A cold coming together

The uprising in Belarus and the poisoning of Alexei Navalny

Together they reveal the weakness of Russian autocracy

To russia’s west, Belarus, previously a model of authoritarian stability, is in tumult. On August 9th its people refused to accept the official assertion that they had, once again, chosen to elect Alexander Lukashenko, the country’s dictator. 

In Russia’s far east demonstrators have been on the streets since July, when the governor of the Khabarovsk region, who had been elected without the Kremlin’s blessing, was arrested on Moscow’s orders and charged with murders committed in the early 2000s.

Those protests were a harbinger of hope for Alexei Navalny, a charismatic Russian opposition leader. He was looking forward to issuing a palpable rebuke to the Russian regime at this September’s regional elections; the far-eastern unrest showed the strategy was working. But Mr Navalny now lies in a coma in a Berlin hospital, having apparently been poisoned in Russia by persons unknown on August 20th.

Together, these three developments make the prospects for Russia’s president, Vladimir Putin, more precarious than at any time since he came to power.

The unspecified neurotoxin which his doctors blame for Mr Navalny’s condition seems to have been administered while he was returning to Moscow after a trip to Siberia. Whoever carried out the attack, the subsequent attempts by the Kremlin to stop Mr Navalny’s transfer to a hospital in Germany, its refusal to investigate the attack and its efforts to muddy the waters strongly suggest complicity if not outright responsibility.

For years Mr Putin has used the power of the state to harass Mr Navalny, pursuing him through the courts, imprisoning him for short spells, excluding him from ballots—but never silencing him definitively. Holding back in this way, it was thought, demonstrated the president’s confidence in his invincibility. 

At the same time it held out the faint possibility that Mr Navalny might one day lead a real uprising—a possibility which helped ensure the support of the elites with whom Mr Putin lives in codependency. For Mr Navalny to be removed from the scene, as has now happened, would show either that the president no longer controlled his own partisans or that he felt real fear.

What there is to be afraid of can be seen over the western border. Despite—indeed to some extent because of—reprisals which have included beating and torture, apparently leaving at least five people dead, the people of Belarus are protesting in ever greater numbers, feeling their moment has come. Their revolt matters to Mr Putin not because he is particularly dependent on Mr Lukashenko, nor because the two countries have, since 1996, been joined in a two-country common market known as the “Union State”. 

It matters because Belarus has served as a template for many of the tactics Mr Putin has used to achieve and maintain his power, and Mr Lukashenko has now lost any semblance of legitimacy. Though Mr Putin has never been dictatorial in quite the same way, he may only be a few steps behind him.

Those involved join the dots quite explicitly. On August 15th Mr Lukashenko, trying to drum up support, said on television “It is not a threat to just Belarus anymore. Defending Belarus today is no less than defending our entire space, the Union State, and an example to others.” 

The others who needed that example set, it went without saying, were those in Russia sympathetic to Mr Navalny. Or, as Leonid Volkov, Mr Navalny’s chief of staff, put it on Facebook, “Lukashenko with a rifle or Putin with his poison—which one of them is more crazy?...What is happening in Belarus today provides some clues about what awaits Russia in the very near future.” On the streets of Khabarovsk the protesters have started shouting their support for the Belarusian uprising.

Under the helicopter

The Belarusians, for their part, are experiencing a true awakening. On August 23rd, in the biggest protest to date, hundreds of thousands came to Independence Square in Minsk, covering it with the red and white of the flag used by the short-lived Belarusian republic of 1918-19. The authorities, which have dialled back the extreme violence of their response to the first protests, sent in police patrols and played patriotic songs from the second world war over a rooftop tannoy system. 

The protesters responded by howling, beating drums and chanting, shaking their heads in seeming disbelief at what they were doing. The atmosphere had an odd resemblance to that of an early Pride parade: something repressed was coming out, surprised and delighted to recognise itself.

