A lot of attention has been paid to Shai Agassi and his Project Better Place, where he is developing electric cars. Governments are throwing money at his project as if it was going out of style. Environmentalists love anything that doesn’t involve fossil fuels. Of course we have not heard the other side. Price of the cars, the need to have battery stations all over the place and perhaps the most important issue, the creation of mobile electro-magnetic fields which may prove to increase rates of cancer, are all issues that need to be addressed.

That’s why I think that Israel needs to capitalize on the recent massive natural gas discovery, to create cutting edge technologies for natural gas powered cars. After all, none other than T. Boone Pickens himself has called for the US to use its massive natural gas reserves to move from gasoline to natural gas powered cars. Natural gas is cheaper, burns cleaner than crude and is abundant in the US and in Canada, which will help the US not be so dependent on foreign oil. Didn’t that used to be a big issue?

Last summer Pickens announced his own energy plan. It called for a move to wind power( okay so everyone misses the boat sometimes!) and natural gas powered vehicles. My thought is that Pickens has the money to invest and Israel has the superior ingenuity to develop cheap and innovative technologies for the world to move to natural gas cars. With Israel sitting on huge supplies of natural gas, this wouldn’t just be an export business, but rather would be implemented locally as well, which will help wean Israel off of crude, which may be helpful in terms of national security. it will also be a boon to the Israeli economy. Pickens and Israeli hi-tech. Sounds like a match made in heaven.

Pickens is a financial wizard, and if he smells a big opportunity to make money he will invest in it. It’;s time for israel entrepeneurs to step up to the plate and start creating technology to allow for the move to natural gas.

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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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With global capital markets in the middle of a meltdown, it would be expected that the Israeli hi-tech startup industry would be in shambles. With most investors hunkered down waiting for the storm to pass, they wouldn’t seem to be in the mood to fund new companies. Well that may be what you would expect, in reality it’s not the case. According to a report in Globes the number of startups that have closed their doors this year is actually much less than in the previous 2 years. “According to IVC Online, 35 start-ups have closed down since January: 24 companies in the first quarter, six in the second quarter, and five in July-August. For the sake of comparison, 228 companies closed down in 2007 as a whole and the number that closed in 2006 was about the same.”

That hardly sounds the panic whistle. It’s hard to understand why this is occurring but one reason may be that companies have cut out the frivolous expenses of years passed, and are doing a much better job of making whatever money they raise, last.

That’s the good thing about lousy capital markets. It sends a dose of reality to the startup world, that they better shape up and watch their spending or their sole option will be bankruptcy. I guess you can find some good in any situation.

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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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For those who think that the local Israeli economy is immune to a global economic slowdown, today’s economic numbers on consumer confidence, may want you to think again. Globes reports that the index dropped to its lowest leevl in 4 years.

The article says: “The Consumer Confidence Index has been falling since the third quarter of 2007, even before there were signs that the economy was entering a slowdown. The index indicates that the public has sensed the economic trends for a long time, even as official macroeconomic data only now shows declines in private consumption and slower growth.”

With so much of the recent local economic success due to strong consumer spending and optimism, this continued deline in confidence, could spell the end of the current economic cycle. Growth estimates have been sliced, and while official estimates are still over 3% GDP growth for the year, with a slowing consumer and export companies reeling from Shekel strength I think we may be hard pressed to achieve those numbers. Keep in mind that israel has been late to the game concerning an economic downturn. That doesn’t bode well for ‘09 growth, which may continue to sag.

So where is there room to be optimistic? With the USD staging a recent comeback and pushing through the 3.6 barrier, the investment opportunities ahead may lie with export driven industries, especially the much sought after Israeli hi-tech industry. With this industry under performing over the last year or two, it may be time for Israeli hi-tech to make a comeback.

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.

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