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Stanley Fischer, Supported by Fayyad, Turned Down by IMF as Leader Candidate

Governor of the Bank of Israel, Stanley Fischer, is credited with assisting Israel through the 2008 global financial crisis; he is criticized for funding Hamas in the Gaza Strip.

Recently, Mr. Fischer formally announced his candidacy to lead the International Monetary Fund. While the selection process is a political one, Mr. Fischer has received support from Finance Minister Yuval Steinitz, who said:

“Were it purely professional it would be hard-pressed to find a better person than Fischer.”

Salam Fayyad disputed Palestinian Authority Prime Minister supported Mr. Fischer, saying the Israeli would make a ”great managing director” for the IMF and is:

“A superb human being…He is supremely qualified for the job. Indeed, it’s difficult to see how one can be more qualified…”

On a side note, Hamas has refused to recognize Fayyad, a political independent, as Prime Minister. Fayyad received his PhD in economics from the University of Texas, as well as working for the IMF in the 1980s; so he is a good man to ask.

As mentioned, the recently announced “reconciliation” between the government in the West Bank, led by Fatah and the terrorist group Hamas in control of the Gaza Strip is threatening Fayyad’s political status.

But Monday night Fischer was notified that his candidacy was disqualified because of his age, 67. IMF rules state the Managing Director must be under 65 when taking office for the five-year position. Fischer was hoping the IMF board would waive the restriction, saying it is “not relevant today.”

Fischer is in the second year of his second five-year term as the chariman of Israel’s bank. He was hoping to take over at the IMF for Dominique Strauss-Kahn of France, who resigned on May 14 after his arrest on charges of attempted rape of a maid in a New York hotel.

Fischer had this to say:

“I will proudly and happily continue in my role as Governor of the Bank of Israel, to deal with the challenges facing the Bank of Israel and the Israeli economy. I would like to thank the Prime Minister and the Minister of Finance for their unconditional support when I decided to submit my candidacy, and for their expressed hope that I will continue to serve as the Governor of the Bank of Israel – as I shall happily do…”

The finance minister of France, Christine Lagarde, is considered to be the front-runner in the IMF race. The final decision will be made toward the end of the month.

Fischer was the thesis adviser to Ben Bernanke, chairman of the U.S. Federal Reserve, when he was pursuing his doctorate in economics from MIT and is a former deputy managing director of the IMF.

Tough To Kill: Israel’s Economy and the Global Economic Collapse

“When it comes to U.S. military résumés, Silicon Valley is illiterate. It’s a shame. What a waste of the kick-ass leadership talent coming out of Iraq and Afghanistan.”

JON MEDVED

AzrieliAlthough it goes humbly un-boasted – perhaps due to antisemitism and worldwide Zionist bashing – Israel has managed to thrive during the recent global economic crisis. Actually Israel’s economy “has the highest concentration of innovation and entrepreneurial ism in the world today”.

What is at the root of Israel’s steadfast success? Is it because a country of G-D’s Chosen people in their homeland is bound to kick ass? Is it the subtle socialist shadows, inspired by the likes of Theodore Herzl, which are still sort of cast over a competitive and modern national work ethic, which encourages capitalism?

These factors may play a role, but upon recent analysis done and expert consensus, the main factor seems to be its very unique government policies having to do with immigration, disproportionate research and development spending and last but not least its universal military training and national service program.

While teenagers in other countries, namely the United States are sweating over which college they can get accepted to, Israelis are racking their brains to be accepted to one of the country’s top military units. In fact, in Israeli culture, the most elite military units are the equivalent of the Ivy League, in the United States. In the Jewish country, which brigade and what duties an applicant was involved with in the army holds the most weight and is the most influential factor in a job interview.

An 18 year old British navy veteran named Gary Shainberg, who is now the vice president of technology and innovation for British Telecom said:

There is something about the DNA of Israeli innovation that is unexplainable. I think it comes down to maturity. That’s because nowhere else in the world where people work in a center of technology innovation do they also have to do national service.”

