Plenty to chew on for great minds of Davos

Blackberries beeped, mobile phones buzzed and all manner of other hand-held devices suddenly exploded into action. As the snow fell on Davos, with a full-scale blizzard blowing at the top of the mountain which closed all but a few of the resort's myriad ski lifts, the news was filtering through of the Federal Reserve's "emergency" interest rate cut of three quarters of a percentage point.

Suddenly the agenda of the World Economic Forum gathering here, already likely to be dominated by the credit crisis, fears of recession and the gyrations in stock markets, had been well and truly set by this out-of-the-blue decision from Ben Bernanke, chairman of the world's most powerful central bank.

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Will the Fed's move signal a determined effort by policymakers around the world to avoid economic catastrophe? Or is it a sign of panic which indicates that central bankers have lost control of events? There is no better place right now than Davos, with its extraordinary concentration of brain power, wealth and government muscle, to answer these questions. The danger of yesterday's interest rate cut, much larger than anticipated and enacted at an unscheduled meeting of the Federal Open Markets Committee, is that it will be seen as a panic decision which indicates that things are very much more serious than the still relatively benign consensus among economists on the outlook for the world economy.

Bankers, business leaders and policy makers assembling for the forum's annual meeting today are already asking whether there is something the Fed knows that the rest of the world doesn't – possibly a major bank running into difficulties or a steeper economic deterioration than suspected.

At Davos this year there will be intense soul searching among bankers about the extent to which unregulated credit structures and products contributed to the present crisis and the explosion in debt. Private meetings throughout the forum have bristled with fevered discussion about the now potent risk to bankers of a fierce regulatory backlash, with politicians on both sides of the Atlantic calling for a crackdown on investment banking practices and pay.

Not since the forum's 2002 meeting, held in the aftermath of 9/11 and uniquely moved to New York as a gesture of solidarity, has the mood seemed so sombre. America at that time was already sliding into recession, as it may be on this occasion too.

Opinion among economists here is still deeply divided over whether what we are experiencing is merely a sharp US slowdown which, after policy action of the sort just announced, will soon dissipate, or which presages a serious recession with job losses, bankruptcies and severe repercussions around the world.

Event organisers are hoping that the concentration of economic brain power, corporate money and governmental power to be found here – perhaps two thirds of the world's wealth – will deliver a coordinated response that will alleviate the worst consequences of the present crisis.

The timing of this year's event could hardly be more fortuitous or auspicious. The US Secretary of State, Condoleezza Rice, US Treasury Secretary, Hank Paulson, European central bank president, Jean-Claud Trichet, Alistair Darling, Gordon Brown and scores of others will have ample opportunity to frame a road map to financial stability over the next four days of meetings.

Leading figures from the world's older economies are being joined in unprecedented strength by the movers and shakers from the rapidly growing emerging market economies of the developing world, especially those of China and India.