Monday, January 31, 2011


As many readers know I've been highlighting the activities of the Fed and how those actions impact the US and the world.  In the 2011 Outlook I emphasized how the exporting of inflation would cause oil and gas to go much higher and how food would also be impacted as a result. 

Over the last week we have seen the media blitz as Tunisia and Egyptian riots have boiled over due to poor economic conditions like high unemployment, poor wages, and the rising cost of food.  Tunisia has overthrown their leadership and it appears as though Egypt will also have new leadership.

The coming changes in Egypt have me wondering what is next.  To assist readers, I've included a link here to Stratfor which is an organization that is made up of former intelligence officers that now sell market and world intelligence to Wall Street and other buyers.  They have a very informed group that has great insight in world politics and economics.  The 8 minute video is worth watching. 

There is a ton of great stuff in the interview, but I think the money shot here is that he says that the events in Egypt are of "towering consequence".  In other words, "THIS IS BIG".  The drama that unfolds there is so interesting because it unveils the conflicting US position where we support strong-men dictators while championing democracy.  This is just another opportunity to see how ill prepared Obama (and Hillary Clinton) is to understand and deal with the real-world dynamics of foreign policy.  The truth is that the US and Israel have implemented successfully a strategy of playing on the divisions of the people in the Middle East for many years.  Think about it, we look to take advantage of the differences between Arabs and non-Arabs, and we play to the divide between Sunnis and Shiites.  A homogeneous Middle East dominated by a common "democratically elected" Islamic movement is absolutely not in the best interest of the US, or probably the world.  I hope that there is a skillful way for the US to continue to play this game, we absolutely need adept diplomatic leadership now.
I also have a few take aways that I've been thinking about over the weekend;

A change of leadership in Egypt probably ushers in a more overt role by the military.

Muslim (Islamist) elements will gain a larger presence within the government.  (Remember, these guys don't have to be the President to impact the direction of the state.  They can simply write laws that steer the country in new directions)

The border with Israel is of great concern.  Remember, Egypt has played a major role in containing the Palestinians by having a "sealed" border.  A government that is more sympathetic to the Palestinians could mean instability for Israel.

The broader question is whether or not the spread of unrest stops in Egypt.  If a change of power is made, I believe that it will incite others to attempt to try.  The reality is that if new countries are swept up in the move to overthrow current leadership, things could become very nasty and bloody as leaders look to put down to the revolts.  Oman is certainly a place to look for this to occur.  I've heard that perhaps a move like this may take place in Syria as much of the country is not Islamic yet the government is run by the  minority (I don't believe this will happen).  As demonstrators have more success, I look for other countries full of disenfranchised youth to try to "Walk Like an Egyptian".