The PJ Tatler

Hey, let's go ahead and bail out Egypt

There’s a scene in Superman: The Movie when Superman catches Lois Lane and says “I’ve got you.” Still skeptical of his super powers, she quips “Yeah, but who’s got you?”

Every time the US proposes to bail out yet another country, I’m reminded of that scene. Only, we’re not Superman, and we’re hurtling right alongside the endangered economies of the world. Obama seems to think he’s a superhero, but that doesn’ t make him one.

President Barack Obama’s guarantee on $1 billion of Egyptian Eurobonds is poised to reduce the country’s borrowing costs, helping the transition to democracy after six decades of autocratic rule.

The support that Obama pledged last month may cut yields on the five-year debt by 200 basis points, or the equivalent of $100 million, according to the median estimate of five fund managers surveyed by Bloomberg. Yields on Egypt’s one-year bills jumped to the highest level since November 2008 following the uprising that ousted President Hosni Mubarak in February. The country last sold international debt in April 2010.

And if Egypt, which is more fragile than it has been in decades, defaults?

I’m also struck by the contrast between how Obama is treating Israel (ultimatum to restart peace talks with terrorists based on Obama’s one-sided view of the conflict) versus how he is treating the new Egypt (backing up their debt with a piece of our debt). It’s hard not to conclude that he’s an Arabist when he keeps acting like one.