Clueless in Davos
I can’t decide if this is a case of cluelessness, stubbornness, or both.
See, I try not to pay attention to the doings of the power elite when they gather each year for their conclave in Davos, Switzerland. It’s not where they make the big decisions, and as such the gathering is little more than an excuse for sandalistas to show up and protest.
But it was hard to avoid the media coverage this year, given the hoopla over how “the world had changed” since the last gathering. Still, there was absolutely nothing interesting or revealing about this year’s model, save perhaps for the fact that fewer bankers showed up.
Except… an enterprising reporter for Italy’s Corriere della Sera newspaper made the most of his assignment at Davos. Federico Fubini surveyed “60 top central bankers, financial market regulators, fund managers, and industry opinion-makers.”
He first asked whether they themselves “might have contributed, even in a minor way, to the financial crisis.” The result:
- No — 63.5%
- Yes — 31.5%
- Not sure — 5%
“How strange,” quipped Carlyle Group chief David Rubinstein to Fubini. “I thought 100 percent of them would say they had nothing to do with it.”
Fubini then asked those who said “yes” what lay behind their hare-brained decisions. It broke down as follows.
- “Too much optimism” — 68.7%
- “I felt I had to keep dancing while the music was playing” — 31.3%
- Greed — 0%
So let’s sum up: Less than a third of the central bankers and other assembled world-improvers (as Bill Bonner calls them) felt they were culpable, and among them, less than a third had a grip on reality.
That’s less than 10% of the total.
I guess I shouldn’t be surprised. World improvers fall along a bell curve just like everyone else.
Fubini wraps up his dispatch with an account of a talk given by The Black Swan author Nassim Nicholas Taleb.
The participants enjoyed his talk, which was brilliant and provocative as usual, but as he spoke, one couldn’t help wondering if what they were actually enjoying was the simplistic comfort that Taleb’s message could provide.
The audience seemed to enjoy the idea that the current crisis is a “Black Swan,” a very unlikely, though possible, event. The alternative view is that of a train driven full speed into a wall. Thinking that way requires one to ask who was in the driver’s seat, and just maybe recognizing one’s own fingerprints on the wheel.
In other words, they think they got a bad break: Their mathematical constructs told them that something like the September meltdown could happen only once every 500 years, and they just had the misfortune of it happening on their watch. The models in their minds are still valid.
But as we saw last week, Black Swan potential still abounds, even if the record-setting Treasury auction this week has so far passed uneventfully.
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