Paging Dr. Freud: Schizophrenic Reports on Mood of Davos Man

Normally, your humble blogger is of the school that the less attention given to “Davos,” as in the annual World Economic Forum meeting in Davos, Switzerland, the better.

But the Financial Times wanted to make sure its readers knew damned well how important the mood of our billionaire wannabe masters is. This was the lead story for most of the day:

One reason for cheer might be that the top wealthy still see plenty of opportunities to loot the rest of us:

However, if you read the pink paper’s Davos writeup, the happy talk is coming from the event’s speakers, and include people like Ursuala von der Leyen and Olaf Sholz, who want you to believe that the war in Ukraine and Western sanctions on Russia are working out swimmingly, as well as Chinese officials who are selling the idea that the Chinese Covid mass infection plan will put China on a growth path….when for the US, which seems better able to shift a lot of work to home settings, the picture hasn’t been been rosy. And that before getting to the serious risk of long-term damage to health and longevity, and resulting loss of labor contribution versus rises in medical costs. From the story:

Business leaders and top government officials have expressed optimism about the global economy as China drops coronavirus controls, the US embarks on a green investment boom and western Europe adjusts to the impact of Russia’s war in Ukraine.

At the World Economic Forum in Davos, Gita Gopinath, deputy managing director of the IMF, signalled that the fund would upgrade its economic forecasts. Instead of predicting a “tougher” 2023, she now expected an “improvement” in the second half of the year and into 2024.

Positive data from Europe and the US in recent weeks have boosted hopes that the world’s economy will avoid a recession this year.

Germany’s chancellor, Olaf Scholz, told Bloomberg that the eurozone’s largest economy would avoid a recession, while the Mannheim-based think-tank ZEW said its monthly gauge of investor sentiment had turned positive for the first time since Russia’s invasion of Ukraine.

One could argue that the improved mood was due to the big fall in gas prices, which is due among other things to warm weather, stockpiling of Russian gas, big output cuts by energy intensive industries, and borderline recessionary conditions due to central bank bloodymindedness. A reduction in pain levels is not a strong platform for gains.

However, some outside the Davos bubble also see upbeat signs in the tea leaves. For instance, from Menzie Chinn:

But it appears the Wall Street Journal attended a different conference than the Financial Times did:

It’s easier than usual to reconcile these starkly opposed story lines. The Wall Street Journal focused on the mood of the participants, not the pep talk of the presenters.

A soccer fan recounted a saying from sports bars: “There’s nothing wrong with your screen. Your team really is playing that badly.”

That does not mean that the capitalist classes might not get lucky this year. But they don’t expect to reach sunlit uplands any time soon. From the Journal:

The end of the free-money era has put a chill in the Swiss mountain air.

Business leaders and economists gathered here for the World Economic Forum’s annual event say they see the world buffeted by high inflation—and high interest rates that central banks have pushed through to combat it. That has created a threat of recession, and led some of the world’s biggest companies to hold their breath—and their spending—ahead of an uncertain year.

Yet, some see reasons to think rising inflation, sparked in part by Russia’s invasion of Ukraine, has peaked. That could, as some business leaders hope, presage a soft economic landing. Alternatively, another rise in interest rates could lead to a more prolonged downturn.

Many businesses are slashing costs—and in some cases jobs—to be prudent, several business leaders said. But a number are also holding out hope that they won’t need to cut too deeply to take advantage of what some expect could be a rebound this year if major economies skirt a recession.

Yours truly is not in the business of economic forecasting, although getting paid to be wrong nearly all the time is an unusually low risk gig. But the subdued mood does not point to a robust early 2023. And in my humble view, much depends on how China adapts to the reality of having a labor force diminished on an ongoing basis by Covid cases and then Long Covid. And the West is capable of finding ways to worsen Russian sanctions blowback, say by barring purchases of Russian nuclear fuel, which happens to be a critical and not readily replaced commodity.

But I have to confess to getting more pleasure than I should from the Davos attendees not getting much solace from their lavish spreads and potables. And perhaps even being made to suffer a wee bit for their safety:

So perhaps the short version, despite the exhortations of the Davos speakers, is that top businessmen find the environment is more uncertain than usual, with ample downside risk, and are therefore proceeding with caution.

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  1. griffen

    The above tweet could have been written by any number of prominent writers. PK Dick first comes to mind but also the ever quotable Gibson. And obviously, Orwell.

    You will own nothing and you will also be nothing, unless we decide differently. That sounds a bit harsh! Argh, retirement and social security (for this US citizen) just appear like a distant dream.

  2. The Rev Kev

    ‘Welcome to 2030. I own nothing, have no privacy, and life has never been better’ was written by Ida Auken. Who is she when she is at home? I went to Wikipedia and found that she is a Danish politician. Those quoted words are actually the title of a piece that she wrote for the WEF back in 2016 but I am thinking that this was actually her application letter to become a made person in the WEF. Anyway, here is her Wikipedia entry-

    And here is a link to the piece that she wrote which appeared in “Fortune” magazine-

    But here is the thing. She is Danish and Denmark is only a real small country about 43,000 km2 in size so maybe, just maybe, you might be able to make it work there. But how big is 43,000 km2? A bit smaller than Ohio but a bit bigger than Virginia. So I would want to know how well this idea would scale up to say Texas. Probably not very well that but would the WEF even care?

