Middle East Financial Markets Plunge- Arabian Graffiti and Verboten Love in the Wild East- Palin and McCain Move Closer to Afghanistan- A Rally of Anger in Florida
Middle East markets feel your pain:
Middle East stock exchanges continued to decline sharply Monday and Tuesday, in tandem with the rest of the world. Monday's losses varied between 9.8% for the Saudi market and 1.53% for Bahrain (probably the least decline in the region, but I haven't looked at the Yemeni market lately). On Tuesday the markets plunged further with the Saudi exchange losing over 7%, the UAE between 4.6-5.5%, Oman 7.29%, Kuwait 2.64%.
In the past, turmoil in world markets had limited effects on domestic GCC Gulf markets. There was a degree of insulation and the main effect was through the investment portfolios of many Gulf companies.The plunge this year is quite different: it is strongly related to world markets, and the impact comes through several factors:
- Declining oil prices and revenues imply reduced public expenditures on projects that oil the activities and profits of many local companies.
- Then there are the issues of huge investments in world markets. Many companies, as well as sovereign funds, sought to take advantage of what was seen then as 'bargain prices' over the past year and snapped up international shares, including many financials in the US and in other places. It is not clear how much was invested in lemons like Lehman, AIG, CountryWide, Merrill, Wachovia and Citibank- as well as in related risky securities. But it is almost certain to be huge.
- Another factor that is new this year and is quite disturbing to the largely trade-dependent states, is the threat from the credit crisis to the flow of finance for international trade, especially imports from the industrial countries. The New Middle East produces little of what it consumes, depending on imports for most of what it consumes in terms of both consumer and capital goods.
So far, government intervention has not helped the markets in North America and Europe, but the intervention is not done by the direct purchase of shares.
Arabian Graffiti, Religious SS, and verboten fun:
The Saudi Society for the Propagation of Virtue and Prevention of Vice (Official Religious Police), the Mutawa'een, is an official militia not unlike many in Iraq. They are a sort of aggressive, high profile, vice squad- in a country that claims not to have any vice, especially of the type that Vice Squads specialize in cracking down on. But they manage to keep very busy in a country where virtue is supposed to reign supreme and what are called basic natural instincts are buried under deep layers of frustrations, suspicions, and paranoia.
Saudi media report that a young couple (as in man and wife) were chased through the streets by the Religious Police who suspected them of being an unmarried couple out to have some fun. The Religious Police jeep finally rammed the other car and forced it to stop. They were pulled out of the car and it turned out that she was indeed his wife and that they were returning from a hospital. But the religious cops suspect that the couple did a switcheroo, that he was with another girl and that after he stopped they somehow switched her with the wife. Interesting but farfetched.
In another incident a young couple were chased by another Religious Police jeep and forced to crash into several cars. The man was beaten up severely and the girl dragged away under arrest. Not clear why the man was not dragged away.
Apparently things are heating up in the moderate New Middle East, and neither Bush, Cheney, nor Condi Rice have even been there lately.
This phenomenon is common in many states of the moderate New Middle East, both the polygamous and the no-so-polygamous. Public fun, other than eating and drinking (tea and coffee) is frowned upon by a large segment of the population, especially in the Gulf.
Some critical Saudi media, broadcasting from the safety of Dubai, keep reminding that the authorities have forbidden the religious police from initiating car chases because of the accidents they cause.
The good news is that many are not putting up with it anymore, they are resisting it.
Speaking of the SS: At a Florida (Clearwater?) rally for Gov. Palin last weekend, I saw a brownshirt, or was it a blackshirt, do the loud introductory speech. The man had cropped hair and a uniform on, a police chief or a sheriff. Reminded me of old news reels on the History Channel from a large country in Central Europe, about 70 years ago.
"...our neighboring country of Afghanistan..." Gov. Palin
With three words Sarah Palin has potentially created a new illegal immigration headache, perhaps a virtual one only. Up until yesterday, Afghans had not known that they were neighbors of the USA. Just like they had not known that they were next door to Iraq until McCain said so last month. They had to make do with pouring over the borders into Pakistan and Iran to escape the violence in their country....while awaiting their own surge.
Now Afghans will seek their newly appointed border with the United States. Or maybe they will cross over the Iraqi border announced recently bu McCain to benefit from the surge.
Unless the governor meant that Afghanistan was a neighbor of Alaska. Maybe the huts she saw from her kitchen window looked like Afghan abodes. As for McCain, he was probably just confused as usual when it comes to foreign affairs, especially when Joe Lieberman has gone to the mattress in Florida and is not around to prompt him.
Cheers
mhg
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