Australian Premier Backs Out of Davos

Bad news for the World Economic Forum annual meeting next week in the Swiss mountain resort of Davos: Australian Prime Minister Kevin Rudd has opted not to attend.

A few months ago, Rudd proffered the provocative idea of adopting global banking rules to require more reserves at financial institutions that reward "excessive" risk-taking and engage in "extreme capitalism."

That line of thought would seem to fit well with the Forum's theme of "Shaping the Post-Crisis World." Unfortunately, Rudd's plans for Davos have been derailed by ... the crisis caused by excessive risk taking.

Rudd canceled his trip last night, opting to remain in Canberra to concentrate on the economic problems at home, the Age newspaper reported. Rudd's announcement came as his government created a $4 billion fund to prop up Australian property developers unable to roll over foreign loans.

It reminds one of his speech at the National Press Club in Canberra in October:

"What we have seen is the comprehensive failure of extreme capitalism--extreme capitalism, which now turns to government to prevent systemic failure. ... The collapse of this house of cards has had devastating consequences both for financial markets and for the real economy."

by Mark Stein