The awakening is decentralised, its lack of established leaders a testament to the years Mr Lukashenko has spent steamrollering all opposition. Svetlana Tikhanovskaya, the candidate who the protesters believe would have won the election handily if the ballots had been fairly counted, was a complete unknown when the campaign started. She stood because her husband Sergei, a popular vlogger who had announced his intention to run for president and thereby crush Mr Lukashenko, had been jailed as a result.

“There has never been a plan other than reminding people of their own dignity,” says Maria Kolesnikova, one of the two other women who helped lead Ms Tikhanovskaya’s campaign and now the only one of the three still in the country. Ms Tikhanovskaya fled for Lithuania on August 11th after the government effectively took her hostage and coerced her into reading out a condemnation of the protests.

Mr Lukashenko seems in shock. The four previous elections he has staged since becoming president in 1994 (he abolished his country’s term limits 16 years ago) all provided him with between 75% and 85% of the vote. This one, rigged just as well if not better, seemed sure to see the streak continue. But when his 80% of the counted vote was duly announced the people simply refused to believe it. 

On August 23rd he flew over the protests in a helicopter with his 15-year-old son, railing at the streets below. On landing he emerged toting a semi-automatic rifle, oddly lacking a magazine, to cheer the riot police guarding his residence in their armoured personnel carriers: “Thank you. You are gorgeous. We will sort them out.” The images were meant to demonstrate his resolve to the armed forces. Their brittle edge of craziness may have undercut the intended message.

Were it not for Russia’s support, so far political and rhetorical, Mr Lukashenko would probably have fallen by now. Sergei Lavrov, Russia’s foreign minister, claims that the country’s backing for Belarus stems from a need to shore up all former Soviet territory against inroads by Russia’s Western enemies. But Mr Putin’s reasons have more to do with maintaining power at home than with geopolitics.

Mr Lukashenko and Mr Putin are hardly cut from the same cloth. Boris Yeltsin, Russia’s first president and Mr Putin’s patron, staked his legitimacy on a rejection of the Soviet past. Mr Lukashenko’s maverick rise to power was based on returning to it. He implemented no market reforms and privatised no large state enterprises. He kept wages low, but roughly equal. His critics and opponents disappeared.

Most Belarusians did not seem too bothered. Some Russians, their economy in tatters and their lives upended by reforms, gazed over the border in nostalgic envy at old-style collective farms, filthy but functional factories and clean streets. When he negotiated the agreement that created the Union State in 1996, Mr Lukashenko may have entertained the hope that, after Mr Yeltsin shuffled on, the desire for a simpler past might see him become the two countries’ leader himself.

When Mr Yeltsin anointed Mr Putin as his successor in 1999 it was expressly to prevent any such backsliding. The former kgb man’s remit was to protect the wealth and safety of Russia’s new elite and preserve Mr Yeltsin’s reforms. But in securing his grip on power Mr Putin appealed to some of the same feelings as Mr Lukashenko. 

He championed those who felt they had lost out in the 1990s, and provided them with the symbols, at least, of the past they held dear—rather as Mr Lukashenko had when he restored a version of its green and red Soviet-era flag to Belarus. He encouraged them to identify with him, and returned the favour; as he said when criticised for re-establishing the Soviet Union’s Stalinist anthem in 2001: “Perhaps I and the people are mistaken, but...” The Russian state media, which he quickly made his own, reinforced the identification.

How to be president for life

Mr Putin chose to act on the people’s dislike of the new elite not, in the main, through economic appropriation but through political emasculation. Those who had made fortunes in the post-Soviet world could expect protection as long as they got out of politics and accepted that they now depended on him. He was not worried about jailing those who balked at the new dispensation.

Having consolidated power, in 2008 Mr Putin embarked on a sojourn as prime minister in order to avoid the constitutional limit on consecutive presidential terms, with Dmitry Medvedev sitting in for him as president. When they swapped jobs again in 2012, though, it was against a background of new level of discontent. The urban middle class, despite having done well under his rule, was protesting.

