Don’t expect to see Russian President Vladimir Putin invited to the White House for a sleepover in the Lincoln Bedroom anytime soon.
Vladimir Vladimirovich has committed the unpardonable diplomatic sin of speaking bluntly.
Like Sherriff Woody from the Pixar movie “Toy Story,” Putin has declared “there’s a snake in my boot,” only in this case, it’s the U.S., which he labels a “parasite” on the global economy.
Addressing a gathering of the pro-Kremlin youth group Nashi at their summer camp near Moscow Putin commented, "They are living beyond their means and shifting a part of the weight of their problems to the world economy. They are living like parasites off the global economy and their monopoly of the dollar. If there is a systemic malfunction, it will affect everyone."
Putin’s caustic comments follow his equally dour observations when in July he called U.S. monetary policy "hooliganism," a favorite code word from the Soviet era for anti-social behavior and castigated the U.S. for printing money to bolster the dollar. Putin added that Americans are "living beyond their means" and that irresponsible U.S. fiscal policies will have a negative impact on other countries, like Russia, Japan and China, all of who hold a massive amounts of U.S. bonds and Treasury bills. Putin said, "We, thankfully or not, cannot print a reserve currency. But what are they doing?" They simply spit nails, turn on the printing press and throw money to the world, in order to resolve their urgent problems."
At the end of his monologue Putin finally praised the U.S. for reaching an eleventh-hour debt deal to cut roughly $2.4 trillion from the U.S. deficit over the next decades, saying, "Thank God that they had enough common sense and responsibility to make a balanced decision."
Putin’s comments, while harsh, nevertheless reflect a global opinion that the U.S. economy has become a hostage to inter-party political grandstanding, but the implications of which extend far beyond U.S. shores.
Three factors play into foreign awareness of the crisis – first, that the world’s largest economy is being held hostage by what some Democrats call the “Taliban” wing of the Republican party, whose insistence on zero compromise and dollar for dollar cuts for raising the debt ceiling have paralyzed the normal workings of the U.S. economy.
The second factor is that while many countries are deeply unhappy with the dollar’s global hegemony, there is no clear consensus about what might replace it. The euro has recently been tanking thanks to the perfect storms of the Greek, Irish and possibly soon, Portuguese, Italian and Spanish fiscal crises, the yen has been hammered by the fallout from Fukushima, and China does not want the yuan to play a major role in world trade, as it could well lead to an inflationary spiral that could short-circuit China’s thriving economy.
Last but hardly least, oil exporting nations like Russia are subject to the vagaries of the fluctuation of the dollar, as it is the exclusive currency used in both New York’s NYMEX and London’s ICE energy exchanges.
The final casualty of all this ultimately is the U.S. fiscal global prestige, which dates back to the end of the Second World War. The fact that a minority of right-wing Congressional leaders have chosen to play chicken with the U.S. economy in order to achieve their extremist national political goals has been a highly sobering and distressing experience for foreign nations to watch, which along with the global recession caused by the casino roulette machinations of American Wall Street banksters, has effectively driven a stake through the heart of the U.S. free market enterprise model, though the corpse is still twitching.
What countries like Russia, Japan and China are now most concerned about is how to shelter their massive American investment holdings since, as the U.S. has a presidential election next year, the internecine political bickering can only intensify.
The Swiss franc is looking better and better; on Tuesday it rallied as much as 2.5 percent against the dollar, but oddly enough, the gnomes of Zurich seem reluctant to turn on the printing presses to produce more of them.
Pay as you go? What a concept.
By. John C.K. Daly of OilPrice.com