World Events Portray the Rise of Radical Islam

We know nearly every government in the Middle East and many in Northern Africa and even the poorest parts of Eastern Europe have felt the effects of riots, food riots and protests-peacful or violent. The Muslim Brotherhood in Egypt which may or may not gain a foot hold in Egyptian politics as they have failed in recent parliamentary elections and thus far have failed to put forth a strong opposition figure that protesters support, is clearly working with armed militants from Hamas that crossed over into Egypt last week to coordinate protests. It's becoming very unclear whether the military regime (forget Mubarak-he's done) will be able to whether the storm. As I've said, what protesters call for and what they get can diverge radically as we saw in the Revolution in Iran in 1979 which overthrew the Shah. Even here in America many Democrats are increasingly disenchanted with their presidential choice. This is not a judgement of the President, just an observation of fact. These are becoming and may be known as the golden days of Islamic militant factions, this is what they have been trying to achieve and now, without their direct participation, opportunities are being handed to them with no losses, no fighting. I imagine many see this as a sign from Allah. Again, I'm not making judgements.

Inflation, which Bernanke refuses to see in its true state is clearly behind the initial spark that has sent the middle east into chaos. As I've mentioned, the US has for decades miscalculated foreign and economic policy and failed to see or imagine the costs and consequences of their actions. Egyptians know that the tear gas thrown at them by police and internal security forces came from the U.S. and it seems the consensus is, most Egyptians couldn't care less about the peace treaty with Israel or the relations with the U.S., why do you think the US has been a key benefactor to the Egyptian regime? These are extremely dangerous times of unintended consequences. It's shocking that oil traders are so short sighted by rumors of Mubarak's fall. It's shocking to hear the Joint Chiefs of Staff say that the American military stands ready to assist. Perhaps they do have a clue, but to hear it and for Egyptians to hear it may have been a shockingly bad miscalculation.

As for the Muslim Brotherhood, of course they have toned down the rhetoric in recent incarnations over the last decade and appeared to be non-radicalized, but why then are they working with their offshoot -Hamas?

Here are some recent statements by officials within the Brotherhood

NEWS 1
NEWS 2


Egypt has for decades been the bedrock of semi-secular support for a stable mid-east. Should radical elements infiltrate and succeed in changing the face of Egyptian positions with regard to Israel, other allies in the region will fall fast.

I don't believe the Iraq war was all about oil, (although you can not say it wasn't about oil to a large extent as HAL profited enormously and we all remember oil prices a few years ago), but a more strategic view was about setting up a US military presence in the middle of key opponents such as Syria and Iran. Whether Mr. Obama grasps that and how important it was to have a US presence and stable government there that would tolerate American bases on the outskirts and border regions of Iraq is an unknown?

Even Iran is not happy with Egyptian events as the shift of power in the middle east could dramatically reduce Iran's influence and bring Egypt to center stage. These are huge events and one wonders about reports from the BLS today whether the Fed may be looking for an early exit strategy as it is clear that their Q.E program has helped stir rampant inflation in all sorts of commodities, especially food. I never understood their take on inflation excluding volatile gas and food as these are the staples of everyday life.

In any case, world events are shifting the undertones in the market, it's not obvious yet, but in looking through some high Beta stocks where I expected to see a huge ramp up, I found many looking very poorly over recent weeks.

Be prepared to be prepared.