Papandreou Must Change Greece’s Economic Course

The day’s focus is once again on Europe, where it is looking more and more like austerity is a useless effort for troubled Greece. On Monday, Standard & Poor’s (NYSE: MHP) cut Italy’s credit rating, and despite Moody’s (NYSE: MCO) and Fitch’s affirmation of ratings, global markets fell into tailspin. Europe is a disheveled beast today as a result, and because of lost confidence in Greece’s ability to survive financial ruin.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Papandreou Must Change Greece’s Economic Course

The Greek Prime Minister faces pressure to tighten the noose around the neck of his electorate. Unfortunately for Prime Minister Papandreou, his rivals are finding opportunity countering Greece’s failing efforts.

The government is moving ahead now with developing plans to sell off state held assets, including stakes in Telecom stalwart O.T.E. (NYSE: OTE), state-owned Hellenic Postbank, and Greece’s two main ports of Piraeus and Thessaloniki. The New Democracy Party is also pushing for the sale of Greece largest electricity producer, P.P.C. Such privatization actions have been proven wise moves through their initiation in the United States and follow through in the United Kingdom and Europe. The question is, what kind of price will a desperate Greece get now? It must not act like the desperate seller, and be patient for hungry buyers to emerge if it wants to best serve its citizenry and my spiritual brothers. In the end, more efficient business operations will emerge and likely grow in the place of currently fat and fraudulent operators.

New Democracy is taking an important strategic position now in opposition of the cornered Papandreou’s socialist government (PASOK Party), and yours truly happens to agree with the position, despite my favoritism of Papandreou, the man and pseudo-New Yorker. The fact is that I’ve argued against austerity since its start, and clearly stated it matched the American mistake of the Great Depression.

However, when I said Greece would do better to raise taxes across tourism, thus forcing visiting foreigners to my paradise-like spiritual homeland to help front Greece’s bill, detractors said it was a mistake. They said it would kill tourism, to which I correctly forecasted that riots and crime would do more to kill Greece’s tourism industry than well-spread taxes across flights, cruises, hotels and taxi rides. The Greek people would have appreciated its government’s efforts to guard them from financial distress. Instead it told them, my dear people, you take the poison for the sake of our heritage. Greeks responded with angry dissatisfaction.

Greeks have plenty of reason to mistrust their government, with scandal and corruption as common in Greece as it is across the globe. Who would pay taxes to a lost cause, or more taxes to a futile escape effort? Thus, it has done well to target corruption, but perhaps it was too late to establish credibility.

The Greek government currently too closely resembles the panicked Bush-government and its pressured quick decisions. You’ll recall Bush’s mailing of $300 checks to every American, a useless waste of important funds and an illustration of the government’s poor assessment of imminent economic catastrophe. We sadly remember the butchered bailout legislations that sent billions into nebulous necromancy, or better stated, into Wall Street executive bonus packages.

Greece cannot raise taxes forever; rather, it can until its Parliament building burns to the ground. The torch that would start that fire is already burning, and New Democracy can sense it. At least though, for Greeks, it is New Democracy gaining attention for seeking change rather than the Communists or Isolationists or Nationalists. Hopefully Greeks will not remember that it was under New Democracy that the nation’s financial position was mishandled and misreported.

The last thing I want to see in Greece is radical leadership gaining control because of the failed establishment. This threat extends throughout Europe, the Middle East and the globe, and is not negligible. This is how Hitler gained power! Who else would have listened to him but the desperate? So beware and be wise Europeans and Middle Easterners.

I disagree with the position of my better-schooled acquaintance, and I hope friend, Economist Charles Calomiris. I disagree with the view that Greece must default, or has no better option. I also would rather not see Greece dislocated from the euro zone or the umbrella of the E.U. Papandreou must change course, but there are many roads to choose from, each of which looks perilous from here. I’ve supported two of them here, selling assets and taxing the use of them by foreigners.

I remain available to Greece should she call, because I bleed for her.



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The Saudi Day of Rage Play

As the weekend passed without significant event in Libya, oil prices started the new week backing off recent 29-month highs as stocks simultaneously reconsidered recently sold ground. We suggest readers interpret the action as a rebalancing against heavy pre-weekend betting only, not a turn in trend, at least for the short-term. In fact, as the week progresses anxiety should build around the "Saudi Day of Rage" also called "the Day of Longing" planned for Friday March 11th. The day of rage has decent enough chance of blowing over without turning over the monarchy, but then again, who could have foreseen Egypt. Thus, money should run as the day nears.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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The Saudi Day of Rage Play

The democratic movement across the Middle East and foreign political interests, opposed by the religious rigidity of Saudi Arabia, which would be labeled civil oppression by most of the free world, could take the Arabian Peninsula in a couple directions this month, each being extreme, but only one involving change. The catalyst is a youth inspired movement for a Saudi Day of Rage this Friday March 11.

Several important barriers support the current regime, and have helped to also quell concern here in the west. Since civil protest is banned by Fatwa in Saudi Arabia, and punishable by death, it would take great courage and confidence for the Saudi people to organize in significant numbers. The Interior Minister issued a statement this past weekend that the ban would be strictly enforced against any protestors, after the sparks of revolution glimmered across the sand. Given the embedded investment in and the importance of Arabian oil to the US and the global community, many a commonly concerned ear would likely be turned away from any call by the resistance for aid, a much different position than that which exists in Libya.

However, the Saudis themselves, perhaps borrowing from the earlier actions of the Jordanians, have acted preemptively. The King announced a $37 billion dollar social welfare program, including a 15% increase in the pay of all government workers. This portion of the action might be directly targeting the Shiite dominated oil rich eastern region of the nation. It certainly could serve to keep many off the streets Friday, for fear of spoiling their new winnings. And with unemployment only barely in the double digits in the country, the streets do not call with the same song as the sirens of Egypt. That said, the Saudis have taken careful count of the significant youth segment of its population (about a third) and have offered unemployment support as well. Choosing between bullets and a pay raise will be easier for some than others.