Ever since the State of Israel won its independence in 1948, the future of its existence has been in question. Such a threat has an amazing effect on an economy and gives individuals a psychological incentive to succeed. Life in Israel is fast-paced in every sector of secular culture; therefore ideas get drawn up faster and put into execution faster.

According to the Organization for Economic Cooperation and Development (OECD) 45% of Israelis have a university education, which is among the highest percentages of nations worldwide; this data goes without mentioning an even higher percentage of military experience among citizens, nearly unanimous, which also has a positive influence on the economy’s attitude.

According to a recent study in theIMD World Competitiveness Yearbook, Israel was ranked 2nd out of 60 developed nations on the criterion of whether “university education meets the needs of a competitive economy.”

To date, Israel’s economy has the highest concentration of innovation and entrepreneurial ism in the world. She is the world leader in the percentage of a nation’s economy which is spent on research and development, and the pay back is huge.
In 2008, when the recession was beginning, per capita venture investments in Israel were 2.5 times greater than in the U.S.

That’s more than 30 times greater than in all of Europe, and 80 times larger than in China; while 350 times bigger than in India.
Currently there are a total of 3,850 successful start-up companies in Israel. That’s one for every 1,844 Israelis. More Israeli companies trade on the NASDAQ than companies for all of Japan, Korea, China, India and Europe, put together!

World Wide Suicide

Former Maccabi Tel Aviv manager Moni Fanan is not unique in his tragic suicide. The last year, characterized by the current recession, has been responsible for countless other suicides and tragic incidents.

Ronan Bell, a 35-year-old Venice man from Venice, California, killed himself last month at a beach pier, when his financial debts drove him insane.

On April 16, a pharmacist opened fire on the Long Beach Memorial Medical Center, in California. He killed two co-workers before turning the gun on himself. An article in China View says about this particular incident, that Police cited the “tension going on in our society” as a contributing factor.

William Parente, a New York lawyer, who had lost roughly a collective 27 billion dollars for his clients, killed his wife and his two daughters, before killing himself in his Maryland Hotel Room on April 19.

David KellermanThe most famous suicide report in the last year was that of Freddie Mac CFO, David Kellerman, who was found hanging in the basement of his Washington home on April 22.

A report done by the U.S. Centers for Disease Control and Prevention exposed that in Los Angeles alone the suicide count went from 695 in 2007 to 805 in 2008.

Americans have nothing to compare this era to except for the Great Depression, in which, suicide rates rose from 14 to 17 for every 100,000 Americans from 1929 to 1933, as unemployment rates soared from 3.2 per cent to 24.9% in the same period.

An article in China Views says that, “Based on previous experience, researchers predict that suicide rates will go higher if the economy continues to deteriorate.” We all pray that this will not be the case, as we all can realistically expect lay-offs and unemployment to increase yet slightly more, as the economy does begin to pick itself up off of the floor.

The chief of psychiatry at Emory University Hospital in Atlanta, Steven Garlow said, “There is very clearly a relationship between macroeconomic conditions and suicide…in times of financial hardship, financial distress, upheaval, there is an increase in suicide.”

Since the recession does not only hurt the United States, but the whole world, the suicide back lash is also being observed globally. France Telecom, a bankrupt, state-run, French company has already lost 25 employees to suicide. The company has laid-off 22,000 workers between 2006 and 2008.

Bibi Folds

People power has apparently won concerning the Finance Ministry’s proposed plan to impose VAT on fruit and vegetables sold to Israeli consumers in open air markets as well as in regular supermarkets. After intense pressure from a number of groups, including fruit and vegetable vendors themselves (who staged wholesale dumping of their produce at open air souks around the country) and from coalition partner Shas (many of whose members are poor and have large families), Prime Minister Binyamin Netanyahu overrode Finance Minister Yuval Steinitz‘s to levy the now 16.5 VAT on farm produce, saying that “sometimes it’s necessary to listen to the will of the people”.

vegetable soukBut at the same time, however, the government is now formulating plans to increase the VAT on other items even further – to 17.5% – to make up for the 1.3 billion Shekel revenue short-fall that is expected to occur due to not imposing what is now known as the produce tax. Prior to the P.M.’s decision, many people were calling for Finance Minister Steinitz to resign. Those close to him say he is furious with the decision concerning the produce tax, and will not resign; even though opposition Kadima party members are calling this act “a sign of weakness” on the part of the present Likud party led government.

