World Economic Forum Annual Meeting 2009

  • 2009 World Economic Brainstorming: What Happened to the Global Economy?

    Wednesday 28th January 2009 - 1:45pm - 3:15pm

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  • 2009 World Economic Brainstorming: What Happened to the Global Economy?

    Chaired by •

    Maria Bartiromo

     
    Wednesday 28 January

    Maria Bartiromo

    , Anchor, CNBC's Closing Bell, and Host and Managing Editor, Wall Street Journal Report, CNBC, USA; Young Global Leader, put three critical questions concerning the ongoing financial crisis to the participants:

    1. What was the most damaging policy mistake leading to the crisis?
    2. What regulatory failure produced the largest systemic shock?
    3. Where did a genuine market failure occur?

    After roughly 20 minutes of brainstorming by 18 groups, most of the participants seemed to agree on a range of factors contributing to the worldwide market collapse. Responses from the different groups tended to lump the three questions together and focused on the following factors responsible for the breakdown of the world financial system:

    • A mistaken belief that markets can be expected to efficiently correct themselves, and a failure to take into account the inevitable collateral damage
    • Too much easy money offered on a long-term basis and rampant underpricing of risk, especially when the risk premium dropped to nearly zero
    • An almost religious faith in mathematical modelling based on data samplings which eventually replaced common sense, and which were based on data samplings that were too small
    • A failure to give full disclosure of the risks involved, and the inability of the world financial system to provide global oversight once these risks were marketed internationally
    • Excessive complexity of new financial instruments, which were often fee-driven and accompanied by go-for-broke incentives

    Following an open floor discussion, participants voted on the causes of the crisis. At least 50.8% voted for overconfidence in the ability of markets to self regulate as the major cause. Another 12.9% listed cheap money. Asked what issue the G20 should give highest priority to at its next meeting, 40.6% listed the lack of an international regulatory framework as the key problem; 21.3% listed the non-regulation of leverage, and 18% listed the inability to accurately assess risks as major concerns. For the last question concerning which risk seemed likely to produce the greatest public backlash, 41.9% listed the misalignment of incentives; 20% considered the crisis to be the result of a failure of governance; and 15.3% listed the misquoting of risk valuation and pricing.

    The only remark during the discussion that triggered a round of applause was a comment by a participant that the failure to attribute personal blame for the collapse was “intriguing”. The participant observed: “If you sell toxic products in any other field, you go to jail.” There was widespread agreement that policy-makers need to make it clear that there are serious consequences for inappropriate behaviour. At the same time, it was pointed out that it is dangerous to go down that road because no one wants to punish people for ordinary fluctuations in the market.

    The bottom line, as expressed by participants during the brainstorming and open floor discussion, is that the world is currently experiencing a paradigm shift, and a way must be found to open up and redesign the global financial system.

Speakers

  • Samir Brikho Samir Brikho
    Chief Executive Officer, Amec, United Kingdom

    Degree in Engineering; MSc in Thermal Technology, Royal Institute of Technology, Stockholm; 1991, YM...

  • Takatoshi Ito Takatoshi Ito
    Professor, Graduate School of Economics and Dean, Graduate School of Public Policy, University of Tokyo, Japan

    1973, BA, Hitotsubashi University; 1979, PhD, Harvard University. 1979, Assistant Professor, Univers...

  • Yasuo Hayashi Yasuo Hayashi

  • John Evans John Evans
    General Secretary, Trade Union Advisory Committee to the OECD, France

    Studies in Philosophy, Politics and Economics, University of Oxford. Formerly: teacher in Introducto...

  • Robin Niblett Robin Niblett
    Director, Chatham House, United Kingdom

    BA in Modern Languages, MPhil and DPhil, New College, Oxford. 2001-06, Executive Vice-President and ...

  • Ethan B. Kapstein Ethan B. Kapstein
    Chair in Political Economy, INSEAD, France

    Formerly: International Banker; Naval Officer; Vice-President, Council on Foreign Relations; Princip...

  • Neal Goldman Neal Goldman
    Executive Director, Relationship Science, USA

    1992, BA, Univ. of Pennsylvania; 1996, MBA, Columbia. Formerly: Investment Banker, M&A, Lehman Broth...

  • Mehmet Simsek Mehmet Simsek
    Minister of Finance of Turkey

    1988, BSc (Hons) in Economics, Ankara Univ.; 1993, MSc in Finance and Investment, Exeter University,...

  • Jan Peter Balkenende Jan Peter Balkenende
    Partner, EY, Netherlands

    1980, graduate in History and 1982, graduate in Dutch Law, Free University of Amsterdam; 1992, docto...