However, globalization, new technologies and social media have opened the world up to Saudi youth as well, to some degree, and opened eyes to a different world. That tempting, happy and love filled place compares against a religiously rigid society that even American Catholic school graduates might fear. Saudi Arabia is one of few countries I will never visit, unless it changes its laws and its rejection of my own faith. If I cannot wear a cross in your home, I will not enter. If freedom of religion is a God given right, the righteousness of one's life is the result of free will. Your author, being a proponent of religious upbringing still recognizes the dangers of the repercussions of oppression versus the effects of education and guidance upon free will.

The words "Constitutional Monarchy" have been uttered by at least one prominent Saudi cleric, jailed and now freed thanks to growing crowds of protestors. As you might imagine, any loss of power is not favored by the ruling family, and so they will give up as little as possible. But how far is the King really willing to go? Would he risk trial by world court for killing his own people like his Libyan cousin-in-crimes against humanity? Mubarak's assets have been frozen, and Gaddafi might face justice akin to Saddam Hussein. There's not much incentive to stand long against a meaningful resistance. However, if it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of heaven, then it must likewise be near impossible for Abdullah to give up the kingdom he has created for himself on earth in exchange for the righteous will of the people for self-rule.

In Saudi Arabia, Abdullah will find more believers in claims of Iranian backed factions driving unrest than Gaddafi found in claims of al-Qaeda's factoring. The Shiite minority of Saudi Arabia would like equal representation in an important government. However, I do not believe Saudi Arabians of any sort want to be anything but Saudi Arabian, the land which hosts Mecca and Medina. There is little love lost between Saudi Arabians and Iranians, similarly to the Iraqi Shiite population favoring the Iraqi flag. Of course, the devil (Iranian regime) works subtly, and may offer some minor gain to the minority, which might lead to a separation of state or succession. But the religious tie that binds is the existence of the regarded important holy land that all Muslims are called to be a part of, and so I do not see separation likely. Democracy has a greater chance of succeeding as a result.

It is the great uncertainty around the peninsula and its great importance to the world though, that will have investors likely pulling capital home ahead of Friday. These fires tend to spread over time though, so while one day may not a revolution make a path may be engaged nonetheless. It will at least be interesting to see if Saudi Arabia goes the way of Jordan or the way of Egypt. It would appear the Jordanian model will apply, but capital will fly nonetheless in my humble opinion.



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Quo Vadis, Aegyptus?

Where to Now Egypt?

The crowds are celebrating; fireworks light up the nighttime sky above Tahrir Square and all of Cairo; the bogey man has fled and tomorrow will shine anew. So goes the old Pharaoh into the sunset of Sharm el-Sheikh. Thus, Global Affairs Columnist Daniel Salem Padovano asks the question that concerns all of Egypt in the wake of revolution.

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Quo Vadis, Aegyptus?

Mubarak's last year posed problems of stability and control to the regime; his time had indeed come. The deteriorating economic conditions and forcing his son's presidential candidacy (if not outright succession) made for unease and uncertainty. In several respects, it seemed as if Egypt was stepping back to before the July 26, 1952 Free Officer's Revolution. One Pharaoh overstepped his bounds and overstayed his time (and usefulness) thus paving the way for his own downfall.

This is the first time that Egypt has been without a central leader (or leaders) in nearly two centuries. A unique time for a land used to Pharaohs, Viziers and Kings.

As the Nile greets a new dawn, the question is: Wither goest thou Egypt?

Now the real work begins.

The end of the Mubarak era is not the end of the era of the Free Officer's Movement. The military remains in control of Egypt, pretty much as it has since 1952. The Supreme Council of the Armed Forces (SCAF) is in charge for the foreseeable future. Whatever course Egypt takes, it will be guided by the military.

As the guardian of Egypt and the 1952 Revolution, the military sees itself committed to the goals of that Revolution. Those goals are a secular state where the most modern and stable state institution (the military) manages the state. That the military leaders would hand over the country to the less disciplined masses is not an option. This is an institution that for better or worse has brought Egypt from a colony into the modern world. This guiding hand will not disappear; it is only now deciding how it will begin to rule.

So far, the military leaders are moving towards some form of representative democracy. The Mubarak Constitution has been suspended and the Parliament dissolved. The military is also planning to remove the State of Emergency laws in place since October 6, 1981. These are and were the key demands of the protestors. Plans are being made to create a committee to rewrite the constitution. Officially, elections are still planned for late September, 2011, however, concerns abound as to whether or not political parties will be ready.

The last time Egypt had a fully functioning multi-party parliament was in the mid-1950's. When this new parliament comes into session, the only other fully functioning parliaments in the Middle East will be those of Israel, Lebanon, Turkey, Iraq and Iran.

What needs to be kept in mind is that all of these developments are "extra-constitutional", meaning outside of the constitution, as the constitution no longer exists. The military is also on new ground as it appears that they will step back once things are more settled.

This proposition means that the military steps back into the shadows and gradually cedes power (but most likely not full authority) to civilian rule. The difference being that power would rest in the hands of the SCAF. The authority (and the amount of authority) to make that power real and effective would still rest in the hands of the military.

This change from military domination (if things progress that way) towards representative democracy is revolutionary. It would mean that the senior officers believe that the 1952 Free Officers Revolution has run its course. If they do not believe this, then little will change (maybe some window dressing).

On its own, this development would be as big as Mubarak's resignation. New reports Saturday and Sunday indicated that many junior officers (Colonel and below) have little trust or faith in the senior officers. (The senior officers are seen by the junior officers as "too" connected to the old regime). It would be the ultimate irony, if in the midst of "reform", a new officer's revolt followed.

Other challenges facing the Supreme Command of the Armed Forces and the soon to be Constitutional Committee are tackling the endemic corruption and getting the economy to function properly. One hopeful sign is one of Saturday's SCAF communiqués. In this communiqué, SCAF stated corruption would no longer be tolerated and would be prosecuted. Additionally, Mubarak era officials and public employees suspected of corruption will face prosecution. It will be interesting if this indeed does come to pass and whether or not military personnel will be among those charged.

SCAF and the new leaders that emerge will also need to concentrate on creating access to the economy for Egyptians, job creation and disengagement of the state / military apparatus from the economy. Not an easy task, but one that will need to be tackled.

As the new dawn arises over the Nile, will the land of Egypt trod a new path or await the rise of another Pharaoh?



