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Davos and trust

Robert Peston | 09:38 UK time, Wednesday, 28 January 2009

The blanket of snow covering Davos, the Alpine resort that hosts the World Economic Forum, is normally a comforting blanket.

DavosThis year it's almost sinister.

Because for the bankers, financiers and business leaders who feel able to leave the day-to-day crisis of managing their businesses through this painful recession for a few days of jaw-jaw and endless canapes, the big question is "what horrors still lurk beneath the surface".

They are sombre and anxious - such a contrast with their confidence of previous years that globalisation and financial innovation were enriching the world (and, as luck would have it, making them particularly prosperous). . .
What really cast a pall in the preceding weeks was the fall from a state of banking grace of Bank of America and its chairman Ken Lewis.

The biggest US lender seemed to have done most things right, till its takeover of Merrill Lynch in the autumn that now looks the very epitome of hubris.

On the top of this mountain, all bankers and traders have wanted to talk to me about is the colossal losses at Merrill, the spat between Lewis and John Thain (Merrill's now departed boss), and BofA's humiliating government rescue.

"What happened to Ken Lewis killed all of us", said a banker. "Investors rightly took the view that if you can't trust BofA, who can you trust?"

This is not an ideal backdrop for the formal business of Davos, which is to come up with proposals to pull the global economy through the painful downturn and make global capitalism safe for the future.

Many of those here see themselves (still perhaps a touch hubristically?) as helping to shape the agenda for April's meeting in London of the G20 group of leading nations.

That will be when the politicians of the rich developed nations, in which the economic mess was cooked up, come together with Brazil, India, China and Russia to save the world.

I have to say that bankers are rather less optimistic about what the politicians can achieve than the politicians themselves.

There's a fatalism among the uber-capitalist class: that the economy won't turn till 2010 at the earliest; and that they've been cast into the unglamorous underworld of bonus-less toil for as long as the mind can contemplate.

If business leaders needed telling that they're less loved than ever (they didn't), the annual poll of how much they're trusted by citizens around the world was a bad start to the day.

Edelman has been polling what we think of business for a decade. This year's result, if translated into a well-known colloquial phrase, would be unprintable Anglo-Saxon.

But here's what really shocked me: Bob Diamond, the de facto creator and head of Barclays' investment bank, isn't here. That's almost the equivalent of the Queen not showing up for Royal Ascot (well not quite - but you know what I mean).

Diamond, understandably, feels he needs to stay in London, where his troops are battling away in the war against financial pessimism. And there are plenty of other Davos banking regulars who've stayed away.

But even in the absence of Diamond - and of John Varley, the bank's chief executive - Barclays is pressing ahead with its lavish annual dinner for corporate clients.

They'll be treated to a rollicking address from Boris Johnson, the Mayor of London. Let's hope he cheers them up.

UPDATE, 12:13PM: The gloom here from business leaders, private-equity specialists, hedgies, bankers, management consultants and economists is deep and unrelenting.

They are immensely pessimistic about the economic outlook and about the ability of governments to lessen the pain.

I'd be tempted to come home immediately and climb under the duvet, except for one thing: when the herd is charging in a particular direction, the herd is normally wrong.

So on the basis that the best time to buy (metaphorically speaking) is when everyone else is selling, just maybe we're near the darkest hour for the global economy.


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  • Comment number 1.

    Hmm, so are any of them going to ask what is to be done about a shrinking Consumer economy?

    I know its dull to say the same thing again and again, but if peoples pay rises do not keep up with their actual cost of living then they spend less in the shops.

    We've seen this and watched many many shops going out of business this year.

    Just count the boarded up shop fronts.

  • Comment number 2.

    Still no talk about cutting back on bankers' salaries...Things therefore can't be that bad yet.

  • Comment number 3.

    Who cares about Davos anymore? It's become the private sector equivalent of G8 summits: endless "networking" opportunities, but nothing of any substance coming out from it. These things don't work from the moment they attract wide media coverage, and "being there and being seen" takes precedence over content.

    Bob Diamond, John Varley, and the many others who haven't gone this year, will achieve far more sitting behind their desks this week than would have been the case if they'd gone to Davos. I think it says it all that Barclays is still holding a big corporate party. Like I say, it's all about being there and being seen. No content.

    There are far better things you could be reporting on, Robert. I'm assuming you're actually in Davos. Maybe the Beeb thinks you deserve a few days off after your efforts over recent months. Fair enough if they do.

  • Comment number 4.

    Of course some firms are laying off staff with the plan to recruit later at a lower rate of pay.

    Very nice for them but they put families into poverty, and reduce the spending power of the consumers.

    House prices rely on the Salaries of those in work to provide the underpinning of the market.

    With falling or static wages, and fear of job losses, the price of Housing will fall.

    This means a continuing tough time for the construction industry unless they do some work for the much maligned Public Sector.

  • Comment number 5.

    I suppose Mr Diamond is walking a tightrope of confidence for his Middleeastern bank.

    Will his Bank have to pay compensation for the SIV's etc it has sold on to other Banks ?

    Hmmm, one for the corporate lawyers !

  • Comment number 6.

    Bob Diamond is a Bilderberger and therefore knows already what is planned for the world.

    That's why he's not going: there's no point for him.

    Of course, there will still be many Bilderbergers, as well as CFR members, attending, as those organisations still have to represented to enjoy the party and slap each other on their backs once the doors close to the press.

  • Comment number 7.

    Why 'name and shame' Barclays in particular? From what I read last night, there are no big guns at Davos. They all pulled out last minute.

    The 'official' line is they are all trying to present a low key, sombre image, and are not having those famous glittering champagne receptions.

    I would venture to suggest these bigwigs are not attending so they don't have to deal with what is bound to be a very uncomfortable time as they are all to blame for bringing the global economy to it's knees! Cowardice of the highest order!

    And US bankers are avoiding this just as much as UK ones, preferring instead to send junior executives to cop the flack!

    Who are these CEO's trying to kid?


  • Comment number 8.

    The useless bankers and even more useless politicians should feel quite at home up in the clouds ! They have lived in them for the last eleven years.

    Lets hope they get cut off whilst we all get on with the job of sorting out their mess

    Had Enough

  • Comment number 9.

    Time out at Davos. Let’s recap.

