Let us take a glance at Egypt, a nation with a heavy cash-based economy and relatively nascent set of financial tools, which should, in theory, provide haven from the “credit freeze” afflicting developed markets. Nonetheless, if not passed even in Egypt a financial crisis might occur, not without reason is this period best described as “global.” For with every advance in online communication, trading, banking and asset management, the flow of capital from one state to another is eased. In fact, the problem for Egypt and other foreign markets is that when outsiders panic, they aren’t just yanking cash out of their own markets, they disinvest elsewhere also.
The odd thing of course is that Candidate A is running against Candidate B--supposedly--yet both candidates come running to vote in support with the President, I suppose I should describe him as President B, further, the bailout was supported by all three and the Treasury Secretary and Federal Reserve Chairman. It seems like just about everyone favors the bill.
But wait, did the American taxpayers? Well, no, polls last week showed that less than 3 in 10 Americans supported the bailout.
I guess they don't count in this financial lovefeast between President B, Candidate A, and Candidate B.
At one time Republicans would have viewed the bailout as an abandonement of their small-government, free-market ideology that was once the cornerstone of their party’s economic ethos. Democrats at one time would not have wanted to use the little person's money to rescue the big money Wall Street megalomaniacs who drove the economy into the current mess in the first place. No more I take it.
Oh yes, and where does the bailout leave Egypt? Left to its out devices, the Egyptian economy is weak. Because of Egypt’s high poverty rates, and record inflation, Moody’s Investor Service lowered their rating on Egypt’s foreign currency country ceilings for bonds and bank deposits from stable to negative and downgraded the government’s local currency bond rating in July.
And as the past few weeks have shown, each bank collapse or whisper of impending economic chaos in the U.S. ties up nervous American investors-—a primary source of investment in Egypt—-who pull out of emerging markets as they try to recoup losses at home.
Egypt was bracing for Eid El-Fitr, which is a Muslim holiday that marks the end of Ramadan, the Islamic holy month of fasting, and Armed Forces Day, so the American setback would be delayed in Egypt. But, once markets re-open on 7 October, Egyptians can rejoice, Candidates A, B, and President B, along with the U.S. Congress, as well as the financial tentacles of the U.S. government, will have helped them.
Only the American taxpayer will suffer from the bailout.
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