Mubarak's Acts of Cowardice; Obama Calls Mubarak for 30-Minutes; Cell Service, Internet Total Shutdown; Anarchy in Cairo; How Long can Mubarak Last?

The situation in Egypt has gone from bad to worse. Cairo is in a state of near-anarchy and Egyptian President Hosni Mubarak's cowardly disruptions to the internet and cell phones have made things worse.

Egyptian citizens unable to get news on the internet or cell phones have only one place to get it now, the street.

President Obama called Mubarak in a 30-minute phone call. Obama's message was "Ultimately, the future of Egypt will be determined by the Egyptian people."

If that was a hint, Mubarak did not get it. Instead, Cairo is in flames as protesters have turned more defiant.

Mubarak Orders Crackdown, With Revolt Sweeping Egypt

The New York Times reports Mubarak Orders Crackdown, With Revolt Sweeping Egypt

With police stations and the governing party’s headquarters in flames, and much of this crucial Middle Eastern nation in open revolt, President Hosni Mubarak of Egypt deployed the nation’s military and imposed a near-total blackout on communications to save his authoritarian government of nearly 30 years.

Friday’s protests were the largest and most diverse yet, including young and old, women with Louis Vuitton bags and men in galabeyas, factory workers and film stars. All came surging out of mosques after midday prayers headed for Tahrir Square, and their clashes with the police left clouds of tear gas wafting through empty streets.

By nightfall, the protesters had burned down the ruling party’s headquarters in Cairo, and looters marched away with computers, briefcases and other equipment emblazoned with the party’s logo. Other groups assaulted the Interior Ministry and the state television headquarters, until after dark when the military occupied both buildings and regained control. At one point, the American Embassy came under attack.

Six Cairo police stations and several police cars were in flames, and stations in Suez and other cities were burning as well. Office equipment and police vehicles burned, and the police seemed to have retreated from Cairo’s main streets. Brigades of riot police officers deployed at mosques, bridges and intersections, and they battered the protesters with tear gas, water, rubber-coated bullets and, by day’s end, live ammunition.

Cairo in Near-Anarchy

The Washington Post reports Cairo in near-anarchy as protesters push to oust president

The Egyptian capital descended into near anarchy Friday night, as the government sent riot police, and then the army, to quell protests by tens of thousands of demonstrators determined to push President Hosni Mubarak from office.

By the end of the day-long battle, the protesters were still standing and the police were nowhere to be seen.

It remained unclear late Friday night what role the Egyptian military might play. Mubarak, a former air force officer, draws much of his strength from the military, and any decision by the armed forces to withdraw support would mean the certain end of his reign.

But unlike the police, which unleashed an arsenal of weapons against the demonstrators, the military did not take any immediate action, and protesters gleefully welcomed the soldiers' arrival in a thundering of personnel carriers.

Protesters were honking their horns in celebration and roaming freely through central parts of the city late in the evening, in defiance of a strict curfew. The night air was thick with black smoke, and the sounds of explosions, gunshots, sirens, cries and occasional cheers echoed through the darkness.

Success in ousting Mubarak would be a remarkable achievement for a group of demonstrators who have no charismatic leaders, little organization, and few clear objectives beyond removing this nation's autocratic president and other members of his ruling clique.

Before this week, few thought a mass anti-government movement was possible in Egypt, a country that has little experience with democracy. But after Friday's protests, the campaign to oust Mubarak only seems to be gathering strength.

The Washington Post has a stunning set of 57 Egypt Riot Images, some of the best I have seen yet. Here are a few of them.



Jan. 29, 2011
In this photo released by China's Xinhua News Agency, demonstrators climb up armored vehicles at Square Tahrir in Cairo, Egypt early Saturday.
Cai Yang / AP



A protester burns a picture of Egypt's President Hosni Mubarak during clashes in Cairo on Jan. 28, 2011.
Amr Abdallah Dalsh / Reuters



Egyptian protesters face anti-riot policemen in Cairo on Friday, Jan. 28, 2011. The riots escalated throughout the day.
Victoria Hazou / AP



Army tanks line up in Tahrir Square in Cairo.
Peter Macdiarmid / Getty Images



Thousands of protesters gather in Tahrir Square despite a curfew.
Peter Macdiarmid / Getty Images

Egypt Cuts Off Most Internet and Cell Service

The New York Times reports Egypt Cuts Off Most Internet and Cell Service

Autocratic governments often limit phone and Internet access in tense times. But the Internet has never faced anything like what happened in Egypt on Friday, when the government of a country with 80 million people and a modernizing economy cut off nearly all access to the network and shut down cellphone service.

