The Buddies Default

Everybody knows that Putin never went  to Davos. So what induced him to go there this time, especially when nobody from the new American administration went? After all, they are the only people with whom our macho man cares to compare the size of his warheads. He clearly felt a pressing need to go to the Swiss Alps. We shall seek to infer from his historic speech at the opening of the World Economic Forum 2009 what made his need so urgent.

If we did not know the name of the speaker, and ignored a couple of choked compliments to "our American friends", we might take this for the speech of some as yet unmasked perverse liberal scavenging, on this occasion, not around western embassies but around major western banks. It included a paean to the spirit of private enterprise, a call to dismantle all protectionist barriers, and even a kicking for the toppled Soviet Union which this warrior of the unseen front once swore to defend to his last gasp.

But where is the pearl hidden in this midden of ornamental liberalism?  Where shall we find the key to Operation Davos? What was the bait that the sharks of western finance, mesmerized by this stunningly enlightened Eurasian leader, were to swallow. Ah, here it is. Our mentor explains:

"In our view the first priority is, in the broadest sense of the words, to draw a line under the past. As they say, 'to show your hand', to reveal the actual situation. Business has to write off its hopeless debts and "toxic" assets. This is unfortunate but it has to be done. Yes, it is a very painful and disagreeable process, and some will be reluctant to embark on it, fearing for their capitalization, their bonuses, and simply for their reputation. But refusing to sanitize balance sheets is tantamount to perpetuating the crisis. In my view, the mechanism for writing off debts and assets should be effective and accord with the realities of the present day and today's economy."

Behold that Russian sensitivity to the world's problems of which Dostoyevsky was writing back in the 19th century! What anguish, what conscientiousness! Can he really be so deeply affected by the suffering of yankee-doodle General Motors? How commendable. The likelihood is, however, that our nation's leader also has Russian assets in mind.

For example, the public loans just issued to Putin's business buddies in the "Ozero" co-operative, veterans from his time in the Dresden KGB residency, and also to all manner of grand ducal scions of the blue-blooded Putin-Shelomov line who are bursting out of the woodwork.

But where does Davos fit in to all this? Surely these are family matters and the debts will simply be written off by a secret decree of the government of the Russian Federation. Evidently the issue does indeed concern that irregular band of cronies the leader brought with him and installed as the heads of banks, state corporations, and monopolies, but he had in mind  different "toxic assets" of theirs. These are the $500 billion from European banks picked up by this Petersburg organized-crime syndicate over the last 2-3 years to the accompaniment of a lot of talk about a Russia that was rising from its knees.

In 2009 alone $136.1 billion of these corporate debts are due to be repaid, with interest, and nobody has the least intention of doing so. The Davos speech was the first stage of a brilliantly designed financial scam to transform half a trillion entirely real US dollars into the "hopeless debe ts" of some and the "toxic assets" of others.

This will, unfortunately, have to be done, and for some the process will not be particularly painful or disagreeable. Quite the opposite. Nobody either in the West or in Russia will ever ask questions about the "toxic assets" written off in the world financial maelstrom, or inquire which new oil and gas fields were developed or which infrastructure projects were realized by these loans, or how they turned into yachts, castles, and other worthwhile projects on the territory of Great Britain or  Switzerland.

An opportunity of this kind comes the way of the chosen few only once in a hundred years, at a time of global economic cataclysm when, as the grandmaster rightly emphasized, "refusing to sanitize balance sheets is tantamount to perpetuating the crisis." The Petersburg buddies will not "be reluctant to embark on it, fearing for their capitalization, their bonuses, and simply for their reputation". Far from it!

In the words of Tyutchev, "Fortunate the man who has visited this world in times of destiny! He has been summoned by the great and the good to converse with them at the feast."

And what a feast! Anatoly Chubais is said to have exclaimed triumphantly at the time of the Russian government default in August 1998, "We've screwed them for $18 billion!" Poor Chubais! As the poet Zhukovsky to the great  Pushkin, he too could present to Putin his portrait  inscribed, "To my victorious pupil from his vanquished teacher".