Davos discusses ways out of the euro crisis

Davos discusses ways out of the euro crisis

The 42. WEF takes place against backdrop of sovereign debt crises, upheavals in the arab world and skyrocketing food prices. In the run-up, investment legend george soros sharply attacked germany’s management of the euro crisis. "Germany is dictating a policy that will lead to a debt spiral with deflationary consequences," soros said. He wondered when the realization would take hold "that the truth union is on a self-destructive course.".

As a way out of the crisis, soros suggested forcing problem states like greece not only to impose strict budgetary discipline. "They also need a stimulus that will prevent a deflationary spiral," soros demands. He proposed a "lender of last resort" of the european central bank and the EFSF and ESM crisis mechanisms to help struggling states like italy and spain. With this guarantor in their backs, the states were able to refinance themselves favorably.

Soros accused germany of setting unattainable goals for euro-crisis states and thus turning them against itself. The current euro crisis management is creating resistance in peripheral countries.

Representatives of banks and financial investors come in for particular criticism in davos. The capitalism of the 20th century. The school system of the twenty-first century is a. The IMF is no longer suited to the financial crisis of the twenty-first century, said sharan burrow, general secretary of the international trade union confederation (ITUC), in a panel discussion. Inequalities are as gross in the world today as they were before the 1930s crisis, he said. Hundreds of millions of people are unemployed. Capitalism has failed to create secure jobs and to distribute wealth equally.

Banks are the mirror of the economy, defended the head of the bank of america, brian moynihan. "Of course there are excesses, but they have been contained."The way banks operate has changed enormously since 2008 in the wake of the financial crisis.

The former chief economist of the international monetary fund (IMF), raghuram rajan, does not believe that breaking up big banks is the right way to prevent future financial crises. In the past, systemically important institutions had benefited from being too large and too interconnected to be dropped by states, said the professor at the university of chicago’s business school. However, higher capital buffers and measures for better risk management are sufficient to put the banking sector on a stable footing for the future.

2600 politicians, business leaders, scientists and civil society representatives meet in davos. The motto of the meeting is: "the rough transformation – designing new models."

Critics of the world economic forum demonstrated wednesday in the immediate vicinity of the davos convention center. Dozens of activists strolled with dog leashes through the main shopping street, a few hundred meters from the meeting place – but without dogs. They carried signs with the inscription "konzern an die leine" (corporations on the leash). They criticized the fact that swiss companies could violate human rights and environmental standards abroad and not be held accountable in their home country. The security forces, who hermetically sealed off the center of davos, did not intervene at first.

Globalization critics are represented near the WEF for the first time this year. A few kilometers from the conference venue, the occupy movement is running an iglu village. A demonstration is also planned, albeit in a somewhat secluded location.

Hundreds of police officers and up to 5000 soldiers are deployed in davos. Many kilometers of wire fence were laid around the conference site.

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