4 Reasons to Really Hate Davos

In Dante's Inferno, sinners were punished by having to continually be reminded of their crimes for eternity. For example, fortune tellers were forced to walk backward with their heads twisted backward as well. And usurers had a bag of money tied around their heads that they could never ever touch.

If Dante had to come up with a punishment for today's global elites, he just might make them attend an endless conference in the town of Davos, Switzerland. Each morning for eternity, commencing at 9 a.m. sharp, the sinner would be forced to listen to an all-day panel discussion -- with Thomas Friedman, Nouriel Roubini, and Jamie Dimon -- on opportunities and challenges facing the global economy. Every once in a while Bono might pop in as well to liven things up a bit.

You're just jealous
Earlier today, the actual meeting of the World Economic Forum began at Davos, and we're already hearing news and policy ideas from the event. Far from seeing this as "hell on earth," the roughly 2,600 attendees will be enthusiastically talking and partying for the next several days. In addition to bankers, politicians, academics, and journalists, there will be plenty of celebrities there too. Just this morning, in fact, we learned that Derek Jeter is attending the event.

In general, I really like conferences, and believe that it's a good idea for thought leaders to get together periodically to share ideas. This particular conference, however, seems seriously flawed on a number of levels. Here are four reasons to be skeptical of Davos:

1. Davos is a huge boondoggle for company executives. In a recent piece in New York magazine, Kevin Roose notes that many of the companies sending big delegations to Davos have also been laying off workers, and cutting back on other expenditures lately. With an average cost per head of $40,000, Davos isn't cheap, even for Wall Street executives.

Despite that hefty price tag, Roose tells us that PepsiCo sent six attendees, even though it had to cut 8,700 jobs this year. And Wall Street bad boy Citigroup sent seven delegates. Even the slumping Washington Post has sent a delegation. Somewhere, Dante is furiously taking notes.

2. Do we really need more chumminess between bankers and politicians? I'm not a big conspiracy guy, and I'm sure the schmoozing between Wall Street executives and government officials is all very professional. Still, you have to admit that the World Economic Forum provides some pretty bad optics from the perspective of Main Street, America. The event brings together Wall Street titans like JPMorgan's Jamie Dimon and Goldman Sachs' Lloyd Blankfein along with political leaders like German Chancellor Angela Merkel and British Prime Minister David Cameron. Even Congressman Eric Cantor will be there this year. I'm not sure what all these folks will be chatting about in the hot tub, but I'm pretty sure they won't be talking about improving our regulatory oversight of too-big-to-fail banks.

3. Is there really a demand for more useless predictions? Just several weeks after the barrage of 2013 financial predictions, we'll be getting another bombardment this week from Davos. Dealbook tells us that most of these predictions will be rubbish. That shouldn't be surprising. I'm pretty skeptical of macro predictions in general, and figure it's an even more difficult task the morning after drinking brandy all night at Sean Parker's chalet.

4. It's in Switzerland. Switzerland? Really? Let me get this straight: The conference for global elites is held each year in a country noted for bank secrecy and extremely loose financial regulation. Surely, our elites are just laughing at the rest of us at this point. I suspect there will be a lot of folks "eating cake" there this week.

Resilience
The theme of this year's World Economic Forum is "resilient dynamism." It seems like a very fitting theme -- if there's one thing Wall Street bankers have been in recent years, it's resilient.

You can follow the World Economic Forum (if you must) here. On Friday, Congressman Cantor will be on a panel called "Creating Economic Dynamism" with Joseph Stiglitz (and four other guys I've never heard of before). You might want to put that one on your calendar.

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Read/Post Comments (11) | Recommend This Article (23)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 23, 2013, at 7:36 PM, SuntanIronMan wrote:

    Cheap shot at Switzerland. What did Switzerland ever do to you? Beautiful country with wonderful people.

  • Report this Comment On January 23, 2013, at 7:50 PM, SuntanIronMan wrote:

    (Reason Number 4)

  • Report this Comment On January 23, 2013, at 9:05 PM, Swiss111 wrote:

    I was first going to put a lighthearted comment on here regarding one positive fact which I entirely believe to be objective, i.e., that it is being held in Switzerland... Don't you like the mountain sceneries?

    But the fourth reason just got me thinking of the very common - foolish [note the lack of capital here] - point that, and I quote, "bank secrecy and extremely loose financial regulation" are rife in Switzerland. I have no idea of where you might even think that the financial regulations are "extremely loose". First, please define what you mean by financial regulation: if going above and beyond what Basel III requires for banks to keep as reserves is "extremely loose", what should banks and politicians do? Second, if by financial regulation you mean the regulation of the capital market, then I have no idea why the regulation of the capital market in Switzerland has a problem. Third, if by financial regulation you mean the possibility of opening accounts there (some sort of pendent to the banking secrecy point that deals with the declaration), then may I respectfully point out that it is much easier for persons living outside the US to open an account there than for someone outside of Switzerland to open one there, even if one is a Swiss national. The US has a lot of "extremely loose financial" regulatory markets, a fact that was pointed out at the OECD a few years back when countries were trying to force Switzerland to change its laws.