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Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Mubarak Resignation Leaves Responsibility with Egyptian Military

Egypt Quake

Wall Street Greek Global Affairs Columnist and Middle East expert Daniel Padovano lays out the most likely next step for Egypt after its President and Dictator Hosni Mubarak's resignation. A void has been left behind, that Egypt's military is more than willing and capable of filling, based on the nation's history.

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Mubarak's Resignation Leaves Responsibility with Egyptian Military

The news from Egypt that President Hosni Mubarak had resigned from the presidency shook the world. Mubarak's Vice President, left in command, formally announced his resignation to the people and a transfer of power to what is called "The Egyptian Higher Council of the Armed Forces". If true, this marks a departure from Egypt's current constitutional practice where the Speaker of the Parliament would succeed the President. This military council would be analogous to our own Joint Chiefs of Staff.

Assuming this is the coming course of events, The Council will be in power outside of the existing constitution. As such, the Council will need to define its existence and governmental responsibilities during its tenure. Among the issues to be considered would be: 1) length of term and existence, 2) securing national strategic assets, 3) securing public order, 4) who in the civilian (and religious community) will be asked / appointed to administer the transition to civilian administration and 5) constitutional reform.

Economic issues will need to be addressed as well, but after nearly sixty years of state centered fiscal and economic policies as well as nearly thirty years of little "non-governmental" management, this will be the most difficult issue facing the new government.

According to several reports, American and Western pressure for more speedy change and acquiescence to the protester's demands pushed the military to act. Little recognition was given to either the Committee on Constitutional Reform or several pledges already in place. That may be so, but little credibility existed or was evident over the last few days.

As this transition moves forward, it must be kept in mind that the Egyptian military has been the guardian of the Egyptian state and nation since the Free Officer's Revolution of 1952. It is still regarded as such and may very well be the most resilient and trustworthy part of the Egyptian state.

In 1952, the military leadership took six months before dissolving the monarchy and establishing a Republic. In this aspect, Egypt's military followed the example of Turkey where the military also served as guardian of the nation between 1922 and 2006.



This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Pharaoh Speaks, Egypt Shakes

Egypt Insists

Reports from Egypt state that President Mubarak has left the capitol, and after protests intensified, has also let go of control of the nation. Wall Street Greek Global Affairs Analyst Daniel Padovano discusses and analyzes how a bridge to new government might progress from here. Mr. Padovano is a Historian and Geopolitics Expert, with a focus on Middle Eastern Affairs.

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Pharaoh Speaks, Egypt Shakes

Last evening, President Mubarak addressed Egypt. It was widely expected that he announce his resignation. That did not happen; instead, President Mubarak announced that he would remain as President so he could oversee the transition and political reforms. Mubarak did transfer some of his Presidential powers to Vice President Omar Suleiman. Since the speech, turmoil and frustration in Egypt greatly increased.

Demonstrations spread to more government related locations, including the state broadcasting center and the Presidential Palace. Those opposing President Mubarak and his regime wanted nothing less than for Mubarak to officially leave office, which occurred by the people's will this morning.

The Egyptian military's High Command issued a telling statement yesterday prior to Mubarak's address. In that statement, the military reiterated that it is "the guardian of the Motherland". This is true, as the military has ruled Egypt since the 1952 Free Officer's Revolution. All of Egypt's presidents: Naguib, Nasir, Sadat and Mubarak were military officers.

The legitimacy of that revolution is now questioned and doubted by the public. That reality and blame is Mubarak's. A large majority of Egypt's population have known no other regime other than that descended from the 1952 revolution. The people of Egypt believe that Mubarak has betrayed them; the real threat to Mubarak's tenure was that the military might share that same sentiment. If so, then Mubarak would become the military's, and therefore the Revolution's, most dangerous liability. As that threat played out into reality, Egypt could wait no longer.

Military intervention thus became very likely to maintain public order and to maintain Egypt. The goals of the 1952 Free Officer's Movement (and) Revolution were to make Egypt a modern state. The revolution is secular and nationalistic in nature; religious parties such as the Muslim Brotherhood and liberal parties such as the Wafd were seen as dangers to this. It is highly unlikely that the military would abdicate its "guardian" role and allow mob rule or the Muslim Brotherhood to change Egypt.

The situation was not sustainable as Mubarak left it last evening. Egyptians were being hurt, and the military so far has not demonstrated any sign that it will risk the good will and respect the public has for it. On the other hand, it is doubtful that the military will allow "mob rule" to threaten the country. At some point, the protesters and the state regime will have to meet. The very survival of Egypt as it is known today is at stake.

As Mubarak has acceded to demands to leave office, or been assisted in that decision, the military will most likely intervene at least as an overseer. Any transition and reforms will be the responsibility of the military and whatever power centers are called in to manage change. Public resentment of authoritarian rule is very high, and thus a prolonged military rule will probably be rejected (in time) as well.

The 1952 Revolution shook off a weak and corrupted monarchy and brought Egypt directly into the modern era. The goal of Egyptians ruling themselves may very well be the legacy of that Revolution, although not in a manner envisioned by the Free Officers of 1952.



This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Egyptian Tremors

A New Day Dawning

A week of rioting across Egypt have placed the future of President Hosni Mubarak in question. Egypt, the leader of the Arab World, now faces a crisis that may very well signal the closing of an old and the opening of a new chapter in Egyptian history.

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Egyptian Tremors

Egyptian protesters are calling for President Mubarak to step down and to open up the political system. Protestors also want solutions to end severe unemployment and widespread corruption. Unlike protests in the past, this week's protests are centered squarely on economic and political issues. What has taken the ruling establishment by surprise are the continuing and growing calls for Mr. Mubarak to resign and leave office (and the country).

Riots are occurring in Al-Qahira (Cairo), Al-Iskandriya (Alexandria), and Asyut, Port Said, Al-Arish, Suez, Nasr City, Dumyat, Mansoura and others.

Mr. Mubarak became President on October 6, 1981, succeeding Anwar el-Sadat after the latter's assassination. Mr. Mubarak's tenure has included a stagnant economy, loss of stature both in the Arab and Islamic world and a governing bureaucracy that is very corrupt. Egyptians have been frustrated by their lack of jobs, access to jobs and economic opportunities.

