“Early 2011 was a dramatic period in modern Egyptian history. The
mainstream mediaa**s narrative on the Arab Spring portrayed popular
uprisings as the driving force that swept away the regime of Hosni Mubarak
and opened the door to democracy. But a closer examination indicates that
the rules of the past still apply. Concentration of power, physical
isolation from the outside world, and dependence upon outside forces for
economic security remain the trifecta that drives Egyptian society and
To understand the Arab Spring one must first understand the factors that
led to it. This is a discussion that must begin, not with the aspirations
of those that protested in Tahrir square, but with the strategic
imperatives of the military, the true vanguard of the Egyptian state.
Nassera**s plan to elevate the military as the vanguard of society worked,
but in years after Nassera**s death the military itself shifted position.
Rather than partnering with the Soviets to create a regional sphere of
influence, the military evolved its vanguard position in Egyptian society
into a system of ossified control. The state still owned nearly everything
of worth, but it was managed by and for the benefit of the military brass.
Everything from banks to import/export to agriculture — already heavily
influenced by the military under the vanguard system — was consolidated
into a series of military oligarchies. Rather than working to elevate
Egypt economically, the military oligarchs mostly divvied up the local
spoils and lived large.
This was a stable system from the late-1970s until the mid-2000s.
Egypta**s shielded geography limited the ability of any international
economic interest to challenge the military staffsa** personal fiefdoms.
Egypta**s partnership with the Americans mitigated international pressure
of all sorts, and in many ways even Egypta**s ostracism from the Arab
world due to its treaty with Israel allowed Egypta**s generals to rule
Egypt however they saw fit.
As (now deposed) President Mubarak aged, however, an internal challenge
arose to the military oligarchy in the form of the former presidenta**s
son, Gamal Mubarak, who wanted to transform Egypt from a military
oligarchy into a more traditional Egyptian dynasty. Doing this required
the breaking of the militarya**s hold on the economy. Gamal and his allies
— often with the express assistance of international institutions like
the World Bank — worked to a**privatizea** Egyptian state assets to
themselves. This process was a direct threat to the militarya**s political
and economic position at the top of Egyptian society. The military also
viewed Gamal, who never completed his military service, as a political
neophyte, incapable of understanding and managing the countrya**s security
The result was the a**Arab Springa**. In the months leading up to the
January demonstrations, Egypta**s top generals were delivering very stern
ultimatums to the president to abandon any hope of passing the reins to
Gamal while looking at their options to unseat Mubarak via more
unconventional means. The military strategically positioned itself early
on in the demonstration as the honest broker and guardian of the
protesters, taking care to avoid a violent crackdown on the demonstrators
while Mubaraka**s internal security forces were vilified on the streets.
Such a light hand was not due to lack of capacity, but due to lack of
need. The demonstrations provided the generals with the means to dismantle
the Mubarak legacy, the biggest liability to their own livelihood, while
maintaining the paramount role of the military.
But perhaps the most central indication that the a**revolutiona** was
misconstrued comes from the participation levels. On the day that Mubarak
ultimately stepped down the protests reached their peak. By the most
aggressive estimate only 750,000 people — less than 1 percent of the
population of densely populated Egypt a** took to the streets. In true
revolutions such as that which overthrew Communism in Central Europe or
the shah in Iran, the proportion regularly breached 10 percent and on
occasions even touched 50 percent. In short, Egypta**s Arab Spring was a
palace coup, not a revolution.”
Dear Valued Clients and Close Friends,
If you were unable to attend the Client Appreciation Dinner in Houston on December 20th, here is a synopsis of our discussion, and my forecast and economic prognosis for the next few years:
The European crisis (not Greek, Italian, or Spain specific) is the beginning of a worldwide banking crisis. The spreading will occur because of the interconnection of markets (stock, bond, commodities). In particular, the Italian Gov. Bond crisis is large enough to bring down German/French Banking system. The proposed cure on the table right now is money printing of the Euro Dollar—Allows sovereignties to buy their own treasury bonds, too many printed will of course cause severe inflation such as what we are facing here in the U.S.
Keep in mind that: Bonds are loans used to finance gov. operations. (e.g., police, schools) No bond buyers, governments can shut down/melt-down. Chaos is probable. Remember the televised Greek riots.
