The economy of fear: why fear became the main theme of Davos-2017

Trump as a threat

One of the stars of Davos has become an adviser to Donald trump’s relations with business Anthony of Scaramucci. The dominant mood of the forum was the fear of strengthening of populism and extremism, a return to protectionist policies and trade wars, the fear of the elected American President, whose statements at times seem to be unusually pragmatic and politically incorrect and sometimes absurd, writes Business Insider.

During the short briefing, which took place on Tuesday, January 17, Scaramucci stated that his goal is to remove fears about what trump will do something crazy, and, conversely, to explain the essence of trump’s plans in a language which could be understood by the business.

Scaramucci said that the root of the problems in the world and the American economy — the oppression of the middle class, and also described measures that will trump, to resolve this issue. The situation can be corrected in 5 to 15 years, predicted counselor. This can be promoted by measures in education policy, in the tax sphere, the simplification of legislation in the field of small business and companies, reduction of state regulation.

“The markets are happy after the elections (in the United States. — ). Of course! The promised fiscal stimulus to boost the economy in the short term,” — said in an interview with Bloomberg American economic guru Nouriel Roubini. According to him, markets may be underestimating the implications for long-term growth. If the dollar strengthened, because the stimuli can be perceived as excessive for the approaching full employment economy, the fed may be forced to tighten monetary policy ahead of expectations and more, says the economist. The strengthening of the dollar, the rising cost of borrowing will have a negative impact on the economy, I’m sure Roubini.

The fear of populism

For decades, Davos has been synonymous with globalization and open markets, but the inevitable background of the beginning of the year was the inability of business and political elites to predict the dramatic political changes that were decisive for 2016, the growth of populist sentiment in Europe and the United States.

This year’s elections — parliamentary in the Netherlands and Germany, the presidential in France. Possible early elections in Italy. There is a high probability of victory of marine Le Pen in the presidential elections in France that will be the “end of Europe”, — said in an interview with Bloomberg, Roubini.

During the panel discussion “Strategic modernization: the Future of infrastructure development”, the former head of the U.S. Treasury Lawrence summers criticized trump, then as an investor and billionaire ray Dalio, founder of Bridgewater Associates, openly admitted in a pessimistic mood.

“I want to say very clearly and frankly: I’m afraid of populism — said Dalio. Now for me as a businessman the number one issue in the economy — as will become apparent populist sentiment in the next year or two.” The world may have already approached the border, beyond which globalization is no longer, and she was replaced by a “provincialization” and the strengthening of national sentiments, concluded the businessman.

A policy response to the protest vote can be a fiscal and structural reforms made the managing Director of the International monetary Fund (IMF) Christine Lagarde. “But they must be point, taking into account the regional context and the benefits to people and implies more redistribution [of resources] than we have now”, Lagarde said at the session of the “Aggrieved and angry: how to overcome the crisis of the middle class”. Extreme inequality hinders sustainable growth, she noted.

According to Lagarde, who leads the CBC, the elimination of economic inequality — the best protection against the strengthening of extremist movements. It’s time for bold leaders to hear the people, she said.

Russian business hopes

The advent of the administration of Donald trump can be regarded as “hope and opportunity” for [improved] U.S.-Russian relations, said in an interview with Bloomberg on the sidelines of the forum, the head of VTB Andrey Kostin. Another question — is this possibility that Washington and Moscow. Yet trump said he is ready for a constructive dialogue with Putin and Russia, and this is an encouraging signal.

Undoubtedly, [lifting] sanctions must be in us-Russian agenda, if we want to return to good relations, they [the sanctions] should be relaxed or removed completely. Maybe not all, maybe those that do not belong to the Crimea, but definitely to other areas, in particular, to financial institutions. I believe that we can restore relations with the West, we can solve the Ukrainian question, if both sides (Russia and the West. — ) will be positive,” said Kostin.

According to head VTB, the slow growth is the main problem of the Russian economy. “This year we expect growth of 1.5% and 1.7%, broadly in line with growth in Western European economies. However, for Russia it is not enough”, — stressed the banker.

