A tale of two cities – Davos and Cairo

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by David Malone

Things are looking up in the world economy. That’s what we’re told.

In Davos they certainly are.  According to the Bloomberg article entitled, “Wall Street Partying in Davos as Bankers Overcome Crisis“,  JP Morgan made its highest ever profits last year and Citi has returned to profit.  The year of ‘mea culpa’ is apparently over as bankers return to beating their chests and sneering at the very idea that the little people should have imagined they could really interfere.

As the same article notes,

“Governments have so far opted against breaking up or levying extra taxes on banks deemed too big to fail, and the Basel Committee on Banking Supervision, which sets global financial-regulatory guidelines, isn’t requiring lenders to meet new capital standards until 2015.”

What does this mean?  For the banking world it means off with the Armani hair-shirt look-alike and back to spending on their parties at Davos. This year,

“JPMorgan upgraded its cocktail reception to the Kirchner Museum from last year’s event at the Tonic Piano Bar at Hotel Europe Davos. Bank of America’s Moynihan and the firm’s other top executives will meet clients for drinks on Jan. 27 at the Steigenberger Grandhotel Belvedere — the same night Morgan Stanley’s Mack is hosting a private dinner at restaurant Gasthaus in den Islen. Standard Chartered Plc and Deutsche Bank AG are both hosting events at the Belvedere the following night.”

A world away in the streets of Cairo riot police are now using water cannon and live ammunition to stop and kill protesters from spreading unrest.  What are they protesting about?  The news will tell you they are in opposition to President Mubarak.  Which is true to an extent.  Mubarak is not liked by a great many Egyptians.  He’s seen as the West’s oppressive, anti Islamic strong man.  

But why are they rioting against him now?  For they same reason they are rioting in Algeria – the spiralling cost of food.

Algeria and Cairo are not isolated.  They are just the latest.  Last year hungry people rioted because they could not afford to feed their children in Mozambique, Mexico, Morocco, Uzbekistan, Yemen, Guinea, Mauritania and Senegal.  This was a report from Mozambique last year,

“Rioting continued in Maputo, Mozambique’s capital city, for a third day on Friday in response to increased bread prices and the general rise in the cost of living.  At least 10 people are dead, including a six-year-old girl and a 12-year-old boy, and more than 400 wounded as police have opened fired on angry demonstrators.”

But don’t worry because this year it’s Davos week again!

The world’s super rich and the banking elite are there to put their heads together to consider what they should instruct our leaders to do for them and to us, next.  Another injection of tax payer’s cash with your lobster sir?  A side salad of fresh QE on a bed of seasoned unemployment garnished with a coulee of speculation of food stuffs?  Or an Irish stew of craven politicians and insolvent banks boiled together in a thick stock of domestic corruption and foreign threats?  Ah, the choices.  But they’re doing it all for the best you know.  Noblesse oblige, n’est ce pas?

And such noblesse doesn’t come free.  According to an article from the New York Times it costs about $156k to get a good invite to Davos.  And that’s just to get your foot in the door.  If you want to party like a banker it costs a whole lot more.

“At the Posthotel, for example, the restaurant is charging a minimum of $210 a head. A cocktail party for 60 to 80 people for just one hour? That costs about $8,000. Two hours? $16,000.”

Make it 4 hours and it’ll cost you more than the average American high school mathematics teacher earns in a year.

“The bigger parties, like one that will be given by Google on Friday night for several hundred people, can run more than $250,000 for the evening.  (In years past, Google has flown in the band and bartenders; one year, the company had an oxygen bar.)”

This is a wake-up call,” said Robert Zeigler, who heads the International Rice Research Institute.  He might have been speaking about the vulgar excesses of the bankers at Davos but he wasn’t, he was talking about food shortages in an article in the Times in 2008.

The spectre of food shortages is casting a shadow across the globe, causing riots in Africa, consumer protests in Europe and panic in food-importing countries.  In a world of increasing affluence, the hoarding of rice and wheat has begun.

And who do you suppose had a hand in the sudden rise in food prices in 2008 and again now?  Could it be the very same people who are stuffing themselves in Davos?

And who is paying for it all, the luxury and the misery?  We are.  We bailed these people out.  We are still bailing them out.  It is your money and mine, that allows these people to gorge themselves on the world’s wealth and then belch in the face of those they are helping to starve.

 

 

David Malone is the author of the book Debt Generation. You can read and listen to excerpts from his book here: http://www.debtgeneration.org/index.php