    Now, to the pièce de résistance, banking secrecy: you may not have heard, but banking secrecy in Switzerland is all but dead. The principle still exists for Swiss residents, but surely you are not aiming your cheap shot at what a democratically tested laws and ways of life proclaim (much more than here, I may add): discretion. What you are thinking of is residents of foreign trying to hide their money from their tax man. I would first point out that this is an internal issue unrelated to Switzerland: a foreign taxpayer hides part of his assets from the foreign tax authority. It isn't Switzerland's business to know whether or not an account holder hides money. That tax payer must declare what the tax code requires him to declare. The alternative is to move. If so, welcome to Switzerland (or Russia, if you're a French actor). Second, now that the banking secrecy is all but dead, that point is moot.

    Now let's talk about why it is in Switzerland: It is a place of diplomacy and neutrality. All the bigwigs of the world may talk freely to one another without fearing retaliation from the public opinion or from zealous enforcement regulators. If one would have such a meeting where else could it be held? If it has been successful for at the least more than three decades, why not continue? People are free to do what they please no?

    I am worried to read those kinds of populist articles. It is indeed quite frightening to believe that someone at the MF doesn't want people to talk to each other. Surely it is better than the classic alternatives: fights, squabbles, and, ultimately, war (which I may add is quite expensive too).

  • Report this Comment On January 23, 2013, at 9:24 PM, TMFBane wrote:

    Thanks for your comments!

    And please, let me clarify something. I'm sure Switzerland is a fine country, and I'm positive it's a far more complex place than point number 4 might imply.

    I was just trying to have some fun with this piece, which was really about perceptions. I think there are some legitimate concerns, however, about points 1 through 3. I will concede, though, that number 4 was meant to be lighthearted, and probably not terribly helpful. Sorry, for the misfire.

  • Report this Comment On January 24, 2013, at 3:51 AM, Clint35 wrote:

    Good article John. But isn't the whole event basically about number 4. Isn't it just one more event for a bunch of wealthy well connected people to make more connections so they can become even more wealthy. I'm sure that's why Eric Cantor is there. Isn't that why they charge $40,000 to get in.

  • Report this Comment On January 24, 2013, at 7:55 PM, dennyinusa wrote:

    I will give you reasons for number 4

    They prosper as a nation because of a banking system which does not care how much blood is on the money they receive.

    They will accept money from Nazis, dictators, drug cartels, tax cheats or any piece of garbage with dollar.

    They are as guilty as the people they protect. I believe it is time for us to call them out.

    We should be putting much more pressure on Switzerland to turn over names of people who took money out of the country to avoid paying taxes.

    We should not trade with them and we should ask other countries not to trade with them.

    During World Wars I & II they were cowards who profited from being neutral.

    Why are we so soft on white collar criminals? I believe they do more damage to society than criminals with guns. They destroy trust in institutions that we rely on throughout society whether it is government, bankers, corporations, unions or Wall Street.

    Once trust is lost the whole system starts to breakdown.

  • Report this Comment On January 24, 2013, at 8:11 PM, tomd728 wrote:

    What did Switzerland ever do ? Besides harboring Nazis

    they make excellent watches, chocolates, and cheese.

    The point is well taken on the enormous layoffs these under achieving CEOs live on. Get rid of those guys in the mail room we just got breached in London.

  • Report this Comment On January 25, 2013, at 4:11 AM, Sotograndeman wrote:

    Very superficial, naive article. The author is woefully informed and comes across as an Occupy Wall St enthusiast.

    1. There's nothing inconsistent for a company to be reducing headcount while simultaneously sending executives to find out what the world's leaders are thinking and planning and get involved in discussion.

    2. The world would benefit greatly if more people got together and talked. Arguably it's what the world needs most. To suggest that it's all about "chumminess" is absolutely naive.

    3. This I agree with. But I think most were aware that people like Roubini have lost all credibility. Reminds me of Peter Lynch's comment that 'If all the economists in the world were laid end to end, it wouldn't be a bad thing'.

    4. Switzerland is not only a beautiful country but an admirable one too - for business, science, technology.

    So, yet another unimpressive and needless piece from TMF.

  • Report this Comment On January 25, 2013, at 4:34 AM, Sotograndeman wrote:

    "If Dante had to come up with a punishment for today's" investors, it would be to enforce reading of all TMF articles, like this one. Imagine the pain, the frustration, the waste - and the resolution of investors, if freed, to spend their time on real material in the future.

  • Report this Comment On January 25, 2013, at 9:48 PM, rdub76 wrote:

    Lumping so called "tax cheats" in with nazis and dictators speaks to the brainwashing that many suffer from. How is it cheating when you try to protect your own earnings from thieves?

    As to the article. Yes, I have a problem with the global financiers smoozing with politicians. Financial regulation is the biggest farce there is. Regulation for those who can't afford $40,000 to rub elbows with their regulators. No regulation for those who can.

  • Report this Comment On January 26, 2013, at 3:22 PM, exileonmainst wrote:

    In response to the 4 reasons against the Davos conference, please note:

    1. Use the number of attendees from publically owned business as a factor when evaluating their business: the more people they send, then the lousier the business.

    2. Note which bankers are paling up with what politicians. Then yank your dough from those banks hobnobbing with those politicians who do not represent your best interests.

    3. Without useless predictions, we wouldn't have the financial markets, Las Vegas, TV 'news' and the endless discussion regarding NCAA football.

    4. Good cheese.

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