Muppets with knives: Donald Trump and Christine Lagarde have turned the coronavirus crisis into an economic disaster
“It is hard to soar with Eagles when you work with turkeys.” — Sam the American Eagle, Muppet.
As everyone remotely connected with business and government knows, there is a great danger in advancing obviously overmatched people not up to the job.
Promoting “muppets” (which, with apologies to Kermit the Frog, is the nickname we used in Washington for such a despised species) is dangerous for any organisation.
It is like leaving an unexploded bomb in your midst. The muppet’s lack of ability almost always comes back to haunt, usually at the worst possible time.
At this most pressing moment of the twenty-first century so far, two such muppets have made a terrible situation even worse. Both President Donald Trump and European Central Bank (ECB) chief Christine Lagarde have lived down to their expectations.
The President, the most thin-skinned leader on the planet, his obvious emotional neediness cocooned in a smug know-it-all-ism that precludes listening to anyone else outside his sycophantic orbit, became yet again his own worst enemy.
Trump was musing aloud two weeks ago that talk of the spread of coronavirus amounted to little more than a Democratic party conspiracy to tear down his great accomplishment of a sound economy.
Just 14 days later he wildly swung the other way, outlawing all European travel to the US for the next month, in an effort to somehow shield the US from the virus.
Undaunted, and confusingly, the President followed this panicked reaction the same day by insouciantly noting the virus will “just go away”.
Confused? Not half so much as the markets. Already heading for the door in the face of the growing global pandemic, they were desperately looking for reassurance from the most powerful man in the world.
To put it mildly, this wasn’t it.
But what should we really expect? Even when the President does the right thing, his motivations almost always have to do with his own colossal ego and self-regard, rather than the wellbeing of America as a country.
Such a failing mattered little during the first three years of his term in office, blessed as it was to be relatively crisis-free.
However, now that the coronavirus pandemic, a true global tsunami of epic proportions, looms dead ahead, this seemingly extraneous character trait becomes of incredible importance. Trump’s selfishness has had the very practical policy consequence of making an awful situation infinitely worse.
Sadly for the world, Trump was not the only muppet to be wielding a knife during the last fateful week. As I predicted last year, Europe’s obvious over-promotion of Christine Lagarde as the new ECB president has come back to bite it.
The long-term policy danger signs have been clear enough throughout Lagarde’s chequered career, yet somehow her many disasters have allowed her to perpetually fail upwards.
Lagarde was duly found guilty of criminal negligence and misuse of public funds while French finance minister in December 2016. But she continued on her merry, unaccountable way, and was quickly promoted to head the International Monetary Fund.
There, Lagarde’s fingerprints are all over both the Greek bailout debacle as well as the even more ruinous failed “stabilisation” of Argentina. Having made a hash of all this, only in a Kafka novel should she have been further rewarded by being made ECB chief — but of course she was.
Following on from her fellow muppet’s disastrous intervention into the coronavirus crisis, Lagarde predictably made everything even worse. At last week’s press conference, she seemed to airily dismiss ECB responsibility for the bond yield spread between Germany and Italy, even as Rome has been decimated by Covid-19 to the point of being forced to quarantine the whole country.
At this most fragile of moments, the new ECB president seemed determined to undo in one moment her skilled predecessor Mario Draghi’s vague but determined legacy of assuring markets he would do “whatever it takes” to stabilise the Eurozone.
In the cases of both Trump and Lagarde, the record of the two protagonists and their painful over-
promotion could prove as harmful to the global economy as the virus itself. Make no mistake, this is the most serious crisis in terms of political risk in the twenty-first century so far, a pandemic of global complexity with wrenching human and economic consequences, almost all of them bad.
The real policy question is whether, when the crisis is over, things settle as a new serious global recession, or as something even worse. That result depends on policy leadership.
Last week’s muppets with knives provide a terrifying answer as to where everything is headed. It’s going to be a very bumpy ride.
Main image credit: Getty