Fear and Loathing in Davos

by Joseph E. Stiglitz

For 15 years, I have attended the World Economic Forum in Davos. Typically, the leaders gathered there share their optimism about how globalisation, technology and markets are transforming the world for the better. Even during the recession of 2001, those assembled in Davos believed that the downturn would be short-lived.

But this time, as business leaders shared their experiences, one could almost feel the clouds darkening. The spirit was captured by one speaker who suggested that we had gone from "boom and bust" to "boom and Armageddon". The emerging consensus was that the International Monetary Fund (IMF) forecast for 2009, issued as the meeting convened, of global stagnation - the lowest growth in the post-war period - was optimistic. The only upbeat note was struck by someone who remarked that Davos consensus forecasts are almost always wrong, so perhaps this time it would prove excessively pessimistic.