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YOUR MONEY

The Uprising and the Economy; The Uprising and the Suez Canal; The Uprising and Cost of Oil; American in Egypt

Aired January 30, 2011 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, HOST: I'm Christine Romans.

Welcome to a special edition of YOUR MONEY. Let's get right to Nic Robertson in Alexandria.

Nic, you've been talking to people all day. And from your dispatches, I've noticed a kind of shift in what people have been talking about. Are some people starting to pivot on the street a little bit to voice some anti-American sentiment? Something we didn't see a few days ago?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: People are really frustrated. And one of the frustrations that's emerged is what they're hearing or rather not hearing from the United States.

They want the United States, President Barack Obama, Hillary Clinton, to be much firmer against President Hosni Mubarak. They want them to side with the people who are demonstrating on the streets. They don't feel that's happening. And what they're saying is -- and this is a very strong loud, angry message we've seen at several demonstrations today. They're saying that the -- that Hosni Mubarak supports U.S. policy in the region and that supports Israel and they say we don't want that.

And the indication is, is that if they have a political voice here, they would seek to change that political dynamic in the Middle East. But there's a huge amount of anger at the United States. Because they really feel they're supporting President Hosni Mubarak.

And while we've been out tonight, the demonstrations continuing way past the curfew. We've seen tracer gunfire and heard heavy gunfire being fired way over the tops of the crowds by soldiers at checkpoints. Warning them, warning the demonstrators not to come too close to the army checkpoints -- Christine.

ROMANS: You know, Nic, we're here, watching these pictures and watching your reports and we see the police and then we see army checkpoints and we see tanks. And we're wondering, who do the people trust on the street there? Sometimes you see people embracing and talking to and taking pictures with the army.

Sometimes you see them throwing rocks at the police. Give us a little sense of who these people trust and talk to me a little bit about the vigilante groups that you've been going along with there.

ROBERTSON: They don't trust the police. In Alexandria, at least, the police are now gone. They were defeated on Friday. And they haven't come back. They think that they trust the army at the moment and I say they think they trust the army because some people believe that the army is there for President Mubarak. Defending government buildings.

Other people say, no, the army is here to support us. But the real concern is that at some point, the army may be forced to choose between the people and the president. And as a lot of people here think that the army and the leaders of the country, President Mubarak, may be playing a game with them and that they brought the army on the streets ostensibly in the support of the people.

But they don't really see that and they think that when the chips are down, that the army will try to put the people down. They say, why don't we see the army in our neighborhoods at night securing our neighborhoods. Why are they only around government buildings?

And that's why we're seeing vigilante groups out on the streets. We were driving around after dark here. There are people with machetes, with long kitchen knives. I saw somebody with a hatchet. A huge meat cleaver hatchet that a butcher would use on the streets. Iron bars, wooden sticks.

They're using checkpoints every street intersection you come to. There's another checkpoint to go through. Another set of youths.

Now for us as journalists, they're very friendly towards us, they wave us through. But we have through the day seen some people getting dragged off for a closer questioning -- Christine.

ROMANS: All right. Nic Robertson -- thank you so much, Nic, and we're going to come back to you as conditions warrant, as you continue to watch events as they unfold tonight.

Right now I'm joined by Andy Serwer, managing editor of "Fortune" and Rana Foroohar, assistant manager editor at "TIME", and Michelle Dunn, a senior associate at the Carnegie Endowment for International Peace.

Andy, the U.S. recovery slowly getting under way here. You saw growth statistics last week that showed that the economy coming back to where it was before the big collapse in terms of how much it's growing every quarter.

What does this mean, first and foremost, what's happening in this region for U.S. growth and for the U.S. economy, if anything?

ANDY SERWER, MANAGING EDITOR, FORTUNE: Well, we saw the U.S. stock market, Christine, take a big hit on Friday. One of the worst down days in six months. Obviously in response to what was going on in Egypt.

The Egyptian economy, not very big. It's only the 40th biggest economy in the world. But it kind of plays a critical role in terms of oil supply, 2 percent of the world's oil flows through that country every day in the canal and in pipelines.

ROMANS: Right.

SERWER: It's a huge importer of wheat. That would affect those prices and a huge exporter of cotton. So a lot of collateral damage. Never mind what's going on with the rest of the region there, too.

ROMANS: That's right.

Ron, I want to look at this annual Pew Research survey, showing the number of Egyptians who described the economic condition as good. Steady decline in the last four years from 53 percent in 2007 to just 20 percent last year. Tension in this region not new.

Why the uprising now? Is the timing a delayed reaction to the global economic crisis? Are they not related?

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, TIME: Well, I think that that's certainly a part of it. You've seen a run-up in food and oil prices even before this and that was a factor in the Tunisian uprising.

And I think what happened in Tunisia is certainly influencing what's happened in Egypt. These regions have high unemployment. The official rate in Egypt is 10 percent, but it's probably double that. So there's a simmering that's been going on for a long time.