    The banks borrow huge sums, on short term loans promising good returns and low risk. They lent this money to us as long term mortgages. All this money fuels house price inflation; and, the security underpinning the loans is ever-rising house prices.

    Meanwhile, companies’ business model is geared up on cheap credit (borrowing to invest rather than accumulating capital) in part because this is tax efficient.

    Meanwhile consumers, given the opportunity to consume, consumed as if there were no tomorrow.

    The bubble bursts (as is the way with bubbles). The point was reached when people could simply not afford to service the increasing debt burden out income. (The fact that sub-prime lending went to people with no reliable income brought things to a head that much sooner but it was coming anyway.)

    The cheap money from abroad dried up. People who lent to the banks want their money back, and the banks cannot afford to pay. Enter the Government as guarantor and lender of last resort. We, as taxpayers, lend the money to the banks to cover the money which they had previously lent to us as mortgages.

    Meanwhile companies find their credit stream drying up at the same time as their sales.

    The real economy, kept afloat by the demand created by the continual influx of ‘new money’ (mostly from abroad), sinks. Government borrowing does not reverse this because much of the money is borrowed from domestic investors looking for a safe haven; and because it is being spent to pay of the banks (foreign) debts.

    The Government starts to lend, or act as guarantor, to companies in the real economy.

    The pound continues to fall and we can no longer buy cheaply from places like China with money borrowed cheaply (from places like China).

    The downward spiral in the real economy continues, while the Government, banks etc invest all their energies in propping up the debt mountain in the hope that something (preferably the economy) will turn up.


    You can write your own end to this story. For my part, I can only believe in an upturn that comes after all the over-extended credit has been work out of the system and consumption (including debt) is back in balance with earnings. This will be at a substantially lower level than before – and consumption will be lower still because as things stand we will still be carrying past debts (plus, on current form an increased tax burden).

    Please tell me if I’m wrong. But if I’m right then current policies are designed to preserve a defunct economic that is past saving. They can only make matters worse.

    Time for a change – but no real change is on offer. Who would lead the revolution? And a thought stirs in the back of my mind. “The debtors control the means of repayment.” Quickly followed by another, “debtors of the World unite! You have nothing to lose but your chains.”

  • Comment number 10.

    I just looked at the FTSE, over optimism ruling the day !

    Question : if peoples salaries remain static or fall, that means they will inevitably spend less in the Supermarkets, and everywhere else.

    So at some future point, one or more of the Supermarkets will see falling Sales.

    SO are the Hedgefunds going long ? And when will they all go short again ?

  • Comment number 11.

    If the place wasn't inhabited by regular citizens too, the best we could hope for would be an avalanche.

  • Comment number 12.

    You know, I forgot to mention Public Sector pay.

    I nice big thirty percent rise to kick start the economy.

    (Three months ago it was twenty percent, now it would need to be more!)

  • Comment number 13.


    And just who are these corporate clients I wonder?

    Lavish slap up dinner? Why? What's the occasion? Early or late Christmas entertaining?

    Should have spent the money on not foreclosing overdrafts!

    Arrogance is still alive and kicking then?!

  • Comment number 14.

    Bearing in mind how badly the Ratings agencies did with the subprime debt, who would care less about any report they might make ?

  • Comment number 15.

    If I was a banker of any discription I would be very reticent to show my face at Davos. Looking back at some of the proclamations made over the last couple of years God help us all if we again have to rely on this particular gathering of free-loaders to come up with the right path ahead. That the event is taking place at all suggests that the attendees still live on a diffrent planet to the one us stupid stupid pension holders live on. The business elite have mugged us lesser mortals and now they want us to pay attention and listen to their next cunning plan? LOL. Remember Frank Spencer. "Betty Betty I think I've done it again" springs to mind. I wonder why. I am sure some worthy topics such as peace in the ME are worth discussing but please lets not have any good ideas about how we should fight our way out of a paper bag - we have been there and done that and are now paying the price.

  • Comment number 16.

    House prices will continue to fall if peoples salaries do not rise.

    It is inevitable, moderating my post won't make it less true.

  • Comment number 17.

    The annual meeting of bankrupt's and insolvents!

  • Comment number 18.

    Housebuilders will continue to struggle whilst salaries fall or remain static.

  • Comment number 19.

    Skiing holidays are nice. Charge it to the Game.
    Are Professional Ladies providing entertainment a valid legal company expense. I wish I could go on some such working holiday or business trip to put on my CV too. Rest assured our future is in very capable hands, at least everyone is above board and no bribes are ever taken.

    I obtained a Job at Pan Am because my Agent played Golf at the same club as the managing Director. It's not what you know it's who you know when playing the Big Money Business Boys. The Wheels of industry keep turning, rolling rolling on the river.

  • Comment number 20.

    Will Davos actually bring out any cooperation over sending messages to root out the "bad apples", and emphasise that trust and honesty must return to banking?

    Must be a quiet day for you to be out there though Robert.

    PMQ's coming up later

  • Comment number 21.

    I suspect that the jaundiced view most people have of bankers is not actually something new at all (though it is obviously now more acute).
    It's probably just that the bankers never cared what anyone else thought so long as the bonuses kept spiralling upwards and they could still regard themselves as 'masters of the universe'.

  • Comment number 22.

    Post 62 from its entirety...

