Stockholm Syndrome In The Nile: 70% Of Egypt's Employed Work For The Government

Tyler Durden's picture

It is easy to forget that when dealing with corrupt, foreign regimes, the labor structure tends to be just "slightly" different from our own. Case in point - Egypt. In today's note from Art Cashin, we read something quite fascinating, namely that while unemployment in Egypt may be very high (who knows what the real number is - we have enough problems with snowfall and reconciling the household and establishment surveys as is), a far bigger concern is that of those employed, 70% work for the government. Is there a better indication of just how pervasive the Stockhold Syndrome is. Surely, at some point Egyptians will want to go back to work. Yet they work for the government, the same government that may well be in tatters should the revolution proceed according to such a plan that ultimately ousts Mubarak. Which begs the question: was the revolt doomed from the get go, and what is the breakdown between employed and unemployed in Egypt, for the anger to get off the ground in the first place.

From Art Cashin:

Jaw-Dropping Payroll Numbers – No, not Friday’s snow excused mini-number. Rather, thanks to Bob Hardy of GeoStrat, a stunning assertion about Egypt. There is, as we know, a high level of unemployment, but Bob says, of those employed, 70% work for the government. No wonder there are reports that many people tire of the demonstrations and seek a return to “normal”.

And as a tangent, here is Cashin's market commentary from his today's note.

Egyptian Enigma Shapes Trading Yet Again – Friday’ trading almost looked like a template of the week’s previous days.

Once again, uncertain, mildly negative morning sessions. Traders watched their TV screens trying to gauge the tone in the streets of Cairo.

As crisis did not explode, mid-day brought a mid-session of indecisive lateral trading. Ultimately, as the closing bell loomed within an hour or two, those awaiting bargains began to feel pressure from the clock running out. The buyers were also pressured by rumors in the crude pits that Mubarak was about to resign. That sent oil into negative territory.

It is somewhat strange to see the same pattern and process day after day but the market seems to have a mind of its own. We’ll have to wait and see what happens as the ultimate resolution of events in Egypt becomes evident.

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HelluvaEngineer's picture

It will be the same way in the USA by 2020.

Downtoolong's picture

I’ve been joking for two years that 100% of the U.S. Population will be working for the government soon. Of course, another downside of that is that 100% of your income will be withheld for taxes.

tonyw's picture

In every fascist state everything significant is under the control of government.


GreenSideUp's picture

Yeah, look at the population around the District of Criminals, throw in all the contractors that are wholly dependent on the teat and we might already be right up there with Egypt.

Rodent Freikorps's picture

So the $3 billion really was food stamps?

Joe Davola's picture

don't forget the tear gas

Rodent Freikorps's picture

CS gas is non-lethal. Most consider it a humane response.


Clampit's picture

Cool, that'll be my defense when I lob a few into the crowds of riot police.

downrodeo's picture

you think they would bring that to trial?

chumbawamba's picture

You really are a dim-witted fuck-tard, aren't you?

That's not a rhetorical question.  An answer is required.

Scottj88's picture

Don't be silly, the USA won't be around like it is in 2020...

We need to end the Federal Reserve...


25% of USA GDP is spent by our government...

What the F***....

Mr C-E-O's picture

Consider yourselves lucky - it's 50% in the UK.

EscapeKey's picture

When you consider how cooked the US GDP is, the figure is a lot higher than 25% - remove hedonics and imputations, and it's closer to:

$3.8tn / $9.0tn = 42%.

Of course, when you consider the spending in comparison to the tax intake, the US is in a lot worse situation, though our benefits system is about to take off vertically in cost.

Max Hunter's picture

And they still have enough to buy our treasuries... It's a great system..

EscapeKey's picture

That's allegedly the private sector.

I say allegedly, as that $155bn -> $511bn rise is more than dodgy as well.

blunderdog's picture

25% seems low.  Isn't that Fed spending only?

People like to bitch about taxes, but hey, we wouldn't have any kind of economy without 'em, so....

HoofHearted's picture

There's got to be a quote about dips in Egypt somewhere around here....high unemployment and 70% working for the Man. Someone (or everyone) is a dip.