Over 50% of Egypt's 80 million people are under age 30; many have never known neither any other ruler other than Hosni Mubarak, nor the dominance of the ruling National Democratic Party (NDP). Mubarak has won four elections since assuming office, with several of those elections being questioned as to their integrity. (The term of office for the Egyptian president is six years). Dissent of the regime is not tolerated. A state of emergency has been in place since President Sadat's assassination in 1981.

The state of emergency was originally instituted to combat "radical" Islamists associated with Sadat's murder. Since, however, it has been widely applied against all challengers to the regime. Those who challenge the rule of the NDP, or are seen to threaten the principals of the 1952 Officers' Revolution (brought about by Gamal abd El-Nasir), face prosecution and / or persecution by the government.

Nasir's revolution sought to modernize Egypt. The goals of the Officers' Revolution were to make Egypt a self-sufficient, secular leader in the Arab world. The leaders of the 1952 Officers' Revolution were from the Egyptian military, probably the most progressive and modern institution in Egypt. Gamal abd El-Nasir, Anwar el-Sadat and Hosni Mubarak were officers prior to becoming President. Like the U.S., the President of Egypt is also the Commander-in-Chief of the Egyptian military.

As calls for Mr. Mubarak's resignation continue and riots take hold in most Egyptian cities, the future of Egypt becomes cloudy. Can Mubarak continue to hold power? He has dissolved his cabinet and promised reforms. This has not placated the protestors.

Recent reports from Egypt include looting and attacks on the Interior Ministry. Protestors so far, have not been attacked by the military. In many instances, protestors are riding on military vehicles without incident. Also of note is that the protests have not taken on any anti-American or anti-Western tones. This is, as of now, a solely domestic matter.

Two things are notable about Egypt's protests. First, is that the military is holding back. Other than protecting government facilities and key economic assets the military has had little involvement in the protests or (at least not seen in public) in the political offices. Whether or not the military acts (on its own) or is provoked into acting is yet to be seen.

Second, is that like Tunisia (and Iran in 2009); this is a "mobile and electronic revolution". Protestors are using cell and satellite telephones and the internet to communicate, and to set and plan protests. Despite a shutdown of the nation's mobile communications networks, Egyptians are able to communicate and stage protests (many have circumvented the government's blockages). Vodafone (Nasdaq: VOD) and Mobinil remain active in numerous locations across Egypt.

Whether or not a regime change occurs, we are witnessing the beginning of a new era in the Middle East. The "street" is awakening. This is the third set of protests to break out in the Middle East where the people themselves have taken to the streets to seek and establish change: Iran in 2009, Tunisia in mid-January 2011 and now Egypt. Similar riots have occurred in Yemen, Lebanon, and Jordan this past week.

Tunisians overthrew President Zine el-Abidine Ben-Ali after nearly thirty years of one party rule. President Mubarak may very well be next.

The people in these protests are and have been motivated by economic frustration and political repression, coupled at times with political and institutional corruption. A new tool in facilitating the protests (and revolution) in Tunisia's case is the cell phone and the internet. One cannot but help but wonder at the power of the pocket sized phone or laptop. Earlier revolutions were fought with guns and bullets, will the new revolutions be fought with flip tops and send buttons?

Whatever change lies ahead for Egypt is yet to manifest itself. Egypt is critical to the U.S. and the Middle East, due to the Suez Canal, Egypt's commitment to the "war on terror" and the peace existing between Israel and Egypt.

Should Mubarak prevail, the inevitable will only be delayed. At some point in the future, a new leader will succeed him. Whether be through the military, an electoral process or some form of revolution, a new day in the Middle East is soon rising.



This article should interest investors in: Market Vectors Egypt Index ETF (NYSE: EGPT), Egyptian Mobile (OTC: EGYMF.PK), Telecom Egypt (OTC: TEGPY.PK), T. Rowe Price Africa & Middle East (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East (Nasdaq: TRIAX), Cellcom Israel (NYSE: CEL), Aberdeen Israel Fund (AMEX: ISL), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), Halliburton (NYSE: HAL), Schlumberger (NYSE: SLB), ConocoPhillips (NYSE: COP), Chevron (NYSE: CVX), Noble Energy (NYSE: NBL), Baker Hughes (NYSE: BHI).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

WikiLeaks Info Should Impact Stocks

WikiLeaks Global Reshuffle

If all were logical in the world, or at least made sense in our climate controlled American environment, stocks should absorb a significant shockwave Monday. The blast would emanate from a series of new WikiLeaks on hot topics centered around Iran and North Korea. Information has been released offering many troubling insights on these two points in the Axis of Evil.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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WikiLeaks Info Should Impact Stocks

The information made public in many cases was already generally known, and not just in the common subconscious, but in plain sight of the stock market for years. Yet, perhaps due to its duration overhanging global order, the potential Iranian event has become something we have grown too accustomed to. The documents show intense Middle Eastern pressure on both the Bush and Obama Administrations to wage war on Iran. Meanwhile, those same Islamic nations have held subdued stances publicly, even perhaps appearing to Iran as allies. As a result, depending on how Iran interprets the leaked information, world order looks to have been reshuffled overnight. Thus, Iran, Israel and the US start the new week with completely different perspectives and images, and that is a frightening consideration for investors to ponder.

WikiLeaks was smart in its distribution methodology, releasing to several select major media organizations, so as to prevent the knock-down of its website today. This information is public and going to stay that way, like it or not. So the US is now engaged in damage control, with some analysts calling the damage catastrophic. The US is concerned that its allies may temper future candor in their communications with US representatives now, given this lesson served.

The WikiLeaks information itself is vast, and so I cannot cover it completely, but I can cover some of the key points of impact to US diplomacy and Iranian perspective (see www.wikileaks.org for details). Europe is flustered this morning, given revealed American intelligence indicating a potential sharing of missile technology between North Korea and Iran, passed down from Russia initially. The info expands Iran's missile strike range to 2K miles, from 1,200. That puts Berlin within range with about half of Europe. Iran could already touch all of the Middle East.

Information has been released showing Israeli interest in aiding the Palestinian Authority to wage a war against Hamas for Gaza. There are also indications that Iran provided secret aid to Hezbollah in its war with Israel. Clearly, with all the cards turned up, the game has changed globally.

