I clearly remember Israeli industrialists begging for the Bank of Israel to intervene in forex markets in order to pick up exports. We were told that a strong shekel caused a loss of over $2 billion in lost business, because Israeli goods were more expensive abroad. Industrialists got their wish and there was central bank intervention and not only that but the USD made a big move against most major currencies. Sounds like great news for exporters, right?

Wrong. Globes is reporting that Israeli exports actually fell in October, the first drop in 5 years. ” exports of goods (excluding diamonds) of 3.4% and an annualized increase in imports of goods of 2.8% in August-October 2008, the Central Bureau of Statistics reported today. This is the first drop in exports in five years, although there have been slowdowns in the rate of growth.”

If i am not mistaken, the Shekel has been strengthening over the last 5 years. That would mean that the industrialists have it backwards. Wouldn’t be the first time. I think( I remember hearing this but don’t quote me) former president Ronald Reagan once said something like ” a strong currency is the sign of a strong country and strong economy.”

Maybe the industrialists should concentrate on making better products at cheaper prices. I bet if they can compete on quality and price, then their sales will increase regardless of currency fluctuations.

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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.

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I’d like to point out a couple of very interesting reads that I stumbled upon today. the first was actually written by my brother, Abe. It appears in the Jpost In the article Katsman compares the current situation in Iraq to that of Vietnam. Politically, similarities abound. “Some quick history: Finally concluding that they could not defeat the American-backed Republic of South Vietnam, the communist North Vietnam signed the Paris Agreement in January, 1973, which called for cessation of attacks by the North and recognition of Saigon’s fragile democratic government. America withdrew its troops, but continued air support and arms to the anticommunist, increasingly stable South Vietnamese, as well as to its neighboring anticommunist Republic of Cambodia.

But a hated President Nixon resigned in scandal, and his obsessive, personally vindictive critics then elected to Congress in 1974 could not bear to support his arguably significant foreign policy success in a war they had vehemently opposed. Within months, Congressional Democrats proceeded to kick the legs out from under the South Vietnamese, withdrawing all American personnel, and cutting off all aid and arms - leaving all of Indochina to the tender mercies of the communist forces.”

Obama’s cut and run strategy could potentially cause bedlam. Sounds familiar. We are  supposed to learn from history, no?

In an article in the online Wall Street Journal,  Steven G. Calabresi has a very interesting post on Obama’s judicial philosophy. In an issue that has gained almost zero exposure during the election, Calabresi points out just how far to left Obama is vis-a-vis his judicial philosophy, and with many potential Supreme Court openings, he could move the court way to left for years to come.

“Speaking in July 2007 at a conference of Planned Parenthood, he said: “[W]e need somebody who’s got the heart, the empathy, to recognize what it’s like to be a young teenage mom. The empathy to understand what it’s like to be poor, or African-American, or gay, or disabled, or old. And that’s the criteria by which I’m going to be selecting my judges.”

Wow. Is Obama advocating that we should ignore the law, and rule in favor of those who need empathy?

I’d love to hear an Obama surrogate explain this one.

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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.

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With the stock market getting pummeled investors have run for cover. Panicking after losing significant chunks of their savings, investors are looking for any reason to jump back into the stock market. Unfortunately instead of rewarding investors, companies are trying to fool them. As if we haven’t seen enough corporate irresponsibility, the new trend of corporate stock buybacks artificially increases EPS, thus fooling investors into thinking the company is actually growing.

It’s funny that this trend towards buybacks has taken hold as Barack Obama has surged in the polls. Much like Obama’s economic policy, share buybacks are cosmetic solutions but often nothing concrete to reward investors. Sort of like running a campaign on hope and change!

Enough trickery, investors have suffered enough. It’s time to start rewarding investors. How? Remember that old time word they used to use,  ‘Dividend.’

I know that share buybacks are ‘tax efficient’ as well as they fatten EPS numbers, but how about doing something radical for investors?  Something like paying a dividend, or investing in growing the company. Doesn’t a stock buyback just mean that the company has nothing better to do with their money? Give some of your profits back to shareholders. Hey, there is an idea!

For a great analysis of the pros and cons of buybacks, check out economist Stefan Karlsson’s blog.

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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.

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So we now have the much anticipated Barack Obama economic plan with the centerpiece being wealth redistribution. Taking from the rich and giving to the poor, or maybe we could say it’s not allowing one to become rich and making people stay poor. Haven’t we tried this before and seen disastrous results. Throw in a little capital gains tax and we have a recipe for a continued economic slowdown.

My last post about how investors are spooked about the prospect of an Obama victory sure seems even more plausible after hearing about his proposal. Taxing capital gains, increasing taxes for the so-called rich, and giving tax credits to those who don’t even pay taxes to begin with sounds like a rehash of European economic policy for the last few decades and look at their situation.

While the tax raise is troublesome enough, the most scandalous part of his plan is to raise death taxes across the board to 45%. What a scam. We are about to enter into the biggest generational wealth transfer in the history of the world and Obama wants to take 45% of it? Where is the outcry? Why should the government see a penny of inheritance money? Hasn’t it already been taxed multiple times? Everyone speaks about how Obama is all about justice; well where is the justice in taxing already taxed money?

If he gets elected this plan will come back and bite the very same people he is trying to help. Inheritance as well as letting workers keep more money of what the earn is the way to increase individual prosperity. If you were to confiscate all the joint net worth of both Bill Gates and Warren Buffett, and you would distribute it evenly among all Americans how much would they end up getting? A couple of bucks at best. What kind of difference will that make to anyone.

This plan is outrageous, and will do nothing to help grow the economy. But heck, Barack, if you are in the giving mood, how about sharing some of the millions you made on your book?

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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.

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