The shutdown caused a 90 percent drop in data traffic to and from Egypt, crippling an important communications tool used by antigovernment protesters and their supporters to organize and to spread their message.

Vodafone, a cellphone provider based in London with 28 million subscribers in Egypt, said in a statement on its Web site that “all mobile operators in Egypt have been instructed to suspend services in selected areas.” The company said it was “obliged to comply” with the order.

Egypt, to an unprecedented extent, pulled itself off the grid.

Obama Calls Mubarak, Talks 30-Minutes

Bloomberg reports Obama Tells Mubarak He Must Stick to Pledge of Egyptian Reforms

President Barack Obama told Egyptian President Hosni Mubarak last night he must live up to promises he made about political, social and economic reforms following the fourth day of anti-government demonstrations across Egypt.

Obama delivered the message in a 30-minute phone call between the two leaders that followed public remarks by Mubarak in which he asked the country’s government to resign and pledged to fight poverty, speed economic and social changes, and promote civil liberties and democracy.

In a televised address to the Egyptian people just after midnight Cairo time, Mubarak said he asked his ministers to resign and promised that the new government would speed reforms and promote civil liberties. He defended his response to widespread demonstrations, which has included ordering the army to help police impose a 6 p.m. to 7 a.m. curfew by sending armored vehicles and tanks into the streets.

Obama responded that “this moment of volatility has to be turned into a moment of promise.” He also called on the Egyptian government to end the blocking of the Internet, including social networking sites that protesters have used to organize.

“Ultimately, the future of Egypt will be determined by the Egyptian people,” Obama said. “Governments have an obligation to respond to their citizens.”

At the White House, Obama said the Egyptian protestors were exercising “universal” rights to peaceful assembly and association, free speech and “the ability to determine their own destiny.

“These are human rights,” he said. “And the United States will stand up for them everywhere.”

Mubarak's Acts of Cowardice

Shutting down the internet is an act of cowardice. Firing all your ministers while pledging reform is an act of cowardice. So is ordering Vodafone to shut down cell phone usage. Sending tanks into the street is certainly an act of cowardice.

Not only are those acts of cowardice, they have backfired. People are in open defiance of curfews. After all, they have no way to get the news but see it themselves in the streets.

By the way what is a tank supposed to do anyway? Is it really going to fire on the people? Check out that first image again. Protesters are crawling all over those tanks and armored vehicles.

As I see it, the only thing tanks can possibly do is get people stirred up. Yet, the only thing holding Mubarak's corrupt regime together is the military.

Mubarak came up from the military so there is some loyalty there. However, the military has some genuine support from the people (unlike the despised state police), and I doubt the military will want to lose that support.

How long the military will support Mubarak is the key question at this point. I suspect not long if these riots continue.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Egypt Calls in Army, Imposes Curfew; Mubarak Orders Ministers to Resign; US Puts Egypt Aid Under Review; Will the US Get this one Right?

The violence in Egypt continues to escalate with more protests, fire bombs, and buildings set ablaze. Protesters burnt the headquarters of Egyptian President Hosni Mubarak's ruling party to the ground. The US embassy was also attacked, but so far, those protesters have been turned back.

President Mubarak imposed curfews, however, those curfews were ignored. When shutting down the internet failed, Mubarak's next step was to bring in the army.

Egypt Calls In Army as Protests Rage

The New York Times reports Egypt Calls In Army as Protests Rage

After a day of increasingly violent protests throughout Egypt, President Hosni Mubarak ordered the military into the streets to reinforce police struggling to contain riots by tens of thousands of Egyptians that posed one of the most serious challenges to his long and autocratic rule.

The president also imposed an overnight curfew nationwide, but demonstrators defied the order, remaining in the streets of the capital, setting fire to police cars and burning the ruling party headquarters to the ground. As smoke from the fires blanketed one of the city’s main streets along the Nile, crowds rushed the Interior Ministry and state television headquarters, but the military moved into the buildings to establish control. Protesters also tried to attack the American Embassy.

Calling out the military is a signal of how dramatically the situation had spiraled out of control after four days of demonstrations. The army, one of the country’s most powerful and respected institutions, prefers to remain behind the scenes and has not been sent into the streets since 1986.

But the police, a much reviled force prone to violent retribution against anyone who publicly defies the state, appeared unable to quell the unrest despite a heavy-handed response that included beatings of protesters and the firing of a water cannon at Nobel laureate Mohamed ElBaradei. In several cases in the capital and elsewhere, the police were forced to back down by throngs of protesters.

