By Fareed Zakaria, CNN
The atmosphere at Davos this year was very different than usual. In the many years I've been attending the conference, there has always been a star: A country that was newly reforming and doing well would send its finance minister or prime minister and everyone would be wowed. There would be a year of Turkey or a year of India.
But this year there was no sense of optimism about any model country. Instead, there was uncertainty. People worried about the U.S. economy (even though U.S. Treasury Secretary Tim Geithner made a pretty good case that the U.S. was bouncing back in the Davos plenary session, which we aired on GPS and can be seen in the video above). There was uncertainty about how strong the recovery was and whether the U.S. would be able to overcome its medium-term deficit issues.
U.S. concerns were overshadowed by European concerns. Although people thought the Europeans were dealing with the crisis management pretty well, there was deep uncertainty about the long term future of the entire European model. There was a sense that Greece would never be able to pay off its debts and that there’d be a massive restructuring. People asked what Europe would look like after that restructuring. One of the delegates said to me, 'At the end of the day, the Greeks and the Italians will never become Germans. The question is: Can we have a Euro Zone that encompasses both?'
There was even a great deal of uncertainty about something that has been taken for granted for the last decade - the strength and vitality of the emerging markets. People were concerned about whether China had over-expanded during this recession - whether it had eased up on credit too much and whether its stimulus program had been too far reaching, producing everything from property bubbles to inflation to an unsustainable rise in wages. There was concern about whether China would be able to pull back and, if it did, what the effect would be on social stability. The Indian delegation was very gloomy because the politics of India are paralyzed and world trade seems to be declining quite significantly. Brazil's economy contracted last quarter. Everywhere, the certainties of the past had given way to a great deal of unease.
If there was one ray of hope, it was Africa. I had dinner with African heads of states, senior officials, and business leaders. They were bullish on Africa. They felt that politically they were doing better than they had before. Democracy was getting more entrenched. One of them pointed out to me that years ago The Economist had a cover that read, “Africa: The dark continent”. Last month, The Economist had a cover that read, “Africa Rising: The hopeful continent.” The delegate said those covers represent the transformation of people’s views of Africa. In a Davos filled with gloom, I was surprised to find the one note of optimism coming from the most unlikely spot.
It seems strange that the very continent that has always come last,is the one bright light in the cloud of economic uncertainty! If only that African leaders abide to the tenets of good governance and be as transparent as possible,the torch would definately shine brighter! A dream that Africans must stride towards or else,it will remain only a mirge!
"Brazil economy contracted last quarter" and grew 7.5% (2010) , 3% (2011) and the forecast is 4% (2012)... Is this a revenge because of Corinthians? Zakaria...
"There was uncertainty about how strong the recovery was and whether the U.S. would be able to overcome its medium-term deficit issues. "- Zakaria
Medium-term deficit issues? The United States is borrowing money just to pay the interest on the debt it owes-not the debt itself. The U.S. debt is now over 100 percent of the GDP. The Federal Reserve has been buying up the treasuries that the U.S. government has put out to pay for the debt because no one else wants to buy them. Think about that. The Federal Reserve is buying up the debt that is owed to it. And if all that wasn't bad enough the Obama Administration continues to run up that deficit faster than any administration in the history of the United States. In fact, the dollar is in just as bad a shape as the Euro- perhaps worse. Bernanke's policies are going to lead to a massive devaluation of the dollar as a currency because all he is going to do is print more dollars to cover over the debt. I guess people should be concerned about the strength of the "recovery" , because there is no recovery given the debt problems I just mentioned. Geithner's comments about the state of the U.S. economy are absurd.
It is apparently impossible for conservatives to recognize the difference between the financial situation of the US government and that of our business community. Let me help you out. The government is under water because our last administration changed its financial structure. It choked off the income and more than doubled the outgo, mostly in war fighting and other military expenditures. To compound the problem, the heirs of that administration have employed every trick in the book to keep the country in the hole for political gain. At the same time, our corporations and those at the very top of our economy have never had it better, unparalled wealth and very low taxes. It doesn't take a rocket scientist to know how to fix things; cut defense spending to reasonable levels, end miltary adventures and ask more from those of us who can best afford to give. Does anyone remember how things were back before we changed course?
"To compound the problem, the heirs of that administration have employed every trick in the book to keep the country in the hole for political gain. " That is one of the dumbest things I've ever seen posted here that didn't also contain the word "doo-doo." You think Obama's re-election strategy is to stop the recovery?