ROMANS: A simmering that now we are seeing it come to a boil, I guess, in the streets.

FOROOHAR: Yes.

ROMANS: Michelle, you've been working in this area for a very long time. Are you surprised by what's going on in Egypt right now? What is your read for why that simmering is now something that we're all talking about?

MICHELLE DUNN, SENIOR ASSOCIATE, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: Tension in Egypt has been growing. There are the economic issues, there's widespread not only unemployment, but youth unemployment. There's a youth bulge in the population that is very dissatisfied.

People in general are dissatisfied with government performance. And recently Egypt rigged parliamentary elections that was just at the end of November. So I would say kind of the tinder was very dry in Egypt.

And we saw this explosion in Tunisia and I think people in Egypt saw it was -- it was possible, rather, to overthrow an authoritarian regime with a grassroots movement and -- you know then they're just going ahead and trying it.

ROMANS: All right. Everyone, stick right where you are, Rana, Andy, Michelle. We're going to take you live to unfolding events in Egypt all hour.

Egypt doesn't export oil. But it does control the Suez Canal. A vital artery for the region's oil that carries a tenth of world trade. This all means something for you. We're going to tell you what it is, next.

(COMMERCIAL BREAK)

ROMANS: These are some of the dramatic pictures from a crisis still unfolding on the streets of Egypt.

Welcome back to a special live edition of YOUR MONEY. All hour we're looking at Egypt and the effect the uprising could have on the economy.

Rana, the unemployment rate in Egypt said to be 9.7 percent in Egypt. But the reality thought to be much, much higher. Median age there 24. These are young people without jobs. The ousting of President Mubarak alone won't bring those jobs.

So what are people looking for?

FOROOHAR: That's right. Well, I think they're looking for really deep reform, not in -- not just in Egypt but across the region. This is a region that has sort of metrics around education, literacy, on par with sub-Sarahan Africa, in some cases, despite all the oil wealth in the region.

It's one of the areas where you see the least foreign investment. People don't want to go there. Money doesn't want to go there because there's a real problem with corruption, red tape. It's endemic and it needs to be fixed from the bottom up.

ROMANS: So deep reform of everything.

FOROOHAR: Absolutely.

ROMANS: From the way the government operates to education to opportunity.

FOROOHAR: Yes. Yes.

ROMANS: To the business climate for other countries and companies looking to do business there.

Andy, the unemployment rate probably much higher than we think. People --

SERWER: Right.

ROMANS: It does a little bit familiar. I mean something you see all around the world now. High food prices, high unemployment.

SERWER: Right.

ROMANS: The feeling from in middle classes, they feel as though they're not able to get anywhere any more. This is kind of a common theme.

SERWER: When you said middle class, that's kind of a key point. Because there really is a lack of a middle class. And it's not just the fact that there's unemployment and inflation around 17 percent. But a huge economic disparity in this country and other countries in the region.

Interesting to me, we just Saudi King Abdullah here in New York City, getting surgery, coming in with his family, and flying back to the country with a fleet of Boeing aircraft, filled with toys and goodies and shopping things that he brought back to Saudi Arabia.

And you know, that's just to me kind of a metaphor of the disparity, the economic disparity that exists in countries in that region. That's something that's definitely a problem in Egypt.

ROMANS: When you talk about the income disparity between the top and the bottom in these countries, we don't even really know. I mean there's not even that much transparency with the numbers.

SERWER: Right.

(CROSSTALK)

ROMANS: It's big, it's big.

SERWER: Yes. It's big.

ROMANS: There's a difference between the rich and the poor in all of these countries.

Michelle, why is this of so much interest to the United States? I mean obviously this is a stalwart ally of the United States. This is someone who has sided with the United States as a hedge, I guess, against Iran. What is at stake here?

DUNN: Well, look, major powers that wanted to have a presence in the Middle East have always found Egypt important. It's sort of on a land bridge between Africa and Asia. It's got a strategic location. The Suez Canal has already been mentioned.

It's got a very large population. It's a quarter of all Arabs are Egyptians. Egypt was the first Arab country to make a peace treaty with Israel. And since then, since the mid-1970s, it has emerged as a major military strategic ally of the United States. Very important in cooperation against terrorism as well as in efforts to spread peace throughout the region.

ROMANS: Which is why you're hearing the language from the State Department, the president so careful. Very, very careful. Because there are two audiences here. There's the Mubarak government -- maybe three, the U.S. and then also the people, the Egyptian people.

Andy, the old adages that markets hate uncertainty, you can't get any more uncertain than what's going on right now. And quite frankly this is why we saw oil prices surge on Friday. We saw gold prices up. We saw stock prices down because this is something, after all, that international investors look to as a geopolitical risk.

SERWER: Yes. ROMANS: That cause them to reassess where they're putting their money.

