Wall Street IB: 12 months losses exceeded last 25 years profits

Speaking at the World Economic Forum in Davos, Switzerland a few weeks ago, Russian Prime Minister Vladimir Putin declared he would break from the recent pastime of blaming America for the world's economic struggles.

"Virtually every speech on this subject [has] started with criticism of the United States. But I will do nothing of the kind. … I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasized the U.S. economy's fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years."

http://www.fool.com/investing/international/2009/02/12/why-russia-is-collapsing.aspx?source=iedsitmrc0000001

When globalisation goes into reverse

When globalisation goes into reverse
By Gideon Rachman
Published: February 2 2009 19:10
Last updated: February 2 2009 19:10

The World Economic Forum in Davos.

For the past decade, the Davos meeting has brought together big business, high finance and top politics to promote and celebrate the integration of the global economy. Whatever their business rivalries or political differences, the Davos delegates all agreed that the road to peace and prosperity lay through more international trade and investment – globalisation, in short.

But this year the forum has had to confront a new phenomenon – deglobalisation. The world that Davos Man created is slipping into reverse. International trade and investment is falling and protectionist barriers are on the rise. Economies are shrinking and unemployment is growing.
The symptoms of deglobalisation are all around us. Last week, it was reported that global air cargo traffic in December 2008 was down 22.6 per cent compared with December 2007. Abhisit Vejjajiva, prime minister of Thailand, told the forum that tourist receipts in his country had fallen by about 20 per cent year-on-year, in line with the general decline in international travel (and stripping out the effects of the temporary closure of Bangkok airport). In the US and Europe, governments are scrambling to bail out not just banks but also car companies. But, as the European Union has long acknowledged, “state aid” to national industrial champions is a form of protectionism.
Then there is “financial mercantilism”, the talk of this year’s Davos. This is the growing pressure on banks and financial institutions to retreat from international business and concentrate on domestic markets. Trevor Manuel, South Africa’s finance minister, captured the fears of many when he warned that his country and other emerging markets were in danger of being crowded out of international capital markets and of “decoupling, derailment and abandonment”.
Financial protectionism is driven by the logic of the market and political pressure. Banks that have lost confidence and capital in the credit crunch are retreating to the home markets they know best. And because so many banks have been bailed out by national taxpayers, they are also coming under political pressure to lend at home rather than abroad.

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