I will have a good deal more to say about the topic in my “Spengler” column in Asia Times Online Monday morning, but the prospect of a failed state in Egypt should worry the markets. I’ve been urging investors to buy oil stocks. Egypt simply doesn’t function as a country, and the spike in wheat prices may have been the wheat-stalk that broke the camel’s back-as a number of observers, including Nourel Roubini, have been saying. If you live on $2 a day, as half of Egypt’s population does, a rise in the bread price hurts. Unofficial estimates put unemployment at 25%, not the 9% reported by the government, and the country’s 700,000 university graduates compete for perhaps 200,000 job openings. Half the country is illiterate. Nine out of ten Egyptian women suffer genital mutilation.
Egypt imports almost half its wheat, despite years of government promises to bring about food self-sufficiency. It’s the world’s biggest wheat importer. Food and fuel subsidies alone account for 7% of GDP. Just to keep the population’s nose above water, that is, the Egyptian government each year must spend a sum comparable to the Obama fiscal stimulus–year after year after year. How an illiterate society that butchers its women is supposed to make an instant leap to liberal democracy is not a question that lends itself to an answer....MORE
Saturday, January 29, 2011
Egypt and the Markets: Buy More Oil
From the Asia Times' Inner Workings blog: