Update 2011: Hey, hey it’s “Davos time” again!
Monday, 24 January, 2011 Leave a comment
“Both governments and societies are less able than ever to cope with global challenges”
This quote (and the following), from the Global Risk 2011 report, suggest that there appears to be a realisation of the nature of what we are facing. I would be encouraged BUT, even if, “call me Dave” does put in an appearance to spout about a work in progress, or the wisdom he has gained from previous meetings with Nassim Taleb, it will have the usual hollow tone to it as he can’t even get the banks to meet commitments already given re SME businesses.
It is a very dangerous “game” that these guys are playing because, IF/WHEN another collapse occurs and contagion heaps more misery on UK citizens, one or both will pay a very heavy price for their stubbornness!
The current fragility is recognised. The nature and pace of systemic risk “known”. So too great a focus upon national interests and growth, at the expense of rebuilding global stability and resilience would be a a huge mistake. From where we are, ensuring survival would be a good starting point!
Clusters of risk
The report identifies three clusters of risk: the world economy, suffering in the aftermath of the financial crisis and weakened by budget deficits and the cost of ageing populations; the illegal economy driven by corruption, organised crime, illicit trade and failed states; and the every growing demand for resources such as water, food and energy.
The authors, drawn from a global network of business and political leaders, try to map how a single problem in each cluster can quickly escalate and cause a wider crisis affecting other areas.
Robert Greenhill, chief business officer at the WEF, said that while it had taken months for the Wall Street crash of 1929 to affect the rest of the world, it took only minutes for the crash of 2008 to make an impact.
The report speaks of “rapid contagion through increasingly connected systems and the threat of disastrous impacts” on fragmented societies where economic imbalances undermine social cohesion.
With economies weakened by the global financial crisis and government budgets strained by the cost of supporting rapidly ageing populations, “both governments and societies are less able than ever to cope with global challenges,” both man-made and natural disasters.
The WEF report, one of the gloomiest in recent years, warns that while nationalism is on the rise, there is also a “growing divergence of opinion between countries on how to promote sustainable, inclusive growth”.