In one of the most arresting scenes of the day, in Alexandria, protesters snatched batons, shields and helmets from the police. Honking cars drove up and down a main street, holding police riot shields and truncheons out the windows as trophies.

In both Cairo and Alexandria, some army patrols were greeted with applause and waves from the crowds — a seemingly incongruous response from demonstrators who say they want to bring down the president. But many people support the army for its success in shocking the Israeli Army with a surprise attack in 1973 and for its perceived reluctance, at least in the past, to get involved in politics.

As the chaos continued, it appeared some Egyptians might be taking steps on their own to stop any destruction. An Al Jazeera correspondent, who had spoken by phone to eye witnesses at the National Museum, said that thousands of protesters had formed a “human shield” around the museum to defend from possible looting of antiquities, though there were no confirmed reports that such looting had begun.

Violent Clashes on the Streets of Cairo

The NYT has a 21-image Slideshow of the Violent Clashes on the Streets of Cairo. Here are 3 of the 21 images.



Tahrir Square on Friday night. Internet and cellphone connections have been disrupted or restricted in Cairo, Alexandria and other places, cutting off social-media Web sites that had been used to organize protests and complicating efforts by the news media to report on events on the ground.

Credit: Peter Macdiarmid/Getty Images



The unrest in Egypt — fueled by frustrations over government corruption, economic stagnation and a decided lack of political freedom — came after weeks of turmoil across the Arab world that toppled one leader in Tunisia.

Credit: Scott Nelson for The New York Times



The protests across Egypt have underscored the blistering pace of events that have transformed the Arab world, particularly among regimes that have traditionally enjoyed the support of successive administrations in Washington.

Credit: Mohamed Omar/European Pressphoto Agency

Mubarak Orders Ministers to Resign

The people clearly want the Egyptian president to resign, instead, Mubarak Orders Ministers to Resign.

President Hosni Mubarak of Egypt appeared on television late Friday night and ordered his government to resign, but backed his security forces’ attempts to contain the surging unrest around the country that has shaken his 28-year authoritarian rule.

He did not offer to step down himself and spent much of the short speech explaining the need for stability, saying that while he was “on the side of freedom,” his job was to protect the nation from chaos.

Secretary of State Hillary Rodham Clinton, reading a prepared statement, called Friday on Egypt’s government to “restrain the security forces” and said that “reform is absolutely critical to the well-being of Egypt.” “We urge the Egyptian authorities to allow peaceful protest and to reverse the unprecedented steps it has take to cut off communications,” she said, apparently referring to interruptions in Internet and cellphone connections in some cities. She also urged that protesters “refrain from violence and express themselves peacefully.” After her comments, the State Department issued a travel alert cautioning Americans against all nonessential trips to Egypt in the next month.

Images of the lowly challenging the mighty have been relayed from one capital to the next, partly through the aggressive coverage of Al Jazeera. Social networking sites like Facebook and Twitter have given the protesters a potent weapon, enabling them to elude the traditional police measures to monitor and curb dissent. But various regimes have fallen back on a more traditional playbook, relying on security forces to face angry demonstrators on the streets.

U.S. Puts Egypt Aid Under Review

Bloomberg reports U.S. Toughens Stance on Mubarak; Puts Egypt Aid Under Review

“The people of Egypt are watching the government’s actions, they have for quite some time, and their grievances have reached a boiling point and they have to be addressed,” White House press secretary Robert Gibbs told reporters in Washington. The U.S. will be looking at its “assistance posture” toward Egypt, Gibbs said.

“For the U.S., any effort on our part to provide support for Mubarak is going to be read in Egypt as support for a crackdown and support for an undemocratic regime,” said Steven Cook, a fellow at the Council on Foreign Relations in Washington. “We need to be forward looking for this.”

More than 80 percent of U.S. aid to Egypt, or $1.3 billion, is in the form of military assistance, according to data supplied by the U.S. State Department. With President Barack Obama in power, military aid has stayed unchanged and economic assistance has been cut to $250 million from $411 million in 2008 with the phasing out of democracy-linked programs.

The amount of money Egypt receives from the U.S. is exceeded only by Afghanistan, Pakistan and Israel, based on the State Department’s budget request for the current fiscal year.

After four days of demonstrations, the top U.S. diplomat for the first time said the U.S. was “deeply concerned” about the crackdown by security forces and police. Clinton was the highest U.S. official in the administration to speak on the matter today.