    "I left school at 16 and have worked extremely hard and paid my taxes ever since. I'm 37 now. On a fairly good wage at 31k per annum. However I?m on the breadline. I got married in 2003 and had my first child in 2005. Everything was great. My wife decided she wanted to be with someone else and left me. She now lives with a very rich man and drives a Merc. I have to pay 15 % of my net salary to her for the upkeep of our son which she never spends on him per se. I have to drive 50 miles every weekend to pick him up because she completely refuses to help out. I have just had another child and am now really with the right person and in that respect life is good. However, my old banger (car) just failed it's MOT and I cannot afford to get it back on the road. Why? Firstly, the mechanics charge of 60 pounds an hour is a joke. Once all of my bills are paid to put a roof over my head, pay maintenance (why I should be paying this I don't know as I?ve done nothing wrong and it's nothing short of criminal) pay the bills and travel to work which costs me ?4800 a year!!!! (I have to commute to London) brought food etc I have absolutely nothing left. I've never earned a huge wage and have not even been able to save, which as it turns out with interest rates doesn't disappoint me too much, apart from a pension which won't be worth anything because of these cowboys in charge.
    So, not only am I being priced off the railways (I'm trying to be green you know), totally knackered from doing 60 hours a week, unable to save, unable to get my car on the road and being robbed by my ex wife who left me and I have to pay, why the hell would I want a car loan from a sleazeball government to buy another car when I can't afford to put petrol in it because the gas bill is so high and the cahoot flexible loan that I got at 6% is now charging me 21% interest (more daylight robbery) meaning it will take me 15 years to pay back the 3k loan on it? I?ve simply run out of money. What comes in goes out. Labour got it wrong. Britain isn't working. Britain is broke and is being run by a bunch of arrogant, power hungry individuals that do nothing but lie and cheat the people. I know many many other people in this same situation. This government are so out of touch with reality it's not funny anymore. I've watched and read everything about our economic mess and now I am actually getting ill over the stress of living here under this government. Can I sue them? Really! Can I? Every time I read these blogs or watch the politicians on the BBC or wherever I get a rush of blood to my head. They never answer questions truthfully. They always avoid them and we're paying for these jokers to buy their second homes and fill them up with quality goods!! How the hell can it happen???
    Now the lords are corrupt and cannot be prosecuted. To quote Terry Wogan..'Is it me'? What the hell is going on? Why aren't people taking to the streets? The dark one is announcing saving the car industry and jobs and creating money for more loans. Are they for real? Who the hell can afford more credit? Haven't they learned from their own mistakes about credit? They keep talking about the need to get banks lending again to business and individuals. Well most individuals are like me. They can't take any more on - don't they get it? There's nothing left to be able to afford it. Things are too expensive and people have had their fill. No amount of cars being manufactured is going to solve this crisis. Man there must be about 10 million cars standing unpurchased on this land anyway. Why don't they get rid of them first or give em away? It?s not our fault they over manufactured and made them too expensive to buy. It's a freaking joke this country and I urge anyone who doesn?t' have any real reason to stay here get out while you can.
    Jeeeezus this is making me mad!!!!!"

  • Comment number 23.

    Wasn't Davos a baddie from Doctor Who?

  • Comment number 24.

    I know why Diamond and Varley are not there as they are finishing their latest book of non-fiction. The title is "Barclays Accounts".

  • Comment number 25.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 26.

    I enjoy your blog Robert, but if this is the most blog-worthy thing to write about today, then I'm calling the bottom of the recession. Is the fact that world bankers are having a more sombre party really the most interesting news of the day?

    Personally, I would very much welcome an article clearly detailing the potential problems associated with the moral hazard created by the taxpayer taking on so much risk for little or no return.

    Also some quantification of the problem (more than just "we're mullered") if the government initiatives fail. How much will taxes have to rise? How much less spending on public projects and welfare will there have to be? etc.

  • Comment number 27.


    Trust and honesty won't return until the Banks adopt the old Uk way of Banking.

    IE the Bank that originates the loan keeps the loan.

    Whilst the American idea of repackaging debt and selling it on to rubes remains in place, trust won't exist.

    They need to cut out the salesmen, and bring back Branch Managers !

    The Americans have no idea how to run a bank, if you don't believe me just look at history.

  • Comment number 28.

    Mondays Picks - Lloyds to Convert

    "As for Lloyds, I'm hearing that it may yet follow the lead of Royal Bank of Scotland by converting £4bn of preference shares held by the government into ordinary shares."

    Update on this story needed please Robert. Lets not lose sight of your scoop........

  • Comment number 29.


    Are we talking about Lady accountants and corporate lawyers performing karaoke ?

    Not very PC otherwise !

  • Comment number 30.

    No. 9 chriss-w

    pretty much spot on with your recap.

    the ending to the story - we reduce our standard of living through a combination of the following:
    1) a much lower currency making imports prohibitive
    2) lower domestic demand due to higher saving
    3) lower domestic demand due to falling asset prices and the ceasing of 'equity' 'release'
    4) structural changes where engineering, r&d and good old fashioned manual labour gradually replaces retail/media/property/banking
    5) a decade of stagflation like Japan

    but let's look at the BRIGHT side: yes there is one

    1) For twenty years, we lived WAY beyond our means by conning the rest of the world into lending us cheap money and polluting their rivers and fields sending us cheap goods
    2) In return we simply gave them bits of paper called pounds sterling that the treated as wealth, at least until now
    3) The empire has been declining for a century, through depressions, wars, oil crises and the like. But for the first time, it appears we may have to live within our means. Even in 1980 when that moment might have come, the oil saved us.
    4) Through that decline we have largely achieved what I believe will be IMPOSSIBLE for the developing world to achieve, i.e. good governance stemming from democratic representation of a fundamentally decent and tolerant socierty. It takes WEALTH to achieve this.
    5) I loathe Brown as much as anyone, but he is a SAINT compared to 3rd world politicians whose route to parliament is no longer civil issues like theft/embezzlement/bribery but criminal ones such as abductions, murders, rioting, etc.
    6) We therefore have clean drnking water on tap for example, or an NHS free at the point of use, HUGE achievements that encompasses the best of society and governance, and which daresay would be a lot harder to achieve were we scratching around for our next meal. Some of the spanking new NHS hospitals paid for by unearned taxes on phantom profits are just superb.

    We are surely the luckiest land in the world, having got so far whilst actually lacking the productivity / natural resources that it might normally entail. No doubt we have the colonialists to thank and lately the bankers. We have ruled / conned the world for centuries and now that the whole hosue of cards has crashed, we can sit back and enjoy a pleasant if dull-ish life on our blessed island.

    I, for one, am thankful.

  • Comment number 31.


    Why on earth has there been no mention of help and support for the very first fatality of the Credit Crunch........the Construction Industry?

    As a business owner suppling into that industry, I saw the carnage being wreaked more than 9 months ago.

    ........and when the upturn comes, if it comes, it won't be a matter of just turning that tap on!

    Rob Lund

  • Comment number 32.

    ASDA are creating another 7,500 jobs, GKN are making 2,800 people redundant.

    Strikes me that's a very good snapshop of the state of the UK economy.

  • Comment number 33.

    why all the gloom here...I thought the tide had been turned as far as the banks were concerned.

    Mr Peston cheer up, you can always hav a break and go skiing - something that has been off my agenda for a while now...

