Davos takes on euro zone crisis

Davos. The name, the place, what it stands for is a challenge to an ideal of journalism. It seems to be one of those events that become a story not because of any intrinsic news value but because a bunch of famous people get together and allow journalists to mingle among them.

There are many national leaders at the World Economic Forum's annual meeting in Davos but no treaties are signed, nor are there joint declarations of policy made. That would be news and worth reporting. There are titans of industry in Davos, but no products are launched or companies acquired. That, too, would be news etc.

It can't be news because the comments about the year to come actually shape events. I came across this article from The Washington Post a couple of years ago on Google about some famously wrong predictions made by the rulers of the planet at the World Economic Forum. It's pretty amusing. (For that matter, did anyone at Davos in 1996 or 97 predict there would be something like Google (founded in 1998) and that a search engine would upend all previously known models of information aggregation and dissemination?

Anyway, the leaders are at Davos, journalists are tweeting like fan-boys and girls about rubbing shoulders with them. 

Because those at the top are completely worried about the euro zone crisis and most European leaders are putting in an appearance, Davos has some genuine news value this year, if only as a place where the increasingly irreconcilable views of the Anglo-American axis and Germany can be restated.

German Chancellor Angela Merkel gave the WEF keynote speech last night and called for Europe to become "more European," more closely integrated. "We have taken some steps closer to a fiscal union, but we can get faster, gain speed and become more decisive."

Today, it was British Prime Minister David Cameron's turn to address a session. He urged the euro zone to take "bold and decisive action" to fix its debt problems. But his idea of decisive action is not Merkel's. He doesn't want closer integration but for the EU to be more like a free trade association – one with virtually no rules on the financial industry. He hammered home his position that the levy on bank transactions being championed by Merkel and French President Nicolas Sarkozy would be "madness" and cause job losses. As someone whose policies have led to Britain's highest unemployment rate in 17 years it was probably not the best way for Cameron to try and make his point.

Indeed, there isn't a lot of talk about jobs so far. Growth is mentioned all the time but it has become clear that in much of the first world at least, growth is now uncoupled from job creation. I'm sure there is a session about this in Davos but I haven't read about it.

There were some interesting comments about Europe from leaders of some the EU's smaller countries.

The Daily Telegraph's live blog of the event carries some interesting quotes from Enda Kenny, Ireland's Taoiseach (Prime Minister) and Danish Prime Minister Helle Thorning Schmidt:

Kenny, whose country has been praised relentlessly in recent months for swallowing the austerity medicine without complaint said the euro zone crisis had been caused by “incompetence of some governments, a lack of trust and internal wrangling about national issues."

Thorning-Schmidt said ordinary Europeans understood that budgets needed to be cut and debt reduced but also thought, Everyone must be part of austerity. People are prepared to make sacrifices but they will not be sacrificed. We must not sacrifice parts of society.” She added that if some banks were considered “too big to fail” the danger is some people will “think they are too small to matter."

She also spoke sensibly about the euro zone crisis: "the core problem is not Europe but bad discipline in budgets among some members states.”

There is a sense coming out of Davos that the business side thinks the governmental side is finally getting to grips with the problem. Bob Diamond, the head of Barclay's bank said, bankers are "somewhat more comfortable" on the euro zone sovereign debt risks that just six weeks ago were threatening to explode the world financial system and send the whole planet into Great Depression Mk II.

Underscoring Diamond's comments yields on Italian 10 year bonds were briefly under 6 percent, they are now a little over but considering they were above 7 percent not one month ago it shows there is a change in perception out there.

Europe's stock markets also had good days. The FTSE was up 1 and a quarter points to close at 5,7965.2 – a six month high. Both the Frankfurt DAX and Paris CAC were also up more than one and a half points.

The positive market movements could all change, of course. Down from the mountain from Davos in the real world, there are still terms of a Greek bail-out to agree on, and next Monday a European Summit.

Journalists will be there as well – and I think it actually passes muster as a real news event