I had a good Davos wrap-up conversation with Ronald Synovitz of Radio Free Europe/Radio Liberty. He concluded – correctly – that I came out of the meeting with a fairly depressed view of the state of the world.
I found my breakfast with Shimon Peres particularly depressing. The feeling was that the economic crisis will be long, protracted and painful, but my sense from Peres and Turkish Prime Minister Erdogan is that we will not see peace in the Middle East anytime soon.
Another theme that kept recurring was the rising cost of financing for developing nations.
Developing nations have made incredible progress in reducing the level of poverty and incredible progress in terms of raising people into [higher living standards] and levels of health care. They are now going to be facing incredible difficulty with refinancing their debts.
It’s not just the cost of borrowing for companies that is going up. When countries start refinancing bonds, they are going to face these same difficult financial markets. So that’s a further impact that we haven’t begun to see yet that is going to be trickling through the economic system.
There was talk of China and India being approached to set up an alternate development bank to the Asian Development Bank. There is a desire for such an institution that is not controlled by the US or Japan.