Davos: Towards Unity or Towards Division?
Uwe Jean Heuser, Die Zeit (in German) | January 30, 2009
Davos' opening speeches have highlighted the opposing attitudes of the two orators. ++ They share only one thing in common, the target audience of their words: the absent USA ++ Putin heavily criticized the US for being the source of the crisis whilst China's Wen Jiabao only indirectly alluded to it, instead stressing the importance of collaborating with the Obama administration to find a way out of the storm. ++ After one day in Davos, there is scarce evidence that the big actors will translate their rhetoric of working together into action.
Tags: | financial crisis |
WEF |
Davos |
Putin |
Jiabao |
Economic crisis |
cooperation |
USA |
Obama |
Sat, Jan 31st 2009, 16:43
Donald Stadler, Self-employed, Diamond Contributor (1052)
Contrary to the conculsion drawn by De Zeit, Wen Jiabao seems to offer some grounds for hope that collabaration between the US, China, and the EU may be possible. Putin's comments are less helpful, but the fact is that size of Russia's economy is dwarfed in relative size compared with the other three players, and even by India. This is particularly true with energy prices at a small fraction of what they were a year ago, which sharply exacerbates the depth of the crisis for Russia while providing an ameliorative effect for the Big 3.
One fact which stands out is that the structure of the world economy must change in a significant manner. The US must cease importing as much as it has, and raise it's savings rate, that much is obvious to observers in the US and in Europe. A simlar restructuring must occur within parts of the EU.
The problem is that an unwinding of the consumer boom in the US and in Europe is necessarily going to have an enormous effect upon the primary exporters - China and Germany, unless they can somehow find new markets (where?) or take steps to increase domestic demand for their manufactures. Germany's position in the EU ootentialy put's it into a stronger position to resist the downturn than China's, but I think both governments must take steps to increase demand in order to avoid a devestating economic crisis brought on by lack of demand for their exports industries.