WORLD ECONOMIC FORUM WORLD ECONOMIC FORUM

FOUNDED BY PROF FOUNDED BY PROF KLAUS SCHWAB IN 1971KLAUS SCHWAB IN 1971

““Committed to improving the Committed to improving the state of the world”state of the world”

• Research: 69 Global Research: 69 Global Agenda Councils, four Agenda Councils, four meetings a year meetings a year

• Davos has record of Davos has record of setting year’s global setting year’s global economic agendaeconomic agenda

• 2009 Meetings: new 2009 Meetings: new records records

- 1 400 C1 400 CEOEO/Chairmen/Chairmen- 41 Heads of Govt 41 Heads of Govt

STRONGSTRONG SA PRESENCE SA PRESENCE

WORLD ECONOMY TODAYWORLD ECONOMY TODAY

STEPHEN ROACH:STEPHEN ROACH:

Worst since WW2Worst since WW2

Will contract in 2009Will contract in 2009

Demand side: US Demand side: US consumer consumer

Supply side: Chinese Supply side: Chinese producerproducer

Decoupling is a myth Decoupling is a myth

WHERE WE ARE (1)WHERE WE ARE (1)

NOURIEL “DR DOOM” NOURIEL “DR DOOM” ROUBINIROUBINI::

• ““I was vindicated by I was vindicated by an economic disaster”an economic disaster”

• WWorst is yet to comeorst is yet to come• Banks must write off Banks must write off

$3,6 tn (only $1,1tn $3,6 tn (only $1,1tn so far) so far)

• Real threat of another Real threat of another Great Depression like Great Depression like the 1930s the 1930s

WHERE WE ARE (2)WHERE WE ARE (2)

RUPERT MURDOCH:RUPERT MURDOCH:

• Past 12 months over Past 12 months over $50tn in savings has $50tn in savings has disappeareddisappeared

• Getting worse; asset Getting worse; asset values still falling values still falling

• Western World been Western World been living way beyond its living way beyond its means - “on a binge” means - “on a binge”

WHY WE’RE HERE - 1WHY WE’RE HERE - 1

GEORGE SOROS:GEORGE SOROS:• Sept 15: Lehman Sept 15: Lehman

bankruptcy, US economy bankruptcy, US economy fell off clifffell off cliff

• US economy now on US economy now on “artificial life “artificial life support”support”

• Banking system collapsed Banking system collapsed like 1930slike 1930s

• Bad bank loans $1,5tn; Bad bank loans $1,5tn; total mkt cap $1tn total mkt cap $1tn

• Efficient market Efficient market hypothesis destroyedhypothesis destroyed

WWHY WE’RE HERE HY WE’RE HERE –– 2 2

MIND HAS TWO BEHAVIOURAL SYSTEMS:MIND HAS TWO BEHAVIOURAL SYSTEMS:

SYSTEM ONE – Impulsive; SYSTEM ONE – Impulsive;

SYSTEM TWO – Reasoning, calculatingSYSTEM TWO – Reasoning, calculating

US Financial Crisis: A transition to System-US Financial Crisis: A transition to System-One behaviour when people lost trustOne behaviour when people lost trust

The way to avoid fear and anxiety is trustThe way to avoid fear and anxiety is trust

Obama has trust for now – can he keep it?Obama has trust for now – can he keep it?

TTHE OBAMA FACTORHE OBAMA FACTOR

VALERIE JARRETT:VALERIE JARRETT:

Her boss Barack Obama Her boss Barack Obama calls on other leaders calls on other leaders to “seize gladly”to “seize gladly”

- Global collaboration Global collaboration dutiesduties

- ““Embrace new era of Embrace new era of responsible finance”responsible finance”

- The return to values of The return to values of honesty, hard work, honesty, hard work, courage, fair play, courage, fair play, tolerance and loyalty tolerance and loyalty

NEW WORLD ORDER?NEW WORLD ORDER?

G20 not G8 G20 not G8 –– end of end of the Washington the Washington Consensus Consensus

US dominance has US dominance has peaked, power shifted peaked, power shifted

New spirit of global New spirit of global collaborationcollaboration

Return to a value-Return to a value-based society now top based society now top priority priority

Crisis presents an Crisis presents an opportunity to address opportunity to address structural imbalancesstructural imbalances

TEST ONE TEST ONE –– LONDON LONDON

TOPPING AGENDA AT APRIL TOPPING AGENDA AT APRIL G20 MEETING G20 MEETING

• Resuscitate Doha Round Resuscitate Doha Round of trade talksof trade talks

• Prevent protectionism, Prevent protectionism, “Buy American”“Buy American”

