On the one hand, there are the historical records of the Wall Street stock market indices. On the other hand, there is Vladimir Putin's interminable press conference: four hours, a test of the physical endurance of a leader who, in early 2023, was believed to be terminally ill, dying and forced to be replaced by doppelgangers (according to some entries). ).
On the one hand, there is an American economy that is bursting with health, and in a long-term comparison it clearly wins over all others, including Europe. On the other hand, there is a war in which Russia, with its military supplies from poor countries (Iran, North Korea), is ahead of Ukraine, which enjoys the support of a wealthy West. A year-end assessment of the “strange challenge” between Joe Biden and Vladimir Putin must bring these extreme paradoxes together.
Wall Street is an indicator that should not be overestimated, because the mood on the markets is volatile, the euphoria can be fleeting, and the ups and downs on the stock markets should not be confused with final judgments. However, we note that American stock indices are at historic highs while the world's second largest economy, China, continues to suffer from capital loss and flee its stock exchanges.
The reason Wall Street is celebrating? And finally, the fact that the Federal Reserve is on the verge of pulling off the miracle of a “soft landing” that few would have thought possible a year ago: that is, a reduction in inflation achieved without the price of a recession pay. Federal Reserve interest rates could begin falling as early as next year. Meanwhile, GDP growth remains strong and the labor market remains near full employment.
Beyond this immediate favorable situation, American strength remains unmatched in the long term. One way to measure this is the distance that separates America from Europe. It is a theme I have highlighted in the past and which has raised the skepticism of some readers who were stunned by the figures of a humiliating European “relegation”. Today, authoritative essays confirm this again. Fareed Zakaria lists the following data in the latest issue of Foreign Affairs magazine.
In 1990, Americans' per capita income (measured in purchasing power parity, i.e. without taking into account price levels and exchange rate fluctuations) was 17% higher than that of Japan and 24% higher than that of Western Europe. Today it is 54% higher than Japan and 32% higher than Europe. In 2008 the USA and the Eurozone were two practically equal economic powers, today the US economy is worth twice as much as the Eurozone (note: the comparison with the Eurozone, Brexit and the UK's exit from the EU since London). was never part of the monetary union). Since another hallmark of an imperial power's superiority is its dominance over advanced technologies, here too American supremacy has increased rather than decreased. In the 1970s and 1980s, the leading companies in the cutting-edge technology of the time included American, but also German, Japanese and Dutch companies. In 1989, only four of the top ten in terms of market value were Americans; the other six were Japanese. Today, nine out of ten in the top ten are Americans.
Another essay along the same lines was written by Tom Stevenson in the Guardian and is the summary of his book Someone Else's Empire: British Illusions and American Hegemony. Stevenson reminds us that prophecies of America's decline have been recurring for decades and have always been proven wrong. Among Stevenson's observations: China is failing to limit the dollar's global role; Military parity with the United States at the global level is not realistically achievable for Beijing.
If the comparison is not with China, but with Russia and its most loyal arms suppliers Iran and North Korea, the gap is even more catastrophic. Putin manages to maintain his offensive in Ukraine by turning Russia into a war economy, but this further weakens hopes for development in other sectors; the migration of the population and the brain drain continue; Chinese colonization promises a humiliating future. Against this background, however, the triumph of Putin's press conference stands out, a marathon of speeches with which the tsar celebrated his new start. The year 2023 began with announcements of a Ukrainian counteroffensive that promised to be brilliant; In the middle of the year the Wagner Group revolted. Everything seemed to be going downhill. The year 2023 ended with Putin's tour of Saudi Arabia and the Emirates: confirmation that his international isolation is not that described in the West.
America has an economy that is unmatched in strength, but how does it represent itself? Half of America – or the media that speaks to him – is debating whether a fascist regime will be installed by Donald Trump in a year. The country's most prestigious universities have suffered a loss of credibility. The other half of America is beset by uncontrolled illegal immigration, a rise in crime and a loss of faith in the country's traditional values. The political representatives of these two warring tribes are holding aid to Ukraine hostage because they cannot agree on a compromise (which also calls into question the migration emergency).
The GDP of the United States, along with that of its NATO allies and Japan, is worth twenty times the GDP of Russia and its arms suppliers (Iran and North Korea). But weapons and ammunition are flowing from the Russian side, while they are in short supply from the Ukrainian side. Also because there has been talk of rearming the West since February 2022, but almost nothing has happened: the NATO arsenals are thin and the factories that work for defense are undersized.
The strange challenge between Biden and Putin consists of these extremes that are difficult to reconcile in a rational way: America is very strong, but doesn't believe in it; Russia is weak but has a hypertrophied ego.