Raising the overall VAT another one percent will in the long run result in even more economic hardship than the VAT on fruits and veggies, as it will result in all other items, including staples like dairy items, bread, flour, cooking oil, and chickens being more expensive. Besides, it was argued that people would still find ways to circumvent paying VAT on produce purchases by buying from roadside stands and other black market fruit and veggie dealers. The idea to raise the VAT even more is something that had probably been in the Finance Ministry’s game plan since the new government assumed power in April, 2009. Despite a deep recession, the government has been desperately looking for ways to increase revenues without resorting to levying higher income taxes. Another thing that has become the new government’s problem is that the January Operation Cast Lead military operation left a big deficit in the previous government’s budget, which the new government inherited when assuming power. By gradually raising the VAT, the government is applying what is known as the salami technique in which they gradually raise the tax amount, bit by bit, like slicing a salami; until eventually they have the entire “salami” of increases with less protest from the general public.

As you can see, it’s obviously easier to get the entire salami, slice by slice, instead of trying to take the entire portion at once. The question now, however, is whether people are gullible enough to fall for this ploy; or whether they really can do anything about it, outside of outright rebellion.

Maybe Israelis will be more successful than the Iranians were at protesting government imposed policies. It all depends on how we like to eat our salami.

Greenback bashed again as exchange slips below NIS 4

Shrinking Dollar
The U.S. Dollar, also known recently as “Obama Bucks” slipped below the NS 4 benchmark rate Friday for the first time in five months. The greenback’s international weakness, aggravated by the ongoing world recession and the immanent possible bankruptcy of giant U.S. automaker General Motors has resulted in the US currency falling against other major currencies, especially the Euro and Japanese Yen. The Shekel has continued to strengthen following the announcement by Bank of Israel Governor Stanley Fischer that the BoI will discontinue purchasing dollars as it has recently to help maintain it’s exchange rate and assist Israeli exports with a lower Shekel rate.

Fischer had tried to prop up the sagging greenback due to fears that Israeli exports would suffer, especially those destined for American markets. Another reason for the BoI purchasing dollars was due to an already large foreign currency reserve by the bank in that currency which would mean a loss of profits if the currency went down to the rate it was at it’s low point of NS 3.30 about a year ago. All this news is a bit discouraging for many people who are receiving pensions and other incomes in US dollars and have to exchange them for Shekels. Apartment sales to Americans also suffer when the dollar rate falls as prices for properties in Israel become more expensive.

For people who remember the early to mid 1980’s, when inflation in Israel reached nearly 400% and the former “old Shekel” was depreciating daily against the dollar and other currencies, this business seems almost comical – unless one is living on dollar based investments and pensions that is. A Citibank economist was recently quoted a saying “we think the Israeli central bank could soon find itself in a position where it is neither necessary nor desirable to continue it’s policy of purchasing foreign exchange (dollars) at the rate of $100 million a day”. That’s obviously what has happened in that the BoI is simply flooded with dollars.

In the long run, however, it’s obvious that the economy of Israel is tied considerably to what is happening in America; and too strong a Shekel rate is counter productive

for Israel’s exporters, especially in the current recessionary economy.

Rioting Peasants Shake Up the Royal Court

Benjamin IThe Israelite king, Benjamin I, was deeply troubled. Following his economic decrees from the Royal Court in Jerusalem, his loyal subjects were on the verge of rioting – even to the point of marching on the Royal Palace with buckets of tar and sacks of feathers.

