Economic Pearl Harbor Hits Israel
Written by: Aaron Katsman | January 21, 2009
A theme that we have been echoing here at Israelnewsletter.com is the fact that many in Israel are living in a bubble and don’t realize that the economic tsunami that has swept the world will cause damage in the holy land. Globes has a great interview with Gemini Israel Funds general partner Menashe Ezra. He says, “Warren Buffett said that we’re facing an economic Pearl Harbor, and I feel that, in Israel, the understanding that we’re at war has not sunk in.” Ezra added, “One of the things that is bothering me is that we’ll experience a local patriotism. I think that globalization will take a few steps back. In Germany and the US, people realize that if they buy a locally made car they’re helping themselves.”
He goes on to say that he doesn’t think that money will be readily available to hi-tech entrepreneurs. “In recent years, we had too much money here. There was a bubble, and entrepreneurs could fund companies without paying a price. They left big companies and got similar salaries at private companies and start-ups. They received stocks and options. This had never happened before in Israel or in the world. It happened because of the surplus of money and incautious behavior, and it created distortions.”
The picture Ezra paints isn’t all that pretty for the short-term future of Israeli hi-tech. On the other hand I think we need to keep in mind that Israel weathered the internet bubble storm, and learned a tremendous amount in the areas of running businesses day to day. I think that that experience will help pull Israel through this global crisis, and the Israeli technology scene will be as strong as ever.
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.
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