As I was inundated with the news out of the Middle East it was simple to recall the song by Gil Scott-Heron. The talking heads were mesmerized by their apparent influence in helping to spark the “PLAZA FIRE.” This is a nice kumbaya moment to believe that the Twitter generation can overcome autocratic rulers by messaging. However, I think it creates a great deal of danger for those with their bodies in the squares. I am a believer in the need to remove the sclerotic autocrats from power but Egypt was not one of those moments. The military that has run the political machinery in Egypt is still intact and pulling all the strings. It is certainly a feel-good moment for those involved but until real change occurs it is nothing more than rearranging the chairs.
For all those who believe that Egypt is a rallying point for the democratic ideals of the West, the proof will be in what starts to take place after the cameras are packed up and the media is headed home. There have been outbreaks of chants for freedom in other Arab autocracies but for me I will not believe any real change is in motion until the repressive minority regime in Syria is tossed aside. President Assad and his father have been a totalitarian minority regime that has kept its jackboot on the throat of Syrian population spanning almost four decades. The Assads are Alawites and they have never made up more than 12 percent of the Syrian people and yet they have ruled by fear and retribution.
In 1982, the Muslim Brotherhood led a revolt against President Assad. In retaliation, tanks and artillery were sent into the city of Hama and it is guessed that 25,000 people were killed as the revolt was brutally repressed. Before the world celebrates the televised removal of an 82-year-old general as the e-mail heard round the world, let’s see if the world’s most tyrannical will be vaporized into cyber space. The world is a far more brutal place and its autocrats more implacable than those who live in a virtual reality would like to believe. It was not long ago that the Western media was lamenting the actions of the Chinese in its killing of Uighars in Xinjiang Province. Again, the REVOLUTION WILL NOT BE TELEVISED.
The EURO was initially sold today as two stories seemed to roil the European markets. Our favorite for ECB president, Axel Weber, made his resignation from the Bundesbank official and would not consider the ECB presidency. Herr Weber cited the lack of “acceptance” among European leaders for his monetary policy views. Wow, Chancellor Merkel tossed the Germans’ sound money man under the train and we are left to wonder what political intrigues are to be played out in Europe. It will be interesting to see if Weber goes quietly to his university post or resurrects himself to cause a popular backlash against Merkel. When the Germans realize that Weber was trying to protect them from making large monetary transfers to bail out the profligate, the political backlash will be severe.
Also out of Germany was concern over the dissolution of the infamous West Landesbank (WLB). This Landesbank has been in financial trouble for years and today it seems it is rumored to have met it end as it was rescued by being divided up. At this point it is rumor more than fact but its overall uncertainty that sent the EURO down. The euro seems to have found support as the immediacy of the Weber situation has cleared and the Europeans announced there would be an increase in the funds available for financial rescues after 2013.
Something else to place on the RADAR SCREEN: Readers of NOTES are aware that the impact from sovereign wealth funds can have an enormous effect on equity, currency and debt markets. In Monday’s Financial Times, there was a piece about the U.S. government approaching some SWFs about taking large stakes of AIG. This is interesting for it would help resurrect AIG because large national funds with a significant investment in the global insurance giant could strongly influence their citizens to purchase insurance from a company that is SWF-owned.
If the Chinese bought AIG it would be a very nice fit because the company originated in Shanghai in the 1920s. When Hank Greenberg ran AIG, it was a very profitable and respected company in China. This is something to watch for it could be a boost to the future fortunes of AIG while allowing the U.S.Treasury to offload its major holding from the sordid period of recent financial bust. Brand recognition in China is strong, which could turn AIG into a Chinese flagship. Again, watch the technicals and see if the market begins to sense the possibility of the SWFs purchasing the troubled financial asset. REMEMBER, SUN YAT-SEN DROVE A BUICK.
Tags: AIG, Angela Merkel, Assad, Axel Weber, China, ECB, Egypt, Euro, Germany, Hank Greenberg, Middle East, SWFs, Syria, Twitter, West Landesbank
February 15, 2011 at 4:43 am |
Today’s NY Times 2/15/11 Companies Raise Prices as Commodity Costs Jump (Consumer Prices on the Rise)
Relates totally with Egypt with to many people with to few Egyptian Pounds trying to get from point A to B.
Takes me back to the late 1970’s and how my parents accomplished what they did while having 3 children is beyond me.
This story seems to becoming to a theatre near you a rerun of the devasting effects of hyper inflation. The only trouble is this time around the good ole’ US of A is in much worse shape to tackle these issues.