  • Comment number 34.

    After all what's life without a lavish annual banquet?

  • Comment number 35.

    Davos - waste of time jolly for a lot of massively overpaid people IMO.

    If you want to find out everything that is wrong and has gone wrong in our country then read the Mortgage Muddle article.

    Sums up

    1) The whole 'its not my fault' culture.
    2) The whole 'heads I win, tails you lose' culture.
    3) The whole 'banks giving bad advice' scenario.
    4) The legal feeding frenzy on the basis of 1,2 & 3.

    Makes my blood boil - if people are not accountable for what they sign then what's the point!

    BUT ON OTHER HAND there is a quote from the banks in the article somewhere that says something like ' noone could have predicted the unprecedented rise in house prices over the last ten years'!!!!!

    Surely that WAS predictable as a POSSIBLE scenario SURELY??

    Large parts of the general public have the wrong attitude to get us out of this mess.
    The bankers have the wrong attitude and I'm not sure they can get us out of this mess.
    The politicians......................

    Noone left to offend its time to go!

  • Comment number 36.

    With regard to number 9 (actually better than the blog) the question you don't address is how hard the landing should be. A hard landing destroys a lot of the business community and creates a situation where the economy spirals downwards too fast and too far. The trick is to soften the landing and glide down to the right level of consumption with affordable debt ratios.

    I think that is being done; and it will take a long time to return to whatever we call normal.

    We can say that this is gross mismanagement by Brown; but who else is there - a set of Tory ex-Etonians with no idea what to do? Vince Cable seems to know something about economics.

    Reality is that nobody knows what the answer is; the current set of activities seem as good as any other - I have yet to hear a better proposal.

    All we have to fear is fear itself

  • Comment number 37.

    If John Varley and Bob Diamond feel they can't abandon their sinking ships (and employees) in such trouble times, why on earth has Boris Johnson abandoned his job and millions of Londoners to go talk to a bunch of Barclays' corporate clients? I promise you 'Red Ken' would never have taken taxpayers money to do such nonsense!

  • Comment number 38.

    Dear Robert
    There is no shortage of money as the peers are getting IT all, so are the
    bosses payoffs
    hedge funds short selling
    civil servant pensions
    Council pension funds
    Bank bonus's
    Motor industry
    Utility Companies
    top council officials
    petrol companies
    PFI Contracts
    Councils and council tax
    All are recieving increases iin monetory contributions from the tax payer, and its the General public who Suffering
    yet NO ONE inthese groups are cutting back.

  • Comment number 39.

    That chap who was killed in the Blitz, ex-BoE Governor Josiah Stamp, warned all those years ago, that this would happen if bankers were allowed too much free rein.

    It has come to pass.

    So it must be time to return to 'sound' money.

    If it is not too late.

  • Comment number 40.

    I thought the whole point of Davos, like most conferences, was for the staff of the banks to have a massive jolly at the shareholders' expense.

    No doubt this costs thousands per delegate, paid for in part now by the British tax-payer.

    Nothing they predict or decide will have the slightest bit of value for the rest of us. It should have been cancelled in deference to the public who have been so royally shafted.

    I bet they are all crying like babies into their champagne right now about how their bonuses have been reduced. Pathetic bunch of bankers.

  • Comment number 41.

    Depression in Davos. As Reggie Perrin would say, "I can see the headline now, Worlds' bankers buried under avalanche of debt".

  • Comment number 42.

    OK so no one is asking the simple question: Where did all the money go. When you have people in massive debt, someone has to have the credit. Obviously it's not that simple but there's one thing that we can be sure of; alot of the credit went into Ferraris, riverside flats and bankers' bank accounts. With the Merryl Lynch bonus debacle and many others surely something has to be done about it. Very few people are getting ANY bonus outside of banking, yet they did despite destroying the economy. It sounds radical but surely there should be some way to claw back ill gained profits from private individuals to put back into the system. You could start with that guy from Lehmans who made half a billion alone over the last few years. So where did all the money go?? Robert Preston please answer this one!

  • Comment number 43.

    Hello Mr Peston

    Hope you are enjoying the bracing Swiss air. An A(lpine) level question for you today Sir.

    "Davos 2006 and 2007 = Hubris

    Davos 2009 = Uncertainty

    Davos 2010 and 2011 = Nemisis ?"

    Explain and discuss.

  • Comment number 44.

    Here we go again save the car ,what about
    a Housing Programe for rent
    How daft are Mr Brown and his Gang

    Housing Programe put much more back into this Country and would get us moving.

    Come on Brown stop being a fool.

  • Comment number 45.

    If only there were someone who could save us. But wait, look. Is it a bird? Is it a plane? No, it's Super Gordon protector of the global - no, the galactic - economy!

  • Comment number 46.

    Just found an amazing photo on
    Titled "Dr Who anyone? Tunnel, on the way down. Davos Switzerland". One picture worth
    a thousand words. Enjoy the ride.

  • Comment number 47.

    It would seem to be like any other night on the town: a load of bull being talked at length by silly people because they cannot find anything more meaningful to do with their time.

    This is all what Davos ever was anyway. We were always told this was where the great and good met but then they would say that wouldn't they.

    Even the money they were supposed to be once making actually belonged to the Leprechaun King at the End of the Rainbow.

    I just fail to see why the little people are to be forced to pay for all this institutionalised mendacity. I think it is time the taxpayer was heard but all we can afford is Bognor.

    I have had enough; it is time for change.

  • Comment number 48.

    Ladies and gentlemen

    As you may not have read my earlier posting, Rahere has decided to withdraw from this blog because of the impossibility of posting anything serious thanks to the abusive moderation.
    This Davos summit is an exemplar of why. If the bankers know their credibility is shot, why the hell did they go on the thing? It's not as if it isn't the world's biggest freebie at the expense of their customers, a freebie which flips a bird at the 2 million unemployed and thousands of businesses on the verge of bankruptcy they are directly responsible for.
    And yet RP decides to emulate them, and doesn't have the knowse to criticise. So much for the son of a socialist, as big a snout as any in that trough.
    I've troughed in my time a bit, but I've kept a sense of context. This puts the hypocrisy of this site's management beyond acceptability.

  • Comment number 49.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 50.

    29. At 10:42am on 28 Jan 2009, supercalmdown wrote:

    Are we talking about Lady accountants and corporate lawyers performing karaoke ?