SERWER: Well, there's a couple of things going on. First of all, contagion, which is something we've been talking about since this crisis started. Tunisia, Egypt, Yemen, who's next? You know, the whole region could become destabilized. That would affect the price of oil. It's already affected the price of oil a little bit.

And in contrast to the Iranian crisis several years ago, here, oil supplies are much tighter as the global economy recovers. So we've seen it really pop up. I mentioned cotton, I mentioned wheat. And yes, it does affect all these things.

But on the other hand, U.S. stock market has been very high lately has trended up.

ROMANS: Right.

SERWER: So, you know, maybe this is sort of just a little -- a little breather here.

ROMANS: They're looking for a reason.

SERWER: Right.

ROMANS: Looking for a reason to take some money off the table because stocks are the highest since 2008.

SERWER: Right.

FOROOHAR: They are. But you know going back to your point about oil and other commodities going up, I think this is going to affect the emerging markets very strongly and this could put the brakes on their growth. Because in emerging markets, the poorest portion of the population spend about half their money on food and oil. So that's a big impact.

SERWER: Yes.

ROMANS: And so much of the U.S. recovery has been depending on growth and emerging markets.

FOROOHAR: Export.

SERWER: That's right.

ROMANS: So we can talk more about that as the hour goes on.

Andy Serwer, Rana Foroohar, and Michelle, Dunn, thank you all of you.

A lot to still get to. There's a vital artery connected to this crisis in Egypt. It accounts for 10 percent of world trade. We'll tell you all about it and how it's faring throughout this ordeal, next.

(COMMERCIAL BREAK)

ROMANS: As we watch the protests unravel in Egypt, there's a major economic concern to keep in mind. The Suez Canal. It's a critical passageway for trade and all sorts of goods, especially oil.

Josh Levs is live at the CNN center right now.

Josh, give us a breakdown of the Suez, where it sits, what it does, and gosh, you know, if you don't go through there, it's a 6,000-mile ride to go around the Horn of Africa. It's a big deal.

JOSH LEVS, CNN CORRESPONDENT: It's a heck of a long ride. If you don't have the Suez Canal. I mean look, as we watch what's going on in Egypt.

Geopolitics is caught up with global trade and with oil as you know. And all of those things come together. When you look at the Suez Canal.

Let me remind you all where it is. Take a look at it right here. I'll show you the basic idea. It's connecting the Gulf of Suez and also the Red Sea up through here to the Mediterranean.

And I have something maybe even a little better for you. We have a Google Earth animation. Let's take a look at that. It's this really skinny passageway and it's critical for global trade. It's 120 miles long and ships from all over the world use it as a critical passageway for getting all sorts of goods through. Not just oil -- there you go.

Got to look at it. Let me do this. I have some key facts for you that I want you all to know. When we try to get our minds around -- wrap our minds around the significance of the Suez Canal, look at this, 8 percent of all global sea trade goes through the Suez Canal.

So that's a massive chunk of the multibillion-dollar trade we're talking about on a daily basis. Thirty-five thousand ships every year work their way through the Suez Canal. And look at this, 1.8 million barrels per day of oil go through that passageway. Right now it's -- it is controlled by Egypt. And the challenge is, making sure for all these countries that want to make sure they still have access to it, Christine, that it remain open, it remain functional. That they can still work their way through it.

And as you said, if it were to close, if all of those passageways were to close, you'd be looking at a 6,000-mile ride all the way around. Something no one wants to see there.

ROMANS: Yes. And then there's even a big pipeline that goes parallel to it quite because --

LEVS: That's right.

ROMANS: -- quite frankly, there would be -- there would more ships if they could fit even bigger ships through there. But you know they're restricted by geography just like the Panama Canal is.

Josh, the importance of the Suez Canal to the U.S. recently came up in some of those leaked diplomatic cables from WikiLeaks.

LEVS: Yes.

ROMANS: Right? I mean anyone who thinks that diplomacy and economics aren't completely married, well, this sort of proves it.

LEVS: I was actually just looking back at that. You're absolutely right. You know a lot of people have been following those WikiLeaks' U.S. diplomatic cables all over the world. But one of them was a U.S. diplomatic cable. This is from March, 2009. I've pulled up the words here.

It says that -- it talks about the aid that the United States gives to Egypt. And it says that the tangible compensation the U.S. gets in return includes Egypt's peace with Israel and also the U.S. having priority access to the Suez Canal and also to Egyptian air space.

So it is absolutely clear, to U.S. officials and to people all over the world, that the continuation of that Suez Canal and being able to get as many ships as possible through it, is key for global trade, is key for U.S. business all around. And that's something everyone is keeping an eye on very closely, Christine, making sure that nothing happens to change that.

ROMANS: All right, Josh Levs, thank you so much.

LEVS: See you again.

