Spengler has been reading the numbers coming out of Egypt, and he says the country is very close to the brink. Excerpt:
Egypt faces a disaster of biblical proportions, and the world will do nothing about it. Officially, Egypt’s foreign exchange reserves fell by half during 2011, including a $2.4 billion decline during December – from $36 billion to $18 billion, or about four months of imports.
But the situation almost certainly is worse than that. More than $4 billion left the country during December, estimates Royal Bank of Scotland economist Raza Agha, noting that the December drop in reserves was cushioned by a $1 billion loan from the Egyptian army and a $1 billion sale of dollar-denominated treasury bills.
The rush out of the Egyptian pound is so rapid that Egyptian investors refuse to hold debt in their own national currency, even at a 16% yield. After Islamist parties won more three-quarters of the seats in recent parliamentary elections – 47% for the Muslim Brotherhood and 25% for the even more extreme al-Nour Party – the business elite that prospered under military rule is counting the days before exile.
The first reports of actual hunger in provincial Egyptian towns, meanwhile, are starting to trickle in through Arab-language press and blog reports. A shortage of gasoline accompanied by long queues at filling stations and panic buying was widely reported last week.
Spengler further speculates that the accession of Islamist parties to power will drive those who have the money to leave Egypt soon to flee, and will collapse the tourism industry.