One of the most interesting sessions of the week took place on the first day. I could not blog it because my battery died and the room did not have any mains plugs at the tables. this session opened with the large room laid out with dozens of round tables with eight to ten chairs each. The moderator stated…..THIS IS THE FIRST TIME IN MY LIFE THAT THERE IS NO LIGHT AT THE END OF THE TUNNEL.

well, that got everybody’s attention…..

our task was to determine what our table felt were the most important issues facing the global economy this coming year. i will simply list the issues that the various members stated….

a. fear of panic encouraged by the media

a. protectionism

a. aging of the global population

b. consumer confidence

b. inflation in emerging markets

c. loss of confidence by the general public

c. lack of transparency/disclosure

c. leadership crisis continues in US

d. mispricing of loans

d. fear, again

e. uncertainty

e. effects of connectivity

f. talent shortages

f. environment and energy

f. 2008….too late now to do much

g. oil price impact

g. intertwined concern regarding trade protectionism

g anxiety in the US coupled with absence of confidence in US leadership

h. risk of credit crunch

h. soverign wealth funds

i. spillover effect of current sub-prime crisis

i. anxiety reversal

we had a fascinating discussion around how to consolidate these… we felt that the impact of connective and collective fear would be the most impactful challenge for 2008.

The vote of the room resulted in the following…

18% Lack of co-ordinated responses and leadership

18% mismanagment of current sub-prime crisis

17% broad-based collapse of confidence in globalization

16% US recession

11% severe global credit crunch

8% over-reation to threat of recession

6% rise in energy and commodity prices

4% rise of protectionism

2% increase in wealth gap

Last year, Climate Change was voted to the be number one issue facing the world with a significant percentage lead. This year it has seeped into just about everyone’s vocabulary. The summary is quite simple taken at face value – LEADERSHIP…where is it?

Imagine if you can access anyone at WEF. who would you want to speak to? why? why would they listen? would they? imagine if everyone at WEF could talk to each other……ever more than they do. David Kirkpatrick, from Fortune Magazine, opened the session with this question. It is an interesting one. Here we have arguably two thousand of the world’s most powerful people gathered together. There must be a reason for them to be able to communicate more than they already do. This was the debate in a WorkSpace session.

The session was one of the best at WEF2008. it really challenged all of those in the room to consider what will make people want to use the WELCOME community? how could it be more than a platform? what is needed for this community to make a difference in the world?

we were given six roles to play…CEOs, Experts, Social Entr, Politicians, Chief Strategy Officer, The Planet. I happened to be in the CSO group. it was interesting to hear the range of views. I was not sure if anyone would use this system. Others were convinced of its merit. In any case, we all agreed in the end that it was worth trying.

In the room were the brains [and brawn] behind Sun, Wiki, Facebook, AMD, BusinessWeek……

this was the last session on saturday. i almost skipped it as my energy level was scraping along at an all time low. I am so glad that i participated. the energy level of the room keep ramping up thru the afternoon until it reached a crescendo with the final skits…..we had to act out the scenario for the interface.

Jerry Linenger – he talked about execution and his respect for those who do things. then linked his experience from the MIR. closed eco-systems really show the abuse. the other issue that bugs him is the lack of personal responsibility that many act around water. water is the essence of life; essence of exploration. the grand view and perspective that he had from space, really changed him forever. he feels that we must raise awareness of solvable problems. the key to this is to make one fieel that we are all in a closed eco-system as he experienced it.

lake michigan.

Maggie presented the issues. essentially two big circles: on is really about climate change adaptation, resource management and the other is the water sanitation and drinking [the taps side]. she called it three big drivers are people, prosperity and population. she reminded us that Water is LOCAL.

Dominique noted that the newspapers have picked up that Water is one of the two big messages coming out of this years Davos. he also pointed out that last year there was only one session on water and this year there are seven.

Peer B-L from Nestle gave a quick

as climate change became an issue for political action, water was overlooked. he offered that there are three issues which must be considered – nutrition, energy and environment. his concern is that working on climate change is damaging the work on water. water is a problem now, not one in 15 years or so. he emphasizd, again, that it is very local. he also emphasized the Call to Action document from the WEF. He pointed out that agriculture is vital to be part of the discussion and are too often absent.