ROMANS: So what implications could the uprising in Egypt have on oil and gas prices here in the U.S.?

Stephen Leeb is the author of "Game Over."

Stephen, will the unrest prove to have a significant impact on oil prices?

STEPHEN LEEB, AUTHOR, "GAME OVER": I think short-term there will be a little impact. Long-term it could be much more significant, Christine.

Short-term, I mean if you're looking at this situation, it really is a shot across the bow. I don't think it's going to spread. I think this is what people are really worried about, that it could spread to either Algeria or Libya and both of those are significant oil producers.

ROMANS: Right.

LEEB: And if it were to spread, who knows what could happen.

ROMANS: Peter Beutel is the president of Cameron Hanover.

Peter, do Americans need to worry about their gas prices? I mean what we're seeing -- the pictures we're seeing today on television, could that translate into a higher price in the gas tank down the road? PETER BEUTEL, PRESIDENT, CAMERON HANOVER: Well, unfortunately, it already is in the pipeline because we saw a big rise in prices on Friday. If this is something that's going to be with us, as a gnawing sort of problem in the oil markets, yes.

It could be something that convinces traders to buy every week. We already have a weaker dollar and a stronger stock market as two nontraditional factors pushing oil prices and gasoline prices higher. This adds another element that pushes buying into the market.

LEEB: Well, I agree with what Peter said, absolutely. But Christine, there's another very, very important element. You're China and you're importing a lot of oil, and you need oil desperately to keep your economy going. What are you going to do when you see something like this happen?

ROMANS: You're going to buy as much oil as you can.

LEEB: As you can. As an insurance policy. Any country right now that is importing oil has to see that this could spread to Algeria. This could spread to Libya. This could even spread to Saudi Arabia.

We haven't talked about what's going on in Yemen.

ROMANS: Right.

LEEB: I mean Saudi Arabia is now surrounded by countries that are revolting. And given that, I mean if you're importing oil, you have to insure yourself. Have to.

ROMANS: You like to talk about America's dependence on foreign oil as this -- I mean, both of you, let me ask, does this feed into the discussion at all -- I guess I'll start with you, Peter, about America's dependence on foreign oil. And a reminder that this is a real big part of our diplomacy for a reason.

BEUTEL: Absolutely. And this has been something that's been with us for 25, 30 years. Really, since the '70s, when we had the Arab oil embargo. It crops up every few years, we have a problem. And until we get in a situation where we don't have to worry about it as much, really, our diplomacy is held hostage, or held over a barrel by what happens --

ROMANS: An oil barrel.

BEUTEL: By what happens in this part of the world.

LEEB: This is not the '70s. This is where I might disagree with Peter. This is really a world in which we have constraint in terms of how much oil is available. Even on a best-case basis, Christine.

ROMANS: Because we're using so much more oil today than we did in the '70s.

LEEB: We're using so much more than we were then. And prices become so sensitive to how -- to how much oil we're using. I mean just as a quick example -- the world was using about as much oil and oil substitutes at the end of 2006 as we are now. Yet oil prices today are about 50 percent higher than they were at the end of 2006.

ROMANS: All right. Peter Beutel, last word, quickly. So oil prices, gas prices keep moving higher from here. This is something that the market can get over or we have to watch and see how it unfolds?

BEUTEL: We have to watch and see how it unfolds. One of the interesting things is Tunisia started it's rioting because of high food and fuel prices. This is now becoming a cycle --

ROMANS: Right.

BEUTEL: -- where as we see unrest, it drives these prices higher.

ROMANS: Which could unfortunately cause more unrest as people in lots of different places really feel to the bone higher prices for many of these economies.

Peter Beutel, thank you so much, Cameron Hanover. Stephen Leeb is going to stick with us for a minute or two.

Imagine this, you're an American student abroad in Egypt. It sounds like a great semester until about six days ago. What do you do now? We're going to speak live to one student spending another tense night in Egypt, next.

(COMMERCIAL BREAK)

ROMANS: Just a few moments, we're going to go live to Ivan Watson for the very latest on what's happening in Egypt. But right now, CNN's State Department producer, Elise Labott, joins us.

Elise, what is the overall message the U.S. is trying to craft here and tell the world about what's happening in Egypt and what the U.S. position is about those protests?

ELISE LABOTT, CNN SENIOR STATE DEPARTMENT PRODUCER: Well, Christine, we've seen over the last couple of days, they don't really know which way to go. On the one hand they really want to support the aspirations of the protesters. They really want to support democracy, the move to democracy in Egypt. And also really emphasize the human rights.

But at the same time they're walking a real tightrope here because they need to show support for an ally that has made peace with Israel. That puts pressure on Gaza. That really helped the U.S. and the region as instrumental in the peace process.

So walking that tightrope, and I don't really think they want to see President Mubarak go right now because they're worried about what comes next. So they're worried about a vacuum. And so what they're saying is, they're talking about a period of transition, of transformation to democratic rule.