“What have I done to deserve this outrage?”, he moaned as he peered out at the crowds massing in the square below his closed window, which had to remain closed to prevent the continuing barrage of eggs and rotten tomatoes from entering the room where he stood, together with his wife, Queen Sarah-li; who appeared to be more interested in a reality TV program going on (Run for the Millions) than the commotion going on below.

“The peasants keep clamoring for bread. Don’t they realize that these new decrees are for their own good? Don’t they understand that they can find other work, good work, as chimney swifts, if our royal treasury can no longer give them largess?” he continued.

“Don’t worry my dear, if they don’t have bread or pitas to eat, let them eat cake”, his queen said, apparently thinking of something else.

“Cake! Did you say cake?” he fumed. “Marie Antoinette, Louie’s wife, said the same thing, and look what happened to both of them! Maybe we should throw our subjects a bone – like allowing them, especially the older ones, to be given an extra penny on their pensions per month. That will enable them to go purchase…..”

“Nonsense!”, the Queen screamed. “Are you becoming weak in your old age? We have to be strong with these people or the next thing you know they’ll be raiding the royal henhouse. Then they’ll even throw those eggs at us!”

“I’ll deal with them, especially their leaders, personally. I have my list of people to get even with, now that you are king again” she cooed, kissing his cheek.

“That won’t work like it used to” he moaned. “The peasants are too strong now. They’ll burn down our palace like the French peasants burned down the Bastille. Maybe we should cut a deal with them, like give their wives free maternity care.”

“Free maternity care?” she hissed. “That’s how we got into this mess in the first place. Also by hiring those alchemists to turn lead into gold. If you would have listened to me, we would have them convinced to do their patriotic duty and pay even higher taxes for the good of the Motherland.”

“I’ve got it! ” the king exclaimed suddenly. “We’ll tax more those knights who received a horse from their “employer” in order for them to get to and from the jousting tourneys. I was going to hike the tax on oats by 10%, but just levying a “horse tax” sounds much easier.

“Oh my king, thou art truly wise,” Queen Sarah-li said. “Now, let’s go eat lunch – the royal butler advised me that the lamb chops, and the caviar should be especially good today.”

AIG Israel and the American bailout scandals

While the ongoing AIG bailout money scandal appears to be gathering momentum in the U.S. many people in Israel are wondering how this may be affecting the insurance consortium’s affiliate in this country, especially in light of the on-going economic recession that is now fully entrenched in Israel. AIG’s attempt to have an increasing share of the Israel insurance market has not been without problems, as the local company, which began business in Israel in the late 1990’s, appears to be investing a considerable sum of money in TV advertising to help maintain a positive image with an increasingly skeptical public.

AIG began its operations in Israel in the late 1990’s by marketing direct automobile insurance in competition with another company, I.D.I. Insurance Company Ltd, otherwise known as “Betuah Yashir” or Direct Insurance. As of June, 2007, AIG Israel had managed to acquire a 3% share of the Israeli insurance market, with annual sales revenues of $100 million and a profit of $10 million. For years, the company sustained losses in the insurance products it marketed to its Israeli customers, which later expanded to household and mortgage insurance covers, as well as life and health insurance products. While it earlier used more simplified types of media advertising, it has recently used high profile personalities from the Israeli entertainment world, including TV and theatre acting personality Avi Kushnir, and transsexual singing star Dana International, who was hired to advertise the company’s Lady AIG insurance packages.

AIG Israel, headed by Hava-Friedman Shapira, has undergone a massive TV “hasbara” or PR campaign to try to insure its existing and potential customers that everything is OK with the Israeli branch of AIG despite the problems its big brother in America is now experiencing, especially after the revelations that a good part of the money the company was given by US Treasury to keep it solvent has been paid out to its high level management in the form of bonuses. Kushnir has literally earned the title of being known as “Mr. AIG Israel” for the clever and cute commercials he has appeared in for AIG, including being dressed as a woman to promote the company’s “Lady AIG” insurance package, along with Dana International, for women drivers over age 30 who have a good driving record. He was also aired in a special PR commercial that came out soon after the near-collapse of the American AIG and the initial bailout from the US government last October. The commercial shows him walking onto center stage and saying the words: “I saw…..I heard……it’s all right now” in order to show AIG’s Israeli policy holders that they have nothing to worry about.