This is not a democrat or republican party issue. Both these parties are bought and paid for by the same monied interest. If you want to look at the rise in the government debt it started long before the Bush administration. You'd have to go back to the eighties with Ronald Reagan. That's when national debt began going parabolic and continued to do so irregardless of whether a democrat or a republican president was in office. If want to look at the roots of the fiasco in 2008 – the so-called banker "bailout" look to the the Clinton Administration. It was their administration that repealed Glass-Steagall and allowed the banks to gamble in the derviative markets with derivative products back by liars loan mortgages and Bogus AAA credit ratings. Our entire political system is owned by the banks and wall street. Consequently , it is totally dysfunctional. It has nothing to do with partisan politics. That's just scripted nonsense for the masses- like pro-wrestling or most of the council on foriegn relations drivel that Fareed Zakaria writes.
Very well said Cal – just unfortunate that smoke and mirrors and politics get in the way of basic common sense...
Indeed, Africa has all it takes to be a bright continent: natural and human resources and plenty of space. Yet many countries have a lot of homework ahead of them. They have to provide for education, law and and order, the equal rights and distribution of wealth. Politicians ought to care about their place in history and not to help themselves with the country's coffers.
One major tragedy that occured in Africa was that at the end of WW1, Germany was compelled to surrender it's four African colonies to the British and South Africans. This meant that the countries of Cameroon, Togoland, Namibia and Tanzania would never enjoy the benefits of German rule. As a result, these countries were kept weak and backward.
Yes, what a shame that those four colonies and the rest of the world didn't benefit from German rule following WW1. Ohh wait a minute...
"these countries were kept weak and backward." They probably thought of it as "running their own lives" or "being free from oppression and slavery."
Morphus Breach of the codes to the Main Frame. The Alien Species Carrot and Stick approach to the sin of Greed.
Confirmed of display story on Myspace holding the money with Will Smith Aspect Critter and story of subliminal of the anicents.
Nov Schmozz Ka Popp, ook ook Potrzebie. G'bla, G'bla. Ooo eee ooo aw aw, ting tang Walla Walla bing bang. Great Googly-moogly!
No sense of optimism??? Please. The globe is gloomy yes, and the future is uncertain however, if there is a bright light you will see it over Canada. Their financials are all in great shape, the Rule of Law works, they have a small population (size of California) and a giant land mass (#2 after Russia) with ample natural resources for domestic growth and export. Canada has a huge share of the world's fresh water supply plus two oceans to harvest. Medicare for ALL the people. The population is educated (globally) and their economy continues to diversify. I could go on but I think the point has been made.
Hi J., As a proud Canadian I was so glad to see you mentioning Canada's economy. Certainly thought this should have been mentioned in the main article as Canada has come through the recession in much better and sounder shape than the US or European countries. Prime Minister Harper certainly brought attention to this in his speech at Davos. Thanks for making your comment.
shhhhhhhhh ... don't tell anyone. I like things the way they are up here.
So proud to be Canadian.. however I do live in WI , USA.. things are doom and gloom...so packing up the family and moving back in June! .
Go to debtclock dot ca to see its at 16k per person at the moment. That's not 16k per tax payer of course. Its horrible. Not as bad as south of the border but probably unpayable because bleeding heart liberals and selfish capitalists will simply not share the burden and do what they must to rein this thing in. Politicians should be jailed if they run a deficit. It breaks all the rules of Grade 1 math. But the sheeple have lost the ability to calculate math. Then you look at consumer debt and you see why people don't care about federal deft. People have lost their respect for money. And it will sting in the future when others simply won't buy our debt. How long would you lend your hard earned money to someone who is an irresponsible spender? I'm guessing not long when they can't even pay a small part of the principle back.
Things are not soo rosy in Canada. The job market is stagnant and the feeling is that we are on the razor's edge of collapse due to US/Euro Market conditions and a retail market that is running red with the blood of fired employees...not as bad as Britian but the tipping point is nigh.
My family and I left Canada for Australia late last year to take advantage of (the weather yes) a economic climate that is much like Canada's but not dependant on the strength of the US. Even though things are not as rosy down under (auto industry is dying and the retail market is following the rest of the develop nations) I feel that they have been overlooked for their ability to weather the storm (much like Canada) but have massive restrictions in place to ensure that the debt to GDP ratio does not tip the country to oblivion.
The restrictions on debt to gdp ratios don't mean a lot. Ireland had the 2nd lowest in the EU until the property market crashed. A property boom generates a huge amount of tax revenue. With property in Australia now even more expensive than it was in Ireland, at levels that I've heard at pretty unaffordable, when that takes a downturn, Australia could have debt problems too. Unless they let all the banks who are exposed to property developers and negative equity mortgages hit the wall, and very few governments have been willing to do that (as the consequences are extremely hard to predict)
Ha ha ha.. just wait until the US elects a GOP to president and they make some excuse to declare war (the GOP always does) and this time it is Canada's turn. Your oil sands will turn into our oil sands.... ;-) ?
Actually, the Democrats have started 6 of the last 9 wars.
What about the Arab Spring Mr. Zakaria that you have been singing praises of?