They're saying that President Mubarak really needs to institute some democratic reforms. They'd like him to remove this emergency law that allows the Egyptians to arrest anybody at any moment for anything.

They'd like to see a national dialogue with political groups going on. They'd like to see free and fair elections. And they're talking about elections in September. So that kind of signifies that they wouldn't mind if President Mubarak were to stay if he were to institute some of those reforms.

ROMANS: I mean, it sounds to me from what, you know, you're hearing from the people around this, who were trying to craft the message from Hillary Clinton, the secretary of State, who talked to Candy Crowley earlier today, is that they support the protest in the streets and they support stability in the government and Mubarak if he supports reforms.

LABOTT: That's right.

ROMANS: It might be that the U.S. has a choice. The people on the streets are asking for a change right now and they say for 30 years the U.S. has pressed for change and haven't gotten very far.

LABOTT: Well, they've said that the U.S. has kind of pressed for change.

ROMANS: Right.

LABOTT: And really hasn't pressed enough. You know there's this real game that goes on where the U.S. says, you need to reform and the Arabs take some ad hoc measures that placates the west. But really doesn't institute a change. And so they've been talking about this but they really haven't been pressuring them. And now you really hear President Obama, Secretary Clinton really stepping it up.

Last night Secretary Clinton had a very tough conversation, I understand, with the Egyptian foreign minister, where she says you really have to take some action now, you need to institute some of these reforms, you need to restore the internet and you need to move towards free and fair elections. It kind of remains to be seen if these measures are not in place, what the U.S. is going to do. I don't think that a, the U.S. really understands that President Mubarak hasn't gotten it. And he doesn't really know what he's facing.

ROMANS: It's interesting, on the street we're hearing people talk about almost revolution, they want him gone today. And in Washington we're hearing a six-month transition to democracy. Those are two very different world views. Colliding, I guess right now. Elise don't go anywhere, because I want to talk about this some more.

We have an American student in Egypt on the phone right now. Nick is from New York and is currently a student at the American University in Cairo. For obvious reasons Nick is more comfortable with us not showing his last name. Nick thank you so much. You just got back into the country a couple of days ago; you were on sort of a side trip. You came back to Egypt where you're a student. You were advised not to go back to your apartment, though. You're now at the university. What's the mood like and how safe are you feeling? NICK (via telephone): At the university I feel very safe right now. As of now, the university is on lockdown and the campus is closed. And only students who live on campus are allowed here.

ROMANS: Where are your American roommates right now and what are you hearing from them?

NICK: I've been in contact my two roommates, I live in the Tahrir area; I live just adjacent to the Egyptian Museum. Just down the road about a minute from the Center of Tahrir. And the two of them actually arrived two days after I left the country for just four short days and they've been sort of held up there.

As of now, I mean everything is sort of nonviolent. The army has taken over and there's not a real worry other than that, I mean there are a lot of these quote-unquote vigilantes on the street. But you know, they've sort of made clear that it is one of those things where people are more concerned about their community and looking after themselves, keeping people from looting. Women who are walking on the street by themselves alone are escorted back to their homes. At this point, the police are gone and there's a sense of calm sort of.

ROMANS: My colleague Andy Serwer makes a good point, he wants to know if you are using, can you use the internet. Obviously you have cell phone or are you on a landline? What sort of communications are you seeing there today?

NICK: I have a cell phone which is functioning today as of a couple of days ago; the cell phones were turned off. But up until yesterday the cell phones back on. But the internet is still down however. The only source of information is news and people from back home.

ROMANS: So no social media. You're not able to follow the Egypt hash tag on twitter? You're not able to see what other people are saying around the world about what's happening there? You're only hearing from people on the phone about it or the news?

NICK: Yes, on the news and al Jazeera and other local news networks.

ROMANS: Have you or any of your roommates heard from the U.S. Embassy and what is the school telling you or what is the American authorities telling you about staying in Cairo. Should you just sit tight or are they telling you that there will be some attempt to get you out of there?

NICK: As for my friends, they have not heard from the embassy directly. They've contacted the embassy today and the embassy is now telling Americans to try to evacuate, try to go somewhere else if they can. They want us to. AUC tomorrow the president will address the school. We had a meeting today, telling us that we should look for ways out and places to go. If we can find refuge somewhere else. But as of recently, I heard tomorrow they're going to try to do a full evacuation of Americans.

ROMANS: Hey, Nick, I want to ask you this one last question, I mean when you obviously signed up to study in Cairo, I mean that's one of those things a semester abroad or a year abroad that's dream come true. You really think you're broadening your horizons, I mean something you really look forward to, you're able as an American to see parts of the world that you couldn't otherwise, did you ever imagine that you'd be in this situation, watching vigilante groups and seeing so many people calling for the ouster of the president?