What Iran should find most troubling is the allegations that its Islamic neighbors have been some of the harshest critics of it behind the scenes. Reports indicate that Saudi Arabia has been aggressively lobbying the US to use its military might against Iran before long. Reportedly, Saudi Arabia is even engaged in the weaning of the Chinese off their dependence of Iranian oil, committing to provide a new source flow in exchange for China's support against Iran in the UN.

Now, given the changed Iranian lens of perspective of the situation, and the realization of this by Israel and the US and its allies, you might expect stocks to reflect a sort of wake-up call sounded in the investment community Monday. After all, war could now be days away originated by any party, given the bluff is up. However, in early trading through 2:00 AM ET, Asian shares did not reflect such concern, outside of South Korea. However, these markets often simply follow the lead of US shares. European stocks seem more likely to reflect a paradigm shift in geopolitical factors. American shares seem even more likely to do so, especially as the WikiLeaks information is sifted through and understood more perfectly.



This article should interest investors in the shares of Barclay's (NYSE: BCS), Lloyds Banking Group (NYSE: LYG), Allied Irish Bank (NYSE: AIB), British Airways (NYSE: BAY), BP (NYSE: BP), British Sky Broadcasting (NYSE: BSY), Currency Shares British Pound (NYSE: FXB), DFA United Kingdom Small Company Fund (Nasdaq: DFUKX), iShares MSCI UK (NYSE: EWU), NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: MS, NYSE: C, NYSE: DB, NYSE: CS, NYSE: UBS, NYSE: STD, NYSE: WFC, NYSE: NBG, NYSE: AIG, Korea Fund (NYSE: KF), Korea Electric Power (NYSE: KEP), Korea Equity Fund (NYSE: KEF), The Korea Fund (Nasdaq: XKFDX), iShares MSCI South Korea Index (NYSE: EWY), Samsung (Korea: 005930.KS), Posco (NYSE: PKX), Hyundai Motor (OTC: HYMTF.PK), Shinhan Financial (NYSE: SHG), Lg Chem (OTC: LGCEY.PK), LG Electronics (OTC: LGERF.PK), Hynix Semiconductor (Korea: 000660.KS), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Korean Border Clash

On High Alert

North and South Korea exchanged fire this morning on their disputed Yellow Sea border. As tensions remain high on mutual threats of escalation, Wall Street Greek Global Affairs Columnist Daniel Padovano offers our readers his critical insights.

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Korean Border Clash

South Korea reported that North Korean artillery attacks began at 2:30 PN local time. The border clash occurred on Yeonpyeong Island located about 80km west of the port of Inchon. Early reports indicate that over 200 artillery shells have landed on the island, killing two South Korean marines and wounding about 20 more people.

The attack comes in the middle of a nine-day military exercise involving all branches of South Korea's military and the United States. North Korea has issued notices to South Korea to halt this aggressive posturing. (North Korean requests like this precede most South Korean military exercises). In this instance, North Korea claims that this exercise is designed to mask an attack against the North's nuclear facilities.

Today's artillery attack has escalated quickly. South Korea's Joint Chiefs are in session and earlier today, the South Korean air force was scrambled. South Korea's military remains at its highest alert level. The main concern is North Korea's artillery batteries surrounding Seoul, just 50km away.

As of yet, fighting has not spread, although North Korea claims that it will continue attacks.

Yeonpyeong Island has about 1,300 residents. Most of the residents are South Korean military personnel. Civilians residents are largely fishermen. The island is part of a chain of islands off both Korea's western coasts. The islands are in the disputed border area between the Northern Limit Line (DMZ). Previous incidents on or near Yeonpyeong include a 1999 incident resulting in the deaths of 6 North Korean soldiers. In March 2010, the South Korean warship Cheonan was sunk by an alleged North Korean torpedo. 46 South Korean sailors died in that attack.

The current spate of attacks come on the heels of the South Korean admission that the "Sunshine Policy" aimed at reuniting the two countries has failed, increasing tension over North Korea's expanding nuclear program and the elevation of Kim Jong Un (the son of Kim Jon Il) to high rank. King Jong Un is rumored to be Kim Jong Il's successor.

North Korea may be striking out to remind the South, China, the U.S. and Russia that it is not to be trifled with or ignored. North Korea may feel itself vulnerable, as it faces increasing pressure from the international community regarding its nuclear program and possible domestic famine.



Article Interests: Korea Fund (NYSE: KF), Korea Electric Power (NYSE: KEP), Korea Equity Fund (NYSE: KEF), The Korea Fund (Nasdaq: XKFDX), iShares MSCI South Korea Index (NYSE: EWY), Samsung (Korea: 005930.KS), Posco (NYSE: PKX), Hyundai Motor (OTC: HYMTF.PK), Shinhan Financial (NYSE: SHG), Lg Chem (OTC: LGCEY.PK), LG Electronics (OTC: LGERF.PK), Hynix Semiconductor (Korea: 000660.KS), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

G-20, Divided We Fall

President Obama said, "Instead of hittin home runs, sometimes we're gonna hit singles. But they're really important singles." This was the positive spin that unwound the two-day summit of the Group of 20 Nations (G-20). However, the end result of the Seoul meeting was neither the consummation of an expected trade deal with the South Koreans nor a resolution on the trade imbalance with China. The latter issue weighs heavily on the agenda of the US Administration.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Relevant Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: SERCX, Nasdaq: SERNX, Nasdaq: FEUFX, Nasdaq: FEEEX, Nasdaq: FAEAX, Nasdaq: FBEAX, Nasdaq: FIEUX, Nasdaq: FECAX, Nasdaq: IERAX, Nasdaq: XRNEX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: UEPSX, Nasdaq: PEUGX, Nasdaq: RYAEX, NYSE: CEE, NYSE: RNE, NYSE: PEF, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, Nasdaq: ANEFX, Nasdaq: CNGAX, Nasdaq: HNEAX, NYSE: BAC, NYSE: GS, NYSE: AIG, NYSE: WFC, NYSE: MS, NYSE: C, NYSE: DB, NYSE: CS, NYSE: UBS, NYSE: MCG, NYSE: MCO, NYSE: TD, NYSE: PNC, NYSE: STD, AMEX: GLE, NYSE: BCS, NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX)

G-20, Divided We Fall

As quickly as the US could get started complaining, China redirected attention to the US Federal Reserve's recently announced capital markets actions, labeled QE2 by Wall Street. Characterizing China's argument can be simplified to its pointing the finger of blame back at its accuser. While promoted as a strategy to spur economic advance, the Fed's quantitative easing will also serve to devalue the dollar and drive US export demand. If this is not trade war, I do not know what is. And in its quarrel, China has found a strange ally, Germany, which is also struck down by American currency devaluation.