• Collective effort to Collective effort to tackle recessiontackle recession

• Agree to bolster IMF, Agree to bolster IMF, World Bank World Bank

TEST TWO - COPENHAGENTEST TWO - COPENHAGEN

DECEMBER’S GLOBAL DECEMBER’S GLOBAL WARMING AGENDAWARMING AGENDA

- Obama’s US coming to Obama’s US coming to the table at lastthe table at last

- Launch of effective Launch of effective carbon credit trading carbon credit trading markets markets

- Fresh water scarcity Fresh water scarcity on the agenda, on the agenda, becoming top priority becoming top priority

THE CHINESE MESSAGETHE CHINESE MESSAGE

WEN JIABAOWEN JIABAO

• China’s economic China’s economic fundamentals not fundamentals not changed changed

• Big stimulus package, Big stimulus package, confident 8% GDP growth confident 8% GDP growth

• Urges “Push for new Urges “Push for new world economic order world economic order that is just, that is just, equitable, sound and equitable, sound and stable.” stable.”

THE RUSSIAN MESSAGETHE RUSSIAN MESSAGE

VLADIMIR PUTINVLADIMIR PUTIN

• Russia doesn’t need help Russia doesn’t need help from the West, thank youfrom the West, thank you

• Avoid trade barriers, Avoid trade barriers, State interventionsState interventions

• Asset measurements, Asset measurements, ratings system must be ratings system must be revamped revamped

• US Dollar cannot be the US Dollar cannot be the only reserve currency in only reserve currency in futurefuture

• Integrity, hard work, Integrity, hard work, responsibility lead to responsibility lead to success success

THE INDIAN MESSAGE THE INDIAN MESSAGE

ANAND MAHINDRAANAND MAHINDRA

• India is less exposed India is less exposed than most; only 20% GDP than most; only 20% GDP is exportsis exports

• 65% of Indians happy 65% of Indians happy –– good Monsoons mean good good Monsoons mean good cropscrops

• In same boat as others: In same boat as others: “India can paddle faster “India can paddle faster than most”than most”

• India’s strong economic India’s strong economic growth of 8% to continue growth of 8% to continue

MESSAGE FROM BUSINESSMESSAGE FROM BUSINESS

State involvement through State involvement through bailouts must be temporarybailouts must be temporary

Financial regulations must Financial regulations must be strengthened globally be strengthened globally

Calls for retribution for Calls for retribution for peddlers of toxic productspeddlers of toxic products

Want a return to the era Want a return to the era when “my word is my bond” when “my word is my bond”

Urge Governments not to Urge Governments not to lose sight of capitalism’s lose sight of capitalism’s benefitsbenefits

OPPORTUNITIES IN OPPORTUNITIES IN GLOOMGLOOM

TOP SECTORS TOP SECTORS –– SHIMON PERES (ISRAEL)SHIMON PERES (ISRAEL)

- Alternative energy and Alternative energy and fresh water fresh water

- SStem cell research tem cell research

- Teaching and educationTeaching and education

- SecuritySecurity

MORE OPPORTUNITIESMORE OPPORTUNITIES

TOP SECTORS:TOP SECTORS:

HAN SEUNG-SOO (KOREA)HAN SEUNG-SOO (KOREA)

- Renewable energy Renewable energy innovations and the innovations and the saving of energysaving of energy

- Convergence (“fusion” of Convergence (“fusion” of media through broadband)media through broadband)

- High value service High value service industries including industries including medical sector medical sector

BEST INVESTMENTS NOW BEST INVESTMENTS NOW

Emerging Market Govt Emerging Market Govt securities securities

Corporate bonds Corporate bonds –– risk risk has overshothas overshot

Infrastructure plays Infrastructure plays –– construction sectorconstruction sector

Corporate restructuring Corporate restructuring businesses about to boom businesses about to boom

Alternative energy, Alternative energy, including ways to reduce including ways to reduce wastage wastage

TECHNOLOGY TECHNOLOGY

MEGA-TRENDS:MEGA-TRENDS:

- Smart phones ruleSmart phones rule- Mobile FacebookMobile Facebook- Twitter catching onTwitter catching on- Youtube replacing TVYoutube replacing TV- Cloud computingCloud computing- DemocratisationDemocratisation- TransparencyTransparency

VALUES MAKING VALUES MAKING COMEBACKCOMEBACK

BEN ZANDER BEN ZANDER - ““Leadership is process Leadership is process

of moving people from of moving people from downward spiral to the downward spiral to the art of possibility”art of possibility”

DESMOND TUTU “Essence of being human is a person is a person through other persons. You and I are created for togetherness.”

FINAL WORDSFINAL WORDS………………

““The harsh winter will be gone and The harsh winter will be gone and spring is around the corner. Let spring is around the corner. Let us strengthen confidence and work us strengthen confidence and work closely together to bring about a closely together to bring about a new round of world economic new round of world economic growth.” growth.”

– – WEN JIABAO, Premier of China, WEN JIABAO, Premier of China, leader of one quarter of humanity leader of one quarter of humanity