NICK: Not really. I mean there is sort of a feeling that people were unhappy with the government and everything else. But I mean, when I left Tahrir on the 25th and everything was normal and peaceful and I walked around and in my community and surrounded by everybody. I couldn't imagine how all of this started.

ROMANS: All right. Nick, thank you very much. A college student there in Cairo at the American University. We're not giving his last name or showing his picture for obvious reasons for his safety, he's sort of hunkered down on the campus. CNN State Department producer, Elise Labot is back with us. Elise what's being done for the American students there, for others there, American tourists there who can't get out of Egypt or don't want to quite yet, to get home safely?

LABOTT: Well this morning, the State Department put out an amended travel warning, travel alert obviously telling people that to avoid travel to Egypt. But also saying that they are going to help evacuate American citizens that want to leave. They're also authorizing the departure of nonemergency personnel and their families. So starting Monday, they're going to start getting some flights out of Cairo. We're going to get all that information on our website. And let all our viewers know how they can get out if they have loved ones that want to get out of Egypt.

ROMANS: All right. Elise Labott thank you so much and also Nick, who is watching local news there and we've been in contact with him via telephone. OK, we promised you Ivan Watson, we're going to go live to Ivan in Egypt next.

Plus what happens when the U.S. market opens Monday morning. We're going to check on your money next.

(COMMERCIAL BREAK)

ROMANS: Well many American investors want to know is what happens tomorrow at 9:30 a.m. Eastern, Time when markets open. On Friday, we saw the recently red-hot markets here in the U.S. all drop, perhaps spooked by the events in Egypt. How will the markets react to the news from Egypt over the weekend? Stephen Leeb is back with us and Jim Awad is a managing director with Zephyr L.P.

So Jim what happens tomorrow morning?

JIM AWAD, MANAGING DIRECTOR, ZEPHYR MANAGEMENT: Well we get a large queue over night from the Asian markets and then the European markets. We are likely to follow them. When you have a market that is up as much as ours has been over the last several months and then you get the uncertainty that this creates, and you get a worry about, worries about the pricing and availability of oil, there's a real chance that the markets open on the down side. ROMANS: And stock markets have been at the highest since 200 8. They've climbed back from a terrible drought over the past couple of years. But oil markets, as stocks fell, oil went up, gold went up. That's a reaction to that uncertainty again.

STEPHEN LEEB, AUTHOR, "GAME OVER:" You know what is unusual Christine yes; oil and gold did go up. But oil went up more than gold. And copper was up. Which is not really what you would expect. I mean you would expect because of the massive uncertainty, that gold would have been the star. And gold really wasn't the star. I think the markets were saying to us even on Friday, yes, we have to be concerned about the price of oil. But it's unlikely to go up so much that it will short-circuit economic recovery.

My guess is, unless you see oil up $20 or $25 in a very short period of time, I think stocks, yes of course they could dip tomorrow. But I think that the short-term course, I'm not just saying, you know, two weeks, but the next three to six months are likely to be pretty good for stocks, but don't, you know, don't assume it's going to continue.

ROMANS: Well Jim, so many of the people I talk to and you know me and I talk to you about the markets every day. I mean Friday they were saying, here we go, the question is, if the pictures keep coming out of Egypt the way we're seeing them and you still have big questions about what's happening with other countries, because it isn't just Egypt, there are other countries involved, too, that keeps that uncertainty hanging over the market and it is uncertainty that markets hate.

AWAD: And the longer it goes on, the greater the probability of an unhappy outcome for the developed world. As it stands now, these areas aside from oil are not economically important. It's much more important what goes on in China and Asia and India and Latin America and the recovery in the United States. But if you get uncertainty and disruption that goes on longer than expected, and people start to really develop this fear about availability of oil, more than price, that's where the real pressure will come from.

ROMANS: Rona Broheart (ph) from "Time" Magazine made a very interesting point. She said that if you had high commodity prices, cooling emerging market recovery and emerging market growth, that's been such a driver of American economic growth, that maybe in the end, that isn't good for the American economy, either.

LEEB: No, I mean there's absolutely nothing good about high oil prices, Christine. But history shows that it's not really the level. I mean here we're paying over $3 for gasoline. It's how fast they go up. Markets can adjust to gradual rises. But it cannot adjust to very sudden rises.

ROMANS: Jim, just quickly, buttons it up for us, for our viewers who might know what stocks and oil are doing. How important, where we've come right now, how important is this in the mix of factors for their investments, their 401(k), their house price, their economic recovery?

AWAD: What I would say is don't let this spook you out of stocks. This is not an important area economically. And if there is a correction, which there could be after the markets have been up this much, it's more likely to be an opportunity than a chance, than a reason to sell.