“These protests underscore that there are deep grievances within Egyptian society and the Egyptian government needs to understand that violence will not make these grievances go away,” Clinton read out in a statement in Washington. “We think that moment needs to be seized.”

Clinton urged the Egyptian government to “reverse the unprecedented steps it has taken to cut off communications.” Clinton still referred to Egypt, without naming Mubarak, as an “important partner” in the Middle East.

The US is in a very tough spot and has to guess how this will play out. If President Mubarak survives, the US does not want to alienate him. If he doesn't survive (and I bet he doesn't regardless of the short-term outcome), the US does not want to alienate those who take over.

Such thinking explains the careful statements by Hillary Clinton calling Egypt an important partner, not President Mubarak an important partner.

Look at the military and other aid we pour into the region (Egypt, Afghanistan, Pakistan, Israel, Saudi Arabia, Yemen, Iraq, Kuwait) in a hypocritical attempt to be on all sides of multiple fences simultaneously, shaking hands with dictators one day, invading their country the next. Has it been worth it? How?

The wars in Iraq and Afghanistan were a complete waste of trillions of dollars. We failed to capture Bin Laden, did not make the region more stable, and made more enemies than before the wars started.

Maybe we will get this one right, but history suggests otherwise.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Ping-Pong Seasonal Madness In Weekly Jobs Claims; How to Predict Whether the 4-Week Moving Average Will Rise or Fall

Weekly unemployment claims have been all over the map recently. Here are the seasonally-adjusted Weekly Unemployment Claims totals for the last 5 weeks.

Jan 27, 454,000
Jan 20, 403,000
Jan 13, 447,000
Jan 06, 411,000
Dec 30, 388,000

The first three numbers above are from the current report. I calculated the January 6, number. The December 30 number is from the archives.

The reported seasonally-adjusted number on January 6 reporting was 409,000. It was revised up but no one saw that revision.

The reason no one can easily spot revisions is the weekly report only gives the latest 3 weeks. I calculated January 6th number from the 4-week moving average, now reported as 428,750.

A similar calculation looking at the January 20 Weekly Claims Report shows that December 30, was revised up from 388,000 to 391,000. These are small revisions but even large ones would be hard to spot if you do did not do the math or go to the archives.

Computing the Missing Number and Hidden Revisions

The 4-week moving average is constructed from the current 4 weeks. However the report only shows 3 weeks. To compute the week not shown, take the 4-week moving average (SA) and multiply by 4. Subtract the last three weeks shown on the report. What remains is the hidden 4th week used to compute the 4-week moving average.

Moreover, the difference between that number and was was originally reported for that number is a hidden revision.

Gaming the 4-Week Moving Average

If you want to pace a bet on whether the 4-week moving average will rise or fall, you need to know the number to beat and how to calculate it.

The number to beat is the missing number (as described above), about to roll off. In this case, 411,000.

Assuming no revisions, a number higher than 411,000 will cause next week's 4-week moving average to rise. A number below 411,000 will cause next week's 4-week moving average to drop.

My guess is the 4-week moving average will rise next week and fall the following week when the January 13 of 447,000 rolls off the report.

Clearly, if you are attempting to predict such numbers, it is critical to look at the number about to roll off.

What's With The Ping-Pong?

Revisions and hidden numbers aside, inquiring minds are asking about the ping-pong.

What's happening is most analysts are misinterpreting seasonal data. It is clear that seasonal hiring picked up in October for the Christmas season. This hiring pattern happened one month sooner than normal. Moreover, some of those people were no doubt kept on (not let go in the traditional after-Christmas employee dump).

In my opinion this is a one-time effect, not a mad rush by retailers (or anyone else) to hire people. With that in mind, one should have expected, in advance, to see large drops in seasonal claims.

Previously, I had commented on the possibility that we might see a couple of hot jobs numbers at the beginning of the year. Certainly the February BLS Jobs Report (for January data) might be impacted by atypical Christmas skew that started early. Also the January data itself is subject to BLS twice-annual revisions. Finally, the BLS is changing the way it does revisions next month, going to quarterly revisions.

If you can game all that, good luck.

While the trend in unemployment claims is likely getting better. I rather doubt the numbers are as good as most think.

Certainly yesterday's reported number of 454,000 may have been impacted by snow, but what about the January 13th number of 447,000?

If this was not messy enough already, next week may again have skew because of snow. Regardless, I do not think we can successfully interpret data for a few more weeks until it is clear that skews caused by changes in Christmas season hiring have ended.

When it does, I believe we will see improvements in weekly claims, but not enough to get overly excited about or enough to cause anyone to believe a big source of jobs is just around the corner.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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