Chairman of the Board of Directors and the basic owner “Severstal” Alexey Mordashov said in an interview with Bloomberg that the victory trump can be regarded as hope — “hope to return to normal”. All in all, Russia and the United States have more common interests than contradictions. We have enough problems outside of us-Russian relations, which can be solved more efficiently by joint efforts. I hope that victory trump will give us the opportunity to return to the base, to minimize the sanctions and to resume cooperation”, — said Mordashov.

Attack China

A distinctive feature of the ongoing forum in Davos — a large representation of officials and businessmen from China led by President XI Jinping, said Pavel Teplukhin, the founder of boutique financial Matrix Capital. Only in the business delegation (and there are still government) entered more than 80 entrepreneurs, including such, as the head of Alibaba and Dalian Wanda Group Jack MA and Wang Jianlin.

“They filled the Chinese subjects almost all elements of the program of the forum. Russia is hardly noticeable against this background, interest in the country is weak compared to what it was before the sanctions,” — said Teplukhin. Special day, special topics, meetings and receptions, devoted to Russia, the program this forum is not, he says.

Cooperation of Chinese and American business — only perspective in the context of growing economic uncertainty and geopolitical risks. The impression left among the participants of the business Breakfast, which was attended by 12 heads of major Chinese state-owned companies (such as CRRC Group and China National Machinery Industry Corp.) and CEO of leading American corporations (IBM, Wal-Mart, General Electric, Cisco Systems, etc.).

“We came to the conclusion that we need to work together. We all expressed confidence in the future, our cooperation and globalization. Regardless of what is happening now is temporary and eventually will operate the company and the country”, — quotes Bloomberg words of Liu Hualon, Chairman of the CRRC, the only Chinese manufacturer of high-speed rail rolling stock.

The discussion focused on the uncertainty caused by the upcoming inauguration of the trump, said Ren Hongbin, Chairman of the largest Chinese mechanical engineering Corporation Sinomach. “Both sides believe that we have the potential for cooperation, — said Hanbin. But first of all, we should cease to engage in “tug of war” and think in terms of “either sink or swim.”

Before Chinese companies came to Davos as they needed that platform to Express their views, said Wang Jianlin. “Today Davos needs people like us”, he concluded.

Russia’s Participation

The official Russian governmental delegation to Davos at full strength is still not reached. First Deputy Prime Minister Igor Shuvalov who heads it will appear on the forum on Thursday, said his spokesman. On the same day to participate in the activities of the WEF will begin and the head of the Ministry Maxim Oreshkin said on the Ministry’s website. On January 19 he will take part in business Breakfast of Sberbank “How to ride the wave: leadership in the age of technological revolution,” in discussion “Structural reforms for inclusive and sustainable growth”, will attend the debate “the agenda of the G20: a new course for growth” and will speak at the panel discussion “world energy Outlook”. . Will also hold a forum bilateral meetings with the Ministers of economy and trade of other countries and investors. On 20 January he will attend an informal Ministerial meeting of the world trade organization.

However, already, at the forum attended by Deputy Prime Minister Olga Golodets, who oversees social bloc of the government, said her representative. For three days she attends two sessions of education, as well as at a dinner for women leaders entitled “New frontiers of leadership”.

President of Sberbank German Gref, in addition to participating in the business meeting of the Bank on 19 January, will speak at the session “the Formation of a national digital strategy”. On Tuesday in Davos already hosted a business Breakfast “VTB Capital”, which the head of VTB Andrey Kostin, in particular, talked about the elected President of the United States Donald trump. “I like trump, but he is a real man, he makes mistakes, sometimes says the wrong things. But he is good in business,” said Costin (quoted by TASS). He considered the victory trump the advantage for American business and relations Russia and the USA and expressed confidence that Washington would weaken sanctions in 2017 and that the attitude towards them will also change the European Union. Only the Breakfast was attended by about 70 people, including the Czech Prime Minister, General Director of Glencore Ivan glasenberg and Chairman of Vnesheconombank Sergey Gorkov, said the “VTB Capital”.

On Tuesday, January 17, also hosted a reception “Sberbank”, said one of the participants, and the environment — a casual Breakfast of the President of Sberbank German Gref.

with the participation of Timothy Dzyadko