  • Ngozi Okonjo-Iweala Ngozi Okonjo-Iweala
    Coordinating Minister for the Economy and Minister of Finance of Nigeria

    AB in Economics, Harvard University; PhD in Regional Economics and Development, MIT. 2003-06, with N...

  • Anshu Jain Anshu Jain
    Co-Chief Executive Officer, Deutsche Bank, Germany

    Bachelor's, Economics, Delhi Univ; MBA, Finance, Univ. of Massachusetts. Formerly, MD, Merrill Lynch...

  • Ernst Fehr Ernst Fehr
    Professor of Microeconomics and Experimental Economics, University of Zurich, Switzerland

    Economist known for contributions to behavioural finance and experimental economics and new field of...

  • Marcus Agius Marcus Agius
    Manager

    MA in Mechanical Sciences and Economics, Cambridge University; MBA, Harvard Business School. Former:...

  • Felipe Larraín Bascuñán Felipe Larraín Bascuñán
    Professor and Director, Latin American Center for Economic and Social Policy, Pontificia Universidad Catolica de Chile, Chile

    1981, BA in Economics, Universidad Católica de Chile; 1983, MA in Economics and 1985, PhD, Harvard ...

  • Michael Kremer Michael Kremer
    Gates Professor of Developing Societies, Department of Economics, Harvard University, USA

    AB and PhD, Harvard University. 1997, MacArthur Fellowship. Formerly, Founder, WorldTeach. Fellow: S...

  • Alan S. Blinder Alan S. Blinder
    Professor of Economics and Public Affairs, Princeton University, USA

    Economist. Gordon S. Rentschler Memorial Professor of Economics and Public Affairs, Economics Depart...

  • Nancy Birdsall Nancy Birdsall
    President, Center for Global Development, USA

    1967, BA, American Studies, Newton College of the Sacred Heart; 1969, MA, International Relations, T...

  • Edmund S. Phelps Edmund S. Phelps
    Director, The Center on Capitalism and Society, Columbia University, USA

    1955, BA, Amherst; 1959, PhD, Yale. Director, Center on Capitalism and Society, Columbia University....

  • Javier Santiso Javier Santiso
    Director, Innovation Funds, Venture and Growth Capital, Telefonica, Spain

    BA, MA and PhD. Studies at Sciences Po, Paris, HEC School of Management, Oxford University; Executiv...

  • Robert J. Shiller Robert J. Shiller
    Sterling Professor of Economics, Yale University, USA

    1967, BA, University of Michigan; 1968, SM and 1972, PhD, MIT. 1972-74, Assistant Professor, Departm...

  • Joseph E. Stiglitz Joseph E. Stiglitz
    Professor, School of International and Public Affairs (SIPA), Columbia University, USA

    1964, BA, Amherst College; 1967, PhD, MIT. Formerly with: Yale, Princeton, Stanford, MIT; Oxford; Wo...

  • Lord Nicholas Stern Lord Nicholas Stern
    President, The British Academy, United Kingdom

    BA in Mathematics, Cambridge Univ.; Doctorate in Economics, Oxford Univ. 1986-93, with LSE; 1994-99,...

  • Dennis J. Snower Dennis J. Snower
    President, Kiel Institute for the World Economy, Germany

    International economist and originator of insider-outsider theory of employment. Former Visiting Pro...

  • Jeffrey A. Rosen Jeffrey A. Rosen
    Deputy Chairman, Lazard, USA

    1969, BA, Yale College; 1972, MBA, Harvard Business School. President of the Board of Trustees, Inte...

  • Sergio Ermotti Sergio Ermotti
    Group Chief Executive Officer, UBS, Switzerland

    Graduate, AMP, Oxford, UK; Swiss Federal Professional Certificate of Business. 1987-2004, with Merri...

  • Cristóbal Conde Cristóbal Conde
    Board of Director, MassMutual Financial Group, USA

    BSc in Astronomy and Physics, Yale University. Formerly, Co-Founder, Devon Systems International. Wi...

  • Victor Halberstadt Victor Halberstadt
    Professor of Economics, Leiden University, Netherlands

    Formerly: Crown-Member, Netherlands Social-Economic Council; Chairman, International Advisory Board,...

  • Geoff Riddell Geoff Riddell
    Member, Group Executive Committee and Regional Chairman, Asia-Pacific, Middle East and Africa, Zurich Insurance Group, Hong Kong SAR

    MA, Oxford Univ. Chartered Accountant. Started career with Price Waterhouse, UK. 1982, joined AIG; n...

  • Andrew N. Joy Andrew N. Joy
    Partner, Cinven, United Kingdom

    Degree in Politics, Philosophy and Economics, University of Oxford. Formerly: experience in investme...

