Clueless in Davos and Belem

The annual World Economic Forum in Davos, Switzerland and the World Social Forum in Belem, Brazil ended on roughly the same note.

After a week of endless discussions in dozens of meetings, Davos Man and the heirs of El Che reached the same conclusions:

1 – The world’s economies and societies are in a dreadful state.

2 – More government intervention and regulation are required immediately to fix the world’s economic and social problems.

3 – Beyond demanding more government intervention, neither side (Davos & Belem) have a clue about what else might be done to keep at bay the combined dangers of global economic recession, rapidly increasing unemployment, social upheaval, political instability and widespread violence that could trigger forced regime changes and even Black Swan events.

Surveys presented at Davos showed an across-the-board plunge in the public’s confidence in government, business and the news media since WEF’s last meeting a year ago. The mood among business and political leaders at Davos was markedly gloomy, with most agreeing that while 2008 was a very bad year, 2009 likely will be worse. WEF’s annual Global Risk Report for 2009 forecast that the coming year will be very difficult, with great risk of social and political turmoil in many developed and developing countries.

The mood among the more than 100,000 people who attended the World Social Forum in Belem was significantly more festive than at Davos. The crowd at Belem is mostly much younger, more casual and more egalitarian than the elite titans of business and politics who gather at a remote ski resort for the rich high in the Swiss Alps.

Belem man sleeps in tents, while Davos man sleeps in five-star hotels at Davos. While Davos man imbibes single malt scotch and fine wines, Belem man drinks rum and smokes marijuana.

Davos man and Belem man appear to be galaxies apart from each other in terms of their political priorities – yet both meetings concluded amid unanimous consensus that more government is the answer to the world’s ills.

However, while Davos man wants government to save his wealth over the coming years with trillions of dollars worth of taxpayer-funded payouts that will mostly hammer middle- and lower-income people, Belem man wants governments to expropriate, nationalize and tax the bejesus out of Davos man’s wealth in order to give the people a much bigger share of the economic pie.

Davos man and Belem man are both looking to the new administration of US President Barack Obama to lead the way, though for different reasons.

Davos man hopes President Obama and congressional democrats will deliver a massive bailout plan to lift the US economy out of its worst crisis since the Great Depression of 1929-1933. But these hopes will be dashed. A first look at HR 1, the misnamed ‘economic recovery act’ crafted under the almost exclusive direction of Democratic House Speaker Nancy Pelosi, reveals that over 60% of the “stimulus” bill is fatty pork which won’t create new jobs or build needed infrastructure.

It’s also likely that President Obama will have a difficult time obtaining the G-20’s political support and coordinated policymaking, which are needed for an effective worldwide economic stimulus plan.

Instead, the mood increasingly appears to be one of everyone for himself. Governments everywhere are way behind the curve in terms of addressing the still-expanding shockwaves of the global crisis. Governments also are increasingly, and justifiedly, worried that grand bailout schemes which so far total over $10 trillion worldwide could drag governments into insolvency and bankruptcy.

Iceland’s government went bankrupt last week, and Britain’s government could be among the next to topple into bankruptcy.

The Eurozone countries led by Britain, Germany and France face GDP contractions of between 2-3% this year and zero growth in 2010. Many eastern European states, the newest and fiscally weakest members of the European Union, also could go the way of Iceland’s government in coming months.

China’s economy will crash hard in 2009-2010, pulling down other Asian economies in its wake including South Korea, Singapore, Thailand, etc. Russia’s economy also will crash over the coming year. Japan’s chronically weak economy will grow weaker; note the recent news that Honda’s profits were down 90% in Q4.

Latin America is heading down too, and the countries likely to suffer most – Argentina, Bolivia, Ecuador & Venezuela – are all ruled by presidents pursuing radical anti-US leftist agendas which have left their respective economies in ruins.

In this climate, the chances are poor that Obama can quickly cobble together a solid coalition of world governments to ride to the world economy’s rescue with the US leading the way.

There may be some progressives among the political and social species described here as Belem man who harbor some hopes that President Obama will shift the US towards the left and launch a quest to create a New World Order.

However, while Obama’s ideas on where the US should position itself in the world remain unknown and untested, Caracas Gringo thinks it very likely that the new US president soon will disappoint far more on the left than on the right.

The reality is there isn’t much that any US president, regardless of party affiliation, can do in terms of initiating bold new foreign policy initiatives.

As Iran has already confirmed, any US president who offers a mortal enemy like Tehran the chance of a real two-way dialogue instead of tough but balanced engagement will certainly be perceived as a weak US president.

Jackals always run in packs (Iran, Russia, Venezuela, Belarus, Syria, Hamas, Hezbollah, China, etc.), and become more aggressive and vicious when they sense a weakening prey. It’s in the nature of jackals to behave in this way.

If President Obama (and the Democratic congressional majority) appears to be moving in the wrong direction on the US economic bailout plan, he also appears to be heading towards a foreign policy disaster on a scale with the debacle in US foreign policy created by former Prsident Jimmy Carter from 1976-1980.

During her Senate confirmation hearings last month, Secretary of State Hillary Clinton outlined a foreign policy agenda which, in a nutshell, would have a vastly more empowered army of State Department diplomats engaging in every imaginable global issue, every country and every conflict in the world.

Under Clinton, the State Department would lead on every possible front ranging from US defense and national security, to trade and development, climate change, human rights and women’s rights. Meanwhile, the Defense Department would have its budget cut by over 10% in the coming fiscal year (2010), and would take a distant back seat to State Department diplomacy.

In effect, blah blah blah and leave the stick at home, even when dealing with crazed Iranian thugs who are determined to launch nuclear weapons at Israel at their earliest possible convenience.

America’s elites, whether Republican or Democrats, appear incapable of understanding that their well-meaning Wilsonian obsession with spreading the American way of life is interpreted by many foreign societies and cultures as offensive Imperialism.

If President George W. Bush dug America into a hole, President Obama now appears poised to dig an even deeper hole, one in which both Davos Man and Belem Man will dumped together in conflict.

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About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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