These protests marked the beginning of Mr Navalny’s career as a front-rank politician. 

Previously mostly known as an anti-corruption blogger and activist, they made him a leading figure in the opposition. His vision of Russia as a modern nation state offered an alternative both to the excesses of the 1990s and to Mr Putin’s increasingly imperial autocracy.

In Belarus, Mr Navalny would have mysteriously disappeared. But Russia was an autocracy, not a dictatorship. To keep the country’s elites, regional leaders and private sector on-side Mr Putin needed some sort of pseudo-democratic legitimacy. So when Mr Navalny announced he would stand in Moscow’s mayoral election of 2013, the Kremlin permitted it—while at the same time seeking to undermine his efforts with trumped-up embezzlement charges. 

The ruse backfired when an overzealous court sentenced Mr Navalny to five years in prison shortly before the election. Tens of thousands of Muscovites took to the streets to demand his release. In the end he won 27% of the vote, according to the official count.

Things changed in February 2014, when Viktor Yanukovych, a corrupt president, was overthrown by the Ukrainian people. Mr Putin encouraged pro-Russian thugs in the east of the country who rose up against the new regime—portrayed in the Russian media as fascists—and made use of the conflict to annex Crimea. This massively boosted his popularity, sidelining the opposition for years. In 2018 Mr Putin was re-elected president; Mr Navalny was not allowed on the ballot.

At that point, though, Mr Putin faced a problem. The constitution barred him from a fifth presidential term. But without the possibility of one he was a lame duck. He considered reviving Mr Lukashenko’s 1990s notion in reverse—amalgamating Russia and Belarus, and becoming the first president of a new country that would benefit from a retailored Putin-friendly constitution. Mr Lukashenko was not keen on the idea and sought, by resisting it, to rally his people round the flag (the green and red one he had introduced in 1995, rather than the white and red one now flying above every protest).

Stymied on the whole-new-country front, Mr Putin was eventually forced to change the constitution under the cover of a plebiscite in which the abolition of presidential term limits was bundled up with all sorts of other changes, most of them crowd-pleasing but inconsequential. It was, as it happens, a stratagem Mr Lukashenko had employed to bestow new powers on himself after he was impeached by parliament in 1996.

A rising tide

Through all this Mr Navalny continued to organise. In 2017, when the post-Crimea euphoria had largely dissipated and the economy was sagging, he sensed a new opportunity. The country’s growing reliance on the internet, as opposed to state-controlled television, for information helped him to seize it. 

A YouTube video which detailed Mr Medvedev’s yachts and palaces sparked a protest that rolled from Vladivostok in the east to St Petersburg and Moscow in the west, engulfing some 90 cities.

Mr Navalny himself was taken by surprise. You can never predict how many people will turn up, he said at the time; they won’t come out just because they are asked to. The protesters of 2017 were angrier and poorer than those of 2011-12, and half of them were under 30. What brought them on to the streets, Mr Navalny noted, was their lack of prospects.

Mr Navalny looked to fill that emptiness with the optimism and confidence of an American-style politician. He shunned ideological issues that might divide people, concentrating instead on what brought them together: incomes, health, education and a desire for the rule of law. The most important thing, he said, was to battle “learned helplessness”.

Unable to register a party and disqualified from standing in the 2018 presidential elections, he nevertheless built up a formidable campaigning machine, mobilising 120,000 volunteers. He came up with a strategy of “smart” voting in regional elections: his followers were to vote for whoever was best placed to defeat the Kremlin’s candidate regardless of party and however uninspiring or unpalatable that choice might be. At a rally in Khabarovsk he said his job was to create as many stresses for the Kremlin as possible.