After thinking about the big issues that are confronting us relating to water, we then were given a scenario in which to consider the situation if things continue as usual. we took a look at the issues which would be manifesting as well as the triggers to get movement. the issues were clumped into five groups:

Politics/Incentives/allocation

Agriculture – concentrate of four geographic areas

leadership – water as the global hero -

data/metrics

multi-stakeholder dialogue – actions: collect stories, rabble-raising, scenario planning

look up on youTube —– the unchained goddess [http://www.youtube.com/watch?v=0lgzz-L7GFg]

John Chambers – CISCO – we feel that CSR is both the right thing to do and it is good for business. [http://en.wikipedia.org/wiki/John_Chambers_%28CEO%29]

Peter Sands – Standard Chartered Bank – you have to make choices. we choose to ensure that it is relevant to our businesses and where we can make a difference.

Wang Jianshou – China Mobile – being a global company means that you take responsibility. 370 million subscriber base and 6 million additional per month with 60% coming from rural areas.

Indra Nooyi – PepsiCo – [Forbes most powerful woman in the world in 2006 + 2007] our company is all about performance with purpose. it is really about connecting with emotions. to unleash the emotions in a directed way. [http://en.wikipedia.org/wiki/Indra_Nooyi]

HRH Queen Rania – Jordan – Corporate citizenship is really about righting the wrongs of the rapid growth of the past few decades. there are two trends that are interesting. one is that causes are being chosen that align with the businesses so that they have real impact. the other is the fact that many are working in partnership and the importance of working in partnership with governments. in the Arab world we are developing a better appreciation of what good corporate citizenship can do for society. we have the advantage of having good citizenship part of the basic roots of our society. [http://en.wikipedia.org/wiki/Queen_Rania]

Gordon Brown – UK – it is really all about partnerships and transparency.

notes of interest

……ONE of the big issues that arose was the question of who really OWNS the goals and is coordinating action.

…….PS stated that we have to remember that the company is really there to do their thing really well. the other things will then follow……..[i am not so sure about this. i think that values must be part of the core of the company] we have decided to put millions into renewable energy and intends to make alot of money on it.

on-stage interview by Klaus Schwab….three questions

KS 1. what steps should be taken to reinsure that the global economy gets back to sustainable growth?

GB – it is a testing time for the economy and for those who believe in open-markets. especailly based on the underpricing of rish and then the aversion from risk. but even more impottanly is the uncertainty that people feel with the current situation. there are three possible reactions:

1. to resort to heavy handed regulation

2. to resort to protectionism

3. inaction or paralysis.

we have also to be very careful about the underestimating of the silver lining… action?

1. the encouragement of transparency – this helps to inform markets. there is a real problem with national oversight in a global market flow.

2. monitor and get fiscal policy right

3. be champions of free-trade and fight against protectionism

the challenge will be to show the world that we can indeed deal with this in a globally co-ordinated.

KS – 2. in order to achieve what you suggest, we need institutions..are they sufficient?

GB – the current insttutions were founded in 1945. they simply cant deal with the new problems. these are more than the sub-prime market problems, these are bigger problems like climate change, pandemics, the internet and expression, poverty. if we do not reform these institutions will become irrelevant

1. united nations reform. a rapid response agency that includes those who can rebuild civil society.

2. make an early warning system for the global economy

3. the world bank to incorporate the environment as well.

KS 3 how are we doing on the millennium goals?

GB – not well. the trajectories are all negative.

Ban KI-MOON – UN

Andrew Liveris – Dow Chemical

Peter Brabeck-Letmathe – Nestle

Neville Isdell – Coca-Cola

Fred Krupp – Environmental Defense

the session was opened by Ban Ki-Moon, Sect Gen of the UN. he began with a series of incidents relating water and war. essentially water shortages impede development and create conflict. climate change and water conflict will be mostly likely seen in 46 countries representing more than half of the world. water stress effects 1/3 of the US and 1/5 of Spain. the challenges of the reduction of the glaciers in the Andes is threatening millions. water stress threatens us all. no one in the world is immune to the effects of this stress. he noted that there is a new revolution in green economics.

PBL – water sustainability is now becoming an issue that is in the public eye. he notes that there is still time, but not long. he framed his understanding of the issue. this is the disparity in the world. an american eats 6000l/day, a european 4,500l/day. in South Africa, it has been established that every person has a RIGHT to 6000l/month. this is a right. to fill up a pool is not a RIGHT and should be paid for. the message is that we need to put a price on water. currently we essentially have water for free. it takes 9000l of water to make 1l of biodiesel. this is a REAL issue. he notes that you should allow.

a great example can be found in OMAN. it is a great example that is 4,500 years old. there are 3,000 individuals who has rights to water. they also must supply the mosque with water and they are required to maintain the supply system. it is the example that must be followed. there is a fair price and it is tradable.

