Three weeks ago Putin called Bernanke a hooligan. Since that remark came from the (allegedly) largest oil producing country in the world, it provoked nary a peep from America's foreign department. Today, he decided to ratchet up the rhetoric, and in a speech to a Kremlin youth group told his listeners what the bulk of the rest of the world thinks of America: ""They are living beyond their means and shifting a part of the weight of their problems to the world economy," Putin told a Kremlin youth group while touring its summer camp north of Moscow. "They are living like parasites off the global economy and their monopoly of the dollar."" Russia has not made its distrust of America clear in the past, and while others (ahem China) have been jawboning about selling Treasurys even as they continue buying US one-ply paper, Russia has been actively dumping its Treasury paper to the lowest in years. The reason for the unprovoked outburst? The insanity in Congress. "Thank god," Putin said, "that they had enough common sense and responsibility to make a balanced decision." The former KGBer's solution? Other, and more deserving, reserve currencies.
Putin, who has often criticized the United States' foreign exchange policy, noted that Russia holds a large amount of U.S. bonds and treasuries.
"If over there (in America) there is a systemic malfunction,
this will affect everyone," Putin told the young Russians.
"Countries like Russia and China hold a significant part of their reserves in American securities ... There should be other reserve currencies."
Well, if Russia and China are so worried about the USD, perhaps it is time they finally pool their resources and release a joint currency: perhaps the Rubimbi? Or the Yuable? After all, instead of bitching constantly, just offer the global capital markets an alterantive and the market will give a thumbs up or down. Frankly, at this point any paper that is backed by something, anything, crude, copper, underground rivers, SS-30 rockets, bubble gum, or even bananas will likely fare much better than the dollar. It will also achieve the goal that the Chair "hooligan" Satan is pursuing: namely to kill the reserve currency and give American bankers a second chance at multi-billion bonuses, unencumbered by the chains of trillions in worthless RMBS on their books.
Alas, we don't see that happening for quite a while, which is why the world will continue reorienting its flight to safety to the one "tradition" that continue to appreciate despite Bernanke's continued confusion over how a yellow metal which has no cash flows can increase in value over his currency day after day after day.
And for those who claims that Russian defaulted 13 years ago, so Putin should just shut the hell up, we can only say: yes - which is why the Russian debt/GDP now is where it is.
Perhaps it is time America thought about doing the same. Oh wait, the Status Quo would have to actually find some productive jobs to do... Never mind.