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Economists at World Forum Deliver Mixed Message


Economic policy makers attending the World Economic Forum in Davos express optimism the recent turmoil on global financial markets does not portend wider economic doom. But bankers and business executives are not as confident. VOA's Barry Wood brings us up to date from Davos.

With the financial markets stabilizing after a roller-coaster ride earlier this week, the talk at the World Economic Forum is more relaxed. There appears to be little sense of panic or impending catastrophe.

At a panel on financial stability, the head of the European Central Bank, Jean-Claude Trichet, even sounded an optimistic note. Risk and occasional turmoil, he told his audience, are part and parcel of a market economy.

"If the risks were not materializing [from time to time] you would not be in a market economy, you would be in the Soviet Union," said Jean-Claude Trichet. "And we could see what happened when risk is not materializing. It is the system itself which collapses."

Trichet heads the Frankfurt-based central bank that manages the euro currency used by 15 European Union countries. Trichet said that in the last few months of market turmoil his bank and other central banks have cooperated in order to calm jittery markets.

Robert Kimmitt, the deputy U.S. treasury secretary, said Washington is determined to take action to cushion the impact of any economic slowdown.

"Obviously in the near term, we're focused on reducing the number of [home] foreclosures and minimizing the impact of the subprime turmoil on the real economy," said Robert Kimmitt. "That's why Hank [U.S. Treasury Secretary Paulson] is leading the effort on the stimulus plan" [being proposed to Congress].

But economists from the private sector are more pessimistic. Joseph Stiglitz, an economics professor at Columbia University and winner of the Nobel Prize in economics, says the current market turmoil is far from over.

George Soros, a billionaire financier, says the current turbulence is the worst in 60 years. And even Bill Gates, one the world's richest men, says capitalism as an economic system may need some tinkering.

"Capitalism harnesses self-interest in a helpful and sustainable way, but only on behalf of those who can pay," said Bill Gates.

Gates proposes a vaguely defined creative capitalism that would enhance the value of personal satisfaction derived from individuals and corporations doing good deeds.

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