The Current Discussion: The mood at the World Economic Forum in Davos this year was decidedly gloomy, which seems a fair reflection of economic conditions. Let's look forward: tell us what the bright spots might be in the world economy this time next year.
Let's be frank: there is no such thing as a bright spot this year. This year will be tough, hard and gloomy. The kind of leadership that met in Davos is not encouraging. Two years ago they mocked the early warning signs of a global recession. They arrogantly supported fantasies like the theory of decoupling or the strong resilience of the American economy, or that Asian economies were protected by strong regional trade. These leaders told fairy tales as if they were consistent and real economic theories. This year they simply realized the reality that everybody already knew: we are in a global recession and world leaders don't know how to fix it.
However, even a bad outlook can have some good results and bright news. Let's look at some possibilities. Governments worldwide have no alternative but to change and clean up the mess. The G-20 meeting in April could be a good chance to talk it over. The global climate meeting in Copenhagen in December could be another good moment, because this time the United States will send a delegation that is sincerely interested in achieving a broad agreement and not in creating obstacles like the Bush Administration has so often done.
The opulent years have created the false conviction that the boom would be booming forever. Risk managers used to say that risk was no longer a threat, but an opportunity to make good deals in hedge markets or in derivative bonuses. Skyrocketing oil prices leveraged bad government such as the Russian Vladimir Putin or Venezuelan Hugo Chavez. In Latin America, economic growth was used as an argument for presidents to extend their terms by arbitrarily changing their countries' Constitutions. The threat of constitutional tinkering has not yet been contained, but at least now presidents dreaming to become lifelong rulers have less chance to succeed.
Rising commodities prices has escalated deforestation of the Amazon for soybean and beef production with the pretext of feeding the world. In the last six years, more than 100 thousands square kilometers of the Amazon rainforest have disappeared in the name of what some people call progress.
The bright moments of this year could come from the temperance, the consciousness of real risks that we face, and a new kind of leadership in the White House.
The best political news is that there are new residents in the White House. They are not magicians. Fortunately the world no longer believes in fairytales; however, the team run by President Barack Obama is different from the previous one. It is a good start, one that makes us more hopeful about the future.
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