The latest World Economic Forum concluded in Da­vos last weekend. For an event that doesn’t produce a communiqué, let alone anything as grand as a treaty or even a lesser governmental accord, a surprising amount of ink was spilt divining the twist and turns of this alpine gabfest. It says much about the contemporary world that an informal event, which despite its best efforts, is elitist but is afforded such prominence in the annual calendar. What should readers make of Davos 2012?

With one exception, the public statements of leading politicians are to be taken with a grain of salt. Indeed, German chancellor Angela Me­rkel seems to have internalised this argument to the point that her speech was utterly pedestrian. Perhaps, the best that can be said about the speech is that it tried not to be too overbearing. British prime minister David Cameron’s speech in contrast was full of brim. Unfortunately, the larg­ely accurate analysis of the deficiencies of the euro zone set up was delivered 15 years too late and his other calls for reform will fall on deaf ears in continental Europe, where what little bandwidth there is, is employed in negotiating a fiscal straightjacket to keep the Germans happy. These speeches were for domestic consumption.

The exception was the Israeli defence minister who warned that soon Iran would move to the point where external military attacks on their nuclear sites would likely be useless. The fact that the Israelis rarely slip up on military matters, makes threats of action a lot more credible than listening to the latest promises of European Union (EU) leaders. Of course, this is no laughing matter because any Israeli attack on Iran may encourage the latter to disrupt oil supplies through the Strait of Hormuz, sending oil prices through the roof and endangering oil supplies in Asia and Europe. This is clearly the geopolitical wildcard to watch in 2012.

Beyond the political grandstanding, Davos afforded the usual round of behind-the-scenes conversations where new and elite conventional wisdom were tested. One important piece of such wisdom was the European Central Bank’s very generous package of three-year loans to euro zone banks that had eliminated any chance of a “Lehman moment” in 2012, a year where those banks will have to repay nearly three quarters of a trillion euros to their bondholders. Uncertainty has eased in the financial markets and not surprisingly, bank stocks are soaring.

Other than monetary policy, however, euro zone policymakers tried to put on a brave face claiming that they were ready to do what it would take to solve the euro zone crisis without daring to specify the ends or the means involved. When it became evident that the German government felt an external EU commissioner should be appointed to ensure that Greece only spends mo­ney that can be paid for from taxes (after interest on government bonds was deducted), howls of disbelief sma­shed the façade of a common front among euro zone governments. We should then expect the European economy to be stuck in a no-man’s land between a severe recession and stagnation. Reform expectations have been rightly downgraded.

While the euro zone crisis may have provided much grist for the Davos mill, two longer-term trends have attained such significance that they can no longer be ignored. The emergence of a dual world economy, where the eco­no­mies of emerging markets gr­ows so much faster than western and Japanese counterparts, continues. This is not to say that difficulties in the latter won’t harm the former, rather, it is the differential growth advantage of the em­erging markets that has been sustained through the global economic crisis and this further reinforces the importance captains of industry give to investing in emerging markets. Several Davos attendees pointed out the contrast between the pessimism of the westerners and the optimism of everyone else. The geopolitical hourglass stops for no one and no crisis.

The growing inequality in industrialised and emerging markets received a surprising amount of attention, in addition to concerns about the large incidence of youth unemployment in the austerity-ridden richer countries. Here the so-called Davos Man — the unapologetic supporter of globalisation was stumped. Some business people acknowledged that tackling inequality required an effective state. It was seen to be a pre-requisite for sustaining public support for globalisation, but few were prepared to take the argument further and advocate specific government initiatives. No major business person dared to mention more progressive tax systems could be part of the solution. Job training was mentioned by some, even though, modern economic research has shown that only the shortest job-training interventions pay off.

Some of the Davos Men linked the inequality “challenge” with the Iranian nuclear “problem”. Notice how the language used to describe the difficulties is softened when really tough questions arise, arguing both were impossible to solve. Rarely does the emperor admit to having no clothes, but, the admission here had a clear purpose - to convince the listener to set to one side policy concerns and to accept the status quo. This is a pretty brazen strategy given the continued practice of paying sizeable bonuses to senior corporate executives. Tempting as it may be to admire the gall of the Davos Man, 2012 was the year when the leaders finally admitted they didn’t have all the answers.

(The writer is a professor of international trade and economic development at University of St Gallen, Switzerland)