We would like to take this opportunity to wish our readers a Shana Tova, a happy new year. May we be blessed with a year of health and happiness, and may all of our prayers be answered.
With global markets reeling and investors completely having lost faith in the financial system, the question needs to be raised whether Israel will turn into safe haven for investors fleeing financial turmoil. The Shekel continues to strengthen against the USD and many Israelis have been sending money back to Israel in droves.
But I can’t imagine that in this era of a truly global economy with global interdependence, Israel will remain largely unaffected by the surrounding turmoil. It just doesn’t make sense. It’s important to note that the Israeli banks have had some exposure to sub-prime as well as both Lehman Brothers and Wamu. While Israeli banks are know for their stinginess in lending money to ‘main street’, they tend to lend money no questions asked to the 10 powerful families the control the local economy. The question is how will these families be able to weather the storm. I hate to think of what will happen if they are unable to pay back their loans. We have started to see that with tycoon Arkady Gaydamak, basically offering his businesses at fire-sale prices in order to raise cash, and one local bank, Mizrachi, actually made a credit call on him.
According to Globes, Former PM and current opposition leader Benjamin Netanyahu, says that Israel needs to take strong steps to avoid falling into economic slowdown. The article says, “We must prepare for a severe slowdown.” He goes on to detail some measures that could be taken to avoid the meltdown. “In order to create rapid growth and use the crisis to strengthen the Israeli economy, we must cut taxes, implement economic reforms, and streamline government work. If we do this, when the global economy recovers, Israel will be in better shape.”
Investors should keep an eye on how the local government reacts to the growing nervousness over the economy. Any missteps could send Israel into an economic downturn that rivals what we see in Europe and the US.
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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
” A friend of the family” - that used to be the slogan for WaMu back in the day when it was a small community bank. My first passbook account was with the company, and I remember taking my hard earned ( not really but that’s another post) paper route money, that I managed to collect from subscribers, and deposit it in the bank. The smile I would receive from the teller is still ingrained in my memory, as she would make some kind of comment about how much money I made this month, and she hoped I would make even more the next month.
That was about 25 years ago. Apparently not much had changed with the bank as customers were still greeted with a smile and left with the blessing that hopefully next month they will be depositing even more money. 25 years ago the smile was genuine, today the smile was a bit more sinister. When a bank lends money to customers who clearly have no means with which to pay back their loan, about the only way the client will be able to afford to keep his house is through a prayer. For WaMu the prayers weren’t answered.
If you want to focus on the ‘greater’ economy, then the failure of WaMu, is a good thing. After all, any company that acts totally irresponsibly and without accountability should be left to go bankrupt. But for me personally the end of WaMu is sad, and it closes another chapter of my youth.
Please see our Disclaimer HERE.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Belated Happy B-day wishes out to Zack “Juiceman” Miller. We were a bit late with this one but with all the volatility in the markets it sort of slipped my mind. For thsoe of us who take a birthday seriously, it’s a time not only to reflect on the past, but more importantly, to look ahead to the future. What do you want to accomplish in the upcoming 12 months?
For investors the previous 12 months have been a disaster with major market averages off about 25% in the US, and some Israeli averages down more than 50%.
Obviously no one can predict the future, but let’s hope that this coming year for Zack will also be a blessing for investors.
Back when I was in high school, I worked for a company in sales and we used to go around to businesses and sell books. We used to have a sales/motivational meeting each morning before heading out to our territory. At the end of each meeting we started doing a chant. The theme of the chant centered on the word juice. The word juice was an acronym for ‘join us in creating excitement.’
Let’s hope that we can get a bit of upside excitement this year. Happy b-day.
Please see our Disclaimer HERE.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.