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Egypt, Too Big to Fail

Through 2008, America’s largest banks and investment firms repackaged risky mortgages as high-quality investments, leading to the largest financial crisis in generations once the housing market collapsed.

In Egypt, Hosni Mubarak has ruled as a “pharaoh” for 30 years, culminating in parliamentary elections two months ago so fraudulent they embarassed even the fraudsters, provoking a popular backlash that has thrown his regime, too, into crisis.

Barack Obama responded to the financial crisis not by seizing the foundering banks, cleaning them of bad investments, and perhaps breaking them apart before reprivitizing them as many economists urged him to do; but rather by pumping them full of bailout money so they would look solvent when they were not, allowing them to weather the crisis with an illusion of legitimacy until everyone went back to business as usual — a strategy of “extend and pretend” as his critics have called it.

Obama now seems to be planning a strategy of “extend and pretend” for the Mubarak regime. Rather than pressure the Egyptian army to demand Mubarak’s departure so the constitution can be reformed, the Emergency Law lifted, and free and fair elections held for both Parliament and the presidency, Obama seems to have decided in the last 24 hours that maintaining the legitimacy of existing institutions is the priority. Representatives of the U.S. and EU establishments are now arguing explicitly that negotiations between the Mubarak regime and the opposition should be dragged out as long as possible, in order to exhaust and divide the opposition, and allow the existing power structure to remain in place. Talk of a new dawn of democracy in Egypt has been replaced a go-slow approach, led by Omar Suleiman or even Mubarak himself.

I should have been cynical enough to see this coming a week ago. Moral opportunism has been a hallmark of Barack Obama’s presidency from its first days — as seen, for example, in the use of drone aircraft in Pakistan, the attempt to bribe the Israelis into a three-month settlement freeze, or the veto of the Goldstone Report; or in domestic affairs, by turning “health care reform” into a massive giveaway to private insurance companies. If Obama sees his job as preserving the legitimacy of failed institutions above all else, I wish he would spare us the high-flown rhetoric and betrayals of hope.


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