The reasons for the revolts are largely similar in nature, the elitist few in the government and corporate business are strangling the lower stratas of society in order to live opulent, extravagant and greedy lifestyles. With poor economic opportunities, a large unemployed youth base, blatant oppression of basic human rights, and the United States exporting inflation through the Federal Reserve's QE2 money printing, people are pissed! "According to the United Nations Food and Agricultural Organization, food prices in Algeria rose 32 percent between June and December 2010, and are expected to rise further." For a great summary of causes of the recent Middle East revolts, click here. This becomes a serious problem quickly for those countries like Egypt who have 20% of their population living on $2.00 a day or less.
Another interesting statistic is that Africa only has a 10.9% internet penetration rate, with Asia sporting 21.5%, and the Middle East a modest 29.8% according Internet World Stats. This shows that even with the exponential growth rates of internet adoption over the past decade, there is lots of room to the upside. I am convinced that we will continue to see unrest and riots as long as the disparity of wealth grows larger in these areas. Those who are similarly oppressed in a given area are increasingly able to communicate, empathize, and organize. They will seek to better their lot in this world by any means necessary, and we all know what humans are capable of when they have children they can't afford to feed.
This all happens to have an interesting parallel with the world's number one brand name: Google. Yes the company that's motto is "Do No Evil" and states,
- "The need for information crosses all borders."
"Our company was founded in California, but our mission is to facilitate access to information for the entire world, and in every language. To that end, we have offices in dozens of countries, maintain more than 150 Internet domains, and serve more than half of our results to people living outside the United States. We offer Google‘s search interface in more than 110 languages, offer people the ability to restrict results to content written in their own language, and aim to provide the rest of our applications and products in as many languages and accessible formats as possible. Using our translation tools, people can discover content written on the other side of the world in languages they don‘t speak. With these tools and the help of volunteer translators, we have been able to greatly improve both the variety and quality of services we can offer in even the most far–flung corners of the globe. "
Could Google actually be a willing co-conspirator with the underprivileged masses who are attempting to overthrow corrupt, evil, and oppressive governments? Making all information readily available to all segments of a population is a cause for alarm in and of itself. Dictators have known for a long time that you have to keep the propaganda machine rolling along full steam and manipulate the people into submitting to your will. If the oppressed knew exactly how they were being manipulated, it would ruin the whole plan.
An obvious example of this would be the situation that evolved with Google in China. The Chinese know very well how real the threat of the peasants revolting over food prices and lack of employment is. When Google's rally cry for freedom of information and 'Do No Evil' was found to be at odds with the will of the Chinese Communist Party, they walked. Google is an obvious advocate for the open, unadulterated, and free flow of information on the internet. Knowing this is part of Google's core value system, do you find it that odd that one of their executives, Wael Ghonim, was behind a Facebook page that played a vital role in organizing the protests in Egypt?
Given Google's political clout, ubiquitous presence, creative talent, massive cash reserves, and golden image, they are quickly becoming a world force that may be unrivaled by anything the world has ever seen. The way the human race is able to communicate is evolving at a clip faster than any moment in our history, we certainly live in unpredictable and exciting times. We will see many regime changes in the next decade due to the current state of affairs facing the global economy. Even a country like Saudi Arabia is not as untouchable as many may think.
I would be willing to establish a position in Google starting at the $550 level. Markets are setting up like a crowded theater before someone yells 'fire'. When there is a sudden and surprising rush for the exits, things will get pretty ugly. This will offer up some intriguing long-term buys, but it is best to be defensive or bearish right now. It is better to sit out and wait for volatility to return than be the last one to the party. Breaking multi-year highs on pathetic volume does not show me anything. I think TZA, VXX, TVIX and short-medium expiration puts on select names such as NFLX, AMZN, and CMG look good here. I know fundamentals don't matter right now but the market can't stay irrationally exuberant forever.
Disclosure: I am long VXX, TVIX.