The Little-Known Story of How a Financial Crash that Began on Wall Street is Setting the Middle East on Fire
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This is an upstairs/downstairs story that takes us from the peak of a Western mountaintop for the wealthy to spreading mass despair in the valleys of the Third World poor.
It is about how the solutions for the world financial crisis that the Ceos and Big pols are massaging in a posh conference center in snowy Davos Switzerland have turned into a global economic catastrophe in the streets of Cairo, the current ground zero of a certain to spread wave of international unrest.
Yes, the tens of thousands in the streets demanding the ouster of the cruel Mubarek regime are there now pressing for their right to make a political choice but they are being driven by an economic disaster that has sent unemployment skyrocketing and food prices climbing.
People are out in the streets not just to meet but by their need to eat.
As Nouriel Roubini who was among the first to predict the financial crisis while others were pooh-poohing him as “Dr Doom” says don’t just look at the crowds in Cairo but what is motivating them now, after years of silence and repression.
He says that the dramatic rise in energy and food prices has become a major global threat and a leading factor that has gone largely unreported in the coverage of events in Egypt.
"What has happened in Tunisia, is happening right now in Egypt, but also riots in Morocco, Algeria and Pakistan, are related not only to high unemployment rates and to income and wealth inequality, but also to this very sharp rise in food and commodity prices," Roubini said.
Prices in Egypt are up 17% because of a worldwide surge in commodity prices that has many factors but speculation on Wall Street and big banks is a key one.
As IPS reported, “Wall Street investment firms and banks, along with their kin in London and Europe, were responsible for the technology dot-com bubble, the stock market bubble, and the recent U.S. and UK housing bubbles.They extracted enormous profits and their bonuses before the inevitable collapse of each."
Now they've turned to basic commodities. The result? At a time when there has been no significant change in the global food supply or in food demand, the average cost of buying food shot up 32 percent from June to December 2010, according to the U.N. Food and Agriculture Organisation (FAO). Nothing but price speculation can explain wheat prices jumping 70 percent from June to December last year when global wheat stocks were stable, experts say.
Here’s a key fact buried in a CNN Money report—the kind intended for investors, not the public at large: “About 40% of Egypt's citizens live off less than $2 a day, so any price increase hurts.”
Think about that: what would you be doing if you were living of $2 a day. You won’t be drinking mochachinos at Starbucks, that’s for sure.
Trust me, the people on top are following this unrest closely on Wall Street as anxiety grows:
Reports the Washington Post:
U.S. stocks declined sharply Friday as violent clashes in Egypt injected a jolt of anxiety into global financial markets.
Egypt is central to U.S. interests in the Middle East as a moderate state and a key player in both counterterrorism operations and regional peace negotiations, said Helima L. Croft, a geopolitical analyst at Barclays Capital.
If street protests were to end President Hosni Mubarak's nearly 30-year hold on power, "I think there would be a fear that you could see radicalism sweeping across the Middle East," Croft said, adding that the fear might be unfounded.