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Bankers Bash on, Regardless

Julio Godoy

BERLIN, Feb 3 2011 (IPS) - The World Economic Forum became a platform this year for bankers to seek to re-assert their traditional power. And once again, it became a forum – in contrast and even opposition to the World Social Forum due to begin in Senegalese capital Dakar next week – where the damaging effects of globalisation and the environmental consequences of unrestrained growth were pushed aside.

“What we have seen in Davos is the return of self-complacency of corporate capital,” Rainer Falk, expert on economic globalisation and publisher of the Luxembourg-based weekly newsletter ‘World Economy and Development’, told IPS.

“It is clear that despite its devastating consequences for international stability and common wellbeing the short-term profit-thinking continues to be the leading economic principle at the WEF and at most large corporations,” Falk said.

Although the WEF claims that it is the gathering of the industrialised world’s economic and political elite, and as such of global wisdom, the embarrassing truth is that it did not foresee the financial and economic crisis that took the global economy to the brink of destruction.

This year the WEF was again surprised by the violent rebellions in the Maghreb countries, which have led to the overthrowing of Tunisian dictator Zine El Abidine Ben Ali and the near end of the government of Hosni Mubarak in Egypt.

Despite such flaws, the WEF went back to business as usual. Instead of confronting the consequences of a deregulated global economy, and pleading for international controls upon devastating speculative business, some participants at the meeting in the Swiss Alps called for and end to “bashing the bankers”, as some of the participants put it.

For instance Jamie Dimon, CEO of the investment bank JP Morgan, said banker bashing “is a terrible thing to do.” Dimon told the audience in Davos that it was a “huge misconception” that all banks faced insolvency during the present financial crisis.

“Not all (investment banks and hedge funds) are the same, not all chief executives are the same. We try to do our best every day,” he said.

Dimon, as well as practically all other CEOs of leading international banks, also opposed further regulation of financial markets. “I can acknowledge the need for reforms after what happened,” Dimon said. “But to suggest we’re supposed to just bend down and accept it because we’re banks – that’s not fair.”

Other bankers present at the WEF in Davos expressed concern that high public deficits may contribute to a renewal of the financial crisis, and called for tight austerity plans and massive reductions in public spending.

The WEF also continues to ignore the constraints that global warming should impose upon economic activities. Instead of giving incentives to innovative energy sources and considering alternatives economic models, the WEF debates touched the question of ecological efficiency only marginally.

Falk says that the WEF failed to address the most important issues. “The WEF contented itself with some words on ecological efficiency. Obviously, most people participating at the meeting in Davos either still believe that global warming can be stopped by some marginal reparations to the system, or are repressing the dire reality.”

Kerstin Sack, German coordinator of the ATTAC Group, said the WEF did not come out with solutions to “urgent problems of our times, such as food scarcity, global social injustice, and international conflicts on raw materials.”

Sack said that the WEF’s main slogan for this year’s summit was misleading. The summit gathered under the banner of ‘Common Rules for a New World’. “But the people who come to Davos are unwilling to accept rules valid for everyone,” Sack told IPS.

Sack also criticised the calls by the CEOs of international investment banks and funds gathered in Davos to substantially reduce public deficits.

“This is the limit of corporate hypocrisy,” Sack said. “The very heads of companies saved from collapse with taxpayers’ money now call for a reduction of deficits and for massive cuts in social public expenses.”

The futility of the WEF contrasts with the focus of other international alternative summits, such as the World Social Forum (WSF) – which will take place next week in the Senegalese capital Dakar.

While the participants at the WEF went back to their business as usual policy, the WSF will be debating the themes that CEOs at Davos ignored – food scarcity, climate change and the neo-liberal approach.