In late March Vladimir Putin finally announced measures to limit the spread of the novel coronavirus in Russia, but placed the financial burden on the private sector, offering virtually no support for businesses and very little for consumers. This was very different from the United States, where Congress, in a sharp departure from its dawdling ways after the 2008 financial debacle, promptly passed a massive $2.2 trillion rescue package. It is now debating a few billion in additional stimulus.
And yet, the reaction to the pandemic in Moscow and in Washington has been remarkably similar — certainly in spirit, but in some actions, as well. Both governments were happy with the pre-coronavirus world and they now want to return to the status quo as soon as possible.
Indeed, before February 2020 people who ran the two countries derived enormous personal benefits from the system. The world was their oyster. They fed two-minutes-of-hate installments of propaganda to their sheeplike populace while making massive amounts of money either from their official positions (in Russia) and from the government they owned (in the United States).
Whether or not Donald Trump is secretly beholden to Putin, he has been clearly drawn to the Russian autocrat. They are soulmates, and Donald tries to emulate his friend Vladimir. In fact, in three years in the White House Trump molded the Republican Party into Putin’s United Russia in everything but name, did away with the separation of powers and checks and balances and cowed America’s free press. Like Russian state television, Fox News and a plethora of rightwing outlets mostly purvey relentless and cloying leader worship.
The glue that holds both systems together is money — a lot of it. In Russia, as long as you toe the line your position is secure and you can go on diverting state budgets into your own pocket. America is not a kleptocracy — at least not yet, although the COVID 19 rescue promises to turn into a pilfering bonanza that will overshadow the “rebuilding” of Iraq in the early years of the 21st century. Still, voter opinion in this “flawed democracy” (based on The Economist classification) no longer matters thanks to gerrymandering and voter suppression, while plenty of money flows between banks, corporations, lobbyists, think tanks and political campaigns.
And so it is no surprise that both Putin and Trump — and therefore their governments, which are merely extensions of their respective Big Boss — completely missed the start of the pandemic. Or, more to the point, since they always have their way, they simply tried to wish the coronavirus away. Putin announced that it is not going to come to Russia at all, and Trump predicted that it will miraculously disappear within days.
Since the contagion continued to spread in their countries, each leader began to appear on his national television. Putin did it three times, each time saying absolutely nothing of substance, while Trump is assailing the virus on a daily basis. He has turned the daily briefings into his campaign rallies, picking fights with everyone from reporters to the WTO and spewing inaccurate and dangerous nonsense.
Both betray their fear of change. Putin has been reluctant to face the crisis, calling the lockdown which he himself ordered by a “paid holiday” euphemism. Trump keeps talking about an early reopening of the economy, disregarding the opinion of public health professionals and ignoring the fact that people simply won’t go out of their homes. Republican elected officials are taking their cue from Trump, so that the governor of Texas appears ready to conduct a medical experiment on his citizens.
Clearly, the American political establishment can’t wait for February to come back.
In fact, the massive COVID 19 rescue package and the open-ended commitment by the U.S. Federal Reserve to print money and throw it out of helicopters are designed to freeze the US economy. The government and the central bank want to replace all the clients American companies are losing during the lockdown, paying them with public cash. The hope is that when the pandemic finally ends and people come out, all businesses will reopen, life will restart and the good times will roll once more.
Unlike Russia — or any other country for that matter — Washington can throw so much money around because the U.S. dollar is the currency on which the global financial system is based. The Fed can just print dollars and other countries will accept them in payment for their goods and services and hold them as reserves. The United States can do that because in the immediate post-World War II years its government created the international economic system and placed the dollar as its foundation. It is an irony of sorts that Trump has been systematically undermining this system.
Putin and Trump are not the only people who don’t want the world to change. The Democrats in the United States want to go back even further, to the Obama years. At least this is what their choice of presidential candidate suggests. Joe Biden is a nearly senile nincompoop whose only claim to fame is his job as vice president to Barack Obama — even though those eight years started the bubbles which are bursting now and saw an unprecedented expansion of income inequality in America.
Saudi Arabia and other OPEC members also want to preserve the world which existed before February. While Mohammed bin Salman and Putin crossed swords in an oil price war during the past two months, they were pursuing the same goal: to safeguard — or rather bring back — oil as a source of fabulous wealth and a political weapon.
Finally, Wall Street also hopes to reflate the deflated bubble. A pre-Easter rally — which began, appropriately enough, right after the April Fool’s Day — showed that financial speculators are hoping for a V-shaped recovery: a sharp downturn that will be followed by a massive recovery.
The first week in April featured the best gains for stocks in nearly half a century. The problem is that it was taking place against the backdrop of 17 million Americans — or 10.5% of the labor force — applying for unemployment in the past three weeks. This number is certain to go much higher in the weeks ahead. America’s budget deficit, which topped $1 trillion last year, despite extremely robust economic growth, may hit $4 trillion when the fiscal year ends in October.
So, no. the financial bubble is unlikely to be reflated. And despite this being Easter, the world as it existed before February 2020 won’t be resurrected. It is not clear how things will change — and whether the change will be for the better — but change they most certainly will.