AL – in 2005 Dow decided that corporate responsibility is important. he quoted a long list of actions that proved how good they are.

NI – he started with the acknowledgment that water is not yet on the global public agenda. last year there was only one session. now there are five. but still, it is not enough. the nexus between climate change and water needs to be recognized. Coke states that they will be Water Neutral in the future. they realize that they must ensure that they achieve this soon. if there is no water, they have no business. there is a triangle between water-food-climate change. this is an extremely complex issue. sadly, it seems that only simple solutions are being looked for. he observes a new coalition that is developing between the NGOs and businesses. water is not yet a crisis, and we need to engage before it becomes a crisis. Agriculture uses 70% of all water.

FK – the Romans had access to water and sanitation 2000 years ago that half the world’s population do not have access to today. most of the issues are solvable. in the Sierra Nevada’s rivers only flow at 5% of their natural flow. the Rio Grande is dry when it gets to Mexico. the reservoirs of Colorado are half-full. Lake Superior is down about 2.5 feet. the essential message is that we must all become more efficient in the way we use water. there must be caps placed on the use of water. he reinforced the market price mechanism for industrial users of water. we need to focus on human, eco-system and climate change all at the same time.

Sharp -

Aebisher – huge interest in Europe on the issue of Convergence. today the magnitude of convergence is huge – especially in the area of the life-sciences. this has been a real result of the genome mapping. systems biology, trying to simulate life, or micro-nanotechnology or metronics, devices to help the quality of life that might be even better than drugs, or micro-electrodes in the brain of a monkey walking on a treadmill are sent over the internet to japan to make a robot walk. another example is the blue brain project at the EPFL focused on modeling the entire ‘CPU’ of a human brain. you need a petaflop machine to do this right now. the model is almost ready. the real convergence is in the training of our new engineers or biologists.

Collins Jr – Metronic is the largest company in this area. one significant trend is Biotech + ICT. these devices can not only provide the therapy, but also do the analysis of the patient. ie the linking of insulin pumps with glucose monitoring. this allows the pump to deliver the right dose at the right time and the device can now be linked to a cell phone to alert of the crisis. they are working on sensors that will be implanted to alert of an extraordinary condition. the acceleration in the biotech area is also ramping up. the example is the site-specific delivery of a protein within the body. all of this very interesting, but also has problems for regulation. the regulators have had their nice clean niches and this convergence cuts across domains. the second issue is the aging of the population creating a dilemma of funding for later age care. the moral challenge will be

Brown – neuroscience – we are seeing the interesting iteration between engineering and biology/neuro. for example, the way in which information is communicated within the brain. the neuron changes properties every time a signal is sent down a neuron. the control of information is an engineering domain. these principles are being used to understand the redundancy and plasticity that the brain has.

Kotick – entertainment – [Activision] – using playstation3 arrays to make visualization. a big realization for us was that consumers are driving convergence. take a group of 26 year olds who make games for a living for our company. they have a whole lot of different perceptions of what convergence is. consider one game with millions of participants – World of Warcraft – which is also a very powerful collaborative tool.

Geoff Moore – tell us more about the metaphor of the brain.

the brain is essentially being explored gene by gene. we are not yet at the point where we can take one cell and understand what it does. we know that the brain is such a complex entity that they are taking it apart from the cellular level all the way to system level at MIT. on the other hand, the system of the brain changes as pathways are used. this is fascinating from a control and adaptive standpoint. the amount of data generated by neuro-scientific research is immense, thus we see the convergence with physics and numerical analysis.

THEN a neuroscientist from Oxford chimed in with such an academic argument/disagreement that went on and one and on and on……she embodied everything that is wrong with an academic out in the real world……lost perspective.

ALL MODELS ARE WRONG, AND SOME ARE USEFUL

World of Warcraft – currently mapping the 10 millions participants – observing their interactions and behavioural patterns. this is like a city of 10 million. how will this impact our understanding of how we will be interacting in cities in the future.

Al Gore – update on Climate Change

Bono – update on Poverty

T Friedman – moderator

AG started off with an update from Bali. he also pointed out the vital nature of bringing these two issues.

B started off by asking that no one let his band know that he was awake this early. he then turned serious and shared the statistic that due to debt cancellation there are an additional 29 million children going to school. he also credited strong leadership in Africa. he then moved the G8 and its lack of promise fulfillment. he hoped that the countries would get their act together.