President Obama's singles hitting reference addressed progress in global financial regulation and efficiencies in aid provision to poor nations. More importantly, he may also be conveying his approval for a plan for the G-20, through the IMF, to analyze the effects of trade imbalance on the global economy and local economies. Clearly, the US would benefit from a global acknowledgement, based in economic fact, that China is cheating. By unfairly, and against free market pressure, keeping its currency cheap, China reaps great economic benefits at the expense of other trading partners and competitors.

The argument has grown heated recently, thanks to rising voices back west, including the qualms of Treasury Secretary Geithner, the Democrats in Congress, and the President himself. In the past, a Republican led American government had been cautious about treading on the feet of the dragon, but a new brazen knight has taken over the kingdom by way of valor. Obama is now faced with the challenge of his presidential political career, restoring economic confidence before 2012. Thus, he wields the once forbidden blade for the sake of fairness and the restoration of his kingdom.

The Chinese Yuan has appreciated a bit since the US government began insinuating it would play currency hardball, and certainly following the declaration of QE2 by the independent Fed. Many hopeful global leaders applauded the use of the G-20 forum to work through issues like these, but the fact is that the US and China appear already engaged in a sort of bilateral currency warfare, however cold it may still be. My concern is that given some time to dwell on the US action, and to debate and deliberate it, the EU and emerging nations like India will likely counter US and Chinese maneuvers with actions of their own before any civilized study is concluded. Thus, the race to the bottom will begin. The result: Fiat currency value would dissipate globally, and the gold standard would be re-established.

While the cost of a loaf of bread is already equal to a year's salary in some very poor nations, the inflation that could ensue as currency manipulation is complemented by rising demand for scarce resources in an increasingly globally developing world is terrifying to me. Global cooperation could quickly deteriorate in such an environment, given likely civil unrest and political pressures. Unstable leadership could easily give way then to radical reform, and usher in popular nationalists. Such individuals could be politically wise, but otherwise ignorant or even dangerously selfish. The same mechanisms that allowed Hitler to rise to power would be in place once again, and the angry crowds would cheer for it all.

Instability would replace global organization, and chaos could follow. In such an environment, world war reenters the equation, and given the unfolding situation in Iran, and the importance of its oil reserves to China, a match sits ominously waiting to light the fire.



(Article interests investors in: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE, Nasdaq: SERAX, Nasdaq: SERBX, Nasdaq: SERCX, Nasdaq: SERNX, Nasdaq: FEUFX, Nasdaq: FEEEX, Nasdaq: FAEAX, Nasdaq: FBEAX, Nasdaq: FIEUX, Nasdaq: FECAX, Nasdaq: IERAX, Nasdaq: XRNEX, Nasdaq: PBEUX, Nasdaq: UEPIX, Nasdaq: UEPSX, Nasdaq: PEUGX, Nasdaq: RYAEX, NYSE: CEE, NYSE: RNE, NYSE: PEF, NYSE: GUR, NYSE: EPV, NYSE: VEA, NYSE: DFE, NYSE: DEB, NYSE: IEV, Nasdaq: ANEFX, Nasdaq: CNGAX, Nasdaq: HNEAX, NYSE: BAC, NYSE: GS, NYSE: AIG, NYSE: WFC, NYSE: MS, NYSE: C, NYSE: DB, NYSE: CS, NYSE: UBS, NYSE: MCG, NYSE: MCO, NYSE: TD, NYSE: PNC, NYSE: STD, AMEX: GLE, NYSE: BCS, NYSE: GLD, NYSE: XLE, NYSE: XLF, NYSE: BJV, NYSE: SZI, NYSE: BPD, NYSE: IEL, NYSE: PBN, NYSE: CGW, NYSE: LVL, NYSE: FRI, NYSE: PBP, NYSE: RSU, NYSE: RMM, NYSE: REA, NYSE: RFL, NYSE: RHM, NYSE: RTG, NYSE: RSW, NYSE: RMS, NYSE: REC, Nasdaq: PDOWX, Nasdaq: XDPOX, Nasdaq: XDPDX, Nasdaq: NDUAX, Nasdaq: NDUBX, Nasdaq: IDJAX, Nasdaq: NJCRX, Nasdaq: UDPIX, Nasdaq: UDPSX, Nasdaq: UWPIX, Nasdaq: RYLDX, Nasdaq: RYIDX, Nasdaq: RYCWX, Nasdaq: ONEQ, Nasdaq: QCLN, Nasdaq: QQEW, Nasdaq: QQXT, Nasdaq: QTEC, Nasdaq: NASDX, Nasdaq: NDXKX, Nasdaq: POTCX, Nasdaq: DXQSX, Nasdaq: DXQLX, Nasdaq: FNCMX, Nasdaq: INQAX, Nasdaq: MOTAX, Nasdaq: XQQQX)

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Bavar-2: Iran's Flying Boat

Iran's Defiance!

In his latest piece, Wall Street Greek Global Affairs Columnist Daniel Padovano reviews Iran's latest asymmetrical warfare mechanism, the Bavar-2, Iran's flying boat. Three small squadrons of these pesky crafts threaten to disrupt the Strait of Hormuz should conflict erupt between Iran and its foes.

Daniel Padovano is an accredited historian and professor, with specialty in modern Middle Eastern and North American affairs. He is a regular columnist of the globally syndicated blog, Wall Street Greek, and has composed a series of articles for the publication on the topic of Iran.

