DAVOS, Switzerland -- They came, they feasted on smoked sturgeon and black truffle risotto, drank liquor paid for by global banks, endured dozens of security checks, and tried not to fall down in the snow. They talked about the perilous state of the global economy and the future of capitalism. Then, they headed back to their home countries -- many in chauffeured limousines, some by private jet.
But as the people who run much of the planet wrapped up the annual festival of influence known as the World Economic Forum on Saturday, any sense of achievement was hard to discern. The participants arrived amid elevated unemployment in many economies, worries about government budget deficits, and fears that contagion from a financial crisis in Europe could infect the rest of the world. They went home with all of these worries intact, and perhaps reinforced.
Nouriel Roubini, the economist who -- not for nothing -- is known as "Doctor Doom," noted that world leaders are divided on a great array of crucial issues, from arguments over trade imbalances and currency valuations to the threats posed by Iran and North Korea and the challenge of climate change.
"On all these issues that require international coordination, there is no agreement," he said during a Saturday morning panel. "It's a world of chaos that can lead to potential conflicts."
European officials confronted a palpable sense of impatience and resentment from their counterparts, drawing accusations that they have imperiled the fate of the globe by repeatedly failing to prop up ailing member states.
In private conversations here this week, senior officials from the United States, Europe and Asia expressed a mixture of resignation and alarm that Greece may yet default on its government debts, despite several efforts by eurozone members to cobble together a credible rescue. Some warned that such an outcome could spook investors into pulling funds out of larger economies such as Italy and Spain, raising the prospect of defaults in those countries. A few suggested this could eventually trigger the breakup of the eurozone and the end of its shared currency, an event that could produce panic rivaling that seen after the investment banking giant Lehman Brothers collapsed more than three years ago.
In a riveting address here on Saturday, Hong Kong leader Donald Tsang recalled his place at the epicenter of the Asian financial crisis in the late 1990s, and the experience of the 2008 global credit pullback, asserting that the current situation is worse.
"I've never been as scared as now about the world, what is happening in Europe," he said.
Hong Kong faces little direct exposure to potential defaults on European government bonds, Tsang added, but the global financial system is now so interconnected that this confers no protection. He wondered aloud about the health of financial institutions that trade with Hong Kong's banks and the potential for trouble rippling out from the eurozone.
"We do not know how deep this hole will be when the whole thing implodes on us," he said. "Nobody is immune."
Tsang merely voiced publicly -- if stridently -- the same perspectives expressed privately in recent days by his counterparts on multiple continents. He urged European leaders to demonstrate a sense of responsibility as global citizens, accusing them of putting the world's economy at risk by failing marshal a plausibly large rescue fund. He contrast this with Hong Kong's own brush with crisis more than a decade ago.
"We were very much left to ourselves, and we overcame it," Tsang said. "In Europe now, you need decisive action, you need overkill. You need to inspire confidence. That confidence must come in the decisive action of government, working together. And do it quickly."
But conversations here this week only underscored the sense that Europe is politically incapable of acting in unison. Though the eurozone shares a common currency, it is comprised of 17 different countries with often-sharp differences over policy -- not to mention history, tradition, culture and language.
Many experts have called for the issuance of Euro bonds by the European Central Bank and backed by the credit of member countries as the most powerful way to demonstrate the community's resolve toward supporting troubled members. Germany has consistently opposed such proposals, unwilling to direct its prodigious savings at saving members it views as profligate -- not least, Greece.
"You spend money you don't have on the bills of others, and that's the wrong incentive in a functioning market economy," German finance minister Wolfgang Schaeuble said earlier in the week, shooting down a question about Euro bonds. "At the end, you have to pay your bills. If you spend at the risk of others, it's a strong temptation. Everyone will fail on this temptation. That would be the wrong method in fighting the causes of the current crisis."
Among policymakers and investors alike, the sense has taken hold that a pair of European rescue funds -- collectively holding perhaps $1 trillion in lending capacity -- are insufficient to assuage the market's fears. Bailing out Spain and Italy could absorb four times that sum, according to Roubini.
Many European officials are hoping to receive an expanded assist from the International Monetary Fund, a once unthinkable prospect for an institution traditionally employed to support developing countries facing crises.
The fund's managing director, Christine Lagarde, has been seeking to drum up a fresh $500 billion to attack the crisis, using Davos as an elaborate fundraising platform.
"The IMF is a tool, but we need to have a toolkit," Lagarde told forum participants Saturday morning, later holding up her purse as a prop. "I'm here with my little bag to actually collect a bit of money."
But that request has received a cool reception from major fund shareholders. The United States, the IMF's largest contributor, has signaled unwillingness to allow more fund finances to flow to Europe until the eurozone deploys its own resources toward an aggressive rescue. Japan's economic policy minister Matohisa Furukawa echoed that position on Saturday.
"Speaking of the role of the IMF, I think that the most important thing is Europe itself make utmost efforts," he said. "Then, IMF can support the European countries."
Underlying the debate over whether and how Europe can erect an effective firewall are deeper doubts about the continent's ability to grow. As many states address budget deficits, they are cutting spending and pressuring labor to accept lower wages -- measures that sap their economies of spending power. Slow growth itself tightens financial straits by reducing government revenues, prompting investors to take their money elsewhere, which raises borrowing costs.
"The eurozone is going to be in recession this year," said Robert Shiller, the Yale economist who warned of both the technology and housing bubbles in the United States. "The U.S. may not. The world may not. It's not going to be a great year, though."
The one source of cheerier conversation here this week has been the relatively strong growth in so-called emerging markets, such as China, India, Brazil and Turkey. But these economies have been slowing in recent months. Now, concerns about Europe's problems are amplifying concerns.
A weak Europe translates into fewer orders for goods from developing countries. As European banks seek to bolster their balance sheets, they are pulling funds out of developing economies and bringing them home -- a trend that could prevent even healthy firms in fast-growing markets from getting their hands on cash needed to expand and hire, further crimping growth.
"You're going to see a credit contraction as the banks pull back," World Bank President Robert Zoellick warned.
All of which means that as the masters of finance and heads of government filter out of this ski resort in the Swiss Alps, the anxiety gnawing at the global economy continues unchecked. The damage could run beyond an economic slowdown, further undermining public faith in the institutions that now govern modern life.
For decades, as crises have assailed developing countries from Indonesia to Argentina, the powers-that-be in the United States and Europe have counseled orthodox advice: Get your fiscal house in order; live within your means; act decisively and resolutely. Yet now that crisis is hitting the wealthy world, leaders are avoiding the hardest decisions and hoping to muddle through -- all while exporting their afflictions to multiple shores.
"This has got to have effects on influence, perceptions of power in the world that are going to be quite significant for years to come," Zoellick said. "Whatever we see come out over the course of this year and the next year, the world is never going to go back to the way it was."
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