    1. Irrational

      Some more colour to RK’s comment:
      Ida is also the daughter of Magrethe Auken from the Danish socialist party and the niece of the late Svend Auken from the social democrats. Ida herself switched from the socialists to “Radikale Venstre” (the “radical left”, which is more centre-right in Danish politics.
      So she is merely continuing a family tradition of telling voters wonderful things, while showing admirably intellectual flexibility even though (or perhaps because?) she studied theology like her mother.

    2. Eric Anderson

      I heartily agree with her.
      Ahem: that is, if applied equally to everyone.
      See: Arendt’s take on the matter above.

    3. Michael Hudson

      Or else, as Aristotle is reported to have written, the worse thing about slavery is that the slaves get to like it.
      Masters do not have to beat you physically. Especially house-slaves who do not have to pick cotton in the hot cropland of their patrons.

  3. Eric Anderson

    Just a coincidence that the MSM propaganda mirrors the geopolitical/economic strawberries and orgasms noises coming from the Davos dolts?

    Nahhhhhh. Couldn’t be. The 5th Estate totally has our backs.

  4. Frank Little

    It seems like the only person speaking at the conference who did not share the optimism you clocked is the head of the Norwegian sovereign wealth fund. Even he acknowledged he was an outlier. The last year was the worst in the funds history since 2008, softened slightly by its holdings in the energy sector.

    Some quotes from the FT writeup headlined Norway fund chief warns at Davos of ‘very, very low’ returns for stocks:

    “We have not seen the secondary effects of the $30 trillion in wealth destruction we saw last year”

    “When you see [digital artworks] changing hands for $69 million, that sends a flashing light that money is too easy and there’s something strange going on. You have to wake up”

    “I think we will see a long period of time with very, very low returns … I think it takes a long time to sweat it out.”

    “I’m not particularly optimistic, but unfortunately that seems to be the consensus, and I don’t like that”

  5. flora

    Thanks for this post. I notice not as many heads of state this year. No Xi, Putin, Macron, etc. Maybe it’s the “war”. Maybe it’s the realization Covid isn’t in check. Maybe it’s the dawning awareness their citizens are not happy. I mean, really unhappy. Was Grigory Potemkin there to deliver a speech by any chance. / ;)

  6. ChrisFromGA

    I wonder if the Ukrainian helicopter crash, killing 14 people including the top heads of the interior ministry, might put a little bit of a damper on the Davos crowd?

    Nah, dying in a war is for the little people. Party on, Klaus!

    1. flora

      I wonder if the Ukr ‘little people’ old men and boys pressed into service and forced to fight against their will could become a bigger danger to Kiev than RU forces. aka fragging. (no, that’s a silly idea. forget it. )

  7. cnchal

    Quiet quitting is a topic of concern at Davos

    It’s on business leaders to keep workers engaged, Davos panel says: ‘Quiet quitting is a natural response to feeling your employer or boss has given up on you’

    That was Vimeo CEO Anjali Sud speaking at the World Economic Forum’s annual meeting in Davos this week about the “quiet quitting” phenomenon that has swept the globe.

    Quiet quitting is often described as employees doing the bare minimum of work at their jobs, or setting higher boundaries with management, in order to create a healthier work-life balance and focus more of their time of non-office activities. A recent Gallup poll found that such “quiet quitters” make up 50% of the U.S. workforce.
    – – – – – –
    The data from Gallup listed several actionable items that managers can do to help increase employee satisfaction and discourage workers from quiet quitting, such as regular weekly chats, accountability for individual performance and showing workers how their work plays a part in the company’s mission.

    Listen up you electrified bag of protoplasm, care about your jawb or else!

    What is ‘or else’? Anjali seems to lack imagination.

    Or else is as simple as marrying GM’s Super Cruise alert system, which monitors eye movement and lack of attention to sound an alarm, with Bezos’ nanosecond by nanosecond monitoring of slaves animated by whip cracking sadists.

    Vimeo could sell that SaaS to bosses everywhere and be a multi trillion $ company in no time. She can send me my cut later.

    1. ChrisPacific

      Davos panel says: ‘Quiet quitting is a natural response to feeling your employer or boss has given up on you’

      I would think the most common reason for people feeling that way would be because it’s true. Look up ‘quiet firing,’ which most people will immediately recognize once they see the description.

      Telling the employee that it’s their own fault is a key element, and hence we have the ‘quiet quitting’ concept.

  8. spud

    davos man is a direct creation of free trade. the countries that managed to keep, or regain their sovereignty after 1993, like russia and china, the davos man is either in jail, run out of the country, or disappeared(dead).

    so to lament that these creatures exist and basically rule us, whilst ignoring the how and why these creatures exist in the first place, will not rectify and eliminate them of their rule over us.

  9. Bart Hansen

    On the diminished China front, the New York Times landing page today has three pieces on how China is doing badly. I wonder whether their employees doing the same on Russia will be switching over to China.

  10. John Hacker

    Thanks, Yves. You always assure me there are conscience people speaking their minds.
    Best Regards, this year and the years to come John

  11. chuck roast

    My big laugh of the day…

    “Yours truly is not in the business of economic forecasting, although getting paid to be wrong nearly all the time is an unusually low risk gig.”

    Kinda like the contemporary zeitgeist.

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