(Relative Tickers: NYSE: HON, NYSE: GD, NYSE: COL, NYSE: GR, NYSE: LLL, NYSE: SAI, Nasdaq: FLIR, NYSE: ERJ, NYSE: SPR, Nasdaq: BEAV, NYSE: TDG, NYSE: CAE, NYSE: HXL, NYSE: ESL, NYSE: TDY, NYSE: CW, NYSE: HEI, NYSE: TGI, NYSE: ORB, NYSE: AIR, Nasdaq: KAMN, Nasdaq: AVAV, NYSE: HAL, NYSE: SLB, NYSE: GY, NYSE: DGI, Nasdaq: SWHC, AMEX: HWK, Nasdaq: LMIA, NYSE: XOM, NYSE: BP, NYSE: CVX, NYSE: COP, NYSE: ECA, NYSE: E, NYSE: EPE, NYSE: PZE, NYSE: PTR, NYSE: REP, NYSE: TOT, NYSE: WMZ, Nasdaq: GULF, Nasdaq: TRAMX, Nasdaq: TRIAX, NYSE: ISL, Nasdaq: XISLX, NYSE: NOC, NYSE: RTN, NYSE: ATK, NYSE: LMT, NYSE: BA, NYSE: IWM, NYSE: TWM, NYSE: IWD, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

Bavar-2: Iran's Flying Boat

At the close of Iran's "Week of Sacred Defense" on September 28, 2010, commemorating the 1980-1988 Iran-Iraq war, Iran showcased its newest weapon, the Bavar-2. The Bavar-2 is a domestically produced fixed wing flying boat.

Iran's Defense Minister, Brig. Gen. Ahmad Vahidi said that:

"The Islamic Republic of Iran is one of the few countries which managed to design, build and use flying boats in a short time".



The concept of flying boats is not new; the Soviet Union embarked on such an undertaking back in the 1980's. The image above illustrates advanced Russian efforts on WIG Boats (Wing-in-Ground effect - also know as WISE or Wing in Surface Effect Ship).

Iran's flying boat, the Bavar-2 (Bavar is translated as Defiance), is a small two-man reconnaissance boat designed to fly at low altitudes. The Bavar-2 has an estimated top speed of 100 knots. The Bavar-2 is equipped with cameras and at least one machine gun. Future plans call for the addition of a second machine gun and possibly small missiles.

Iran claims that the Bavar-2 has stealth capability; however this has not been independently confirmed. If true, this new weapon system could greatly enhance Iran's military capability in the Persian Gulf. Stealth capability is questionable because of the loud sound of the overhead propeller. This protrusion also adds squares and angles to an otherwise sleek and curved profile which enhances stealth capabilities.

As a strategic weapon, the Bavar-2's value is an unproven quantity; however it is an example of asymmetric warfare (where one side uses low technology to offset an adversary's superior technical advantages).

On its own, the Bavar-2 will allow Iran to more closely and rapidly assess and know ship position and movements throughout the Gulf, and its own coastal areas. The Bavar-2 has the capability to harass vessels, but would stand little chance against a military or armed civilian ship if engaged in combat under its present configuration.

The true value of the Bavar-2 is that of a decoy vessel. Reconnoitering or "buzzing" civilian or military vessels would distract coalition or U.S. naval patrols. Buzzing ships can confuse and potentially overwhelm the target's observational and defensive capabilities, thereby allowing other elements of Iran's military to engage in more strategic operations. These other strategic operations could include mining and closing the Straits of Hormuz, or attacking targets of greater value and worth. The potential use of these flying boats as a kamikaze-type weapon cannot be underestimated, especially in a narrow waterway as the Straits of Hormuz.

According to press releases, three squadrons of these flying boats have been fielded and are under the command of the Islamic Republican Guard Corps (IRGC). They are currently based in Bandar Abbas, conveniently near the Straits of Hormuz.



Article Interests WisdomTree Middle East Dividend Fund (Nasdaq: GULF), T. Rowe Price Africa & Middle East Fund (Nasdaq: TRAMX), T. Rowe Price Institutional Africa & Middle East Fund (Nasdaq: TRIAX), Aberdeen Israel Fund (NYSE: ISL), Aberdeen Israel Fund (Nasdaq: XISLX), Northrop Grumman (NYSE: NOC), Raytheon (NYSE: RTN), Alliant Techsystems (NYSE: ATK), Lockheed Martin (NYSE: LMT), Boeing (NYSE: BA), NYSE: IWM, NYSE: TWM, NYSE: IWD, Honeywell (NYSE: HON), General Dynamics (NYSE: GD), Rockwell Collins (NYSE: COL), Goodrich (NYSE: GR), L-3 Communications (NYSE: LLL), SAIC (NYSE: SAI), FLIR Systems (Nasdaq: FLIR), EMBRAER (NYSE: ERJ), Spirit Aerosystems (NYSE: SPR), BE Aerospace (Nasdaq: BEAV), TransDigm Group (NYSE: TDG), CAE (NYSE: CAE), Hexcel (NYSE: HXL), Esterline Technologies (NYSE: ESL), Teledyne Technologies (NYSE: TDY), Curtiss-Wright (NYSE: CW), HEICO (NYSE: HEI), Triumph Group (NYSE: TGI), Orbital Sciences (NYSE: ORB), AAR Corp. (NYSE: AIR), Kaman Corp. (Nasdaq: KAMN), AeroVironment (Nasdaq: AVAV), Smith & Wesson (Nasdaq: SWHC), DigitalGlobe (NYSE: DGI), GenCorp (NYSE: GY), Hawk (AMEX: HWK), LMI Aerospace (Nasdaq: LMIA), Exxon Mobil (NYSE: XOM), BP (NYSE: BP), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), Encana (NYSE: ECA), Eni SpA (NYSE: E), Enterprise GP Holding (NYSE: EPE), Petrobras (NYSE: PZE), PetroChina (NYSE: PTR), Repsol YPF SA (NYSE: REP), Total SA (NYSE: TOT), Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

HMI Reaction Shows Stocks Priced in Bad but Not Worst Case Scenario (Iran)

The reaction of housing stocks to today's depressing Housing Market Index seems to say the bad news has been well understood and priced in. The solid earnings report of a housing stock, Lennar, also went far in keeping homebuilder shares in the green today. However, global events bring our attention to the worst case scenario, which is not only absent in the valuation of housing stocks, but ignored by the entire market. We suggest our President tread carefully with regard to Iran, given the current vulnerability of our economy. We further urge our government to focus the entirety of its attention to first curing the economic situation and labor problem, before placing a vulnerable economy in the line of fire.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

(Tickers: NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, Nasdaq: AVTR, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD)

HMI Reaction Shows Stocks Priced in the Bad, but NOT the Worst Case Scenario: Iran

The Housing Market Index (HMI) for September stuck at a very low mark of 13, matching both August and the low point reached in March of 2009. Oh by the way, that was the low point for the stock market as well, when full panic had a grip of every American, especially those with 401K plans dwindling away. Thus, this latest check of builder confidence is worrisome, and it supports our case for a double dip in home prices and possibly the economy generally, should some new catalyst find this sensitive economic situation.

