Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
Report from WEF Davos 2009 - Presentation by Alec Hogg, Moneyweb
1.
2. WORLD ECONOMIC FORUMWORLD ECONOMIC FORUM
FOUNDED BY PROFFOUNDED BY PROF
KLAUS SCHWAB IN 1971KLAUS SCHWAB IN 1971
““Committed to improving the stateCommitted to improving the state
of the world”of the world”
• Research: 69 Global AgendaResearch: 69 Global Agenda
Councils, four meetings a yearCouncils, four meetings a year
• Davos has record of settingDavos has record of setting
year’s global economic agendayear’s global economic agenda
• 2009 Meetings: new records2009 Meetings: new records
- 1 400 C1 400 CEOEO/Chairmen/Chairmen
- 41 Heads of Govt41 Heads of Govt
4. WORLD ECONOMYTODAYWORLD ECONOMYTODAY
STEPHEN ROACH:STEPHEN ROACH:
Worst since WW2Worst since WW2
Will contract in 2009Will contract in 2009
Demand side: US consumerDemand side: US consumer
Supply side: Chinese producerSupply side: Chinese producer
Decoupling is a mythDecoupling is a myth
5. WHERE WE ARE (1)WHERE WE ARE (1)
NOURIEL “DR DOOM” ROUBININOURIEL “DR DOOM” ROUBINI::
• ““I was vindicated by anI was vindicated by an
economic disaster”economic disaster”
• WWorst is yet to comeorst is yet to come
• Banks must write off $3,6 tnBanks must write off $3,6 tn
(only $1,1tn so far)(only $1,1tn so far)
• Real threat of another GreatReal threat of another Great
Depression like the 1930sDepression like the 1930s
6. WHERE WE ARE (2)WHERE WE ARE (2)
RUPERT MURDOCH:RUPERT MURDOCH:
• Past 12 months over $50tn inPast 12 months over $50tn in
savings has disappearedsavings has disappeared
• Getting worse; asset valuesGetting worse; asset values
still fallingstill falling
• Western World been living wayWestern World been living way
beyond its means - “on abeyond its means - “on a
binge”binge”
7. WHY WE’RE HERE - 1WHY WE’RE HERE - 1
GEORGE SOROS:GEORGE SOROS:
• Sept 15: Lehman bankruptcy,Sept 15: Lehman bankruptcy,
US economy fell off cliffUS economy fell off cliff
• US economy now on “artificialUS economy now on “artificial
life support”life support”
• Banking system collapsed likeBanking system collapsed like
1930s1930s
• Bad bank loans $1,5tn; totalBad bank loans $1,5tn; total
mkt cap $1tnmkt cap $1tn
• Efficient market hypothesisEfficient market hypothesis
destroyeddestroyed
8. WWHY WE’RE HEREHY WE’RE HERE –– 22
MIND HASTWO BEHAVIOURAL SYSTEMS:MIND HASTWO BEHAVIOURAL SYSTEMS:
SYSTEM ONE – Impulsive;SYSTEM ONE – Impulsive;
SYSTEMTWO – Reasoning, calculatingSYSTEMTWO – Reasoning, calculating
US Financial Crisis: A transition to System-One behaviour whenUS Financial Crisis: A transition to System-One behaviour when
people lost trustpeople 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?
9. TTHE OBAMA FACTORHE OBAMA FACTOR
VALERIE JARRETT:VALERIE JARRETT:
Her boss Barack Obama calls onHer boss Barack Obama calls on
other leaders to “seize gladly”other leaders to “seize gladly”
- Global collaboration dutiesGlobal collaboration duties
- ““Embrace new era ofEmbrace new era of
responsible finance”responsible finance”
