Life is beautiful (mainly for the rich)
MUNICH and DAVOS - Last year, the transition from Hubert Burda's Internet conference in Munich straight to the World Economic Forum in Davos was abrupt, and sharp. In Munich of January 2006, we met a few hundred young Internet sprouts, social activists on the web, bloggers and media people, alongside a handful of leading businessmen
Two days later, at Davos, we met the usual clients of the yearly conference: the leaders of the biggest companies in the world - drugs, finances, oil and commodities. Yes, 2006 was the year of the owners and the CEOs sitting snugly on top of the biggest reserves of commodities in the world, whose prices had doubled and tripled in the last year.
But this year Munich was closer than ever to Davos. Or vice versa.
The number of participants at Burda's Digital Life Design Internet conference doubled to 1,500. Their average age rose by 10 years and the corridors were crawling with businessmen wearing suits.
It was amazing to see hundreds of businessmen standing on their feet for hours, as there wasn't enough seating, listening to lectures by bloggers and young Internet entrepreneurs, about social networks, blogs, and video sites.
Maybe they forgot the 2000 bubble. Or maybe they feel the main difference between Web 1.0 (the former generation of companies) and Web 2.0 is that the latter has a much better chance of growing profitable businesses.
Psst. Want to call Israel for free?
Ten minutes after we entered the first lecture, a young entrepreneur came up to us, not introducing himself but asking to see our cellular phone, a Nokia E61, for a moment. "Maybe you'd like to call Israel from Europe for free?" he asked quietly.
Our journalistic instincts ignited and five minutes later he had downloaded, via the WiFi network in the hall, a small software program into the phone, and it worked.
Nice to meet you, he said, I'm Alex Straub, founder of TruPhone. Two days we ran into him again, this time at Davos, where he had been invited for the first time.
The day before Eran Gabay reported in TheMarker, based on Cellcom's prospectus, that the cellular service operator's biggest growth engine was roaming services, meaning, phone calls by users outside Israel. They had grown by 30%.
Ventures like Straub's threaten not only the cellular carriers, but other sectors too, and it's easy to see why Klaus Schwab, EIF founder, decided to yet again increase the number of Internet and technology entrepreneurs at the conference.
Last year it was Sergey Brin and Larry Page who attracted the attention, reflecting the rapid changes that Internet was bringing to the global economy. This year Davos was brimming with Internet companies, bloggers, and social network ventures.
The fate of bears
But the EIF didn't need spirited young Internet sprites to improve the mood. Last year too, we reported that leading corporate executives and economists were flabbergasted at the tremendous power that the global economy was evincing despite the surge in oil prices, the vast American trade deficit and the political instability. But this year, the pessimists were silent. Going by the traditional yearly survey of PwC, optimism this year broke all records.
Professor Jacob Frenkel, formerly the governor of the Bank of Israel and today the vice-chairman of insurance giant AIG, and the permanent star on the opening panel on forecasts for the global economy, provided his usual fare.
A. He's optimistic. B. He reminds everybody that he was optimistic last year too. C. He's convinced that the tremendous development of the open financial markets installs an automatic mechanism into the global economy, that prevents sudden financial and real meltdowns.
His fixed counter on the opening panel is the chief economist at Morgan Stanley, Steve Roach. For five years now the two have been dueling: Roach with elegance and Frenkel with Israeli aggression. This year Roach wasn't there. He was replaced by the renowned economist Nouriel Rubini, on the ticket of the Pessimist, who spoke of the Three Bears lurking in wait for Goldilocks - the American economy.
Unable to contain himself, perhaps, by the second round Frenkel was needling him: "I'm sorry, my friend, Mr Roubini, but I must disagree with you. All these bears" (euphemisms for slowdown in the economy and markets) "lurking for us in the woods ultimately sprout horns and turn into bulls."
But the executives at the conference didn't need Frenkel to tell them how good the economy is. Corporate profits in America and Europe reached record heights in 2006. The high price of oil didn't derail any economies and the forecasts for the year 2007 are rosy.
What about the threats hovering over the American economy? The trade deficit, the tremendous credit households have taken on, the housing bubble? They are all real, but Asia's brisk economic growth and the impressive rally in Europe mean the American economy is no longer seen as the main engine driving the global economy.
What comes around
The U.S. is gradually losing its hegemony, and not only in economics. In politics, Washington is no longer perceived as ruler of the world. The force, or at least that's how the people at Davos feel, is starting to filter down, and from the center to the sides.
Naturally, what isn't filtering anywhere, and they don't like to talk about this at Davos, is the tremendous wealth created throughout the emerging markets in the last five years, wealth that is shared by mere hundreds or thousands of lucky business people with contacts in government. Dozens of oligarchs and politicians who came here from Moscow to burnish Russia's and their own image in the west, accrued much of their money from the transfer of vast national assets to private hands. Their hands.
It isn't only in Russia that business is booming. All the CEOs, the hedge fund managers, the venture capitalists and bankers are discussing investment opportunities in emerging markets: China, India, Brazil or Turkey.
Do none of these people feel a whisper of guilt over the vast wealth heaped on the in recent years, and the growing chasms between the haves and have-nots?
They do, which is why Davos is also filled with panels on poverty, AIDS, income gaps, global warming, education, and so on. Everybody comes here to network, to see and be seen, to promote business, but they also take part in social and community activities.
The person who helped the executives feel more comfortable than ever is none other than The Economist, the most important business magazine in the world, which ran a huge cover story on poverty and wealth. It claimed that in contrast with the conventional wisdom, the meteoric increase in executive remuneration in the last 20 years has usually proven to be economically justifiable: it pays for the companies to pay more for talented managers.
But wait a moment, what about Israel? What is the Israeli angle at Davos?
For that, we have Katsav. Between discussion to cocktail to meeting, the CEOs, the reporters, the politicians and the academics dropping by their rooms to shower, rest, refresh themselves turn on the TV, and get the latest on this gripping story about the president of this little country, who's suspected of rape. No other country represented at Davos can boast a story that fascinating, not to mention original.