World Economic Forum Preview - Is The "Davos Man" Diminshed?

The World Economic Forum will be held in Davos-Klosters, Switzerland January 25-29, 2012. Anyone, but anyone, of any consequence in the business, financial and economic communities will be there. We unfortunately have a scheduling conflict and will have to pass it up this year.

But that will not prevent us from taking a look at the agenda and some comments by observers on what might transpire.

Anyone paying attention over the past several years is likely aware of the sexy ski resort location in the Swiss Alps, the star power of celebs attending, the ultra-tight, sniper-enforced security, and the whispers of power-brokered deals going on. (We’ll get to some of that later). But let’s try and get through the obligatory boring stuff here with the least amount of pain possible.

First, what is the World Economic Forum anyway? (at least according to their media guide)

Quick Facts about the World Economic Forum

• Headquartered in Geneva with affiliate offices in New York, Beijing and Tokyo
  
• More than 380 staff members from 56 nationalities
  
• Incorporated by Professor Klaus Schwab as a foundation in 1971
  
• Not-for-profit organization, tied to no political, partisan or national interests
  
• Motto: “Entrepreneurship in the global public interest”
  
• Mission: “Committed to improving the state of the world”

Second, the theme for this year is, “The Great Transformation: Shaping New Models”.

In the introduction to the event by Managing Director Mr. Lee Howell, the major discussion issue is outlined as follows:

“The contextual change at the top of minds remains the rebalancing and deleveraging that is reshaping the global economy. The net result will be transformational changes in social values, resource needs and technological advances as never before. Leaders must return to their core purpose of defining what the future should look like, aligning stakeholders around that vision and inspiring their institutions to realize that vision.”

According to Founder and Executive Chairman, Prof. Schwab:

“The Annual Meeting 2012 in Davos is the place where we must – individually and collectively – have the foresight, the commitment and collaborative power to shape the new models needed to safeguard our global future, and to respond to the expectations and hopes of the hundreds of millions of people who presently feel left out.”

The conference will address: The Global Economic Outlook, Global Power Shifts and Emerging Markets, Growth and Employment Creation, Political Entrenchment and Multi-Stakeholder Governance, Natural Resource Scarcity and Climate Change, and The Digital Revolution. A major focus will be on the youth of the world and their prospects in a changing environment.

In excerpts from a personal editorial, the well-known Mohamed El-Erian of PIMCO had this to say:

“Within the next few years, a tipping to one of the two extremes of bimodal distribution is likely -- either into the good equilibrium involving the restoration of conditions for sustainable growth, meaningful job creation, and orderly financial rebalancing; or into a nasty one characterized by higher unemployment, debt deflation, financial instability, and even greater income and wealth inequalities. The history of Davos does not provide much reassurance that challenges will be addressed properly. Yet we must all continue to hope and urge that things will be different this time around. The welfare of billions around the world is at stake.”

Ok, enough with the academic headache-inducing overview…what is the real action?

-One of the most-anticipated events will be the kick-off address by Germany’s Angela Merkel, undoubtedly talking about the Euro zone crisis and the outlook going forward (while also trying to influence world leaders to Germany’s agenda). Forty “Heads of State” are expected to attend.

-There are approximately 280 official sessions but a lot of the “real business” done offsite and in private power meetings (with official session topics like “The Seeds of Dystopia” no doubt a few adult beverages will be consumed late into the evening also).

-About 2600 attendees, who are all “invited” (and a very tough invite) and the cost of attendance about $20,000 plus expenses (but first you need to spend $52,000 to be a member and then, according to the NY Times, need to pony up another $100,000 or so to attend the most exclusive private sessions. The highest levels of membership could run to several hundred thousand; the WEF is estimated to take in $185 million in revenue annually). The WEF goes to great pains to point out that it also invites non-paying guests from a wide variety different fields, disciplines and interests.

-Reportedly confirmed attendees aside from Merkel include Draghi, Lagarde, Geithner, Clinton, Pandit, Moynihan, Soros and Gates, while no one will be surprised to see a Buffett, Dimon, Bono, Prince William or Andrew, Zuckerberg, or any number of politicians, industry titans, finance chiefs or just plain old celebrities. As CNN Business said recently, “Forget the 1%, this is the 0.00004% crowd.” Something like 80 or more billionaires will be in attendance.

But Mr. El-Erian is one prominent figure who continues to diss Davos, seemingly proud of his record of having never attended and saying on his blog: “Over the years, and in the context of an increasingly unsettled and uncertain world, Davos has not had much impact. Even if nothing really consequential gets done there, Davos will remain a hot ticket, but I will not be going.”

-Journalist and author Andrew Ross Sorkin, of CNBC, the NY Times and “Too Big to Fail” fame, is attending Davos and will be writing and reporting on it all week. Mr. Sorkin quotes some past attendees:

“Of course, much of the week is really about one thing: networking. The event is chasing successful people who want to be seen with other successful people. That’s the game. But you always feel like you are in the wrong place in Davos, like there is some better meeting going on somewhere in one of the hotels that you really ought to be at. Like the real Davos is happening in secret somewhere.“

We guess the trick is to look like you know what you are doing at Davos and do so with a purpose, even if you don’t particularly have one. Which brings up another cynical slant from parts of the media, which have been running pieces on the “Diminished Davos Man”, citing the lack of trust in institutions and leaders, scandals in politics and business, and the societal upheaval around income disparity and elitism.

The good news is that the event has gone full-bore new media, with an official “Social Media Center” and the press guide giving tips on how to access various blogs, an official Twitter list, Facebook, Google Plus, You Tube, Flickr (for photos), Foursquare, Facebook Places, iTunes, and a variety of apps. And of course “old media” will be out in full force and you will be seeing any numbers of features on CNBC and Bloomberg over the next few days.

So it will be no problem for those of us in the 99.99996% to get our vicarious Davos fill at any time if we so choose, unfortunately minus the mountain air, Rivella, fondue, and Riesling.

Good Trading!
David W. (aka The