Day 2 of the world Economic Forum in Davos saw increased pressure on politicians and business leaders to produce strategies to stop the financial crisis from growing.
Only on Wednesday one former president, Russia’s Vladimir Putin, warned – a unipolar financial system is counterproductive.
“It is a system where one center prints money and consumes benefits practically without any restriction or control and the other produces inexpensive goods and saves money issued by other states.”
And another former President, Bill Clinton of the U.S., echoed Mr Putin.
“The fiscal and spending policies of the last administrations doubled the debt of the country. So we can't finance the President's plans unless other people buy our treasury notes. We can’t possibly get the American economy out of it without the support from China, from, basically, countries that are export-dependant, cash-rich, but also hurt.”
The former U.S. leader hopes that the global recession will end in the next 12 to 15 months but cautioned that nobody knows when it will end. So it seems that Davos 2009 has the participants running like hamsters in a wheel – the same words as last year and still no obvious solution according to Jean Pierre Lehman, Professor of International Political Economy, at IMD International.
“What’s fascinating is that there’s been a lot of analysis on how we got here but I’ve heard very little how do we get out of here. I mean it’s only the second day but nothing that I’ve heard so far gives a sense of direction.”
That certainly doesn’t make life easier while debts continue to hang around companies’ necks according to Aleksandr Gnusarev, CEO, of United Industrial Corporation.
“The problem is that Russia has a large debt not only domestic but also in foreign currencies – and that is something we are yet not only to face but we’ll have to deal with it.”
Ruben Vardanian, CEO of Troika Dialog, is no more positive.
“Today unfortunately only the US or maybe Japan can borrow any money from the market. It’s not only Russia’s problem – most of the companies can not borrow any money or get any injection of capital in equity.”
So while leaders analyze – the International Monetary Fund says world trade has ground to a virtual halt. Robert Shiller, Professor of Economics, at Yale University says that isn’t great prospect for the future growth.
“Right now the problem is that everyone in the world has heard that we are in an economic crisis and that means that all sort of different people and businesses are putting their plans on hold.”
At Davos so far – a lot of talk – but little result. At the end of the second day one thing is absolutely clear – it is a much more somber and sober Davos than anyone has ever seen. And while the movers and shakers continue looking for a path through the fog of financial crisis – the world economy is close to coming to a standstill.