The stress was seen in the summer of 2019. The Kremlin, afraid of smart voting, disqualified all of the independent candidates from seemingly insignificant local-council elections in Moscow. Protests broke out; the Kremlin responded with violence. Across the country, though, most sympathy was on the side of the protesters. The level of brutality being applied was counterproductive. This probably explains why there has been very little police violence in Khabarovsk over the past month.

That success, coupled with evidence that Mr Putin’s popularity was in long term decline, led Mr Navalny to concentrate even more effort on the regional elections to be held on September 13th as a rehearsal for the parliamentary elections in 2021.

The increasing appeal and sophistication of his operation, coupled with the protests in Belarus, may have changed Mr Putin’s calculations about the safety of leaving an opposition leader in place as a signal that such opposition did not worry him. And events in Minsk have shown again the limits of police violence. 

Even when applied with bestial enthusiasm it could not make up for Mr Lukashenko’s cataclysmic loss of legitimacy; instead it accelerated it. Better act savagely against a leader now than take on the people later.

The irony is that this could lead to the regime’s eventual downfall being more tumultuous than it would have been. Mr Navalny may be the last Russian opposition leader who can control street protest while also engaging in negotiations with the Kremlin. 

His absence does not make future protests a lot less likely, but it makes them a lot less predictable. 

Mr Putin may feel that he has the situation under control. So did Mr Lukashenko.

Federal Reserve Action To Propel Gold And Silver Prices

Bob Kirtley


- A major policy shift was the theme in that the U.S. Central Bank was to allow “average inflation targeting.”.

- The takeaway from this Jackson Hole Jolly is that inflation is coming and that it will be supportive of gold and silver and their associated stocks.

- Investors to rotate out of currencies and into the field of hard assets, one of which is the precious metals sector. 

- I remain firmly in the camp that these dips should be bought aggressively as this bull market is in its infancy.


The Meeting of the Central Bankers at Jackson Hole has just concluded with the main item of interest being the speech made by The Chairman of Federal Reserve, Jay Powell.

A major policy shift was the theme in that the U.S. Central Bank was to allow “average inflation targeting.” Roughly interpreted means the Fed will allow inflation to run “moderately” higher than the central bank’s stated goal of 2% “for some time”

This is a vague statement and begs the question of how much higher is inflation acceptable? 3% or 8% and for how long is “for some time” two months or three years?

The Federal Reserve has no real targets and therefore can not be held accountable for their actions as this policy is opened ended to say the least.

The takeaway from this Jackson Hole Jolly is that inflation is coming and that it will be supportive of gold and silver and their associated stocks.

A Brief Look At Some Of The Current Issues

As we see it there two major issues, firstly we are heading into a recession which was long overdue, and it will present its own set of challenges for us all face and deal with. The second issue is that the global economy is being battered by the Coronavirus pandemic.

In an attempt to lessen the impact of the recession and also to battle the pandemic record amounts of cash is being generated in order to cushion these two body blows. This flood of cash is already having an impact on the US Dollar as the chart below clearly shows that it has been in decline for the last 5 months or so.

The US Dollar Chart

Charts courtesy of Stock Charts, TA by Author

The technical indicators have unwound and are basically neutral suggesting that the USD might trade sideways in the near term, but do not count on it.

The Gold Chart

The chart below shows the progress made by gold. Over a 12-month period it has increased in value from $1400/Oz to $1932/Oz registering an increase of some 38%, which is a terrific start for a Bull Market.

Gold had managed to trade as high as $1700/Oz before being hit by the pandemic in March 2020, however, it recovered quickly and has continued its trek to higher ground.

Also worthy of note is that from March the US Dollar started to head south and gold started to head north suggesting that their inverse relationship remains intact.

Charts courtesy of Stock Charts, TA by Author

The days of The Central Bank targeting the ‘normalization’ of interest rates is dead and buried. Interest rates are now expected to stay low for the foreseeable future and coupled with more Quantitative Easing we expect the US Dollar to decline even further in value.

This decline in value along with the misery amount of interest on offer for our investment funds will cause investors to rotate out of currencies and into the field of hard assets, one of which is the precious metals sector.