Assignat's picture

If you think that's bad have a look at Kuwait or its GCC neighbors, where something like 95% of locals work for the government.  In fact, most locals will turn down private sector employment because the government jobs are so cushy, which explains why key industries such as banking are generally run by foreigners.  These are enormous welfare states built on the back of large but dwindling resource endowments, which should make for an interesting political dynamic in the years ahead. 

Willzyx's picture

Those nationals that do work in the private sector are inserted into the highest levels of senior management, often to fullfill the role of a local partner/majority owner.  Nationals have few business skills, but are paid well, and wield enormous power within the organization.

Rodent Freikorps's picture

Even the Soviets weren't that nuts.

Cleanclog's picture

Just heard on the radio that the Egyptian government just gave their employees a 15% raise, effective immediately.  Really!

CPL's picture

To cover a 120% increase in the price of food, clothing, water and other "un-needed" living expenses.


That's how inflation works.  The government can give out more money.  Doesn't mean you can buy anything with it.  Might as well double the salary while they are at it.  Won't make a lick of difference.  It the whole reason for the beginning of the Egyptian civil war.

ebworthen's picture

Hosni Mubarak has $70 billion personal wealth, so he can afford it, though he probably has his own "Ben" and "Timmy" to help him print and gin the numbers.

Talk about bribery.

The benevolent Pharaoh (although a 15% raise for those killed won't mean much).

He can raise their pay all he wants.  Tourism for the next five years will be crap because of fear; which means unemployment will be worse, which means riots will return if he can quell this revolt.

However, the U.S.A. will likely print some dollars on the necks of future generations to send to him, along with some tanks and tear gas, jets, and ammo.

All Hail Ceasar.

nevadan's picture

The buyers were also pressured by rumors in the crude pits that Mubarak was about to resign. That sent oil into negative territory.

Mubarak resigning is seen as bullish for oil supplies?  How does that work?

treasurefish's picture

Considering that we give $1.4 Billion to Egypt per year, I guess that means 70% of Egypt's population works for the US Government.

sangell's picture

So maybe Mubarak does 'know his people' better than the US State Department. No one ever went wrong under estimating the capacity of Muslim states for a pluralistic democratic way of life but plenty have come to grief assuming the opposite. George W. Bush being a particularly egregious example with his belief that you could have a Switzerland on the Euphrates.

Mubarak, as perhaps the second longest serving head of state still regnant, Castro and Queen Elizabeth being the only ones who I can think of who've been around longer, is right to not want to quit in the midst of turmoil. That's a good way to find yourself in front of a firing squad or wandering the globe in search of a home.

anony's picture

Bush had beliefs but he didn't believe.

Don't take public persona for the man, any man.

They are all simply actors playing a role, as are we all.

Gully Foyle's picture

Has the Obama photography gotten WHITER since 2004?

I know about that halo shit they have been pulling since god knows when. But someone seems to be whitening Obama pictures.

nonclaim's picture

So, I'm not alone thinking this...

Open any magazine when he was a young senator, a "big promise" as marketed (a constitutional scholar, remember?). He had definitely more contrast then. Maybe it's the cheap chinese ink we use now, who knows...

ivana's picture

70% is extreme but many other countries have similar "working class" structure. Add war vets, disabled, retired, aging population etc etc = unsustainable self-corrupt incest vote-buying pork subsidized "stimulated" societies. How about gov employees salaries up and rest of us fired and salaries down trougout last few years?
Fin crisis is just a consequence od major but MAJOR "democracy" crisis ... the real question is how are we going to look like exiting this mess? Corporations and banksters completely replace all politicians and parties? Some sort of neo-comunist society where all of us are slaves/consumers? Politicians, laws, parliaments replaced by strictly controlled social networks and algorithms to cut costs?

anony's picture

Read your Kurt Vonnegut primer, "Player Piano", to see what is going to happen.

Short bus version:  Ayn Randian world,  with a head cold.

Printfaster's picture

Ivana says:

Corporations and banksters completely replace all politicians and parties?

Not quite.  The bankers are part of the government.  They just have higher salaries than the rest of the government employees.  The banks would not exist if it were not for the insatialble demand of government for credit, which like taxes must be stolen from the private sector.  The banks are the conduit for robbing private sector of credit and passing it to the government.  I regard the banking system as a form of tax farming.