  • David Marchick David Marchick
    Managing Director, Carlyle Group, USA

    BA, University of California, San Diego; MA, University of Texas; JD, George Washington University L...

  • Stephen King Stephen King
    Group Chief Economist, HSBC, United Kingdom

    Studies in Economics and Philosophy, Oxford University. Formerly, Economic Adviser, civil service, H...

  • Ian Goldin Ian Goldin
    Director and Professor, Oxford Martin School, University of Oxford, United Kingdom

    BSc in Mathematics and BA in Economics, Univ. of Cape Town; 1979, MSc, LSE; MA and DPhil, Oxford. 19...

  • Nouriel Roubini Nouriel Roubini
    Professor of Economics and International Business, Leonard N. Stern School of Business, New York University, USA

    Undergraduate degree, Bocconi Univ.; PhD in Economics, Harvard. 1998-2000, Senior Economist for Inte...

  • Richard T. Pascale Richard T. Pascale
    Associate Fellow, Saïd Business School, University of Oxford, United Kingdom

    Twenty years as faculty member, Stanford University Graduate School of Business. Consultant and Advi...

  • Rui Chenggang Rui Chenggang
    Director and Anchor, China Central Television, People's Republic of China

    Degree in International Economics, China Foreign Affairs University. 2005-06, Yale World Fellow, Yal...

  • John Byrne John Byrne

  • Rich Jaroslovsky Rich Jaroslovsky
    Executive Editor, Bloomberg News, USA

    Graduate, Stanford University. 1975-2002, with Dow Jones including with Wall Street Journal: 1981, W...

  • Tanya Beckett Tanya Beckett
    Presenter, BBC World News, United Kingdom

    Graduate in Metallurgy, University of Oxford. Formerly, five years as investment banker in London an...

  • Peter Gumbel Peter Gumbel
    Europe Editor, Fortune Magazine, France

    Studies at Bristol University. Over 16 years' experience with Wall Street Journal including Correspo...

  • William Baldwin William Baldwin
    Editor, Forbes, USA

    1973, AB, Harvard University. Former Reporter, Gannett newspapers; since 1980, with Forbes Magazine:...

  • Thomas L. Redburn Thomas L. Redburn
    Deputy Editor, Foreign Desk, International New York Times, USA

    1972, BA in Sociology, Pomona College. 1974-75, editor-reporter, Washington Monthly; 1975-76, edito...

  • Chris Giles Chris Giles
    Economics Editor, The Financial Times, United Kingdom

    Formerly: Economist, Institute of Fiscal Studies; Economics Correspondent, BBC. Since 2000, with Fin...

  • Ed Conway Ed Conway
    Economics Editor, Sky News, United Kingdom

    Studies at Pembroke College, Oxford and John F Kennedy School of Government, Harvard. Fulbright Scho...

  • Olaf Gersemann Olaf Gersemann
    Business Editor, Welt am Sonntag, Germany

    Formerly: six years as Washington Correspondent, Wirtschaftswoche, a German business weekly; 2005-07...

  • Bob Davis Bob Davis
    Senior Editor, Wall Street Journal, USA

    Bachelor's in Political Science, Queens College, New York. 1980, Associate Editor, then 1981, Editor...

  • Subramanian Rangan Subramanian Rangan
    The Abu Dhabi Crown Prince Court Endowed Chair in Societal Progress, INSEAD, France

    MBA, MIT Sloan School of Management; PhD, Harvard University. Member of the Board: Fundaçaõ Dom Ca...

  • Joseph Kasputys Joseph Kasputys
    Chairman, IHS Global Insight, USA

    Master's and PHD, Harvard University. 1972-77, positions including Assistant Secretary, US Departmen...

  • Leif Beck Fallesen Leif Beck Fallesen

  • Andrew R. Sorkin Andrew R. Sorkin
    Columnist, The New York Times, USA

    Graduate, Cornell University. Since 1995, with New York Times; since 2000, current position. Co-Anch...

  • Roberto Quarta Roberto Quarta
    Partner and Chairman Europe, Clayton, Dubilier & Rice, United Kingdom

    BA, College of the Holy Cross. Former: Chief Executive Officer and Chairman, BBA Group; senior leade...

  • Chang Dae-Whan Chang Dae-Whan
    Chairman and Publisher, Maekyung Media Group, Republic of Korea

    BA in Politics, University of Rochester; MA in International Affairs, George Washington University; ...

  • Heizo Takenaka Heizo Takenaka
    Director, Global Security Research Institute, Keio University, Japan

    BA in Economics, Hitotsubashi Univ.; PhD in Economics, Osaka Univ. 1973, with Japan Development Bank...

