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Wednesday, February 2, 2011

Let My People Go

  I was folding some washing last week (yes, I lead a very glamorous existence), when my partner Mick said to me “Now this is why I don’t want to travel to Egypt.” Visiting Egypt has been the subject of a fairly lengthy battle between us over the years; as an ex-historian I want to go with a passion but Mick has always maintained it’s dangerous.

So I turned to see what he was talking about, arming myself with my usual arguments, and was greeted with scenes of horrific rioting. Suffice to say I didn’t win any points that day.

Then on Monday morning I was driving to work and one of the radio stations was interviewing an Australian woman who was in Egypt waiting to be evacuated. She had a bird’s eye view of the rioting from her hotel window, and understandably feared for her life. When it was finally safe enough to travel to the airport, rioting began in the terminals amongst sleep-deprived, hungry, and frightened people.

She had been told she would be on a flight Wednesday, but many Australians had no idea when they would be able to leave the country. Ugh! Scary stuff.

I may have been physically safe at home in Australia, but a few swear words escaped my potty mouth on Saturday morning (darn, jeepers, gee willikers) when I learned that the DOW had dropped a 166 points overnight. This was effectively its greatest one day loss in almost 6 months.

I couldn’t help wondering if there were a lot of people out there wondering how the geopolitical instability in Egypt could have such a sizeable impact on the US stockmarket, and of course our own.

Well that’s what I’m here for right? Grab your favourite beverage, get comfy, and let me tell you all about it…

Regular readers will know that the market can behave a little like a skittish horse and spooks easily. Egypt is something like the 40th largest economy in the world, so you could be forgiven for being surprised when it has such an effect on an economic powerhouse like the US, but remember a little country called Ireland a few months ago….

Before I go any further I do need to point out that the US market had been red hot and was just spoiling for a correction.

On top of that, we need to look at Egypt not just as a country in its right, but as part of the Arab region. Suddenly the insurrection takes on a bigger meaning when we acknowledge that tenuous relationships involved, and the overall political impact.

You see there are many that would argue the US needs to take some responsibility because the programs they’ve implemented to improve their own economy, has exacerbated the food price situation, not to mention opened the door to at least a measure of exploitation by investors.

Alan Kohler made a poignant observation in his article The economic roots of revolution yesterday when he stated “A sudden increase in the prices of both food and energy is very bad news for both the world economy and world peace.” Simple but true.

Of course, to suggest Egypt’s troubles are solely food and oil would be a gross over-simplification, but they are definitely providing significant fuel.

Anyway, Hosni Mubarak has announced his “resignation” and the Dow Jones index was up almost 150 points when it closed this morning, and our market ended the day almost 1% higher. Great news, but I’m not sure the cage has stopped rattling just yet. We’ll see eh?

In the meantime, let’s hope Egypt let’s our people go and everyone is home safe and sound soon.

Talk soon,


PS. Thank you to everyone who rang/emailed to tease me about my photo in the local paper. And no, they didn’t need to re-touch the picture – grrrrrrrrrrrrrrrrrrrrrr.

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