August 15, 2012–Financial decrees are upon you, people of Israel! At least that is what the headlines have been screaming out lately (and what certain irresponsible politicians have been defiantly announcing, as if talking about decrees imposed by Pharaoh on the Israelites, heaven forbid). The truth, obviously, is rather different. The measures that the government recently agreed upon, with the full support of Bank of Israel Governor Stanley Fischer, cannot be described as “decrees.” They are rather a string of essential measures, extremely moderate and well thought out, aimed at preventing the grim global financial outlook from making real decrees necessary in the future.
If anyone thinks that the worst part of the global financial crisis is behind us, they need to wake up: The prices of basic food staples are about to rise significantly in the coming weeks because of the severe drought in the U.S. and other parts of the world (this will affect food prices in Israel), and many economists believe that we are in for another financial meltdown this coming September, more severe than the last, in most of the European Union. Greece will officially go bankrupt, and may have to leave, or be kicked out of, the EU; Spain and Italy will continue to waddle along the edge of the financial abyss; countries like Germany and the Netherlands, whose economies are relatively healthy, will come under mounting political pressure to stop providing bailout funds to ailing states.
The news coming out of the U.S. is no better, and the fact that Republican presidential hopeful Mitt Romney chose an economically minded running mate — Wisconsin Rep. Paul Ryan — indicates that he views America’s crippled economy as the main battleground for his confrontation with U.S. President Barack Obama. In the meantime, a disturbing real estate bubble is forming in China and exports are slowing down.
How does all this affect us? Well, it certainly does affect us. After all, the Israeli economy is largely based on exports, and who constitutes two-thirds of our market if not those failing economies in the EU and the U.S.? The fact that Israel has so far managed to weather the global crisis is a direct product of the Bank of Israel’s responsible policies, which have reined in the government. But these dams that are protecting us from harm could burst at any time and drag us as far down as any one of those collapsing economies mentioned above, unless we take preventive measures well enough in advance…Read More>>