a different side of Israel

Tag: Stanley Fischer

TABANK Beats Bloomberg Analyst’s Estimates and Unemployment Rates Sink

The three biggest Israeli banks surprised analysts’ estimates for second-quarter profit, by sending the banking index to its highest close in a month.

The Tel Aviv Banking Index (TABANK), which includes the five biggest lenders, gained 1.2 percent to 1,107.58, set for the highest close it has had since Aug. 8. The index dropped 15 percent in the last six months, and the benchmark TA-25 fell 12 percent during the exact same period.

Bank Hapoalim Ltd., the second-biggest bank, led the gains rising 3 percent to 14.91 shekels at about 1:46 p.m. Israel Discount Bank Ltd. (DSCT) was sent up 2.9 percent to 6.13 shekels, and the American Bank Leumi Le-Israel Ltd. fell 0.6 percent to 13.17 shekels.

Bank Hapoalim’s net income rose 43 percent from last year to 712 million shekels, 11 percent more than the 643 million- shekel mean estimate by five analysts. Leumi, Israel’s largest bank by assets, said net income rose 10.7 percent to 563 million shekels or $158 million, beating the mean estimate of 535 million shekels by leading analysts. Second-quarter profit at Discount Bank climbed 48 percent to 231 million shekels, above the mean estimate of 192 million shekels by other leading analysts.

Stanley Fischer is keeping the benchmark interest rate unchanged at 3.25 percent for a third month as the economy expands and inflation slows down.
The two-year breakeven rate reflecting the rate of inflation which traders generally expected dropped to 206.9 on Aug. 22nd. This is the lowest it has dropped in at least 14 months. The rate spiked two basis points to 2.24 percent last week.

In other news, the unemployment rate fell to its all time low of 5.5% of the population labor force in the second quarter of 2011. Participation in the labor force jumped to 57.5% in the second quarter from 57.4% in the first. The number of employees was 3.2 million in the second quarter, a figure which includes 3.03 million employed by 175,000 private sector businesses.

58.9% of men over the age of 15 participated in the labor force in the second quarter, up from 58.3% in the preceding quarter, and the participation of women rose to 50% from 49.9%. The rate of men employed aged 25-64 rose to 72% from 71.7%, and the participation of women aged 25-64 shot up to 66.6% from 66.5%.

The number of men employees spiked to 1.6 million in the second quarter from 1.58 million in the preceding quarter, and the number of female employees rose to 1.43 million from 1.42 million.
The unemployment rate among people aged 25-64 fell to 4.6% in the second quarter from 5.2% in the quarter before that one. The unemployment rate among men in the age group fell to 4.6% from 5.5% and the unemployment rate for women fell to 4.5% down from 5%.

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.

Fischer Criticized For Not Changing Interest Rates

Market analysts hurried to comment on Governor of the Bank of Israel, Professor Stanley Fischer’s decision earlier this week to keep the country’s interest rate unchanged at 2%.

Stanley FischerThe decision was in harmony with market expectations, given the crisis in Europe and the U.S. economic slowdown, which is actually beginning to affect Israel, whose GDP growth decelerated to 3.8% growth in the third fiscal quarter from 4.6% in the first quarter.

The stall in the central bank’s return to “normal” interest rates could result in increasingly swift interest rate hikes in the future.

DS Brokerage chief economist Alex Zabezhinsky said:

“Inflation is beginning to be felt not only in apartment prices, and because of international factors, such as commodities prices, but also as a result of domestic demand caused by falling unemployment and the full use of production capacity. Although the rise in the latest CPI was in line with expectations, were it not for the unexpected drop in the housing item (rent), which we think was ephemeral, the CPI would have greatly exceeded forecasts due to higher prices for a long line of goods and services. In addition, the continuing rise in home prices leads us to conclude that the risk of an inflationary outbreak has risen, and today’s decision by the Bank of Israel does not help calm things down.”

Happy Days Here Again?

Unemployment center
“They certainly look happy, don’t they?”

Happy days are here again
The skies above are clear again
So let’s sing a song of cheer again
Happy days are here again

Sung during the Great Depression, and composed by J. Yellen and M. Ager

Bank of Israel Chairman Stanley Fischer and Finance Minister Yuval Steinitz appeared happy when it was announced that the numbers of unemployed Israelis had decreased to “only” 17.5 thousand new claims in Jun/July, as compared to 18.6 thousand during May, or a decrease of 5%. That, according to Steinitz, brings the total number of redundant workers down to “a more manageable level” of slightly less than a quarter million souls. Another statistic that appears to cause both Mr. Fischer and Steinitz to smile is that the number of people being fired from various jobs fell by 2.2.% as compared to previous months.

But if all this is supposed to be such great news, why are so many not smiling, or whistling modern versions of Happy Days are Here Again? And why did the Bank of Israel have to go out and purchase another 100 million dollars on top of the 250 million the bank bought a few days earlier to try to stem the continuing decline of the Greenback? Perhaps things aren’t as “happy” as Fischer and Steinitz want us to think?

During the summer months, unemployment figures always seem to drop a bit for a number of reasons, including many people finding temporary summer jobs, or taking a vacation due to their kids being out of school; or simply waiting for the job market to pick up again in the fall. This logic is particularly true for women who are now unemployed from high tech or similar higher paying positions, and have decided to be home with their children instead of having to pay for expensive day care; since the greatest day care “plans” around , school and pre-school, are both out on summer break.

Another factor deals with people who out of desperation have taken lower paying jobs as cashiers, security guards and even maintenance workers that pay only minimum wage or slightly higher; making them under employed as compared to their former status. All of this goes along with a statement made the other day by U.S. President Barack Obama, when he told a press meeting that “we are now seeing the light at the end of the tunnel regarding the end of the current recession”. He almost broke in a version of the Happy Days song himself while making this statement, apparently giving himself the credit for any improvement in the still faltering U.S. economy.

But getting back to what’s happening on this side of the pond, it’s still far too early to whistle any happy tunes; especially when many people’s unemployment benefits are about to run dry and local banks are calling on credit card companies to return payments due to lack of funds. We must also bear in mind that when that Happy Days song came out in 1929, the Great Depression had not even begun yet.

So who’s whistling this song now? Maybe Yuval and Stanley are – but a lot of folks aren’t!

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