The country of Germany[under A. Merkel] is the strongest E.C.B. Member (European Central Bank) and she doesn’t want to simply bail out smaller indebted nations and encourage irresponsible deficit spending.
Incidentally the U.S. Central Bank=The Fed under Bernanke, doesn’t seem to worry that printing money will cause inflation—Over 2 $Trillion in the past 3 years; but the E.C.B. does indeed worry.
Its important to know that the U.S. stepped in to avoid a stock and bond market crash [1st week of Dec.] via the Fed’s currency trading desk, which lent money to E.U. member nations at very low rates. If that didn’t happen, A Euro Dept default was inevitable; Effectively both US dollars and Euros will be printed, eventual results =inflation.; The anomaly=Printing more money seems to be the only answer.
This is how we have paid our debts over the past 3 years because we are the only country in the world (U.S. Dollar World’s Reserve Currency) that doesn’t need to convert their currency into an international trade partner’s in order to do biz with them…which will end soon. When we lose the World Currency status to (e.g. to the Chinese currency-Yuan), some say we could fall quicker into a depression.
Big problem here is not just Greek banks are failing, but French and German ones also after bad loans (bond purchases from) smaller nations in the Union. Key point: If German banks fail, particularly if not enough Euros begin to get printed—Europe fails with it, and dominoes to the rest of the world. Moreover, if Italy defaults on its bond debt, that too could topple the world financial system (some say very likely).
Greater than 50/50 chance: High worldwide inflation within 2 years (this will cause a huge stock market crash worldwide), its estimated that this will force economic “tight money policies again”. Will dry up loans as we saw in 2008, and thrust us into a worldwide depression.
This is how I see things in about 2-3 years from now:
The Depression begins in late 2013, early 2014, the first phase lasts 2-3 years characterized by the following:
Unemployment in excess of 35% (today its about 20% in reality).
Inflation hits 15-20% per year as the value of the U.S. dollar falls about 20% per year.
The more the dollar crashes, so goes the R.E. market further, stock market, and bond markets in like manner. Gold goes to $4K/oz.
Governments will greatly increase income taxes, sales taxes & property taxes due to rapidly falling tax base, from broke consumers. Governments forced to drastically cut budgets, including pensions, social security, food stamps, and unemployment insurance.
U.S. Treasury bonds begin to crash, cutting funding for government ops and payrolls. Today they are considered the next safest investment besides the U.S. dollar and money market funds. No more consumer tax cuts, no more money for stimulus programs, and no more funding of overseas wars and peace keeping. China will refuse to give our country loans to bail us out.
That was just the first 2-3 years, now comes years 4 & 5: Phase II
Social security will be eliminated for anyone with assets, including home owners, or even those with income. No more unemployment insurance funding. Food stamps will continue, but will be reduced to those only in dire need. (19% of population in U.S. on them now).
Homeless shelters will replace many apartments (or be rebuilt within) apartment complexes due the explosion of folks without housing. Shanty towns will begin.
Medicaid will be eliminated or combined with Medicare, but services and payments to physicians and providers will be greatly reduced. Many doctors will lose their wealthy lifestyles, and many small hospitals will close their doors –bankrupt.
One of very two small businesses go bankrupt.
Much more frequent and stringent audits by the IRS to get tax money from consumers in years 4-5 of the New Depression; lowest tax bracket jumps from 15 to 30%, and up to 60% for those left with moderate with high incomes. Sales and property taxes double; unemployment hits 45%.
Larger factories will avoid strikes by simply shutting down.
Small pockets of street violence in major cities will escalate (think L.A riots), government protests will turn violent. THESE ARE HARSH WORDS BUT…
Murders of family members and business mgrs will greatly increase, particularly those mgrs doing the firings and lay-offs.
More killings and attacks of lower level muni./state politicians. Higher level political leaders such as senators will be well protected from stepped up security and body guards. Politicians will become more reclusive, and no matter what they say, no one will like it.
There will be enormous anger at any partisan official, but a chaotic government overthrow wont happen, just high office turnover.
One of the few areas that will be hiring in years 4-5 of the New Depression will be private security contractors and state troopers, but they will no longer earn what they were used to. Inflation surpasses 40% per yr, and the US Dollar has now dropped by 50% in value.