What sort of catalyst do I suggest? Well, there are more than enough possibilities, like for instance sovereign default within Europe; the disintegration of the European Union's troubled euro; an asset bubble burst in China, which would hurt the domestic demand that is supporting US manufacturing now; a significant terror attack (though we can’t live in fear of it); the loss of control of government debt and entitlement programs; war in any oil sensitive market, like Venezuela for instance.

And there is one major risk in focus this week, which threatens to send shipping costs skyrocketing and the economy deep into recession at a moment's notice. That moment would be the one in which Israel and/or the United States and Western nations engage Iran in conflict. Though this may be the necessary step, it would also mark the moment when Iran launches missiles, aircraft and maybe even troops, perhaps all over the Middle East, but most likely toward Israel and maybe into Kuwait, Iraq, Saudi Arabia, and Afghanistan. That's the day all hell breaks loose and oil prices top $150 on their way to plus $200 per barrel. Iran's real reaction may fall significantly shorter than where we have forecast, but we have not even spoken of China's reaction, given a major source of its oil supply could be shut to it.

So yes, things could get worse, and yes we do sit on the brink of economic depression; and yes, our government had better tread carefully while our economy is so vulnerable.

The Housing Market Index is sad enough, even without such a risk. Who needs a catalyst with homebuilder confidence already so low just on the lack of demand and the flood of distressed properties to meet that slim pool of home shoppers. Who needs such catalyst when banks will not give money away like they used to. Who needs such a catalyst when 10% of America is unemployed and another 7% not making enough money to pay for basic necessities, let alone a new home. They can't qualify for the loan anyway, not even applying old standards of lending (the legal ones anyway).

The National Association of Home Buiders' published its report today, and we quote: "In general, builders haven't seen any reason for improved optimism in market conditions over the past month," noted NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "If anything, consumer uncertainty has increased, and builders feel their hands are tied until potential home buyers feel more secure about the job market and economy."

"The stall in the nation's housing market continues," agreed NAHB Chief Economist David Crowe. "Builders report that the two leading obstacles to new-home sales right now are consumer reluctance in the face of the poor job market and the large number of foreclosed properties for sale. However, we do expect that moderate improvement in the job market will help boost consumer confidence and improve conditions for new-home sales in this year's final quarter." I'm not so sure about that last part!

The component indexes measuring current business (measured 13) and opportunities over the next six months (18) stuck at the same low marks seen in August. Perhaps these readings are so low now, that any further deterioration will be hard to find in the index. In other words, this may be about as bad as it gets for homebuilders.

The industry also reported that foot traffic dropped in September, as that index fell a point to a depressing mark of 9. I would have to say this is the most important component reported, as it measures real business opportunity.

By now, Greek readers are well aware of the impact the First-Time Homebuyers Tax Credit had on housing. At this point, you must understand that the synthetic demand it created was limited to the few folks in position to buy their first home, or who qualified for the tax incentives offered when the law was expanded. By now you understand that economic activity of the sort we are mired in, with unemployment laboring all things, cannot support gains in housing nor any consumption.

Regionally speaking, it looks as though the softening manufacturing space is having an impact on Midwestern activity, with the regional index dropping three points to a mark of 12. The honeymoon is indeed over in Detroit, and so those of you thinking about buying into GM's IPO, might think twice about the timing. It's certainly suspect that the offering is being sought this soon.

In the densely populated Northeast, the index also fell 3 points to a mark of 16. It seems it would be difficult for the West to get worse, as that index now sits at 8, unchanged from August. Only the South improved, with the regional measure gaining two points, to a mark of 14. Perhaps oil slick slowed Gulf activity is returning toward normal now, which would explain the different direction posted by the region's homebuilders.

Given the state of affairs was already understood to be harsh by the stock market, the report has had little impact on trading Monday. In fact, the Dow is up about 1% at this hour. Toll Brothers (NYSE: TOL), an important high-end homebuilder, saw share rise of 3% thus far today, as the entire housing sector benefited from a good report from Lennar (NYSE: LEN). LEN shares were up 9% at the hour of publishing, so a pretty bad scenario has already been priced in.

However, we argue the worst case scenario is one nobody wants to think about, and would send these shares tumbling, along with the entire market. Tread carefully my dear President. The economy is of highest priority now, because nothing else can be addressed until it is off cliff's edge vulnerability.



Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX and Avatar Holdings (Nasdaq: AVTR), NYSE: HON, NYSE: GD, NYSE: COL, NYSE: GR, NYSE: LLL, NYSE: SAI, Nasdaq: FLIR, NYSE: ERJ, NYSE: SPR, Nasdaq: BEAV, NYSE: TDG, NYSE: CAE, NYSE: HXL, NYSE: ESL, NYSE: TDY, NYSE: CW, NYSE: HEI, NYSE: TGI, NYSE: ORB, NYSE: AIR, Nasdaq: KAMN, Nasdaq: AVAV, Nasdaq: SWHC, NYSE: HWK, Nasdaq: LMIA, NYSE: XOM, NYSE: BP, NYSE: CVX, NYSE: COP, NYSE: ECA, NYSE: E, NYSE: EPE, NYSE: PZE, NYSE: PTR, NYSE: REP, NYSE: TOT, NYSE: WMZ, Nasdaq: GULF, Nasdaq: TRAMX, Nasdaq: TRIAX, NYSE: ISL, Nasdaq: XISLX, NYSE: NOC, NYSE: RTN, NYSE: ATK, NYSE: LMT, NYSE: BA, NYSE: IWM, NYSE: TWM, NYSE: IWD.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.