Don't you think it has unleashed economic, religious and other freedoms that were oppressed for long by US supported dictators (as you zealously state!)?
Are you scared that the world is getting a taste of those freedoms, in the most violent way, as in the daily massacre of the Coptics in Egypt, and the massacre of over 73 Egyptian soccer fans today?
Ofcourse you are in Davos, rubbing shoulders with world leaders, but how can you disregard sea-changes in the ME and its impact on western & global economy?
Because in the end, the people in the middle-east don't matter. They're uneducated, desert-dwelling barbarians. The only thing from the middle-east which matters is the oil.
The "European Concerns" are multiple and country specific. Hence the new treaty – a tighter fiscal union -that was approved two days ago sees challenging times ahead.
I concur with this story- including the optimism with respect to Africa. While I recognize that Greece may never "become a Germany", Italy has all the potential to be one some day. Anyone knowledgeable on the industrial mix of the Italian economy would tell you that it possesses the drive, experience and citations to make a big comeback within the next 10 years. The list of global brands with which the world has come to associate Italy are illustrious and vital. All that remains is for Italy to make the sincere reforms needed and for it to chart the clear path for a comeback and it shall occur. Forza Azzurri !
If you are an Italy-fan, don't be over-optimistic. Your estimation of "a big comeback within the next 10 years" might just be an illusion.
Italy has the drive?
There's only two Italian drives.
One has to do with cars (beautiful, beautiful cars). The other has nothing at all to do with economics or hard work.
Hahahha – so the Italians will never be Germans , but clearly Africa will beat the rest at the game – hahaha – and this comes from the paragon of melanin-complexed Zakaria – hahaha –
Rashid, can you tell us why Jim Watson was forced to resign – hahaha –
What a clown, thisZakaria -
How bad must things be that Africa looks good?
Preaty bad I must say; all that is fuzzy logic though, because if the West is going bust so will Africa and the rest of the world.
Geitner is a liar
How can there be gloom over a "global economy". Only a "globalist" would think that. All you "one world Antichrist" mother f–kers trying to force your one world monetary system on all of us can stick it up your butt, we don't want it, it's the mark of the beast and the devil, so take your gloom and doom fear mongering to the nearest lake of fire, throw it in, and oh yeah, jump in with it!
I wouldn't be surprised if we saw some kind of false flag incident where they'll say "Oh, looks like we'll have to microchip everyone with this super special mark of the beast because of this! It's ok, it's for your safety... and look they come in different colors too! Lime, Cherry, Tangerine, and Watermelon. Get one today and we'll give the first 500 people an autographed picture of Satan!
Seriously, If anyone comes near me with a syringe they're going to spitting out Chiclets, that's a promise.
The Book of Revelation is a "False Flag" Incident. There is no Antichrist to unite the world under some evil World Government, and you're being played as a sucker by religious nutjobs who rely on your ignorance to keep their own power.
You actually believe that stuff? Lookout, there's a great big satan coming to GIT you. Better run and hide. Good grief, is this the Dark Ages?
Your mom says "Hi."
Next guy who says I'm "of the Beast" is going to get his collarbone broken.
Europe's economy is like a bucket of water with a hole in it, but instead of patching the hole they keep putting more water into the bucket. Someone needs to go over there and start slapping people around, probably should do the same over here. Polticians either aren't very intelligent, or they're purposely doing this, I'm unsure which.
Why do those that choose to buy into the republican way of thinking, which is much of the middle to lower middle class American's no understand that most of the world is going through a monetary crises? And as for the U.S., it was the Bush administration that put our country in the hole. Protecting the rich! Why is that? Is it that much easier listening to the liars and cheats than using your own brain to see things the way they are? Look outside our country. Listen to more than one news organization. Educate yourself. And don't just think about yourself.
Geithner is the guy, along with the FED, who will throw buckets of US cash into the fast-sinking EU debt problem to try and bail out not only rotten banks in the EU, but their Wall St buddies, like Goldman Sachs who helped Greece to cook their books to get into the EU in the first place.........Geithner is the guy who will make your kids and grandkids indentured servants to the banks.....
You forgot to mention that he eats Gentile babies and bathes in the blood of virgins, Rush.
"At the end of the day, the Greeks and the Italians will never become Germans. The question is: Can we have a Euro Zone that encompasses both?"
If we can have a Dollar Zone that encompasses New Yorkers and Mississippians, Wisconsinites and Idahoans, Californiacs and Texans, Illini and Alabamans, why not a Euro Zone that encompasses Greeks, Italians and Germans?
The Euro Zone eliminated discrepancies between currencies, which used to inflate and deflate almost daily. You put a million into Yen, and then wait and watch; the next day you cash that Yen into Rubles and it's now worth 1.25 mill. Keep going until you have two million, then put your original million back into yen and repeat. You can't do that when everyone is on Euros, and I'd have resisted it just for that reason.