Gold will exceed $5500/oz.
Now come years 6-9 of the Depression: Phase III
No jobs/high bankruptcies lead to little incentive to pay mortgages.
75% of all small businesses close their doors and 50% of all mid-size firms shut down.
Many banks become insolvent, and almost no market buyers of foreclosed homes. There will be no “runs on the bank.”
Much of the mortgage defaults will be handed over to the Gov., but they will be stretched so thin that sheriff evictions will be minimal. No one to buy empty homes of those evicted.
Even Apt. landlords will find it rare to find a good tenant to replace the bad ones, low evictions in that area as well. Shanty towns will explode everywhere (e.g. Fresno today)
Business centers will follow a similar path as individuals; Squatters will become very common in both biz and residential districts.
No more funding for municipal employee pensions in years 6-9, those funds pilfered to pay for needed services of police and fire.
Life insurance companies will not pay out the full value of policies they carry; so much of their assets depended on stocks, bonds & R.E. performing well. Whole life will be entirely replaced by Term life policies.
Although the FDIC insures savings up to $250K per account, any holdings over that held in a failing bank will be lost: Will send Schwab SIPC protection for your investments at your request, needless to say, you are protected well in excess of $1million in cash and $100 million for investments.
Anyone fortunate enough to find work (years 6-9, phase 3) will be forced to move down the ladder. $80K/year will become $40K/year, and no benefits will be given; Up to 60% unemployment at 7 years into the depression.
There will be no shortage of food to give to the poor. Up to 75% unemployment for those under age 30 and over age 55.
Universities & Colleges will burst will delusionary applicants thinking more edu is the answer, and student loans will dry up. Result: cost of edu will drop by about ½ or centers will close. Professors, like doctors mentioned earlier, will get a rude awakening in pay adjustments.
One of the few businesses that will prosper during years 6-9 will be auction houses (from all the bankrupt business liquidations, and estates). To a lesser extent, low end drinking establishments. Inflation surpasses 70%, with a commensurate decline in R.E., stock values and the U.S. dollar. (dollar bubble bursts). No hyper inflation occurs.
Because of no money, few jobs, and no discretionary spending, gourmet restaurants (or anything gourmet) will be rare. Fast food will do well but not necessarily prosper.
Cheap, high calorie food will double the obesity problem in this nation, caused from depressed eaters.
Speaking of depression, psychological pain and mental illness will go way up during this time. Clinical depression will be very common, up to 25% of the population.
The price of gold bullion will pinnacle toward the end of year 9, @ about $7K/oz.
Good news: After 8-10 years of this pain and suffering, the political and economic cycle will begin a turn around. Being that stocks and real estate can be bought at a nickel or a dime on the dollar (after the 90-95% previous drop), there will be a slow steady growth cycle that will begin with regard to asset value increases. Although our new depression will be moderately better than the GD of the 20s, the recovery will be very similar to that of the early 40s. It wont look very good the first few years, but a very profound event (past example=WWII) will cause the nation to rally together and cause unity in most aspects of business and finance.
Call me with any questions, and if I haven’t given you advise on your 401K or other investments not under my management, let this letter be a wake-up call.
I spent a few hours with the Austin Occupy City Hall movement today. Like much of the movement, most of the time of the meeting was spent with dealing with internal problems, such as sleeping arrangements, camping equipment such as tarps sheets and blankets, rules regarding excess clothes, powerwashers, first aid, food arrangements and other “incidents” that may have happened.
Very little time was spent penetrating the issues occupy stands for, as Pops the leader of the group said very poignantly “we’re homeless, we cant do much. our best hope is to possibly make an impact on an individual” he implied that what the group needed was patronage and financial support of the middle and upper class.
There was a well-rounded documentary film maker, he’s working on a project and we’ll see how it turns out. Otherwise, most of the occupiers more or less believe their best hope is getting people to read signs, become educated, and more informed “on the issues”. basically a liberal progressive means of rebellion. It reminded me of the scene from CHE when he’s camping in bolivia trying to start another revolution, this time a latin american one (in the hopes of emperor BOLIVAR) the revolutionaries find out that the communist party of bolivia does not support an armed struggle and cannot afford to pay their stipends. Most of the men quickly turn despairing “How will I take care of my family?” Most of the urban farmers could only fight the revolution on the terms that the communist party would still continue to support them, and once they found out they would be getting no help the movement quickly died.