    Not very PC otherwise !
    ask harriet harmon who is concerned that the numbers for female employees are going down due to the recession when she hasn't got a clue about the smaller details of other factors in the breakdown of numbers such as contractors, temps, part-timers, black, white, rich, poor etc losing their jobs too.

    there is no shame in the game for respectable professionals and top quality glamour models

  • Comment number 51.

    Post 23. I think it was Davros.

    However a room full of bankers that really would scare the Doctor.

  • Comment number 52.

    I'm sure many would love to find out what Barclays Bob Diamond and John Varley are up to.

    Many still think that there is political dynamite inside the Bank's books and records. How far back do they need to keep records? 6 years? Hmm.. what happened 6 years ago....Tony B's government.

    As for Davos, what is the point?

    Busted bankers congratulating themselves no doubt, a quick jolly to the Alps maybe.

    Now that we've skipped straight to Global Stagnation, what's needed is a way out.

    Another War perhaps? Generates a lot of work, jobs and income for Weapons systems manufacturers and associated industries, Armies, Navies and Air Forces.

    Sadly history seems to prove this - 1930's Europe/Japan, 1980's Falklands, 1990's Gulf War.

    So Robert, where do the bankers go next?

    Down to the Davos pubs or off the Davos 'cliffs'?

  • Comment number 53.

    30. courteousnewcitizen
    9 chriss-w
    36 Andywr

    I'm with you guys on this.

    Maybe we will never really know just how effective or ineffective GB's government is being, because this, our current reality, is the only one we will ever know.

    Sounds obvious really but it does mean that all this endlesss moaning and hypothesising by us armchair economists/philosophers as to how we got here and where we are going is just hot but nonetheless very interesting air.

  • Comment number 54.

    Things must be tough for those little darlings at Citigroup

  • Comment number 55.

    I hope that when the UK political contingent makes it contribution to the discussions at Davos, they don't get too carried away with Gordon Brown's hubristic conviction that he's doing all of us UK citizens a great favour by gracing us with his supreme leadership skills (albeit with his customary lack of grace).

    My worst fears were confirmed today when I read the Institute for Fiscal Studies Report informing me and my fellow taxpayers that we're going to be paying for Brown's economic genius for the next 20 years:

    How does Brown continue to get away with this? What's happened to democracy in this country and/or the spines of Brown's close cabinet colleagues who should have by now revolted and allowed the good people of this country to express their views on the Government's handling of Gordon Brown's carefully crafted recession?

    The man who dispensed with boom and bust appears to have been the architect of the UK's most spectacular bust in living memory. Amazing how Brown fails pathalogically to acknowledge in any way this slight error on his part.

    Anyway, time now for me to pop out and buy, er, a new car to assist with Lord Mandelson's brilliant plan for keeping the economic wheels on. Yeah, right.

  • Comment number 56.


    "OK so no one is asking the simple question: Where did all the money go"

    Simple answer - it's vanished, noone has it!

    To expand a little an example:

    1. I put $100 in bank A

    2. Bank A is allowed to lend out 90% ($90) of this money keeping $10 in reserve in case I want my money back so it lends $90 to my Mum

    3. My Mum spends the $90 on a new bike and the bike shop puts the $90 into it's account with bank A. Suddenly there's $190 in the bank but on $100 existed to start with - $90 has appeared out of nowhere

    4. Bank A lends $81 to my cousin who spends it etc

    This assumes the "fractional reserve" that the bank retains is 10% and after 30 cycles you've got $950 in the bank - 9 times the original amount of money created out of thin air.

    Now, if the bank has to increase it's fractional reserve to 15% 30 cycles produces on $650 so in effect $300 has vanished - it never actually existed but that's the effect.

    Here endeth the (rubbish) lesson!

  • Comment number 57.

    Anyone want a really good job?

    Salary excellent i.e. over GBP 125K a year plus healthcare.

    Only problem must appy by Monday 2nd Feb.

    It is at

    After all you couldn't do a worse job than the current lot!

  • Comment number 58.

    The only way to be trusted is to be trustworthy and the major investment banks and brokerages, at least, were not trustworthy. They were joined in this behavior by many real economy firms who engaged in questionable accounting practices.

    Naturally, it should not be a surprise if they have lost our trust. The firms who engaged in these practices have brought down the level of trust in all firms. How is the investor supposed to distinguish between the trustworthy and the untrustworthy in the corporate environment.

    "Cheat me once, shame on you. Cheat meet twice, shame on me. "

    That trust will be a long time in returning, if it ever does. It is unfortunate that this will indeed make the task of restoring economic growth that more difficult.

    The penalties for a breach of trust must be very severe indeed, both to deter this behavior and to punish those responsible for the economic and social devastation that resulted from it.

  • Comment number 59.

    #9 spot on.

    Any amount of economic theory cannot hide the fact that bankers made deals to hit bonus targets, not to achieve the bank's best interest. Nor can it turn attention from our Govt being dominated by people who lack the intellectual rigor, honesty and honour to make objective assessments and act on them.

    This crisis is the result having a managing and governing elite who are without honour and are dishonest.

  • Comment number 60.

    44. mac1946:

    "Housing Programe put much more back into this Country and would get us moving".

    You are absolutely right, and it is something that I have been calling for for a long time now.

    The motor industry is important, but it is dwarfed in economic terms by the housing and related industries.

    Builders and building workers are available, and at reasonable rates. Land for building social rented accommodation can surely be made available at low cost through the planning system.

    People need the houses, builders need the work, and the knock-on effects would be huge (electricians, plumbers, suppliers and so on). A social building programme would not damage house prices as the new houses would not be sold, they would be rented at affordable rents. Government could treat the investment as capital spending, so it would not damage the financing position in terms of reported current spending.

    If anyone talks to GB about this, please tell him that this policy would also be hugely popular!

  • Comment number 61.

    9. At 09:59am on 28 Jan 2009, chriss-w wrote:

    "Time out at Davos. Let?s recap."

    You have managed to cover everything i have been trying to say for months., only in a more concise way.

    I agree wholeheartedly with your message ( for what its worth).
    This is the whole point about the current financial crisis, if the housing price boom was born from insecure lending policies, how on earth can HMG expect to protect Britains economy from the effects by trying to keep the economy at the same level of consumerism?

