Forum Opened in Davos with Emphasis on Economic Recovery

The World Economic Forum in Davos (WEF), dominated in 2010 by the theme of global economic recovery, began on Wednesday with discussions on the need for stricter regulation of banks, advocated by U.S. President Barack Obama, although opinions on this matter are divided, agencies report.

The five-day gathering, which traditionally brings together the global elite in the fashionable Swiss winter resort at the end of January, is expected this year to provide guidelines for assisting earthquake-ravaged Haiti and outline reforms to prevent a new collapse of financial markets. – What (U.S. President Barack) Obama proposes is going in the right direction, but it does not go far enough. We must separate commercial banks from investment banks – warned Nouriel Roubini, an economist who predicted the financial crisis of 2008, reports AFP.

Obama announced last week that he would limit the size of banks and their excessively independent activities in the market. Regulation of the banking sector is one of the main topics of the 40th WEF, which concludes on Sunday. Other participants expressed opposition to the rising “populism” that some Western governments are resorting to in advocating stronger regulation of banks. The United States, France, and Great Britain recently announced measures to tax banks or limit their speculative activities to avoid a new crisis.

– Professional investors fear that the U.S. government is overreacting – says David Rubenstein, director of the Carlyle Group investment fund. – The danger of regulation is that it could focus on the most visible aspects while simultaneously preventing the financial sector from following the economic recovery – assessed Raghuram Rajan, a finance professor at the University of Chicago. The U.S. agency AP emphasizes that discussions have warned of the disproportion of global growth, with China as a major engine on one side and Western countries in crisis on the other.

– China alone cannot be the only engine of global economic growth – said Roubini, assessing that this will lead to further economic decline in the United States, Europe, and Japan, writes AP. An important topic of this year’s Davos is how to deal with record unemployment. The UN’s labor agency reported that 27 million people lost their jobs last year, with the heaviest losses in North America, Japan, and Western Europe.  (H)