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An end to 'grimmest Davos ever'

Feb 2, 2009

The World Economic Forum (WEF) meet at Davos ended yesterday. Bloomberg terms it as the 'grimmest Davos ever'. This is given that the meetings, which were originally aimed to arrive at measures to shape the post-crisis world, ended in members pointing fingers at the culprits (the US at large) that created the crisis in the first place. "The search for scapegoats and the worst economic prospects since World War II resulted in a gathering marked by fear, anger and bitterness, a far cry from the usual search for consensus," goes a statement on Bloomberg in a report discussing the takeaways of the meet.

"We should not trust these bankers," moaned Nassim Nicholas Taleb, author of 'The Black Swan'. "Look at their track record. The only way to stop the process is for the government to own those banks," he concluded. Economists present at the meet also questioned Obama's US$ 819 bn stimulus plan, which they believe will sow the seeds of the next crisis based on unmanageable government deficits and massive inflation.

Amidst the gloom, the Indian contingent remained enthusiastic as ever. This can be seen from what Mr. Anand Mahindra, vice chairman of Mahindra & Mahindra (M&M) had to say - "The real strength that India has is that one major sector of its economy is truly decoupled from the rest of the world, and that's Indian agriculture. We never moved quickly enough on banking reforms, we were criticized for that, but that's precisely why our banking sector is well insulated today and has some of the highest capital adequacy ratios." He further said, "We were always behind in the export game, which is why it's only 20 percent of GDP. That means we are not suffering any severe whiplash from markets melting down."

In the meanwhile, Mr. Mahindra's flagship company M&M has reported a 93% dip in consolidated profits during the third quarter. A general slowdown in economic activity coupled with scarcity of retail finance and high interest rates has seen the company's volumes tumble, thereby leading to a bad overall performance.

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