By David Malone

A recent article on ZeroHedge is all outraged that at the news that the US government is going to  act as guarantor for a 1 billion eurodollar bond issuance by Egypt.

Originally published by Liberal Conspiracy 

They ask why the US is:

…backstopping paper by another government, which will soon be very much insolvent…

The answer in a UPI article on May 18th is simple – the price of Wheat. Just as it was for why we had the uprisings in the first place.

Egypt is reported to have only four months’ supply of wheat on hand and only one month’s supply of rice.

Not only that but Egypt is also running out of money with which to buy food.

The situation in Egypt was about to, and perhaps still will, get critical. If food prices, shortages and hunger ignites another street uprising it will not be against an aging dictator who can be thrown to the crowd, it will be against the quasi-military government which the US backs.

What worries the US is the possibility that if there is another wave of unrest, this time blaming the moderate, largely secular uprising itself, then more radical Islamic groups will rise to prominence. That is why the US is giving money it can ill afford given the fact that it has exceeded its own debt ceiling yet again.

And it is not only the US. This week Saudi Arabia has pledged $4 billion in loans and aid to Egypt. When the Saudi’s give you know it’s serious.

The price of food in Egypt is partly due to global Wheat harvest shortages. Last Wednesday Wheat futures jumped 7% in a single day. Wheat futures are now up 91% in less than a year. 91%!

Egypt alone has told donor nations it will need about $10 billion overall in aid in the next 13 months. That is money to keep its poor fed and stop them taking to the streets in all out revolt.

Such huge price rises are going to make staple foods unaffordable in all the same countries that saw popular uprisings already this year. Here is how much unaffordable wheat the other North African and Middle East nations need with a comparison with the US and EU to make clear how much these nations depend on Wheat.

Combine that with reports that the business elite who flourished under Mubarak are shifting their wealth to safer havens. In the first quarter $13 billion of Egypt’s foreign reserves has left the country.

The Arab spring is going to turn nasty. The nations who were hungry will get hungrier and look to us to help them. If we don’t there is a real chance they will feel betrayed by us and by Democracy. If that happens then there will be the preachers of hate on hand to offer an alternative.

Surely these are the crises we should be bailing out not bankers in their penthouses.