Dr. Feelgood’s Absence

The unusually high demand for pills for depression at the on-site infirmary at the Davos Congress Centre – which hosted the 39th Annual Meeting of the World Economic Forum (WEF) – captures the mood of the event well: low-key and off-colour.

Political leaders instead of CEOs and financers held centre stage, with 40 heads of state -- twice the usual number -- attending the event. Klaus Schwab, WEF’s founder, adept at keeping his finger on the pulse, carefully adjusted the number of Hollywood celebrities invited, reducing the glam quotient while giving show business an Asian feel, represented by Jet Li and Amitabh Bachchan.

Discussions at the event revolved around how to deal with thecontinuing crisis rather than how to emerge from it -- countriesvoiced concerns that countries should agree on common standards forbank bail-outs. And a distinct policy vacuum was felt because of limited representation from US President Obama's new administration.

Chinese Premier Wen Jiabao made scathing comments about the “unsustainable model of development characterised by prolonged low savings and high consumption” practiced by some unnamed countries. Another other self-confident speech in the gloomy gathering was made by Russian Prime Minister Vladimir Putin: “Today, the pride of Wall Street – the investment banks – have practically ceased to exist. In one year they have had to declare losses which exceed their entire profits for the past quarter of a century.”

Bankers kept a very low profile. Josef Ackerman, chairman of Deutsche Bank moderated a panel discussion of central bankers, the new heavyweights in the finance universe. Bob Diamond, president of Barclays, didn’t show at a party he was due to co-host and Lloyd Blankfein, chief executive at Goldman Sachs visited crown Prince of Dubai Sheikh Hamdan in the Middle East instead. “In their absence all the world’s problems have been laid at their door,” says Sir Howard Davies, director of the London School of Economics.

It got sexist at points, too. “Would we be in this mess today if it had been Lehman Sisters?” asked the moderator at a panel discussion. Harvard economics professor Kenneth Rogoff remarked that it was German Chancellor Angela Merkel who called for transparency and regulation in financial markets 18 months ago; some men suggested the problem would have been averted since women would never have come up with those sophisticated tools.

But policy discussions regarding the financial crisis soon meandered, converting the WEF into a forum to gain political points. By walking away from a debate on the recent military campaign in Gaza with Israeli President Shimon Peres – he claimed his response time was curtailed – Turkish Prime Minister Recep Tayyip Erdogan became a hero in his country. Erdogan faces elections in March. Deputy Chairman of the unpolitical Planning Commission of India, Montek Singh Ahluwalia too didn't hesitate to use the international forum to promise goodies in the next budget if the UPA were voted back to power.

The irony in Gordon Brown’s statements didn’t g unnoticed, either. After decrying financial mercantilism – an addition to the vocabulary, like de-globalisation, at Davos this year – and preventing developing countries access to vital capital resources he called n the Royal Bank of Scotland to concentrate more on UK lending.

Even in the closing ceremonies, where a display of expectation is almost mandatory, there was little optimism this year. Everybody warned of the growing threat of protectionism. Kamal Nath, India’s minister for commerce and industry, blamed the US elections for impeding trade negotiations last year stating that while it affects US commerce, sensitive issues such as rice have implications of life and death in India.

Jamie Dimon of JP Morgan said something about policymakers in general that surmises this year’s meeting. “I haven’t yet seen people get all the right people in a room, close the damn door and come out with a solution.”