The only way to survive this declining economy is to learn how to become self sufficient, growing your own food, using the skills that all of us have and going back to basics. Once people start relying on themselves, they will not need to rely on governments to take care of them and the society will prosper. You can start small, just create something on your own and you can trade with others. This is as much certainty as one can get in life, everything else does not depend on regular people, but depends on people at the top with big money.
For a lasting repair of every economy is, first: understanding that money is the subordinate of human resources & energy, second: restricting governing to the “moral”, “social”, and “academic” development of the nation, thirdly: raise taxation for governing only. For your information Google “The World Monetary Order”.
“STOP TREATING THE SYMPTOMS!” Start treating the cause of our global economic upheaval. The cause is our departure to conform to what the Laws of Economics dictates us. For your information Google “The World Monetary Order”.
I bet if I clicked that it would tell me how only L. Ron Paul can save us, right?
Remember when Russia defaulted on its debt in 1998? They recovered. Or at least, the country is in better shape than it was then. Default is not the end of the world. But it would be painful for awhile. Best to get it over with. It is inevitable for a few countries much smaller than Russia......
Can we get Congress drug tested before the vote.
Review of their voting records indicate they have to be using some form of mind altering pharmacuticals.
They aren't on drugs; they are simply corrupt politicians who are selling their votes and position to monied special interest groups. Instead of investigating them for drugs they should be investigated for tax evasion. You'd be amazed how many of these congressmen have off shore accounts with 100's of millions of dollars in them that they don't pay any taxes on. I'm willing to bet they didn't make those millions on a congressman's salary.
I'd go the other way and serve them all some brownies and koolade an hour before the vote. Anything to humanize them a bit . . .
Could it be that Davos was a depressing place this year because the rich and powerful know their power is being userped at the fringes. Many of the moves being taken by the "powers to be" are not very good solutions to the world's problems and they know it. There is more pain to come and the only resource rich area left to tap is the rich. It doesn't help their cause when Romney pays 15% taxes on $21,000,000 in income.
These are people who profit by increasing business volume and sales, which means jobs and prosperity for the workers is critical for their success. 'What's good for General Motors is good for the USA' is the same in other countries, too. When I make good wages, I buy stuff from you, and you make more money to pay your workers better so they can buy stuff from me. Vulture capitalists like Mitt aren't the whole story.
At the end of the story the unemployed will force the gov't to pay them to obey the "law," the idle preferences of anonymous others. After all, why else will they?
We missed our real opportunity; one well placed missal would have changed the world’s future. We would do well to start over; the leaders representing us at Davos are obviously not taking care of business.
"We missed our real opportunity; one well placed missal would have changed the world’s future." Praying at them from a Catholic hymnbook wouldn't do much damage, cowboy. Now try not to perpetuate any more stereotypes.
Such a charming setting in Davos. Das Graubunden ist schoen, ja? It is a shame the outlook was gloomy. My recommendation is to relax by going to a local restaurant. Order grilled Bratwurst mit Roestti, blau kraut optional. Follow with a desert of apfel kuchen mit schlag rham und ein Coffee Fertig. Ein stumpa ist optiona. If that doesn't immediately change the mood check out of the hotel and catch the Zug to Flughafen Zuri am Kloten for the next flight to the USA. Michael R. Wimberly
J. Von Hettlingen says:
“Indeed, Africa has all it takes to be a bright continent: natural and human resources and plenty of space. Yet many countries have a lot of homework ahead of them. They have to provide for education, law and and order, the equal rights and distribution of wealth. Politicians ought to care about their place in history and not to help themselves with the country’s coffers.” And I cannot but concur with him. It's a shame, the type of leaders we have in Africa that have no concern about the future of their people. Majority of Africans are under-educated or uneducated, and you'd wonder what the future holds for such people, this is not to mention the endemic corruption and lawlessness in the continent. But for the abundance of natural resources in the continent, I don't see the light that's being talked about. And with the rate at which our leaders are going with corruption, our nature's blessing (natural resources) has become a curse.
Wonderful, insightful, thoughts as always.
I believe however that you are referring to: 'The Hopeless Continent', rather than 'The Dark Continent', in your allusion to that seminal article that marked the baseline for evaluating the change in the tone of the Economist's coverage of Africa over the years.
'The Hopeless Continent' appeared 12 years ago when Richard Dowden was Africa Editor. He has conceded himself that this piece represented the lowest point in the Economist perception of the continent, and that matters have improved steadily since then.
I would also like to take the opportunity to inform you and your readers of the launch of the Africa 2.0 Manifesto in Davos this year, another seminal landmark.
I do agree with all of the ideas you've presented in your post. They are really convincing and will definitely work. Still, the posts are too short for newbies. Could you please extend them a little from next time? Thanks for the post. Robbin Goal http://www.robinhoodchina.info
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