TF asked how they met and how are they working together.

they met about four years ago. AG points out that the relationship between climate change and poverty is very tight. the plans to alleviate poverty depend upon a program to provide food for thee impoverished. if the planet heats up by two degrees these plans will no longer function. AG pleaded for a better understanding of this. he pointed out that the G8 is a format for discussion and this kind of discussion is vital.

Bono then picked up with really great humour the incredibly difficult issue of how to wean ourselves from addition. he pointed out that oil has been really good for him. he believes in innovation as a way to find the future solutions. he also pointed out that the brunt of the climate change will be felt by the developing world. he also was not so sure of the state of emergency.

AG then chimed in that this is not just about changing light-bulbs, but changing laws so that Carbon has a price. in this way it can be incorporated into every business decision. he followed by noting that those who are now incorporating carbon considerations into their business decisions are at a disadvantage. not much progress will be made ntil there is a global price of carbon that effects everyone.

Bono hopes for coherence in foreign policy around the three extremes [ poverty, climate change, ideology ] after the next election. he hopes for this, but is concerned that there will be incrementalism, rather than the step change which is required. if you take a look at globalization, it has indeed taken quite a few out of poverty, but he asked if it was enough. the world need to be re-imagined… this needs to be anticipated. and really thought about like after WWI or WWII.

Gore followed-up citing the analysis of the questions posed to the candidates recently completed. it revealed that only three questions were posed on the environment. the media must get its act together to focus on real issues. he also picked up the re-imagination theme.

[[[[......I wonder how we can most effectively re-imagine this future......]]]]

TF – what one decision would you ask of a new president?

B – show a trajectory to deal with the millennium goals. we need to see real stability. the pentagon is starting to understand that SECURITY = STABILITY + DEVELOPMENT. he later followed up with the fact that social movements always win the day….

THE SELF-INTEREST MUST BE SERVED BY ACTING ON BOTH OF THESE ISSUES.

B – it is for him about justice – ADAPTATION FUND and education are the two things we have to focus on. get girls into schools around the world so that they have a chance for a better life which will have many rippling effects.

Session Title – If America Sneezes, Does the World Still Catch a Cold?

F Bergsten – Dir Peterson Institute for Intl Economics

C Siwei, Vice Chair, Standing Committee PRC

M Klein, Chair CEO Markets and Banking Citi

M Brauchli, Managing Editor, The Wall Street Journal

D McCormick, US Undersecretary of the Treasury

interesting session. i wonder what they really did not talk about. i feel that session really talked around the question, but really did not get to the meat of it.

what is your opinion of the US economy?

FB – the rest of the world will get the sniffles, but certainly not a cold. i believe that the world economy has certainly decoupled from the US. INDIA and CHINA now account for 50% of the world’s economy. even if there is a slight slow down in China, there will be slowdown there from 11% to 9 or 10 %. the world as a whole will continue to grow. I also believe that we will see the first reverse-coupling… .this is when the others will help keep the US from falling too far. the mechanism is the trade balance. we have to remember that the US is no longer in a slowing. the internal market will stay low, but the international markets are expanding.

CS – i agree partially with FB. this is because the US is still the largest economy. the sub-prime crises might be over. it is my opinion that the US gov’t has a policy of a weak dollar. the election year will also mean that little attention will be placed on this. i believe that the us economy will grow up to 3% next year. i believe that this year will will stick to the 8% growth goals. We overachieved in the economic area. China now has $1.5 trillion in foreign cash reserves. china has a huge excess liquidity. it is intended to reduce this in 2008. we also are heading towards fully convertible RMB.

MK – yes. if there is a sneeze, there will be a global impact. over 100 countries have grown at over 4% for the past decade [more or less]. this has been driven by three things

regulatory globalization

technology globalization

capital markets globalization

this has had a profound impact on the growth that i mention. the transformation of wealth and jobs. oil is a 4 trillion dollar business. 50% moves to four countries. the reverse-coupling will be important to make a soft landing.

DM – we have no doubt that the growth will slow. the question is not coupling. the three issues are – housing downturn, sub-prime crisis, and broad-based increase of commodities prices. these three are putting pressure on the economy. in order for the decoupling to be real, these threee issues must be decoupled. i do believe that the regulators are working on these three issues. The long standing policy is that only the US President and Sect Treasury speak to the policy of the dollar.

