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How we got here: Davos, poster child for survivor bias


John Ranalletta

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John Ranalletta

Klaus Schwab, the German-born economics professor who founded the World Economic Forum:

"It's (Davos Conference) like a guillotine," Schwab said, relishing his role as guardian of the velvet rope for the mover-and-shaker and position-paper crowd. "So many former CEOs and former politicians want to come. We say no. Once you lose, or you're not in an active decision-making role, you don't have the right to an invitation."
In prior years, Dick Fuld of failed Lehman Bros, commanded the Davos scene. Today, he can't get a hotel room in Davos.

 

My god, wouldn't it make some sense to invite people who actually ran out of dumb luck to share their experiences? If all the attendees are "winners" like Dick Fuld was a "winner" in past years, how useful is the event? Likely, it's just a group of people whose luck hasn't yet run out.

 

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Someone should either take your suggestion, or drop the neutron bomb on that conference. What a theater of excess self-congratulation. It's the Academy Awards of Finance.

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Francois_Dumas

I am not in favor of dropping a neutron bomb on Davos.... it is too nice a place for that. Just move the conference out to Dubai or someplace will do.... amidst the other lucky devils and camels.

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Harry_Wilshusen

Francois

 

The neutron bomb is designed to kill people but leave the buildings in tack.

 

So Davos will be a nice place again.

 

 

 

 

 

Might take a thousand years but that's just details.

 

Harry

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John Ranalletta

From Bloomberg:

Bankers, once hailed as Masters of the Universe, return to the seminars and parties of the World Economic Forum’s annual meeting chastened by losses and writedowns that top $1 trillion. Deutsche Bank AG Chief Executive Officer Josef Ackermann, who said two years ago that many investment banks “have a very good future,” reported a record loss in the fourth quarter.

 

Some won’t be back at all. Former Merrill Lynch & Co. Chief Executive Officer John Thain, originally slated to be in Davos this week, lost his job on Jan. 22. A year after Lehman Brothers Holdings Inc. head Richard Fuld sat on a panel discussing sovereign wealth funds, his bank no longer exists.

It's time for big banks to be nationalized.
“The financial system will kick back against transparency,” says Joseph Stiglitz, the Columbia University economist and Nobel Prize winner who’ll be in Davos.

 

“Those working in markets see information as power and money, so they depend on a lack of transparency for success,” says Stiglitz, who won his Nobel for research on information asymmetry -- what happens when one party in a transaction has access to knowledge that others don’t.

 

The resistance may set up the ultimate test of strength between markets and governments, dictating the future of the world economy. As the global slump deepens, and President Barack Obama promises to exert a “watchful eye” over the financial system, the risk is new rules won’t be strong enough to stop banks repeating history and circumventing them.

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It's time for big banks to be nationalized.
Yikes... Yeah, because that's worked out so well everywhere else they've tried it.
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John Ranalletta
It's time for big banks to be nationalized.
Yikes... Yeah, because that's worked out so well everywhere else they've tried it.
As it stands today, the big banks are bankrupt. Under the current scheme (TARP) which is designed to recapitalize them, taxpayers have all the downside risk and bondholders have all the upside gain.

 

Common shareholders have already been taken out, for the most part.

 

They are bankrupt, broken, unable to climb out of the hole they're in because no one can define just how deep the hole is. So, is it better to take control or let the people who dug the hole vis a vis their malfeasance and bad judgment continue to manage them? Nationalization for a short period (2-3 years) is the best of nothing but bad scenarios.

 

What's your solution?

 

Where's the beef?

"Dow Jones, the keeper of the DJIA, has an unwritten rule that any DJIA stock that gets below $10 gets tossed out.

 

"The financials in the DJIA are ...

 

Citi © = $2.80

 

B of A (BAC) = $5.10

 

Amex (AXP) = 15.60

 

JP Morgan (JPM) = $18.09

 

"If every financial stock in the DJIA went to zero on today's open, it would only lose 331.25 points, less than it lost yesterday (332.13 points).

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