Egypt in the Cross Hairs
Egypt’s stock market is in free-fall, down 50% since the overthrow of Hosni Mubarak. What’s interesting is that Turkey’s stock market isn’t far behind.
The economic crisis overwhelming the Middle East stretches from Libya all the way through to Turkey. The problems are of a different order, to be sure. As I reported earlier, Egypt’s spendable foreign exchange reserves are down to just $13 billion and falling daily as the central bank buys its own unwanted currency from the market in order to postpone the inevitable collapse in the change rate. Why not just devalue? The probable answer is that the generals and their civilian front men are moving as much money as they can out of the country before Egypt goes bankrupt. Last month the generals fired all the private-sector board members of the central bank, as I reported at Asia Times Online. Everything that can be sold abroad for cash is being sold. Al-Ahram reported Nov. 19 that there is no enforcement of the ban on rice exports, because controls have simply broken down. Egypt subsidizes rice at a fraction of the world market price, so traders have an incentive to sell it overseas. Not only the country’s capacity to buy food in the future, but its existing stocks of food are disappearing. And Egypt imports half its caloric consumption.
No wonder the country is blowing up. An out-of-control kleptocracy is frantically trying to close on townhouses in Chelsea and apartments in the 16th arrondissement before the central bank’s foreign exchange reserves run out. What will ensue, will be horrifying.
Egypt is now down to $13Bn in cash reserves. Food brokers are trading subsidized rice at market rates overseas. Stock market in collapse. I would say that is not an acceptable position. But then the US is not far behind as to cash on hand….
Read the whole thing. Spengler also covers Turkey in the same breath. Israel has in interesting opportunity if it were to play its cards right. I am surprised that Mubarak `Miss Me Yet?` posters have not appeared.
University of Cairo 1959 University of Cairo 2004