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Davos A Forecast From The Swiss Alps
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DAVOS, A Forecast From The Swiss Alps

By John Dietz - Email Editor

Date : February 3, 2009

Dear Valued Reader,

The five-day World Economic Forum in the Swiss Federation announced that it will begin a “Global Redesign Initiative” and this was unanimously supported. However, the week started with the premiers of Russia and China, Russia's Prime Minister Vladimir Putin and China's Premier Wen Jiabao calling over-reliance on the dollar "dangerous."

Last week some of the brightest minds in business, economics and political science met at DAVOS to analyze and assess the global financial situation and to determine if there is an answer to the problems in this time of uncertainty. An aura of indecisiveness and mixed emotions has prevailed from this important conference and the conclusions failed to show any clear-cut path to global relief.

 

They both did argue for global cooperation amidst bouts of anger.

China’s Wen Jiabao did state that in spite of the enormous woes, China would hit its’ target growth rate of 8%. Mr. Wen called for an expansion of regulation in the U.S. and encouraged American leaders to tighten their belts more than a notch. One note of significance from Mr. Wen’s comments came only a few days after U.S. Treasury Secretary Timothy Geithner accused China of manipulating its’ currency for economic gain.

Mr. Wen, though not as harsh in choice of words as Mr. Putin did say, “The crisis is attributable to inappropriate macroeconomic policies of some economies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit -- and other excesses.” There was no doubt that Mr. Wen does blame the U.S. for the economic woes.

Russia’s leader was much harder on the U.S., having far from complimentary things to say about U.S. business and U.S. business acumen (not to mention a few digs about greedy American executives, referring to Wall Street.) "Today, investment banks, the pride of Wall Street, have virtually ceased to exist," he said. Putin claimed that the American market and its’ consumption of wealth has caused a manufacturing crisis now that consumption has halted.

In the end, Mr. Wen did not call to end the U.S. dollar’s reign. Mr. Putin? He may have a different modus operandi.

Of course, the unknowns of President Obama were a highlighted topic of discussion and possibly gossip (he did not attend). With a new President, what inevitably comes out of these types of conferences is a ploy to win the new President and his leadership over to a certain way of favoritism and thinking. Leaders discussed and agreed he should concentrate on issues ranging from the financial crisis to promoting Mideast peace and dealing with Pakistan, Afghanistan and Iraq. No big surprise there!

Turkish Prime Minister Recep Tayyip Erdogan stomped off the stage on the discussion of the Gaza Strip and did not respond to Israeli President Shimon Peres' defense of Israel's air and ground attack.

There is one thing that did prevail: a clear-cut message to the Americans to get their finances in order and to stop the deflationary spiral.

It seems that the complexity of the situation begins with simple solutions. Everyone did agree that the U.S. needs stimulus, but where, how, what, when and why were all subjects of debate. There were some mutual conclusions.

1) Get the economy going with tax relief.

2) Change policies within infrastructure, cutting pork and restraining spending, as in spending where returns on investment will favor the economy rather then drain it.

3) Spur on the employment market.

4) The need for government to put some restraints pertaining to issues surrounding the U.S. dollar.

How simple is that?

Another bright side? Previous celebrity guests such as Angelina Jolie, Sharon Stone and Bono were not invited, and maybe that is progress.

If you are thinking like me, maybe the outcome is and will be, that we are capable of solving the world’s problems.

Until next time,

John

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ABOUT THIS EDITOR:

John Dietz is a strategic advisor at Trustmakers.com with a passion for client solutions that can encompass your business, your real estate, and your personal assets. Mr. Dietz serves to educate you on the latest in asset protection planning.

Full Bio - Email John