There are a number of ways that an investor can gain exposure to this sector of the market which are as follows:

Purchase the physical metal and take delivery

Purchase shares in an ETF such as SPDR (GLD)

Purchase stock in the Mining and/or Royalty companies.

Trade options on the above.

If you are new to this sector, then acquiring some physical gold and silver and keeping it in your possession is a good starting point. An ETF offers excellent liquidity should you wish to trade in and out of this sector.

Mining and Royalty companies take some work, due diligence as they say, however some of them can increase in value at two or three times the price of the underlying commodity. The purchase and disposal of options can lead to sleepless nights and is best avoided unless you are an experienced options trader.

I acquired physical gold and silver many moons ago, so I tend to focus on the Mining/Royalty companies at the moment. Four of my favorite stocks are listed below, however, it is your hard-earned cash that is on the line so please do some homework.

Wheaton Precious Metals Corp. (WPM)

SSR Mining Inc. (SSRM),

Kirkland Lake Gold Ltd. (KL)

Sandstorm Gold Ltd. (SAND)


The Federal Reserve will continue to implement a policy of financial support via the mass production of Dollar Bills. This will dilute the value of the US Dollar and as gold has an inverse relationship to it, gold will be the beneficiary.

A similar policy is also being implemented by other central banks so the US Dollar may find support as foreign investors flee from their currencies in the belief that the US Dollar is a safer place for their funds

I remain firmly in the camp that these dips should be bought aggressively as this bull market is in its infancy.

Take good care.

There’s a New Game of Thrones in the Mediterranean

It’s time to listen to Germany and take a step back.

By The Editorial Board

Agence France-Presse, via Greek Defence Ministry/Afp Via Getty Images

As if there wasn’t enough trouble around the world, two NATO allies, Greece and Turkey, have lit up a new and dangerous crisis, dragging in countries near and far. In this game of thrones, only Germany seems to have the sway to mediate a return to sanity.

At the core of the crisis, as in so many other dangerous squabbles around the globe, is energy — specifically the rich gas deposits discovered over the past decade under the eastern Mediterranean.

Greece claims that its many islands in that region give it sole drilling rights in the waters around them, a stance broadly supported by international law. But Turkey, feeling hemmed in, says otherwise, and it has sent ships, accompanied by warships, to explore for gas off Cyprus.

Feuds between Greece and Turkey are hardly new. What complicates this one is that the gas reserves are also being eyed by many other countries. In principle, the vast reserves should bring those countries together to tap and share the riches off their shores.

In fact, most of the countries — including Greece, Cyprus, Israel, Egypt, Italy, Jordan and even the Palestinians — have done just that.

Turkey, however, has found itself excluded, in part because of Greece’s territorial claims, and in part because Turkey’s authoritarian president, Recep Tayyip Erdogan, has antagonized many of his allies and friends with his aggressive behavior in Syria, Libya and at home.

Further complicating matters is that Turkey is a member of NATO but not of the European Union; Cyprus is a member of the European Union but not NATO; and Greece is a member of both, creating overlapping and conflicting loyalties. Then there’s the fact that Cyprus is divided into a Greek south and a Turkish north, although nobody except Turkey recognizes the Turkish part as a separate state.

An attempt by Germany to untie this Gordian knot foundered when Greece announced an energy deal with Egypt that effectively claimed rights to a broad area of the sea, which it did in response to a similar accord between Turkey and Libya. Turkey soon started exploring again, its operations monitored by a Greek naval frigate.

On Aug. 12, the Greek warship managed to collide with a Turkish warship, and things quickly heated up. France, already furious at Turkey over its support of the faction in Libya that France doesn’t support, briefly sent in a couple of fighter jets and warships, and it’s currently holding military exercises with Greece, Cyprus and Italy to deter further exploration by Turkey.

