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Panic at Davos!The global financial meltdown intrudes on the World Economic Forum.

By Daniel Gross
Posted Tuesday, Jan. 22, 2008, at 5:13 PM ET
Traders at the Chicago Mercantile. Click image to expand.

Financiers and CEOs come to Davos to escape the grind of SEC filings, subprime write-downs, and EBITDA, and to indulge their inner wonks. It takes some doing. There's the eight-hour flight to Zurich followed by another couple of hours in a car, bus, or train, chugging slowly up a narrow snowscape, through stands of enormous pines. Then, instead of sitting through sales meetings, placating investors, or scanning bar charts, they can ponder the implications of the human genome project for cancer research, or listen to Tony Blair, or sit in on a panel discussion with food pioneer Alice Waters. It won't be so easy this week.

The prebuzz at Davos this year was about the megatrends transforming the global political economy: sovereign wealth funds, sustainability, China, energy, and the promise of medical technology (a topic of increasing salience to Davos' aging baby boomer stalwarts). The early sense was that while the United States is slowing and may be in for a rough time, the rest of the world is doing quite well. The United States has clearly sneezed, but the rest of the world has yet to catch cold.

That was last week. In the last few days, as conference-goers packed their boots and business cards, global markets have cratered because of continuing troubles in the United States and concerns over the stability of the financial new world.

There's a whiff of panic, even high up here in the Alps. When I alit from the train in the Davos Platz, jostled by young Swiss headed for a day on the slopes, my primary concerns were croissants and chocolate. But my traveling companion, a fellow financial columnist, quickly put the kibosh on my schussing plans. Whipping out his BlackBerry, he noted: "They're talking about a coordinated rate cut." In the press center, one of the Swiss army of greeters asked excitedly if I had heard the news. The Dow looked as if it was going to open 500 points down, and the Fed was cutting interest rates another 75 basis points. Suddenly, the prospect of lunch with George Soros tomorrow has become much more interesting.

The conference hasn't formally started, but as I attempt to take the temperature at Davos (cold, with a really good chance of snow), one thing is evident. Usually, the world (or at least a well-heeled, nicely dressed chunk of it) comes to Davos every January. This year, the world is intruding on Davos. With global markets falling in concert, all the banking executives, finance ministers, portfolio managers, and private-equity grandees won't find it so easy to focus on their presentations and breakout sessions.

At the Knowledge Concierge (basically, laptops provided by PricewaterhouseCoopers), where I was enjoying my third espresso of the day, an American investor was furiously multitasking: chatting with a broker on the phone, checking e-mails, reviewing his portfolio. I asked if he was worried that the market turmoil would ruin his Davos. "Not really, this is mostly technical." Meanwhile, it looks as if the Federal Reserve has saved the day—again. As night fell in Switzerland, the Dow was down only about 1 percent, but my fellow Web surfer in the Knowledge Center was still looking at stock charts.

At the opening reception (ooh, there's Emma Thompson!), where it's common practice to stare not at people's eyes but at their chests (the better to read names on the badges), a private-equity guy's eyes were glued to his BlackBerry, checking stock quotes. Based on a few interviews, the early consensus seems to be that the United States and its credit problems are partially to blame for the suddenly destabilized global markets. "The whole subprime mess is the fault of American greed, and Bush's fault for not regulating it," Ron J.C.M. Kok, president of the Dutch engineering firm OTB Group, told one of my colleagues. What's more, from my distinctly unscientific sample, global big shots seem to believe that the punk U.S. economy is just something Americans—and the world—will have to learn to live with. Jacob Zuma, president of the African National Congress and the likely next president of South Africa (and my nominee for world leader with the most aggressive bodyguards), was philosophical. "No country in the world can escape the impact of what's happening in the U.S.," he said. "But the South African economy has very strong fundamentals." Others were less diplomatic. "The U.S. sucks," said the chief executive of a large U.S.-based auto parts company, referring, of course, to the domestic auto parts market, not the country as a whole.

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Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at . He is the author of Pop! Why Bubbles Are Great for the Economy.
Photograph of traders by Scott Olson/Getty Images.
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