  • Comment number 62.

    For those wih a little time on theit hands try this

  • Comment number 63.


    Just checking.......but do you read any of these comments.........?


  • Comment number 64.

    Why no mention of the attendance intentions Citigroup executives.

    Perhaps they could fly out on their brand new $50 million French built corporate jet.

    Maybe you could write an article on the interior soft furnishings. Obviously you have been properly brought up and would never be so crass as to contrast this vital expenditure with their receipt of some $45 billion of US taxpayers money.

  • Comment number 65.

    I remember in the late 1990's the smug people in my office who were riding the dot com bubble, who had created funds for their retirement and childrens' education, by doing no more than buying a few shares.

    I remember the TV programs a couple of years ago showing people with almost no skills or education buying properties, painting the walls beige, and selling them a few months later at enough profit to put money on the next one, and after 2 years having a multi-million pound property empire.

    Unfortunately we live in a real world. We all know that if money is being obtained too easily, by too many, that there is a substantial bubble that will burst. Some delude themselves, others hope to get out before the bust.

    We desperately need a new government because the current one will not, and cannot, admit that so much of our wealth was a bubble. And they are killing our future's by pursuing policies to maintain it.

    The only way for a nation to have real wealth is by adding value, either by digging up stuff that didn't exist before, making things that didn't exist, improving things, etc etc.

    Lunch time over.... back to making real wealth...

  • Comment number 66.

    @ #44. mac1946

    A huge programme of building quality social housing for rent would be a a big help to the economy. It would employ tens of thousands, help contruction-based SMEs, alleviate the huge waiting lists and help stabilise house prices in the buyers market.

    It should be built with massive grants as opposed to loans and the outstanding loans from earlier programmes written-off (most councils don't even pay the full interets cos they can't afford it so central government/taxpayer is never going to get it back anyway).

    Unfortunately we are run by a bunch of clowns and with the exception of the likes of Vince Cable or Ken Clarke, they are only opposed by fools.

  • Comment number 67.

    "managing their businesses"
    Translation - We give orders and feed our egos.

    Translation - Making money is always about who you know ... you know what I mean .. wink, wink.

    "They are sombre and anxious"
    Translation - We shed crocodile tears.

    "unglamorous underworld of bonus-less toil"
    Translation - We are addicted to ever larger dosages of bonus-drugs.

    "They are immensely pessimistic about the economic outlook and about the ability of governments to lessen the pain"
    Translation - There are no more golden eggs left. We know, because our faithful servants took them all for us.

    "Investors rightly took the view that if you can't trust BofA, who can you trust?"
    Translation - Trust is our most effective cloak. We are naked without it!

  • Comment number 68.

    # So now that the BBC no longer occupies yout time, perhaps you can get a few hospitals built!!

    Why do you sound so surprised/affronted - the BBC will never let anything "serious" through - If serious is defined as any intgelligent observations regarding the bizarre cabal who are busy marching everyone off the edge of the cliff.

    The whole media deal is about atomising the population - have everyone sitting at home on their own freezing, just so long as each person feels it is only them, and they are a unique failure, then everyone is happy.

    Censorship and suppression never works in the long term. In due course the sound of the streets will be heard.

  • Comment number 69.

    "That will be when the politicians of the rich developed nations, in which the economic mess was cooked up..."

    Are you sure there isn't a spelling mistake in there somewhere?

  • Comment number 70.

    No 30 courteousnewcitizen wrote 'I for one am thankful' Well how do newly born children look forward to the next 20 years after you have never had it so good? The generation born today have firstly got to fund your excesses with great sacrifice to themselves, and then to really spoil their future, you will expect the 20 somethings to top up pension funds so that you can enjoy another decade or so of comfort and a blessed retirement.I for one am actually worried about our children's future. Finally while you raised some good points in your argument 'Brown and SAINT' do not go together!!!

  • Comment number 71.

    I find this whole thing rather sick.

    Financiers who have been leeching millions of the back of the real economy for a decade are suddenly all depressed because their bonuses are gone, and the governments of the world are getting together in a top-class ski resort to figure out how best to take money from MY pocket to start the good times rolling for the city boys again?

    It's offensive.

  • Comment number 72.

    Yep, the West's luck has run out; I could have written this article myself:

  • Comment number 73.

    Why Davos? Perhaps Daventry would be better for these bankers.

    Robert ending on a positive note, zut alors! It must be the end of the world or are green shoots appearing?

  • Comment number 74.

    Bankers are on the piste again.
    It's a city tradition to visit all the historical pubs in the vicinity that were established in them good old slavery trade days.
    (but in canary wharf it is generally frowned upon to spend the whole afternoon in such pub type meetings because it is not part of their culture unfortunately, but they do have girlie wine bars and pole dancers for managers)

  • Comment number 75.

    This blog portrays that this lot of quasi elite BANKERS actually care about what is and what will happen.

    The reality is they will all be comparing yachts and mistress' and luaghing at the debt slave mass' who have recently become even bigger debt slaves.


  • Comment number 76.

    More Doom and Gloom Robert. When will you try to put a positive spin on anything.
    Lloyds Shares up 40% due to an up grade to Buy from one of the brokers. This would not seem to indicate sale conversion of the preference shares to ordinary stock which you implied a or so ago!!
    Perhaps mystric Meg should have a word with you.
    On a more serious note it does concern me that the general impression from the business leaders from Davos is so negative, did nione of them realise that the present financial situation was on the horizon. Even I was able to see that mortgage offers of 125% to value was likely to end in tears.
    Also what benefit is to be gained allowing politicians to speak At Davos. The thought of Gordon Brown addressing me about anything would be enough to tip me over the edge.
    All he has proved during the present crisis, which is his normal reaction to anything, is to act in haste (be regretably he never seems to repent!!).

  • Comment number 77.

    23 -

    Davros was the leader of the Darleks - what better place for the (self-styled) Masters of the Universe to meet.

    On a serious note why all the coverage? It doesn't look like anything significant is happening at what is supposed to be the World Economic Forum

  • Comment number 78.

    Anybody who thinks, or ever thought, that Davos is any more than the modern day equivalent of a workers' outing, deserves to have their opinions shunned for the rest of time.