ROMANS: Jim Awad, Zephyr Management thank you so much for joining us. Stephen Leeb. A curfew is in effect in Egypt, but effective, it is not. Thousands of people gathered at Cairo's largest public square, far past the curfew. That's where our CNN's Ivan Watson is right now. Ivan there is a curfew, but there are a lot of people out there with you now, aren't there?

IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: That's right, the curfew was supposed to start at 4:00 p.m. Christine, and now at 10:40 local time p.m., there are still thousands of people here. The crowd has thinned out somewhat, but if you zoom in you can perhaps get a look that there are still people there, they're chanting down with Hosni Mubarak, they're clapping. They're engaging in heated political discussions and they've even lit camp fires under the palm trees of Tahrir Square, which means Liberation Square in English.

Earlier in the day, at the time of the curfew was supposed to set in, 4:00 p.m., there was an unmistakable show of Egyptian military force. As two fighter planes circled over the square repeatedly, so close that I could see into the cockpits of the passing planes. And they were roaring overhead. There was a military helicopter as well. And some people interpreted that as a sign of intimidation and said we will not leave. You're going to stay out here despite the curfew.

A few hours ago, we saw the former head of the United Nations International Atomic Energy Agency, Mohammed ElBaradei, and a famous Egyptian figure and beloved by some of the demonstrators here, as an opposition figure, to the president for some 30 years, Hosni Mubarak, they have been calling for his resignation. He came out and was thronged by supporters. Made a few brief statements calling for people to continue defending their rights.

Now perhaps part of the reason why people are leaving, Christine, is because of the extreme insecurity on the streets of the Egyptian capital tonight. I've been talking to men, an account manager for Cisco, another man who is a real estate broker. These are people with day jobs and decent salaries who have organized in volunteer neighborhood protection committees. They've even made Molotov cocktails; they've set up checkpoints and barricaded the streets into their neighborhoods to prevent criminals from taking advantage of the absence of a police force here and to prevent them from robbing their houses or threatening their families.

This is the second night running these men, say, that they've been doing this. They're stopping passing cars, searching them and they say tonight they've even set up signaling systems, using whistles to alert each other at different neighborhoods if there's an emergency and if they need help. And one of these men, the account manager for Cisco said that within the first hours of their second vigil, shortly after 9:00 p.m., he and his group had actually scared away a group of people that were trying to scale the walls into their up scaled residential compound. Christine.

ROMANS: Ivan Watson, battling his own communication challenges there in Cairo. To get you all the latest information about what's happening there tonight. It's about seven hours ahead of east coast time in the U.S. Ivan Watson, thanks.

At the end of the day, what is going to resolve the situation in Egypt? It might not be what you think. We'll be right back.

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ROMANS: Can the conflict in Egypt be resolved peacefully? Let's bring in someone who specializes in conflict resolution, Salman Shaikh is the director of the Brookings Doha Center. According to a Pew Survey, just one in four Egyptians feel the government has done a good job handling the economy in 2010. At the moment are all the hopes for the jobs and economic recovery tied to the government? Is that part of the reason why people are so upset there, because the government has had such a heavy hand in its economy and people don't feel good about the economy?

SALMAN SHAIKH, DIRECTOR, BROOKING DOHA CENTER: I think, thank you. I think it's very much part of it. But I think it's much broader than just the economy. I think what you're seeing is a broad-based uprising involving so many sectors and factors of Egyptian life. Where people are shouting for their dignity, for opportunities and also, for political freedoms. That will require an orderly transition as President Obama and Secretary Clinton have said. But I'm afraid that will need to go beyond so far what's been laid out. I don't think now there is anything short of the removal or the departure of President Mubarak, which will do.

ROMANS: Why now? You say there's so many other things besides just the economy but other things as well. What's the one trigger? Is it a businessman in Tunisia? Does it really all go back do that? Or is there something else there?

SHAIKH: I definitely think Tunisia example is a very, very important one for Egyptians. I have heard talking to people there over and over again that we didn't really think that this could happen. But the Tunisian example has provided a lot of inspiration. But this particular uprising has been many, many years in the making. This is why I think the depth of anger and of frustration and calls for the ousting of President Mubarak are so loud and so vociferous.

ROMANS: How long can this whole thing be drawn out? You know, the people on the street are asking for resolution today. From Washington, you are hearing about a six-month transition to democracy or some kind of a road map that seems much longer than the people of Egypt are talking about.

SHAIKH: I agree a little bit with what your correspondent Elisa was saying. As I said, I'm afraid I think the administration is still very much playing catch up. I think the important thing for us to note here is that the longer this interim phase before the proper transition starts, the more the potential for damage before the actual transition itself.

Let me say how I made that clear. For example, the role of the army is extremely important and that needs to be safeguarded and protected but as long as it is in the streets in a tug-of-war between the regime and the people it's going to be something which is going to be erosive.