What we need is something like the original 80 guys who conquered Cuba (only 12 survived to see it to the end) which simultaneously already works with existing movements but also has members that are completely self-sacrificial without any deep worldly attachments. If Occupy can create an international dialogue with those around the world who are also fighting their ruling classes, international bankers, and global power elite (india/syria/saudiarabia/yemen/libya/south africa/argentina/venezuela/spain/ [parts of the eurozone opposing neoliberal economic policies ]/ the french insurrection/london riots/anonymous/) it might go further than the battle of seattle, and other left leaning egatlitarian democratic movements againts globalization. If it continues to isolate itself, and have general meetings purely on interntal regulatory problems (problems that only deal with perpeuating occupy, not actually DOING a beligerent political action) it will continue to disolve, and will be used to constrain the debate in the future
“…well you saw what happened with OWS, do you really want another movement like that?”
(this guy is also the god father of trusting the invisible hand)
I’m not an economist, yet, and I don’t prescribe to every consequence of every philosophy but I can employ multiple authors for the same consensus of criticism, this, this is taken from the Nov 20th, 1994 interview with Milton friedman on Brian Lamb’s Booknotes
Brian – “What do you think of the Federal Reserve Board today?”
Milton – “Well, I’ve been long been in favor of abolishing it. There is no institution in the United States that has such a high public standing and such a poor record of performance.”
Brian – “What did Arthur Burns think of That?”
Milton – “He didn’t like that very much. But needless to say, I didn’t hesitate to say it to him. Look, the Federal Reserve System was established in 1913, started in operation in 194. It presided over a doubling of prices during World War I, it produced a major collapse in 191, it had a good period from about 1922 to 2, then it undertook actions that led to a recession 929 and 1930, and it converted that recession, by its actions, into the great depression. The major villain, in the great depression, was in my opinion, unequestionably the Federal Reserve System. Since that time, it presided over the doubling of prices during world war II, it finances the inflation of the 1970’s, and on the whole, it has a very poor record. It’s done far more harm than good.”
Brian – “In your lifetime, have you ever had a theory that proved to be wrong? Do you ever go back and say that I was wrong?”
Milton – “Oh yeah, Sure”
Brian – “What was it?”
Milton – “Well during World War II, when I was at the treasury, I was a keynesian. That is, I believed that the way to control inflation was by controlling government spending, Only after World War II, when I started to work in the field of money, did I come to a different conclusion. Now I believe keynes was a great man. He was a great economist, but I think his theory is wrong.”
Brian – “And his theory basically stated is?”
Milton “Basically stated, the fundamental element of it is, that matters is spending. And what matters in particular is government spending. And that government spending must play a major role in guiding society. He was a liberal in the 19th century sense. But he was also a believer, he was also an Elitist. And he believed there was a group of able, public spirited intellectuals, who should be given charge of society.”
– inspiring words, although I must learn more. It seems that basic 19th century liberalism, french revolutionary rhetoric of freedom empire building, mason principles of basic equality under a guided Heiarchy an animal farm “everyone is equal, but some are better” tie in together. I’m not surprised Keynes belives in a group in charge of society, what do we think of this?
The official statement by this committee is: The Bretton Woods Committee is a bipartisan, nonprofit group organized to increase public understanding of international financial and development issues and the role of the Bretton Woods institutions — The International Monetary Fund, The World Bank, and the regional development banks — in the global economy.
The game began at an international meeting of financiers, politicians, and theoreticians held in July of 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire (named after its hotel like the Bilderberg Group to hide its intentions). Officially, it was called the United Nations Monetary and Financial Conference, but is generally reffered to today as simply Bretton Woods Conference. Two international agencise were created at that meeting: the International Monetary Fund and its sister organization, the International Bank for Reconstruction and Development commonly called the World Bank.
The announced purposes of these organizations were admirable. The World Bank was to make loans to war-torn and underdeveloped nations so they could build stronger economies. The International Monetary Fund (IMF) was to promote monetary cooperation between nations by maintaining fixed exchange rates between currencies. But the method by which these goals were to be achieved was less admirable. It was to terminate the use of gold as the basis of international currency exchange and replace it with a politically manipulated paper standard. In other words, it was to allow governments to escape the discipline of gold so they could create money out of nothing without paying the penalty of having their currencies drop in value on world markets.