As for corporations, they are becoming more and more captive of the government the bigger that they get, viz GM, Chrysler, AIG, GE (look where Jeff Immelt is hanging around) and big defense contractors.  Hey even Google is becoming the handmaiden of the NSA.


ivana's picture

fully agree but we know and they know that's not sustainable in long run. Corrupt politicians are just adding more cost to taxpayers from both sides: we pay them and corporations have to bribe them.
Imagine corpo-bankster heads sitting with cigars and cognac after dinner and complaining to eachother how xy congresman is much more expensive than yx one? And singing:
Imagine there's no congress... it's easy if you try ... only us and consumers ... wouldn't it be niiiceeeee ...
Imagine all the people - paying only us yuhuuuuuuu :-)

ok may be I went too far - but year 2100...

redpill's picture

We need Perestroika!

bugs_'s picture

So is GS managing the Egyptian state worker retirement fund?

KickIce's picture

Same problem as the US, everybody wants government cuts - except those programs that benefit them.

Steaming_Wookie_Doo's picture

Yeah, Webster Tarpley just went over an interesting aspect of this. While acknowledging the high levels of 'public' employment, this the real reasons that the Muslim Brotherhood types are interested in joining the anti-Mubarak protests. Not because they identify with the so-called "Golden Youth" with their comfy lifestyles, internet access and twitter accounts (they would be counted as decadent in MB)---but because the MB see that if there is an overthrow, their lot can access all of those (relatively) cushy public jobs.

Pick your country, this unfortunate calculating can be found in many places (Philippines, Pakistan, etc).

ivars's picture

What do you think China is thinking right now, watching Tunisia, Egypt, food inflation and in general, the turning of informed middle class against ruling elites, be it dictatorships, communist rule, oligarchs or crony capitalists in indebted democracies?

China thinks hard how to organize another 1989 crackdown on democratic intentions of its population in current situation once uprisings reach it. If that happens, how will that affect the stance of current dictatorships and crony capitalism elites people are trying to overthrow, with China showing there is another way out? And the USA not so sure which direction to support? After China makes its choice, the world will polarize again between 2 ideologies, more direct democracy (West) and no democracy at all (China and its copycats=many nations as well).

My bet is that will happen before or during the Party leadership change scheduled for Autumn 2012- Spring 2013. That would be the right time to end Chinese games with capitalism and increasing inequality, and take serious efforts to further destabilize the West and build up military power with obedient poor population.

Dr. Gonzo's picture

The saying in the old Soviet Union was: "They pretend to pay us. We pretend to work." That's going to be America's new credo. They are going to have to give every loser in the country a make work job because: 1. They need to pay off the masses so they don't revolt making their situation as compromised and complicated as they can. 2. They need a get market for FRN's even if it's from their loser citizens when foreigners refuse to buy them and the mid east won't take them for oil. They will brow beat everyone over the head here to take their worthless irredeemable debt based money. No one will want it though.

Miles Kendig's picture

Direct or indirect government employment in the US is much closer to this number than many would like to consider.  When one counts food stamp & extended unemployment recipients, tax professionals, bankers, corporate farming, the military complex, pharma, the medical industry, energy producers, and more, all dependent upon the government in one way or another for their sustenance is it any wonder Americans only seem interested in; when Netflix will start streaming porn (the way it does for federal regulators), discovering if The Kardashians will sponsor a new weight loss pill (and relieve the FDA of the need to pretend there is actual science backing their decisions) and their new iwhatever?  

99er's picture

Der Spiegel reports that Hosni Mubarak's plan to leave Egypt for a "hospital stay" in Germany is more developed than officials are letting on. Over the weekend, the New York Times revealed that U.S.-led plans were in the works to send Mubarak to Germany for a "prolonged health check" if needed, affording him a dignified exit if protests continue. (He's rumored to be suffering from cancer). It turns out that U.S. officials already in talks with potential hosts, and a luxury clinic near Baden-Baden has emerged as a likely choice for Mubarak's spa exile. Officials from the Max-Grundig-Klinik Bühlerhöhe clinic wouldn't comment on their potential new visitor, but Chancellor Angela Merkel has said that Germany would be willing to welcome the Egyptian leader. Meanwhile, a report in the Guardian suggests that Mubarak won't have any trouble picking up the clininc bill. The family is estimated to be worth up to $70 billion, potentially making him one of the richest men in the world.