    Where has all of the money gone? Like the Madoff investments, it has been spent on bonuses, dividends, absurd property pricing, and taxes which in turn have been profligately spent. Nothing of any real consequence has been salted away. The lost money is gone, never to return.

    When will things return to "normal"? Silly question because "normal" is indefinable. If we rephrase the question to read "when will economic growth return?" then my considered opinion is, not before 2015 and probably somewhat later than that.

    Have a good look at the delegates at Davos, Robert. Some of those people you may well see again queuing at a local soup kitchen before this mess is over and done.

  • Comment number 79.

    Let's set a scenario... Imagine the world is in the grips of a financial meltdown, that unemployment is rising, that govts are throwing money around in an attempt to put things on an even keel, that banks are teetering on the edge of the abyss. Against this backdrop the World Economic Forum is called for sober reflection......Who ya gonna call?..... Boris Johnson???????
    ....or has Mr Peston been on the Gluvhwein?

  • Comment number 80.


    7,000 new asda jobs gets the headline. This is pitched as good news despite the fact that ASDA predicting a big increase in 'bottom end' supermarket sales is actually bad news for the economy as a whole. Does that sound like spin to anyone else out there? Or is it just me.

    Robert in his update is calling the bottom of the market.

    The ruling elite of this nation and their media mouthpiece are really getting worried arn't they!

    Good job we still have Paul Mason on Newsnight who tells it how it is in his blog.


  • Comment number 81.

    Acordind to the latest economic forecast, Britain will paying for the colapsing credit bubble for the next 20 years ,which will give the pessimists something to look forward to after a decade of "no return to boom and bust "missery caused by charlattans on sterroids

    Another 20 years to be able to say "i told you so "and and wallow in untaxable shadenfreude

    Westearnerrs may be witnessing the end of dramatic external changes in their external world leaving future generations to inhabit the same environment as us and ponder why we built "mountains "in city centres that only seemed a lasting and fitting memmorial to the gods of "debt and delusion" that supported ,in their day ,the greatest cargo cult the world has ever seen. before it sank .

    Pollynesan cargo cult sounds so like Pollytitian car go cult with the chief priests meating in Davos to discuss the disintegration of their control over the millstones arround their necks before they get their tounges arround the subject of AAA's holes and how to sell them to themasses

  • Comment number 82.

    Anyone else wish they'd bought some bank shares on Friday.........

  • Comment number 83.

    ".....the best time to buy (metaphorically speaking) is when everyone else is selling...."

    I have reservations about going anywhere near shares again until the short-selling nonsense becomes more transparent to the small investor.

    Whats the point of buying shares in an apparently 'sound' business when I dont know if that business has offered a chunk of shares to the shorters to play with?

  • Comment number 84.

    Property prices must and will continue to fall. Banks will not make the mistake again and will insist on at least a 10% deposit.

    If property prices are still on average £150,000 then a minimum £15,000 deposit will be required. Not many people have anywhere near this amount and more likely have this as a credit card debt.

    With unemployment increasing and most of the private sector worrying about job prospects people will quite rightly be concentrating on paying off debts and saving. People like Peter Jones (Dragon) may be critical that the recession is being made worse by a lack of spending but why will anyone buy anything at present which is not an essential?

    Having 6 months savings in case of unemployment/sickness etc is the first essential.

    Lets get rid of debt, both government and personal, and never again allow a situation where debt can spiral out of control, especially in the alleged good times! Of course these were never good times in reality as the boom was caused by debt.

    House prices will be at more manageable levels if a large depsit is required.

    Gordon Brown promised he would not let house prices escalate as part of the 1997 manifesto. Yet another broken promise. Another case where regulation in this area could easily have been implemented to stop ridiculous mortgages being offered when the ability to repay was dodgy to say the least.

    Prudence first and then the recovery can begin.

  • Comment number 85.

    "1219 A Conservative MP asks why the UK is heading for a deeper recession than its competitors. The PM says the Institute of Fiscal Studies has found otherwise and that the Conservatives are "living in a dream world".

    I think it is he who is in the dream world. Or at the very least he is behind the times. Unless the IFS to whom he refers is a different one to the one that the rest of the world refer

  • Comment number 86.


    Did you really need to go to Davos in order to deliver the devastating insight that is your 12.13 update? In case it's escaped your notice, the current economic difficulties are firmly centred on the financial services industry. So hardly surprising that these guys are mired in a pit of doom. And in the brave new world of "boring banks" does it matter that they are?

    So, is Davos giving you a representative view of the world? What are you going to report back to GB and Ally D? You might be better served sticking the now-infamous "post 62" from your previous blog in front of them instead of regurgitating a load of guff from the Davos jolly. "Post 62" was a heartfelt plea from a guy who clearly just felt badly let down by a variety of agencies. It speaks volumes about Brown's total failure to do what he claims is his raison d'etre: namely to "support hard working families".

    If you were here and not sharing the pain of failed Hedge Fund managers etc in Davos, you might actually be able to quote some stats to back up your "just maybe we're near the darkest hour for the global economy". Stats such as the better than expected housing numbers from the US yesterday, or the better than expected consumer confidence numbers from France today, or Asda planning to create 7,000 more jobs, or the fact that at least one broker is now calling the main UK banks as a Buy.

    Many of the numbers are still horrible, but they're less horrible than they were, and less horrible than expected. When two or three of these get reported in quick succession, it usually means we've hit bottom. You're not going to get that kind of message from people who know their industry isn't simply in a bit of a downturn, but is being fundamentally and systematically taken apart and rebuilt in a more sustainable but, for them personally, a far less lucrative manner.

    Updates like that of 12.13 simply suggest you're trip to Davos is a waste of licence payers money.

  • Comment number 87.

    Post 54. See the link attached to my post 54.

    They have had to cancel it after Obama kicked up a fuss.

  • Comment number 88.

    Dear Robert
    I have read Hundred of blogs, public ones and your Correspondants , hundred's of the public have asked hwere has all the money gone AND THERE HAS NEVER BEEN AN ANSWER,
    Robert, Nick, Stepanie, Mark, and Andrew, come on lets have an answer.?

  • Comment number 89.

    Another one for you RP. Not sure if this came out at Davos or elsewhere, but George Soros has publicly stated that he's stopped shorting GBP. He thinks the currency is going to strengthen.

    Just making sure your Davos friends' depression doesn't cause you to do anything silly, RP.

