Mubarak Steps Down
Research for Online Investors

by John Dalt

2/11/11

The news today has been wall to wall Egypt.  President Mubarak reportedly left Cairo last night for his home in the country after a broadcast that came up short from resigning the Presidency.  He turned over most power and decisions to Vice President Suleiman, but planned to stay in office until fall when new elections would be held.

This did not satisfy the crowds of demonstrators, as they were expected to gather in the early morning to continue to press for his resignation.  Stratfor sent out an alert last night that Mubarak’s intransigence had effectively put the military into a box.  The military had maintained the support of the population by not clashing with the demonstrators.  The only fights that occurred were with police.

By not resigning, Mubarak placed his trust in the military to defend the constitutional government he headed.  If protesters marched on the Presidential Palace, the military would have to defend the government and repel the mob.  The military could stand down and let the protesters enter government buildings, but this could quickly cause the government to fall.  In this scenario the military would be standing on the sideline and not in control of events.  It could quickly spiral out of control, with extremists taking power.

According to Stratfor, this left only a third option for the military that was palatable.  They had to force Mubarak out of power overnight, before the protesters took control of events and forced their hand.  We don’t know what the military did overnight concerning Mubarak, yet.  This morning, Mubarak resigned which satisfied the crowds and turned the crowds of protesters into a mood of celebration rather than a mob intent on removing the government.

It has been interesting to watch the shift in Egypt, and we only hope the protesters get the change they want and not the change that some may impose on them.  I am always mindful of a quote attributed to Stalin concerning the masses, “Give them what they want, good and hard.”

The market was down early this morning on concerns which way Egypt would go.  We had inherited this concern from market action overnight in Asia and then Europe.  This morning we learned that Mubarak would step down and it seemed like a great relief to the Egyptians and the world’s financial markets.  The market rallied to close higher for the day.

Precious metals and crude oil came off the rallies they had experienced from the uncertainness of Egypt’s future.  The weekend will be instructive as political events continue to play out in the Middle East.

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The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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