  • Azman Mokhtar Azman Mokhtar
    Managing Director, Khazanah Nasional, Malaysia

    Master's in Dev. Studies, Darwin College, Cambridge; postgraduate diploma in Islamic Studies, Int'l ...

  • Hussain Dawood Hussain Dawood
    Chairman, Dawood Hercules Corporation, Pakistan

    Graduate in Metallurgy, Sheffield University, UK; MBA, Kellogg School of Management, Northwestern Un...

  • Pawan Munjal Pawan Munjal
    Managing Director and Chief Executive Officer, Hero Group, India

    Mechanical Engineer, known in industry forums. Formerly: Member of the Board, Asian PGA Tour; Presid...

  • Lee Hee-Beom Lee Hee-Beom
    Chairman, STX Energy, Republic of Korea

    1973, graduate, School of Public Administration, Seoul National University; 1987, MBA (Hons), George...

  • Daniel Gross Daniel Gross
    Global Business Editor, Newsweek Daily Beast, USA

    1989, graduate, Cornell University; 1991, MA in American History, Harvard University. Formerly: Repo...

  • Bill Saporito Bill Saporito
    Assistant Managing Editor, Time Magazine, USA

    BA, Bucknell University; MA, Syracuse University. Twelve years' experience with Fortune Magazine inc...

  • Alec Hogg Alec Hogg
    Anchor of Power Lunch , CNBC Africa, South Africa

    Media entrepreneur, broadcaster and writer. 1997-2012, Founder and Chief Executive Officer, Moneyweb...

  • Mohamed Chebaro Mohamed Chebaro
    Bureau Chief, MBC-Al Arabiya, United Kingdom

    1988, BA (Hons) in Political Science and Public Administration, American University, Beirut; 1992, M...

  • David Wighton David Wighton
    Associate Editor, Business and Politics, Times, United Kingdom

    Studies in Politics, Philosophy and Economics, University of Oxford, UK; studies, City University Jo...

  • John F. Ferraro John F. Ferraro
    Global Chief Operating Officer, EY, United Kingdom

    BA in Accounting, Marquette University, US. Since 1977, with Ernst & Young: previous roles include G...

  • Robert G. Card Robert G. Card
    President and Chief Executive Officer, SNC-Lavalin Group, Canada

    Bachelor's in Civil Engineering, University of Washington; Master's in Environmental Engineering, St...

  • Christoph Hardt Christoph Hardt
    Corporate Editor, Handelsblatt, Germany

    MA in Philosophy and Musicology, Heidelberg University. 1989, Journalist, Koelner Stadt-Anzeiger and...

  • Richard Samans Richard Samans
    Managing Director and Member of the Managing Board, World Economic Forum

    BA in Economics and French, Tufts; Master's in International Affairs, Columbia. Former: Corporate Le...

  • Jean-Pierre Lehmann Jean-Pierre Lehmann
    Professor Emeritus of International Political Economy, Institute for Management Development International (IMD), Switzerland

    1966, BSc in Int'l Affairs, Georgetown; 1970, PhD in Japanese Economic History, Oxford. Formerly, re...

  • Rafael Ramirez Rafael Ramirez
    Fellow in Strategy and Director, Oxford Scenarios Programme, Saïd Business School, University of Oxford, United Kingdom

    IB, Atlantic College; BSc; MA, University of Oxford; Masters in Environmental Studies, York Universi...

  • Corrado Passera Corrado Passera
    Minister of Economic Development, Infrastructure and Transport of Italy (2011-2013)

    1977, degree (Hons) in Business Economics, Bocconi University, Italy; 1980, MBA, Wharton School, Uni...

  • Michael W. Spicer Michael W. Spicer
    Vice-President, Business Leadership South Africa, South Africa

    BA and MA in History, Rhodes University, US. Formerly, with: Royal Institute of International Affair...

  • Sebastián Piñera Echeñique Sebastián Piñera Echeñique
    President, Fundacion Futuro, Chile

    Degree in Economics, Universidad Catolica, Chile; Master's and PhD in Economics, Harvard University,...

  • Matt Bross Matt Bross
    Chief Technology Officer, Huawei Technologies, People's Republic of China

    2002-09, Chief Executive Officer, BT Innovate and Chief Technology Officer, BT Group. With Global In...

Chaired by

  • Maria Bartiromo Maria Bartiromo
    Anchor and Global News Editor, Fox Business Network, USA

    Graduate in Journalism, New York University. Formerly: Producer and Assignment Editor, CNN; Reporter...