Kushnir has since been seen in a different commercial in which he tells the viewing public that in spite of many companies conducting massive layoffs of employees, AIG is actually hiring people to work in the company’s sales and customer service departments. It’s understandable why this may be happening; since insurance companies make a good part of their total revenues from selling policies, as well as renewing existing ones. More than likely, the company surely needs extra help to try and bring in more insurance customers, and especially to keep existing policy holders from deserting the company in favor of other insurers. With all that is going on with AIG in America, who might not be just a bit edgy when the time comes to renew an automobile or other type of personal insurance policy. And this reality is something that even Kushnir or Dana will have a hard time trying to prevent AIG policy holders from saying: “I saw…..I heard….I left!”

The main election issues in Israel

Avigdor Liberman

Parliamentary elections are only a few days away, and ongoing pre-election polls are trying to determine what the most important issues are in regards to which political party, or parties, in Israel’s usual governmental coalition formations afterwards will wind up forming the next government.

livniIn the aftermath of the just completed 22 day military operations in Gaza, and the continued firing of rockets and mortars into Israel by Hamas and other Palestinian extremists, it would appear that the security issue is the one that will be on the top list of most voters when they step into voting booths on February 10. The problems dealing with the country’s security, especially for Israelis living in Israel’s southern regions and northern areas near Lebanon, as well as the problem of dealing with Iran and its nuclear program; has resulted in parties like Binyamin Netanyahu’s Likud party and Avigdor Lieberman’s Yisrael Beitanu gaining so much in the pre-election opinion polls.

barakSecurity is a very important issue, and will always be so in a country still largely surrounded by hostile enemies. But as important as this issue may be, there are many others that need the most urgent attention. And two of these issues are the country’s dire water problem and the economic recession that the country’s population is now “officially” immersed in. Both of issues are none-the-less serious than the security one, and may even be eventually more difficult to deal with.

The water problem, or it’s increasingly lack of, is a very major concern due to one of the driest winters in the country’s history; which follows a number of below-average rainy seasons that has brought the current water in the Kinneret as well as the mountain and coastal aquifers to levels so low that it will soon reach an irreversible state. Apparent lack of proper government attention to this problem has resulted in a state where water may have to be actually imported in large quantities just to satisfy the population’s basic household needs. Much of this problem could have been averted years ago if enough emphasis had been put on building desalinization plants along Israel’s Mediterranean coastline. Although a few of these plants were built, such as the one in Ashdod, at least 20 more should have been constructed. An example of how some countries have solved their water problems by desalinization is how Persian Gulf Emirate countries have been able to build beautiful futuristic cities which have virtually all their fresh water needs supplied by this method. One Emirate state, Dubai, even constructed a ski slope within an ultra-modern shopping and entertainment complex. Had Israeli governmental authorities followed this example Israel might now have at least 30-50% of its water needs supplied this way.

bibiThe other major problem deals with the state of the economy, in which thousands of people, many of them engaged in technology based industries, are now unemployed and having to look for any kind of work just to put food on the table for their families. Although the world economic crises, which began in the U.S.A. several months ago, is not of Israel’s making the result has created a recession which is most likely to worsen before it gets better. The weaker elements of society, especially the old, the disabled, and the poorer sectors of the population, are suffering the most as they had virtually no reserves to fall back on even before the stock markets began to crash. Lowering prime interest rates to all time levels (now at 1%) doesn’t help much if one has no money to spend anyway. And Israel’s dependence on exporting goods and services to certain economically stressed markets, like the U.S.A., has resulted in a sharp reduction of cash flow to most companies, not to mention small businesses.

Taking all of these issues into account, there will be a lot of things on peoples’ minds on Tuesday when they vote to elect their country’s leadership for the next few years.

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