January 23rd, 2012
01:27 AM GMT
Davos, Switzerland (CNN) – I have arrived in Davos, a few days ahead of the World Economic Forum. Getting here early before the hot air starts rising from the WEF gives me a chance to witness this elite mountain resort without the fuss and to think about what might happen at this year's junket. Writing this I can see the last straggler skiers enjoying this year's superb snow - the best in a decade - which frankly is more than can be said for the prospects for this year's forum. I think this will be one of the most complicated and will produce relatively little by way of initiative and solutions.
It will be "Davos do little."
The sad fact is, for the decision makers coming here, all the necessary decisions and actions are getting nastier, harder and more difficult to take. The same problems they tried to solve in 2009, 2010 and 2011 are still smoldering, while some, like Greece, are at imminent risk of bursting into flames again – for instance, if the banks fail to agree on how much of a haircut (posh way of saying “loss”) they should take.
Incidentally, it would be unkind to remind those coming here that it was at Davos in 2010 that policy makers promised that Greece would never be allowed to default and that the euro crises would soon be solved.
It is a raw truth that during the past three years the low hanging fruit have been picked. Slashing interest rates, bailout of banks, Quantitative Easing (1, 2 & 3), Full Allotment - they have thrown everything at the problem, and things are still pretty dreadful with high unemployment and sluggish growth in the United States and an imminent recession in the eurozone.
These facts make Davos 2012 different from the early years of the crises. In 2009, the fire was well and truly burning; there was a sense of urgency about what could be done. By 2010 the sovereign debt crisis was bubbling up, and the call was, "something had to be done." Even last year, there was still some hope they could get “ahead of the curve.”
Thirteen European summits and several national ratings downgrades later, no one is that naive. What's left in Davos 2012 is the slow, realization of a lot more pain ahead. So in that scenario people will come here to talk and do little. They have no other options.
Take the world's finance minister who is coming here, knowing that governments have stretched their budgets to breaking point. They are cutting back, not spending more. Downgraded European countries have to worry about how they will fund the European Financial Stability Facility sufficiently to create a decent firewall around Italy and Spain to say nothing of the awful arguments awaiting the negotiators finalizing the eurozone's fiscal compact on deficit and debts.
Central bankers will be here, knowing they have to get the printing presses running again and worry about inflation further down the road. Call it QE, Full Allotment or Reduced Reserve Ratios...it’s printing money to keep us going.
And those who come here with the social agenda - to alleviate poverty, disease and despair - will find people nodding in agreement and doing little about it. This year the biggest noise may come from the Occupy Davos protesters living in makeshift igloos outside the Congress Centre.
I still believe there is huge value in the Davos forum: It is the starting point of the year when government leaders, CEOs and the great thinkers take an overview of what needs to be done and start planning how to do it. That won’t happen this year, I am afraid. It’s simply too complicated and difficult.
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