What Next for Egypt?

I confess that I’ve been feeling a bit lonely of late. Everyone is bubbling over with enthusiasm for the events in Cairo and I have been thinking that reality cannot possibly be as good as everyone thinks it is.

When I feel too lonely, I naturally turn to a true sage like George Friedman whose Stratfor column today analyzes the gap between enthusiasm and reality. If you feel tempted by exuberance, you should pay Friedman some serious heed. Link here.

In a way, my situation shows how difficult it is to trade a market using contrarian sentiment indicators.

Everyone knows that one of the best ways to do well in the stock market is to go against the crowd. When everyone is bullish, it pays to sell. When everyone is bearish, it pays to buy.

Everyone knows this; everyone considers himself a true contrarian; yet, precious few really practice it.

It does not feel good to go against the crowd. It feels lonely. Most people would rather be part of the group than make a lot of money. Most would rather join the crowd on the historical wave than to provide an objective analysis.

Worse yet, as I listen to the pundits, I start thinking that perhaps I should have had more confidence in the Obama administration’s ability to manage this-- or any other-- foreign policy crisis.

My predictions notwithstanding, seasoned observers are saying that the administration has done a creditable job managing this crisis. Some want to give credit to George W. Bush, but most pundits are declaring the revolution a great success, giving credit equally to Obama and Twitter.

With a few notable exceptions, people seem to believe that they have witnessed a moment when the human yearning for dignity and freedom triumphed over a sclerotic autocracy.

So said Tom Friedman from the left and William Kristol on the right.

Friedman had the chutzpah to suggest that Israeli misgivings about the events in Egypt were ill considered, a function of an unimaginative right wing administration. Link here.

Tom Friedman is certainly the world’s most overrated foreign policy pundit, but you would think that he would have expressed a few misgivings about a revolution whose visual signature was an image of Hosni Mubarak with a star of David on his forehead. Especially when he was being interviewed by the Jerusalem Post.

As you probably know, most news coverage of the revolution for human dignity and freedom scrupulously neglected to show the sea of anti-Semitic posters.

I have said it before and I will say it again: when it comes to which Friedman you choose to read, you will learn much more about foreign policy by reading George and ignoring Tom. Do it for your own mental hygiene.

For those who align themselves more closely with the right, Matthew Kaminski weighs the possible outcomes of the turmoil in Egypt today in the Wall Street Journal. Link here.

Kaminski surveys the different scenarios that foreign policy experts have been examining. He asks whether Egypt will turn out to be another Iran, as many have warned, or another Pakistan or Turkey. Perhaps, it will become a new Albania.

Kaminski is not a cheerleader for the revolution. He is cautiously optimistic and fair minded. But, he is trying to refute the vision in which Egypt turns into another Iran.

Given his optimistic tone, Kaminski has overlooked one possibility that is not quite as encouraging. In truth, no one has really considered it.

I am thinking of Algeria in 1991. You may recall that Algeria held elections in 1991. After the first round of voting it appeared that the Islamic Salvation Front-- (DNI James Clapper notwithstanding, the ISF is no more secular and peaceable than the Egyptian Muslim Brotherhood)-- would attain a sufficient majority in the second round of voting to proclaim Algeria an Islamic state.

This caused the Algerian military to cancel the elections, declare a state of emergency, and take power in a coup. This led to a civil war that has raged in Algeria for the past twenty years. Apparently, military authorities have just lifted the state of emergency that they had imposed in 1991.

I am not saying that the Algerian elections of 1991 offer a more plausible outcome for the situation in Egypt. I would point out that not one of the pundits who are prognosticating about the future of Egypt, has even suggested that it might.

As I said, the preponderance of pundit opinion has been giving me the feeling that I am simply out of touch with reality. Not the best feeling to have, but one that you need to learn to deal with if you want to be a true contrarian.

But today something strange happened. I was glancing through the offerings on The Daily Beast and discovered an article by Harvard history professor Niall Ferguson.

Ferguson is a serious and brilliant economic historian. His viewpoint is always worth considering.

As it happens, the Ferguson article is also the cover article on the new edition of Newsweek.

Neither the Daily Beast nor Newsweek… the two are currently planning their nuptials… is know to be conservative, right leaning, or even moderate. In truth, Newsweek has always been a liberal publication, and Tina Brown has, to the best of my knowledge, always tended toward the liberal point of view.

For those who do not know the name, Niall Ferguson was born and educated in Great Britain, and is , best known for his writings about the Rothschild banking empire and the history of money. As best as I can determine, he is not associated with either the political left or the right.

But what was this eminent Harvard historian shouting out from the cover of Newsweek: “Egypt: How Obama Blew It?” Link here.

When Newsweek is more negative about Obama than the Weekly Standard, you have to stand up and take notice.

Here’s a sampling of Ferguson’s views: “In the case of Iran, he [Obama] did nothing, and the thugs of the Islamic Republic ruthlessly crushed the demonstrations. This time around, in Egypt, it was worse. He did both—some days exhorting Egyptian President Hosni Mubarak to leave, other days drawing back and recommending an ‘orderly transition.’

“The result has been a foreign-policy debacle. The president has alienated everybody: not only Mubarak's cronies in the military, but also the youthful crowds in the streets of Cairo. Whoever ultimately wins, Obama loses. And the alienation doesn't end there. America's two closest friends in the region—Israel and Saudi Arabia—are both disgusted. The Saudis, who dread all manifestations of revolution, are appalled at Washington's failure to resolutely prop up Mubarak. The Israelis, meanwhile, are dismayed by the administration's apparent cluelessness.”

I am happy to recommend that you read the whole thing. If you, as I, have been feeling somewhat out of touch with the giddy, party-like atmosphere enveloping the world’s intellectuals, Ferguson will, at the least, make you feel less alone.