- The return to values ofThe return to values of
honesty, hard work, courage,honesty, hard work, courage,
fair play, tolerance and loyaltyfair play, tolerance and loyalty
10. NEW WORLD ORDER?NEW WORLD ORDER?
G20 not G8G20 not G8 –– end of theend of the
Washington ConsensusWashington Consensus
US dominance has peaked,US dominance has peaked,
power shiftedpower shifted
New spirit of globalNew spirit of global
collaborationcollaboration
Return to a value-basedReturn to a value-based
society now top prioritysociety now top priority
Crisis presents anCrisis presents an
opportunity to addressopportunity to address
structural imbalancesstructural imbalances
11. TEST ONETEST ONE –– LONDONLONDON
TOPPING AGENDA AT APRIL G20TOPPING AGENDA AT APRIL G20
MEETINGMEETING
• Resuscitate Doha Round ofResuscitate Doha Round of
trade talkstrade talks
• Prevent protectionism, “BuyPrevent protectionism, “Buy
American”American”
• Collective effort to tackleCollective effort to tackle
recessionrecession
• Agree to bolster IMF, WorldAgree to bolster IMF, World
BankBank
12. TESTTWO - COPENHAGENTESTTWO - COPENHAGEN
DECEMBER’S GLOBAL WARMINGDECEMBER’S GLOBAL WARMING
AGENDAAGENDA
- Obama’s US coming to theObama’s US coming to the
table at lasttable at last
- Launch of effective carbonLaunch of effective carbon
credit trading marketscredit trading markets
- Fresh water scarcity on theFresh water scarcity on the
agenda, becoming top priorityagenda, becoming top priority
13. THE CHINESE MESSAGETHE CHINESE MESSAGE
WEN JIABAOWEN JIABAO
• China’s economicChina’s economic
fundamentals not changedfundamentals not changed
• Big stimulus package,Big stimulus package,
confident 8% GDP growthconfident 8% GDP growth
• Urges “Push for new worldUrges “Push for new world
economic order that is just,economic order that is just,
equitable, sound and stable.”equitable, sound and stable.”
14. THE RUSSIAN MESSAGETHE RUSSIAN MESSAGE
VLADIMIR PUTINVLADIMIR PUTIN
• Russia doesn’t need help fromRussia doesn’t need help from
the West, thank youthe West, thank you
• Avoid trade barriers, StateAvoid trade barriers, State
interventionsinterventions
• Asset measurements, ratingsAsset measurements, ratings
system must be revampedsystem must be revamped
• US Dollar cannot be the onlyUS Dollar cannot be the only
reserve currency in futurereserve currency in future
• Integrity, hard work,Integrity, hard work,
responsibility lead to successresponsibility lead to success
15. THE INDIAN MESSAGETHE INDIAN MESSAGE
ANAND MAHINDRAANAND MAHINDRA
• India is less exposed thanIndia is less exposed than
most; only 20% GDP is exportsmost; only 20% GDP is exports
• 65% of Indians happy65% of Indians happy –– goodgood
Monsoons mean good cropsMonsoons mean good crops
• In same boat as others: “IndiaIn same boat as others: “India
can paddle faster than most”can paddle faster than most”
• India’s strong economicIndia’s strong economic
growth of 8% to continuegrowth of 8% to continue
16. MESSAGE FROM BUSINESSMESSAGE FROM BUSINESS
State involvement throughState involvement through
bailouts must be temporarybailouts must be temporary
Financial regulations must beFinancial regulations must be
strengthened globallystrengthened globally
Calls for retribution forCalls for retribution for
peddlers of toxic productspeddlers of toxic products
Want a return to the era whenWant a return to the era when
“my word is my bond”“my word is my bond”
Urge Governments not to loseUrge Governments not to lose
sight of capitalism’s benefitssight of capitalism’s benefits
17. OPPORTUNITIES IN GLOOMOPPORTUNITIES IN GLOOM
TOP SECTORSTOP SECTORS ––
SHIMON PERES (ISRAEL)SHIMON PERES (ISRAEL)
- Alternative energy and freshAlternative energy and fresh
waterwater
- SStem cell researchtem cell research
- Teaching and educationTeaching and education
- SecuritySecurity
18. MORE OPPORTUNITIESMORE OPPORTUNITIES
TOP SECTORS:TOP SECTORS:
HAN SEUNG-SOO (KOREA)HAN SEUNG-SOO (KOREA)
- Renewable energy innovationsRenewable energy innovations
and the saving of energyand the saving of energy
- Convergence (“fusion” ofConvergence (“fusion” of
media through broadband)media through broadband)
- High value service industriesHigh value service industries
including medical sectorincluding medical sector
19. BEST INVESTMENTS NOWBEST INVESTMENTS NOW
Emerging Market GovtEmerging Market Govt
securitiessecurities
Corporate bondsCorporate bonds –– risk hasrisk has
overshotovershot
Infrastructure playsInfrastructure plays ––
construction sectorconstruction sector
Corporate restructuringCorporate restructuring
businesses about to boombusinesses about to boom
Alternative energy, includingAlternative energy, including
ways to reduce wastageways to reduce wastage
21. VALUES MAKING COMEBACKVALUES MAKING COMEBACK
BEN ZANDERBEN ZANDER
- ““Leadership is process ofLeadership is process of
moving people from downwardmoving people from downward
spiral to the art of possibility”spiral to the 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.”
22. FINAL WORDSFINAL WORDS………………
““The harsh winter will be gone and spring isThe harsh winter will be gone and spring is
around the corner. Let us strengthenaround the corner. Let us strengthen
confidence and work closely together toconfidence and work closely together to
bring about a new round of worldbring about a new round of world
economic growth.”economic growth.”
–– WEN JIABAO, Premier of China, leader ofWEN JIABAO, Premier of China, leader of
one quarter of humanityone quarter of humanity