Davos convenes amid slashed budgets, capitalist contrition
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The annual World Economic Forum has convened in Davos, Switzerland, but the normally lavish festivities have been scaled back this year amid worldwide economic turmoil that has forced many global companies to tighten their budgetary belts.
AFP - Lavish parties thrown by top Wall Street bankers used to be the talk of the annual Davos forum but the economic crisis has forced belt tightening this year.
The number of A-list bankers who will debate the global turmoil at the World Economic Forum starting Wednesday has been cut and many financial institutions have slashed their entertainment budget.
Caviar and lobster are out and ham and cheese are in for receptions at luxury Davos hotels such as the Steigenberger Grandhotel Belvedere where white wine and cheaper champagnes are replacing Dom Perignon, media reports say.
John Thain, former Merrill Lynch chief, was scheduled to debate the future of the global financial system, according to a WEF programme circulated last week.
But he resigned from Bank of America, which bought Merrill Lynch on Thursday and Thain's name was dropped from the latest list of forum participants.
Goldman Sachs, renowned for its Davos parties, is not holding one this year. The bank's chief operating officer Gary Cohn is on the Davos list, but chief executive Lloyd Blankfein is not.
Likewise, Citigroup chief executive Vikram Pandit is not attending, and Lehman Brothers, usually a prominent presence at Davos, has folded since economic storm clouds started gathering over last year's event.
JP Morgan, led by its CEO James Dimon, will be left leading Wall Street's depleted delegation this year.
Swiss newspaper Sonntagszeitung reported recently that budgets for receptions were being cut by 30 percent, quoting Steigenberger Grandhotel Belvedere chief Ernst Wyrsch.
Marc Demisch, general manager at the Central Sporthotel said a bank which used to host two events at its restaurants has opted for just one event this year.
Another private event will see 25 percent budget cutback, with "wine that is about 10-15 francs cheaper," he told AFP.
"We will probably make a little less than last year, a maximum of five percent less on food and beverages, but not tremendously less," said Demisch.
Jean-Pierre Lehmann, a professor at the IMD business school said: "Citigroup used to throw big parties. So did Goldman Sachs and the others. But the mood this year is very different."
Davos, he noted, was founded on the "dogma of business leadership" which in recent months has been choking on fallout from the credit crisis fallout.
"There was always a certain element of evangelism capitalism during previous years' Davos. You don't get fundamental debate on the system," he said.
Lehman is on the lookout for "acts of contrition" this year, as bankers and other captains of industries are under the spotlight for their role in the financial crisis.
The gaps left by the diminishing teams of bankers are more than made up for by politicians and policymakers.
With the capitalist world suffering its worst battering since the Great Depression, the words of communist China's Premier Wen Jiabao and former communist Russia's Prime Minister Vladimir Putin will dominate the start of the elite five-day meeting.
Putin, Wen, Japan's Prime Minister Taro Aso, German Chancellor Angela Merkel and British Prime Minister Gordon Brown are all to lecture the forum on how crashing economies can be saved.
Russia and China have a chance to monopolise attention since no top policymaker from President Barack Obama's new US administration agreed to go to Davos.
The World Economic Forum said it was "symbolic" to put China and Russia side by side as "key players of the world economy,".
"It is a very powerful sign from China, my sense is that they want to engage with the rest of the world in finding a solution out of the crisis," said Kishore Mahbubani, dean at the Lee Kuan Yew School of Public Policy in Singapore.
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