Greece announced a demonstrative extension of its territorial waters off its western coast to 12 miles, in effect warning Turkey that it could do the same in the Aegean Sea on its eastern side, a move Turkey would not tolerate.

What is peculiar in this crisis is that competition for fossil fuels should have given way by now to competition over how to stop using them, especially among countries that have subscribed to the Paris climate agreement. Besides, with the slowdown in the global economy from the coronavirus pandemic and the resulting drop in energy prices, Europe has plenty of gas.

It also seems bizarre for Mediterranean and European countries to be plunged into extraneous tensions when there are so many serious crises to keep them busy, including the economy, the pandemic, the political suspense in the United States, the street clashes in Belarus and Russia’s threat to intervene in Belarus.

In an earlier era, the United States would have stepped in to separate feuding NATO partners, as it did when Greece and Turkey almost went to war in 1996. President Trump did make a call to Mr. Erdogan urging him to negotiate, but that had no effect — the United States under the Trump administration is not regarded as a viable go-between, especially with Mr. Trump in campaign mode.

Britain, too, has retreated from European affairs now that it is out of the European Union. The union also lacks leverage over Turkey, since it has become evident that Turkey under Mr. Erdogan, despite its status as a candidate for membership, has no chance of joining the unión.

So Germany, which currently holds the rotating chairmanship of the European Council, the policy-setting assembly of E.U. heads of government, has taken the lead in trying to get Turkey and Greece to the negotiating table, with Heiko Maas, the German foreign minister, shuttling between Ankara and Athens.

The mediation is not entirely altruistic — a cornered Turkey could unleash another flood of Syrian refugees into Europe, most of them seeking to reach Germany. But with nearly three million Turks living in Germany, Mr. Erdogan has at least some assurance that his side of the argument will be heard.

That is important. Though international law is largely on the side of Greece in the maritime dispute, there is room for negotiation, and Turkey’s explorations in disputed waters have not yet crossed a legal red line.

On Friday, E.U. foreign ministers met in Berlin and effectively endorsed Germany’s role, putting off any discussion of sanctions against Turkey until E.U. heads of state meet in late September.

War is in nobody’s interest, and a conflict between NATO members ought to be unthinkable.

But when tensions reach the level they have in the eastern Mediterranean, as Mr. Maas has said, “Even the smallest spark can lead to a catastrophe.”

Germany has called on all sides to immediately halt provocative military exercises, a step that should be followed by a moratorium on exploration in disputed waters. Then let diplomacy take over.

The Post-Capitalist Hit of the Summer

Ever since COVID-19 collided with the enormous bubble governments have been using to re-float the financial sector since 2008, booming equity markets became compatible with wholesale economic implosion. That became clear on August 12 in London and New York.

Yanis Varoufakis

varoufakis69_ Alexi RosenfeldGetty Images_NYSESP500

ATHENS – On August 12, something extraordinary happened. The news broke that, in the first seven months of 2020, the United Kingdom’s economy had suffered its largest contraction ever (a drop in national income exceeding 20%). 

The London Stock Exchange reacted with a rise in the FTSE 100 by more than 2%. On the same day, when the United States was beginning to resemble a failed state, not merely a troubled economy, the S&P 500 hit a record high.

To be sure, financial markets have long rewarded misery-enhancing outcomes. Bad news for a firm’s workers – planned layoffs, for example – is often good news for its shareholders. But when the bad news engulfed most workers simultaneously, equity markets always fell, owing to the reasonable expectation that, as the population tightened its belt, all income, and thus average profits and dividends, would be squeezed. The logic of capitalism was not pretty, but it was comprehensible.

Not anymore. There is no capitalist logic to the developments that culminated on August 12. For the first time, a widespread expectation of diminished revenues and profits led to – or at least did not impede – a sustained buying frenzy in London and New York. And this is not because speculators are betting that the UK or the US economies have hit bottom, making this a great time to buy shares.

No, for the first time in history, financiers actually don’t give a damn about the real economy. 

