Sterling Weekly for February 28th, 2005

"This is a historic step. For the first time since the days of the pharaohs, the Egyptian people will choose their ruler," said Mohamed Ulwan, assistant head of the opposition Al-Wafd party. "

The overall market finished last week very strongly. The major market indices are continuing to test previous highs and look poised to retest their all times over the course of the next few months. Politics and the strong demand for commodity based products continues to be the main influences driving the market. This week is definitely going to be a heavy and important one in terms of economic news to be released. I am not expecting any surprises that will rattle the market.

The quote I posted above from an article on Reuters by Edmund Blair. It discuss the current reforms proposed for Egypt, which is in some aspects the most powerful of the Arab countries. If the reforms are successful in Egypt, then I would expect to see them spread across the other Arab countries. Encouraged by the powerful message sent by the Iraqi people when they turned out to vote, the Lebanese people have begun demonstrations against their Syrian occupiers. Even the Saudis have begun limited reforms. It is much better to be part of the agent of change, then swept away by it. The political reforms in these countries will ultimately reform their economies, increasing trade with other nations, and help the overall world economy grow. The challenge facing the United States in addition to how best promote and encourage this change, is how this reform will effect the world economy and how we need to adjust our economic system to benefit from these changes. I see the primary areas we need to address as being an improved education system and eliminating the inefficiencies of our tax system that discourage trade and prevent the repatriation of profits from foreign subsidiaries of US corporations. A full text of the above mention story can be found here (more)