  • Comment number 90.

    Has anyone read the new IMF report this afternoon -

    Quote --
    "The IMF believes that Britain's output will contract by another 2.8% over the next 12 months, with a stuttering growth of 0.2% projected for 2010.

    This is in contrast to predictions from the Treasury.

    Chancellor Alistair Darling, in the pre-budget report, set out that forecasts that the UK economy would shrink between 0.75% and 1.25% this year."

    Is our great leader still going to tell us all that "The UK is better placed then most"???

    Maybe he means Zimbabwe!!

  • Comment number 91.

    Re: #9. 09:59am. chriss-w: "Time out at Davos. Let's recap".

    Of course. I'm sure few would seriously dispute. I doubt not that Mr. Brown agrees with you. I need no convincing that wise heads all across the country are even now nodding their sagacious approval. the very birds of the air sing the same song.

    But how we are all trapped by our own human nature. Brown can't change direction. He's thrown his spear at the beast and now' he's charging it with his stone axe. He'd rather be trampled by the Mammoth than ask for his spear back to cast again - and see his manhood despised.

    Little of the current hoo ha has much to do with economics or wisdom. What silly creatures we are.

    Just have to wait for the next election for a change of course. It doesn't really matter who wins as long as the current mighty hunter and his close kin have been despatched.

    How about Roger the Squirrel for PM?

  • Comment number 92.

    #56, scouseflyer:

    Your example is nonsense. You forget that the $190 in the bank is offset in the books by the $90 that has been lent out, resulting in an overall balance of $100, or exactly the same as you started with. No money has been "created out of thin air".

    If you're going to bang on endlessly about fractional reserve banking then at least make an effort to understand it.

  • Comment number 93.

    So the bankers are more pessimistic than politicians?

    Well as it was the views and ideas of the bankers who got us into this mess, with their reckless *ideas*, why should we trust a thing what they say. And why should we believe them??
    *Roll on the bankers massive annual bonuses*

  • Comment number 94.

    No. 70 Badboysaver

    All your anger / frustration are no doubt justified, I too am a young saver renting all my life (in case you got the wrong impression). However, with the flexibility to move investments around between assets and currencies, one need now go down with the house of cards as those in debt are finding out.

    Its all relative really, and I can assure you that you are amongst the 3% of humanity that is privileged enough to live in a social democracy where politicians ARE held to SOME standards. Its just that you haven't seen worse and there is far worse believe me.

    I doubt it would have been too different under anyone other than 'saint' Brown. Blair ran most of the last decade. As did our elite bankers, corporate chiefains and regulators.

    I would however now tend to disagree (thankkfully) on the 'young paying for old' argument, because this downturn is rather refreshingly hitting the rich JUST as hard as the poor. From russian Oligarchs to smug 50-60-something middle-englanders with no mortgage who planned to retire in style by unlocking their 'savings' in their bricks n mortar pension, it is pretty clear that if you are a hardworking young person, things are finally moving your way with property prices crashing, and labour making up ground on capital as a source of wealth/earnings.

  • Comment number 95.

    72. moraymint:

    Thanks for the link. It is a very good article, with profound implications.

    If I may paraphrase, the era in which we in the West over-consume on the basis of borrowing, at the expense of underpaid, industrious workers in Asia, is coming to an end because the process has shifted assets to Asia and created liabilities in the West, creating a fundamental change in the balance of economic power.

    In my opinion, we are in the last days of this process, with the creditworthiness of Western government paper now the only remaining factor holding off the structural shift.

    This means that we, as societies, are going to get a lot poorer, because we will have to live within our means, where "our means" translates as "our productive output". This productive output is not high, and is certainly less than that of the emerging Asian economies. Logically, therefore, their future living standards will be higher than ours.

    This in turn raises huge questions about how we allocate much-diminished economic resources between the private and the public sectors.

    This is not a zero-sum game. If too much of our economic resources are taken away from the private sector, that sector will decline. This process would in turn set up a vicious downward circle. We therefore need to rethink the entire structure of our society.

    Compared to structural issues like this, Davos is a bit of a side-show at best.

  • Comment number 96.


    When you see the skill set etc it is clearly

    jobs for the boys

    I wonder what the annualised rate is, it cannot be a full time job judging by the members outside activities.

    5 million PA equivalent plus or minus?

  • Comment number 97.

    Chriss at #9, Sadly I can only agree with you. There are a couple of 'good' things to come out of this mess. Global carbon emissions will downturn sharply without any extra legislation or technical effort. A correction in the house market, especially in the UK, was long overdue. I can only hope that if the situation improves the opportunities for prosperity will be in the real economy and not from betting on the value of other people's currency.

  • Comment number 98.

    80. Jericoa wrote:

    "7,000 new asda jobs gets the headline. This is pitched as good news despite the fact that ASDA predicting a big increase in 'bottom end' supermarket sales is actually bad news for the economy as a whole"

    Careful not to confuse short-term and long-term. You're right that the current trend towards lower end food shopping is indicative of the economy being in trouble. However, the Asda jobs will be there when the recession is long gone, and Asda is again pushing its higher margin products.

    I think it would be a lot more worrying if Asda was so pessimistic that it was closing stores rather than opening them, cutting jobs etc. I don't think anyone doubts that the next 6-12 months are going to be tough. But the fact that Asda (and others - you just have to do a bit of digging) have longer term expansion plans shows that what we're experiencing is a recession, and not the end of the world.

  • Comment number 99.


    Actuarily speaking.

    I wonder how many of the people who have contributed to this discussion today will still be alive in 20 years.

    Sobering thought eh! what!

    Eat drink and be merry for tomorrow we are bankrupt

  • Comment number 100.

    Rahere - it is important that you keep posting.
    AlexanderCurzon - WHERE ARE YOU

    The regular contributers to this blog (you know who you are) are what make it such an informative and addictive read, without you it will dissolve into 10 or 20 posts of mundane comments.

    Anyway, Davos, what is the point, don't they have teleconferencing at the top tables these days, why the need to abandon such important posts to have a jolly in the snow (perhaps they aren't so important after all)

    They produce a report (actually, it has already been produced Global_Risks_2009.pdf) so why don't they stay at their desks and read it there.

    Davros, at least we know that his agenda was world domination and the abolition of stairs, what's this lots agenda.


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