They can see that COVID-19 has put capitalism in suspended animation. They can see the disappearing profit margins. They can see the tsunami of poverty and its long-term effects on aggregate demand. And they can see how the pandemic is revealing and reinforcing deep pre-existing class and racial divisions.

Speculators see all this but deem it irrelevant. And they are not wrong. Ever since COVID-19 collided with the enormous bubble governments have been using to re-float the financial sector since 2008, booming equity markets became compatible with wholesale economic implosion. It was a historically significant moment, marking a subtle but discernible transition from capitalism to a peculiar type of post-capitalism.

But let us begin at the beginning.

Before capitalism, debt appeared at the very end of the economic cycle. Under feudalism, production came first. Peasants toiled in the lord’s fields, and distribution followed the harvest, with the sheriff collecting the lord’s share. Part of this share was then monetized when the lord sold it. Only then did debt emerge, when the lord would lend money to borrowers (often including the king).

Capitalism reversed the order. Once labor and land had been commodified, debt was necessary before production even began. Landless capitalists had to borrow to lease land, workers, and machines. The terms of these leases determined income distribution. Only then could production begin, yielding revenues whose residual was the capitalists’ profit. Thus, debt powered capitalism’s early promise. But it was not until the Second Industrial Revolution that capitalism could re-shape the world in its image.

Electromagnetism gave rise to the first networked companies, producing everything from power generation stations and the electricity grid to light bulbs for every room. These companies’ gargantuan funding needs begat the megabank, along with a remarkable capacity to create money out of thin air. The agglomeration of megafirms and megabanks created a Technostructure that usurped markets, democratic institutions, and the mass media, leading first to the Roaring Twenties, and then to the crash of 1929.

From 1933 to 1971, global capitalism was centrally planned under different iterations of the New Deal governance framework, including the war economy and the Bretton Woods system. 

As that framework was swept away in the mid-1970s, the Technostructure, cloaked in neoliberalism, recovered its powers. A 1920s-like spate of “irrational exuberance” followed, culminating in the 2008 global financial crisis.

To re-float the financial system, central banks channeled waves of dirt-cheap liquidity to the financial sector, in exchange for universal fiscal austerity that limited spending by lower- and middle-income households. Unable to profit from austerity-hit consumers, investors became dependent on central banks’ constant liquidity injections – an addiction with serious side effects for capitalism itself.

Consider the following chain reaction: The European Central Bank extends new liquidity to Deutsche Bank at almost zero interest. To profit from it, Deutsche Bank must lend it on, though not to the “little people” whose diminished circumstances have weakened their repayment ability. So, it lends to, say, Volkswagen, which is already awash with savings because its executives, fearing insufficient demand for new, high-quality electric cars, postponed crucial investments in new technologies and well-paying jobs. 

Even though Volkswagen’s bosses do not need the extra cash, Deutsche Bank offers them such a low interest rate that they take it and immediately use it to buy Volkswagen shares. Naturally, the share price skyrockets and, with it, the Volkswagen executives’ bonuses (which are linked to the company’s market capitalization).

From 2009 to 2020, such practices helped prize stock prices away from the real economy, resulting in widespread corporate zombification. This was the state capitalism was in when COVID-19 arrived. 

By hitting consumption and production simultaneously, the pandemic forced governments to replace incomes at a time when the real economy had the least capacity adequately to invest in the generation of non-financial wealth. As a result, central banks were called upon to boost even more magnificently the debt bubble that had already zombified the corporations.

The pandemic has reinforced that which has been undermining the foundation of capitalism since 2008: the link between profit and capital accumulation. The current crisis has revealed a post-capitalist economy in which the markets for real goods and services no longer coordinate economic decision-making, the current Technostructure (comprising Big Tech and Wall Street) manipulates behavior at an industrial scale, and the demos is ostracized from our democracies.

Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and Professor of Economics at the University of Athens.