BUSINESS AND political figures expressed concern about corporate greed as French president Nicolas Sarkozy vowed to protect the euro.
At the World Economic Forum in the Swiss Alps, billionaire financier George Soros said it would be wrong for Irish citizens to bear all the cost of bank bailouts without bondholder losses.
Without specifying that senior bondholders should take “haircuts”, he said: “It’s patently unjust that the Irish people should absorb all the losses made by the banks and that the bondholders should be totally free, and that, I think, will have to be modified.”
Mr Sarkozy said he and German chancellor Angela Merkel would never abandon the euro, adding that to do so would be to threaten the very fabric of Europe’s postwar settlement. “To those who would bet against the euro, watch out for your money because we are fully determined to defend the euro,” he said.
He also attacked what he described as “madhouse” practices in offshore securitisation markets and upbraided JP Morgan chief Jamie Dimon after he called for flexibility in new banking regulations.
In a packed auditorium, Mr Sarkozy said there was an “ocean” between flexibility and the scandals that led to the crisis. “If people present me as obsessed with regulation, it’s because there is a need for regulation,” he said.
Left-wing activists claimed responsibility for a small explosion yesterday in a luxury Davos hotel in which no one was injured. A group calling itself Revolutionary Perspective said in a statement on an activist website it had targeted the Posthotel in what is described as a campaign against the “dictatorship of capital”.
At the annual gathering of the world’s corporate elite, corporate and political leaders spoke of the requirement to regain the public standing of business.
Maurice Levy, chairman and chief executive of French advertising giant Publicis, said many people had huge suspicions about corporate chiefs, their companies and bankers.
“People do not understand that these large corporations are doing extremely well, while their lives have not improved and without the support of the people, there is no way we will be able to grow,” he said. “We have been led by greed. We have been led by only the bottom line, the profit, and we have sacrificed the workers in order to please the stockholders.”
In the same panel discussion, Dominic Barton, world managing director of consultants McKinsey, said governments drained the “trust bank” to prop up the financial system. “I don’t think there’s much reserve there. I think that businesses ... we’ve also drained a bit of the trust bank and we have to rebuild it.”
Indonesian president Susilo Bambang Yudhoyono told his audience that there should be more “compassion” in global economic and social policy to achieve growth with equity. “We will need to work together to manage the world economy so that it functions to meet our needs, rather than satisfying our greed,” he said.
Greek prime minister George Papandreou said there would be no restructuring of his country’s debt but economist Nouriel Roubini said such a fate was inevitable without stronger growth.
“We need an orderly restructuring of this debt. And we should do this sooner rather than later,” Mr Roubini said.
