Blain’s Morning Porridge, 17t^h January 2024: – Davos: Deaf, Dumb and Blind to What is Coming!

“There are none so blind as those who refuse to see, as deaf as those who will not listen, or as dumb as those who do not question.”

This year’s Davos is shaping up as the most offensive yet. As the elites pontificate on what will make them richer, the proles are getting antsy. Inequality and political failure have spawned populism on the grand scale. This could get chaotic.

Yesterday, my chum and fellow Scottish economist, Professor Mark Blyth of Brown University in the USA, told me: “Davos: It’s where the people causing inequality get together to talk about what could possibly be causing it.”

In one line he brilliantly summed up how utterly blind, deaf and dumb to reality the annual WEF gabfest has become.  (Mark went on to tell me a number of other things – but it’s too early in the morning to print profanities. He is one of the top economists on the planet today – with a fantastic line in telling it as it is in his thick Dundonian accent.)

Sadly, the fact I don’t really have a job at the moment, (except for being a gadfly on the belly of the financial beast through the Morning Porridge), means I find myself a bit stretched to make the trip this year.  The great, the good, the sleazy, and the downright evil of the global elite “community” will just have to do without my wit and wisdom.

I did, however, receive an informal “invite” to base myself at a well-known global asset-pricing and news vendor’s “Davos House” for the world’s foremost power-boasting-to-power junket. (The eponymous vendor is owned by a billionaire who is no-doubt in residence.)  Had I gone I could have watched President Zelensky of Ukraine plead for support from a panel of leading bankers (a really bad sign), or China’s vice-president try to explain why China is not comfortable with the West setting the rules and constantly changing them. There are rumours a Ukraine cease-fire is being inked in the background – and I doubt Zelensky is much involved.

Whatever, the reality is Davos is so over. The Zeitgeist of The Age has turned against it. The Elites don’t know it yet.

Davos might have had some relevance when it became the festival of globalisation, but that age has ended. The world is dividing, riven into new blocks as new lines are drawn. In recent years Davos has dabbled with pointless and failed concepts like the Great Reset promising to make things better, and pontificated about climate change with hot air and private jets. It has utterly failed to address inequality or conflict. Today, it has become a pointless, ostentatious, offensive display of power over matter.

But it is still where the world’s great and “good” go to be seen and heard. As such it attracts those who believe association with power is how to make themselves wealthier. Which explains why I have an invite to the Davos launch of new Alpha Fund focused on Gold and Buttcoin as the ultimate hedges for today’s uncertain geopolitical landscape… and another pitch for a firm that intends to use methane to mine Buttcons in a “sustainable” and zero-emissions way. Really…? Check out my comments on Bitconn last week. (Link here.)

I decided to ask some of the movers and shakers among the readership what they thought of the Davos event. I emailed a mix of senior hedge funders, traders, bankers, investors, regulators, journalists and a number of politicians. The answers were very mixed indeed.

I was assured by a leading PR advisor that issues of global import are being discussed at the conference, and how absolutely vital any major company is represented by the full panoply of the board, advisors, advisors to the advisors, and advisors to the advisors’ advisors (including himself). And even he admitted it was difficult to support it these days: “but I have school fees to pay.”

Most of the financial types dismissed it as irrelevant. One of my clients – a very successful hedge fund boss – told me he reckons it has zero credibility. At a time when Trump is set to win the populist vote, when Brexit and immigration dominates in the UK, when Dutch and German farmers are in open revolt, then it’s clear the divide between the elites and the people has never been wider.  “If business and political leaders don’t start leading for the bottom 70% of society, the people will rise and demand their replacement.”

That was a theme shared by many of financial contacts – there is no connection between the elites attending Davos and the reality faced by constituents across the global economy. One UK CIO told me it’s: “irrelevant except as a leading example of how our leaders are totally detached from the people they lead. Hence my view that anyone looking like a “Davos Man/Woman” has lost every western election in the last decade. The only exception is Macron who had the good fortune to be running against a Nazi.” 

As for the event itself… I watched the Japanese CEO of Fujitsu (mired in the UK Post Office Scandal) reacting like a challenged child-molester when door-stepped by a BBC reporter asking if he was personally responsible and would he pay compensation. Seeing a post by a news anchor trying on her new fur coat for the event just confirms everything about its lack of self-awareness. The Daily Mail, predictably, leads with inflation in the cost of the prostitutes who “flock” to Davos each year.

We all suspect deals are done in dark alcoves and hidden back rooms at Davos, but another hedge fund head said even that is no longer true. He commented other events like the Munich Security Conference and events like Milken Conferences are much more effective, focused and worthwhile.

Only the politicians and journalists were positive. Predictable a journalist looked forward to “ligging” the parties. A politician thought it a useful forum for government and industry to address long-term issues. Others thought it a useful networking opportunity – but one of them likes that aspect because her parliamentary seat is near the top of Labour’s hit list.

However, the but, but, but and but again of Davos is what does it hide? There is a presumption global elites understand the world and will keep it stable. What if they are so blind they don’t see what is coming….

Anyone with the sense to question the self-congratulatory tone of the elites and the proclaimed importance of Davos should consider three things:

• The Davos Elites got rich on the back of mispriced money through the QE era – ultra-low interest rates fuelled speculation and the rise of the billionaires. All that money was not spent on new plant or infrastructure – it went into the pockets of the wealthy, The period saw the greatest widening in inequality as the rich got insanely richer, while real incomes of the consumer classes declined. Playing to the rich, and nonsense economic theories like trickle-down, and hopes the patronage of the Davos classes would raise all boats, have proved utterly false. Naked self interest and greed wins every time.
• The divide between the Davos and Political Elites and the Electorate has widened to dangerous and now unstable levels. The trust between the political/business elites and the people has manifested itself in political populism. 2024 is the year of elections, and the outlook is for populist turmoil on the grand scale. It’s not just Trump!
• Revolutions never happen slowly. They are sudden events – when the balance tips from apparent stability into outright chaos in a notional heartbeat. Davos may look like our elite betters rationally discussing growth, the future of AI and geopolitical solutions, but the reality is a crashing storm of inequality and resentment under the surface threatening to overturn it completely. If that happens in the form of mass populism – then all bets are off.

The issue is all about equality. Over the past decade and a half of low interest rates we have seen enormous wealth creation in financial assets, making a very, very small number of technocrat and financial elites unbelievably rich. Yet, that wealth has absolutely not “trickled down” to populations: real incomes had fallen, taxes and costs have increased, services have diminished and in many cases collapsed. The demands for change, for amelioration, are being reflected onto the incumbent political classes.

We’re all very aware of the risks a second Trump presidency raises, but if it’s happening across all 60 of the global democracies voting this year – at a time when trust in the global hegemony of Western Capitalism is collapsing…. Then we have a serious problem.

In a few centuries time I suspect the historians will be looking at Davos much as we look at the court of Marie Antoinette in 1787.

Out of time, and off to find a day-job…

Bill Blain

Author of the Morning Porridge – Shard Capital and Bowline Capital Advisors