Meeting of Global Titans Tainted by Tanking Economy

By Pratap Chatterjee, CorpWatch. Posted February 7, 2008.

The CEOs of three-quarters of the world's 100 largest companies have just completed an uncomfortable weekend at the tiny Swiss ski resort of Davos, while their companies' share prices nosedived on global stock markets, amid concern that the U.S. economy was staggering towards recession.

The Alpine village, which is virtually inaccessible to anyone without a helicopter, is ringed with barbed wire and tight security arrangements for the World Economic Forum (WEF) in late January every year. This 37-year-old private gathering brings together dozens of heads of states, hundreds of government ministers and a smattering of activists and celebrities to join the chief executives for a series of discussions and workshops, as well as private parties thrown by companies such as Google with the help of the world's most famous disc jockeys.

The price of attendance isn't cheap: each CEO spends roughly $60,000 a year to attend. But once they have made it onto the invite list they can look forward to schmoozing with their peers in Davos and hobnobbing with celebrities. This year they had a chance to meet Tony Blair, the former British prime minister; Al Gore, the former US vice-president and Nobel Prize-winner; and Bono, the Irish rock star and debt campaigner. Past gatherings have also given CEOs the opportunity to play chess with Antoly Karpov, the former Soviet champion, and to take a twirl on the ice with Russian skating stars.

Some CEOs have occasionally delighted in doing the incongruous: Rupert Murdoch, the billionaire owner of News Corporation, did a stint as a waiter at one party this year.

Questioning Capitalism

But the 2008 gathering was fraught with irony for the CEOs and the bankers who have financed them. Wrote Bruce Nussbaum of Business Week: "Last year, an army of slick-haired, Wall Street private equity and hedge fund guys turned up to show the doubting Europeans the clever and kindly face of American market capitalism ... (t)o the Europeans who complained that private equity and hedge fund wheeling and dealing were distorting economic growth, they gently suggested that the Old Country was out of touch with the new reality of financial innovation."

This year the Wall Street whiz-kids had to eat humble pie. "Turns out the Europeans were right," wrote Nussbaum. "The subprime junk packaged and repackaged as top prime credit collapsed and is taking the rest of the U.S. economy (and perhaps the world economy) down with it ... (s)o if the slick-haired guys can still afford to hop their private jets to get to Davos this year, they're going to find a lot of really angry Euros armed with really strong euros."

Indeed, Lionel Barber, editor of the Financial Times, suggests the Davos tradition of celebrating globalization has come to an uncomfortable halt: "In the past few years, globalization has enjoyed virtually unqualified applause from the power-players inside the Davos conference rooms, whatever the noisy protests outside in the snow-clad streets -- the triumphalism has disappeared, replaced by a pervasive uncertainty."

One of the world's best-known CEOs, Microsoft chairman Bill Gates, admitted to fellow participants that he had become skeptical of the very notion of capitalism. He told the Wall Street Journal that he had seen the failings of capitalism first-hand on visits to places such as the South African slum of Soweto, and had discussed them with dozens of experts on disease and poverty.

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Pratap Chatterjee is managing editor of CorpWatch and the author of 'Iraq Inc.' (Seven Stories Press, September 2004).

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