FB – one of my reasons for what i stated is the weak dollar. the trade balance has increased. the big improvement in the price competitiveness. the dollar has lost effective value of 25% and will still fall another 10%. we might see an export driven growth. I also have a problem believing that the surplus will drop in China. In reading all the numbers from the Govt, there is no way that it will drop. The Chinese surplus will soon approach the deficit of the US. this puts allot of pressure on the rest of the world to allow these flows to actually take place. in noting the actions o the Chinese Govt regarding the RMB which seem to be opposite of the intention to allow the RMB to float.

CS – we need to do three steps… 1 pegging to dollar, 2 pegging to a currency basket, 3 fully convertible. we changed this to referring to the dollar rather than pegging to the dollar. ….. just sell us a Space Shuttle and this would essentially take care of the deficit. you would be welcome to sell us high technology.

FB – we should not expect any immanent action by Congress to ‘rock the financial markets’ right now

MK – i believe that after we get thru this current phase of slow-down. we will realize that the current shift in economic structures of employment and industry is so deeply profound. the non-democratic companies are now the majority of the major growth countries. they are now 50% of the value weighted status; up from 10% in 1990. one of the significant issues is the relationship of commerce and State in these nations. upon what playing field do state-owned companies play? the ability to put up national walls is really almost unthinkable. will there be a backlash? in some areas yes. others not. we need to make sure that there is a clear amount of rhetoric so that the baby is not thrown out with the bath-water. the single most benefit of global liquidity has been the influx of liquidity from the new economies into the banks in the UK and US.

FB- it is quite incredible that the US congress did not know that the US is a debtor nation and needs $6 to 8 billion per day to survive. thus the Dubai Ports fiasco. today, they have a bit better understanding…. [[[i wonder how much?????]]]]

from the floor:

it seems that there are essentially three sources of liquidity concentration: Middle East due to oil/gas; Russia due to gas; China due to trade….interesting!

Yip De Boer -

James Rogers – CEO Duke Energy USA

Rajendra Pachauri – IPCC

Christian Mumenthaler – Chief Risk Officer, Swiss RE

Bruno Lescoeur – SR Exec VP EDF

Tulsi Tanti – Chair and MD Suzlon Energy

business as usual – IEA says, emissions up 50%. IPCC states we need to drop 50%. looming recession. challenge to reconcile both near-term commitments and log-term goals. so the quesiton is to the panel ‘where do you think we will be in 50 years time?’

JR – cautiosly optomistic that the reduction will happen. over the next 25 years we see a rise. i believe that technology is the key. funding is key.

RP – i agree that technology is the key, but it is essential to provide a policy framework to price carbon appropriately.

CM – some positive trends today, but from all the evidence, we do not believe that the 50% target will be met. the big question mark is the opportunity for technology to close the gap. the mindset change in the past six months has been huge. there has been alot of money moving into new technologies on the back of this

BL – our company uses mostly nuclear, thus we are not a great emitters of greenhouse gasses. he did not give an opinion

TT – he also believed that technology will save the day.developed countries must focus on energy efficiency due to the inequality of consumptive patterns. everyone must focus on the average global consumption targets.

JR – what we really need is an arms race to become the most energy efficient. the bottom line is, we are beyond mitigation alone.

YDB – coal is a great lobbying force and we see coal-fired plants being built everywhere. do we have an alternative? china and india will double their energy need over the next 20 years.

TT – coal is clearly the easiest option. other resources must be considered. nuclear should be the base load provider and then the alternatives. india is the 4th largest producer of wind energy today and this is growing rapidly. renewable energy is growing rapidly in India

JR – as far as emissions….Duke is 3rd in the USA, 12th , 41st in the World. Duke is the largest consumer of coal for energy. now building two, the only two, in the US. Duke is building the largest coal gasification plant in the US. he stated that there are only five options to create energy:

coal, gas, oil, renewables, energy efficiency.

PP – lighting a billion lives

YDB – should we not be heading back home on monday, as we face a recession,

unless the US and China get into the game, there will be no game as far as climate change is concerned.

we need to get away from oil running cars. – look up Project Better Place

YDB – one of my jobs is to create a global framework over the next two years a way to achieve the goals that PP sets forward. not an easy task

what should a politician do?

TT – think globally first and then react locally.

BL – they need to listen to the other politicians first

JM – need to agree on a carbon target and get on with it

PP – equity and culture must be considered. moral imperative

JR – the time is now. cap and trade important.