concered about my impact on the environment. I heat my home with heating oil but am worried about what this is doing to the environment. I live in a rural area of lincolnshire so there's not much alternative to heating my home with oil except wood and LPG... but I don't know if this is even more harmful. I have just found a website called heating oil who offer Group Buying Days, this seems like a great way to help the environment because me and my friends can order together so we keep tankers off the roads more, reducing CO2 emissions.

    I would like to see more information on the internet about the effects of heating oil on the environment. On most climate change sites I go on there are articles on gas and electric heating but little on the effects of heating oil.

    Does anyone have any figures about heating oil and ways to minimise my impact on the environment?

  • Comment number 42.


    Hi Stephanie

    "The odd sense of limbo may explain why the subject of commodity prices has raced up the agenda. The rising price of oil and other commodities has all the requirements for a perfect Davos issue: the problem is immediate and easy to identify; no-one in Davos can be directly blamed for it..."

    I may or may not disagree with this bit, depending on who is in Davos. Does anyone there have anything to do with the money supply of the various currencies?

    If a barrel of oil today buys substantially more cotton, copper, wheat, beans etc than it did a year, 5 years and 10 years ago, then sure, it is more expensive and may even be in a bubble.

    If an ounce of gold today buys substantially more cotton, copper, wheat, beans etc than it did a year, 5 years and 10 years ago, then sure, it is more expensive and may even be in a bubble.

    Those are "ifs". The fact is we are seeing all these commodities go up in price together. Sure there are exceptions due to crop failures, weather events, etc but generally they are moving together.

    Are we seeing a dozen or more simultaneous bubbles? Not likely!

    I say look to your measuring stick! Someone has sneaked in behind you and lopped off a piece of it! Virtually all currencies are being suppressed in value through increased supply, presumably out of concern for export volume. That is at the root of this apparent "rise in prices".

    I am frequently hearing from the US that they don't have consumer level inflation so no problem. But let's go one step farther. Either the rising prices will soon come through to the consumer level, or the middleman type businesses for whom these commodities are input costs, will be squeezed. Manufacturers, distributors, and retailers etc could all suffer reduced profit margins. Future earnings may be revised downward. Stock valuations may fall. There may be more layoffs. These are the likely results of commodity price increases not being passed on to consumers.

    Given elevated commodity prices, these are the two possible outcomes. Neither is attractive. We do know who is responsible. One of them, named Bernanke, said outright that he wanted some inflation. Well, now he is getting it.

    So you see why I am not sure if "no-one in Davos can be directly blamed for it". Does anyone there have anything to do with the money supply of the various currencies?

    Cheers

  • Comment number 43.

    Nick at number one seems to know a lot about India, my guess is that he has probably never been there. All I need to say is Tata, and if he doesn't know what that means he doesn't know anything - just off to have a cup of Tetley tea, I wonder who makes that? Oh, and they make all our steel too.

  • Comment number 44.

    Forget this monetary system economics rubbish ....If you are worried about your children's future, or even your own future, watch the fantastic documentary, 'Zeitgeist moving Forward,official release,2011' on you tube. This includes the moderators of this forum who must also be just as concerned about their own futures as much as any of us are.

 

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