Yesterday, we posted a note about the Jasmine Revolution becoming Tunisia’s top export. Specifically, we wrote:
“Over the last three days, there have been massive protests in Egypt against the autocratic regime of President Hosni Mubarak. These protests are being driven by economic concerns, primarily spiraling costs of living (read: inflation). As the costs go up, the underemployed and underpaid youthful population naturally vents, and in an autocratic regime they have no outlet other than, at least in their minds, to take to the streets. No doubt the successful revolution in Tunisian was a catalyst for the Egyptian revolts; the success of overthrowing the Tunisian government has emboldened protestors across the region.”
This morning it seems the Egyptian government is combating the spread of the Jasmine Revolution . . . by cutting off almost all internet in the country. In the chart below (with credit to Arbor Networks), you can see the precipitous drop in internet traffic. Somehow we don’t think this is going to appease the people of Egypt.
This is a country with more than 2/3rds of its population below 30, a country where 40% of the population lives on under $2 per day, and unemployment is close to 10% (and higher in reality).
If President Mubarak thinks that he is going to stem the rising tide of discontent in Egypt by limiting their ability to communicate, Tweet, and Facebook, he is, in our estimation, misjudging the power of the Jasmine Revolution. So far, the stock and credit markets in Egypt agree with us, and profoundly so. Specifically, Egyptian 5-year credit default swaps are hitting two-year highs today at 375 basis points and the EGX 30, the benchmark equity index in Egypt, closed down (-10%), after a prior three-day drop of 16%.
Our advice is simply this : Mr. Mubarak, turn on that internet!
Daryl G. Jones