The ripple effect from the successful ouster of a 30-year dictator Egypt is being felt all over the globe, as Libya, Bahrain, and maybe even Saudi Arabia take center stage and attempt their own versions of civil unrest. Even in the United States, union protesters are battling various Governors over state budget deficits – right now Wisconsin is in focus, but soon it could be all around the country. All of these issues are a systematic ripple effect from the financial crisis over 2 ½ years ago.
Now everyone is focused on oil, commodities, inflation, and what happens next in the Middle East. However, the focus should really be concentrated on Asia as the ripple effect is being felt in many Asian nations. Asia is very important to the United States. Middle East countries tend to be poor and uneducated, repressed, and un-democratic. These countries are not the marginal buyer of copper, steel, cotton, or US treasuries. Asia is the world’s power buyer.
Now while there is not yet civil unrest in Asia, interesting events are happening which are being completely ignored by the mainstream media: there has been a run on the banks in South Korea over the past week. The eighth bank just closed yesterday because of insufficient capital and none of the banking officials are sure what to do to stem the flow of funds out of the banks. No one is sure why it is happening.
So what’s the issue? We should be sure we don’t let the latest news story in the Middle East distract us from the main attraction - Asia. China is beginning to face increasing social unrest. It is only one of many un-democratic regimes in the region, with a poor, uneducated class that is now facing rising food prices (actually all countries are facing rising food prices). If China’s economic growth begins to slow due to social unrest, look for industrial commodities, such as copper, to fall sharply and a ripple effect to come out of China and impact the rest of the world.