Prior to this conference, currencies were exchanegd in terms of their gold value, and the arrangement was called the “gold-exchange standard“. This is not the same as the “gold-standard” in which currency is backed by gold. It is merely that the exchange ratios of the various currencies – most of which were not backed by gold – were determined by how much gold they could buy in the open market. Their values, therefore, were set by supply and demand. Politicians and bankers hated teh arrangement, because it was beyond their ability to manipulate. In the Past, it had served as a remarkably efficient mechanism but it was a strict disciplinarian.
The method by which this was to be accomplished was exactly the method devised on Jekyl Island to allow american banks to create money out of nothing without paying the penalty of having their currencies devalued by other banks. It was the establishment of a world central bank, which would create a common fiat money for all nations and then require them to inflate together at the same rate. There was a kind of international insurance fund, which would rush that fiat money to any nationa that temporarily needed it to face down a ‘run’ on its currency.
Today the price of Gold dropped another 45 dollars making it 1,778.20 (sept 15 2011). When I was considering buying gold it was just at 1880 following the S and P rating. My inquiry led me on an interesting journey into my own ethnocentric ignorance. I tried to figure out why Gold, would lose value or gain value. Did Gold become discovered somewhere in the country? Is the gold scare causing the scarcity of Gold to rise? On the contary, the value of gold never changes. I found out that the reason the price of Gold dropped was because the Eurozone was going to be doing better with its saving of greece, and that Gold was generally lowering in value as people prepared for a possible stimulus plan people’s trust in the dollar would increase. Gold doesn’t change value, it’s a litmus test for the value of a monetary unit. What I’ve witnessed by watching the price of gold drop and increase, was actually a momentary increase in the worth of the worth. I’m so american-english driven that I see things through the dollar’s eye when really the number next to Gold is Gold telling us how much we are worth, the lower the better.
This leads to an interesting contradiction, that those who invest in gold and fight for gold hurt their investment. That what ultimately helps them, the de-valuation of the dollar, stimulus and bailout packages, is what they constantly fight against. If I invested 100k in gold, I should be hoping that the government continues to make stupid decisions in order to increase the value of Gold by de-creasing the value of the gold and vice versa. BUT! IF I truely WANTED more equality, more fairer things in the world, I would be honest and tell people that we ought to fight for Gold because it has a fixed standard and have other people invest in Gold too, thus increasing the value of the dollar as it relates to the gold standard, the value of my 100k would go down and I would not deceieve any of the fun free money from the federal government and I would be worse off, but my country would be better off. Do you see the contradiction?
“Both ’empire’ and ‘imperialism’ derive from ‘imperium’ a latin noun reffering to ‘power’ and ‘command’. After the long reign of Caesar August that marked the final demise of the Roman Republic in the early first century CE, imperium signified the Emperor’s ‘legal power to enforce the law’ a function he would routinely delegate to his chief military leaders and civil magistrates. Operating within a Hellenic cultural framework, the Roman inherited the Stoic conception that an empire was universal, in the sense of partaking of universal reason, and, therefore, valid for all societies. Hence, the concept of imperium implied a universal humanitarian mission of “Spreading civilization” to the rest of the World. Romans were convinced that only the complete conquest and civilization of all “barbarians” residing beyond the borders of the empire would ultimately lead to a harmonious union of the world’s peoples under Roman leadership, thus establishing peace, order, and justice on earth.”
“With the modern spread of liberal capitalist democracy and its professed ideals of freedom, equality, and national self-determination, ’empire’ aquired the rather undesirable connotation of political oppression and coercion–a charge most vehemently rejected by those powers that seem to deserve it the most. With the end of the colonial era after World War II, the world’s powers claimed to seek benign influence rather than domination. American and Soviet leaders eagler attempted to substantiate their assertion that their respective nations were not involved in an “imperialist” enterprise by pointing to the lack of what had always been seen as the hallmark of empire: direct or indirect political rule over formally annexed or incorporate external terrorities”
– Manfred Steger