Also, and of course the loss of life and the insecurity it is just going to raise the anger levels. In the immediate phase we do need to get, catch the momentum of what's going on but then channel the street to politics and to bargaining. And to get that going, I think we do need President Mubarak to move aside. I think the U.S. here has a decisive role, particularly President Obama and the U.S. military and its connections with the Egyptian army. And then I think we can move into a proper transitional phase, I don't think we have very much time to be honest with you.

ROMANS: All right. Salman Shaikh the director of the Brookings Doha Center, thank you so much with some crisis resolution there and some ideas and you know solutions for the United States government.

Back now with me is Andy the managing editor of "Fortune" and Rana Foroohar the assistant managing director at "Time." So Andy let me bring it back to the economy then. We talk about something he says, there is not much time to be had. The U.S. talks about timetables that are a bit, what is this all going to mean for the global economy and for American investors?

SERWER: Well, of course we really don't know. I think that as this plays out over the next couple of days and weeks, we are going to see whether or not this is going to be reserved quickly or whether it is going to be resolved, you know, over a period of months. I think the army is critical here.

ROMANS: You agree?

SERWER: Yes, I do the Egyptian army is the tenth largest in the world it has about 500,000 troops.

ROMANS: And its leaders trained with the U.S. army and many of them have trained at the big U.S. defense colleges, right?

SERWER: That is right and we provide about $1.3 billion a year in aid to the army but the U.S. government has to sort of follow this in a very nuanced way, it is a tight rope and they are going to have to balance between, you know, stability and the desires of the people so it is going to be tough.

ROMANS: Rana do you think the U.S. has to be a partner in any kind of solution that goes through here or do you think that is risky? Because you are already seeing, as Nic Robertson reported, people in the streets starting to say that the U.S. is a hypocrite, thinking the U.S. is tone deaf in its response to this?

FOROOHAR: Yes, I think it is very interesting. One of the few things I had found hopeful in the beginning was the protests what about what need to be done inside the country and now you are seeing that shift. I think in terms of the global takeaway from this there is going to be two things. One this is a lesson for authoritarian states if you are going to keep a very repressed political system, you have to open up the economy at least. That is what happened in China that is the reason that you can still keep local control. These Arab countries haven't done either and that is why we are seeing these things happening now.

ROMANS: You bring up China which is interesting because I'm sure if you are a country with authoritarian rule and hundreds of millions of people who may not feel like they are coming up in the middle class, you are watching this with some caution.

SERWER: Right, but the Chinese are obsessed with one thing that Hosni Mubarak didn't really seem to care too much about or doesn't seem to care too much about.

ROMANS: What?

SERWER: And that is jobs. The Chinese are obsessed with creating jobs, jobs equal stability and that seems to have been lost upon the Egyptian leader.

ROMANS: You already have people talking about how you can't type the word Egypt into a browser in China already, but you know stability is the most important thing for the Chinese. That's why that's a different story all together.

SERWER: The Chinese have a lot in common with us here, they would like to see that region stable, they depend upon oil and also radical Islam is their enemy, as it is ours. So we could work with the Chinese in concert here, if things continue on.

ROMANS: Is it possible, saying we only have about 40 seconds left to talk about this but is it possible that this we have seen the six days and now this has been the most dramatic moment of this and we are going to recede back to diplomacy behind the scene?

FOROOHAR: I think that is possible, I also don't think we are going to see any oil disruption through Suez that didn't happen in '09 in Iran and it didn't even happen more than a few weeks in '79 in Iran. So I don't think that is going to happen, but I do think that you are going to see some rise in prices, decline in the emerging markets, and potentially export problems for the U.S.

ROMANS: OK. More on what this is going to mean for the viewers at home and for American consumers in just a minute. Both of you are going to stick with us. We have one more question for both of you. This special edition of YOUR MONEY, we will be right back.

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ROMANS: Welcome back. We are talking about the uprising in Egypt and what it means for your money and your economic future. Andy, some final thoughts for you after this hour of discussing what all this means for the U.S.? SERWER: Yes, I mean there is a few positive things going on in Egypt that people should know about the stock market there is actually rather open, it is transparent so that's good. Also, GDP grew 11 percent last year. The oil and gas situation is improving. And the economy grew 11 percent last year. So you know there are some positives.

ROMANS: More people want a piece of that people live there want to feel that?

SERWER: It could be a place for investment, but they need to get their act together.

FOROOHAR: And they have to liberalize quickly, because some of the areas they have been doing well in for example textiles, China is moving into that stuff, and they will be eating their lunch soon if they don't do the right things.

ROMANS: All right. Rana Foroohar thank you so much. Andy Serwer from "Fortune" Magazine, thank you very much sir. And we will talk about more of this all week as we keep going forward, talking about what this means for your gas prices, the economic recovery around the world and for here as well. Thank you for joining us on this special edition of YOUR MONEY.

The coverage of Egypt in crisis continues in the CNN "NEWSROOM" with Drew Griffin, right now.