I guess the celebration of Israel’s 61st birthday last week was superfluous. After all according to BOI head Stanley Fischer, Israel came into existence when he took his position a few years ago. How else do you explain his bizarre statement in the Knesset today, when speaking about the Bank Hapoalim situation.
According to Globes: “Fischer told the committee, “It’s a mistake to discuss this matter. We’re still in the middle of the measures. I can assure you that we would not have embarked on this path without considering everything, every repercussion, in the middle of the greatest financial crisis this country has every known.”
The ‘greatest financial crisis the country has every known’. Huh?
What drivel. What is he talking about? Israel was about to go bankrupt 7 years ago…remember? Remember the days of hyperinflation????
Give me a break. The fact that Fischer was talking up the economy, as it was entering a slowdown is bad enough. To now say this is a great crisis, is both admitting that you have failed, and that you know nothing of Israeli history. Either way it doesn’t look good.
Much like Prez. Obama, who is trying to recreate the country in his own image without any respect to history, Fischer as well has used the same strategy. unforuneately, those that don’t learn from history are the ones that are doomed to repeat it.
No economic growth, a stable currency, and yet the March CPI figure jumped by 0.5%.
According to Ynet: ” The Consumer Price Index (CPI) rose by 0.5% in March compared to February, the Central Bureau of Statistics (CBS) said Tuesday, following four months of price reductions in light of the recession. Analysts were surprised by this figure in light of pre-estimations pointing to a stable CPI or a price-hike of up to 0.2%. Since the beginning of the year, the CPI has fallen by 0.1% on the backdrop of rise in unemployment, the cutting down of production and the drop in demands.”
The jump was led by higher fuit and vegatable prices as well as higher housing costs. This will surely mean that BOI head Stanley Fischer will hold interest rates steady for the time being.
If we see continued higher CPI readings we may start seeing higher interest rates. That could delay any Israeli economic recovery.
The US dollar is flying by almost 2% against the Shekel this evening after the Bank of Israel said that they were stepping up the purchase of foreign currency.
According to Globes: “The central bank says it will buy government bonds to the tune of NIS 200 million daily, and will continue its program of expanding the foreign currency reserves at an average rate of $100 million daily.”
Why the need to weaken the Shekel? It has already dropped buy almost 30% in the last 6-9 months against the greenback. Trying to ignite an economy via inflation is bad news. Come to think of it wasn’t current BOI head Stanley Fischer head of the IMF back during the Asian, Russian and Latin American financial crises at the end of the ’90’s? Isn’t this a similar policy to what he recommended then? If so, look out. I sure hope that speculators don’t drive down the Shekel, like they did to Asian currencies 11 years ago.
How about a strong currency and to attract foreign investment, and lower taxes to help ignite long term growth?
Fischer is playing with fire, and if his track record is any indication, look out!
Though they have done a great job of paying themselves large salaries, with the current economic downturn, even senior Bank of Israel officials are taking a pay cut.
According to the Jpost: “Bank of Israel Governor Stanley Fischer and 12 of his senior managers have agreed to a 5 percent
salary cut for a year, the
central bank announced Sunday. The
Bank of Israel has been under public scrutiny for paying excessive wages and benefits, compared to other state workers, including bonuses and pensions. The central bank has, in recent months, drawn criticism for its intention to allocate “outstanding performance” bonuses in a period when the private sector is undergoing efficiency measures, slashing jobs and cutting salaries. The bonuses for 2008 are part of a
salary agreement between management, employees and the government. Management has been discussing the possibility of postponing or canceling the bonuses for 2008.”
Looks like they have also entered reality and realize that they have no business paying themselves so much when everyone else is suffering.
