The economy stupid!
The Israeli economy is strong, and in fact is probably the strongest in Europe. It has had greater than 5% growth rate for the past three years and greater growth rate over the last six years than any country in Europe. Although the Israeli stock market (miniscule compared to the US) fell 3.5% yesterday, it has not been afflicted by Bank failures and is unlikely to be. It seems that unlike many European and Asian Banks, who bought into the US market and became tainted with the "toxic" debts that some American Banks had, there were few such purchases by Israeli Banks. Bank Leumi (National) had the most, about m$45, but not significant enough to cause specific worry.
Nevertheless the Israeli economy, although relatively separate from others is tied into the US economy, and so share losses are expected. Already retirement funds here have lost ca. 100 million shekels (NIS), equivalent to ca. m$30. But this is chicken feed compared to the current situation elsewhere in the world, for example in the UK the Government has agreed to provide b$500 towards supporting a slew of Banks whose financial situation is precarious, including the Royal Bank of Scotland and several other well known British Banks such as Lloyds and HBOS. In little Iceland the biggest Banks have failed and the Govt. there has refused to bail them out, thus leading to b$2 additional losses in the UK. In Japan, the market is in melt-down, having lost ca. 10% of its value in one day, and in Russia the bourse has had to be closed twice to stop a sell-off of shares.
It seems that the b$700 rescue/bail-out of Banks and financial institutions in the US, although it has been passed by Congress and signed by Pres. Bush, is taking time to be implemented, and so the market has crashed another 8%. What do the traders expect, that it could be implemented in a day, it will takes weeks to months at least. In each case there have to be hearings and or decisions regarding how much of the debt the Govt. should buy-out and at what cost.
It is most notable that in the list of prospective hearings in Congress, on such private companies as AIG, there are no hearings scheduled on Freddie Mac and Fannie Mae, the two giants of the loan/mortgage industry, that have been administered by the Govt. and Congress and that have been heavily involved with the Democratic Party. It was their loans of millions of mortgages to people without sufficient credit that was largely responsible for causing this subprime crisis in the first place.
All the losses listed above must be multiplied several fold in the few days since I wrote that! The market is falling fast, and until the money voted comes on line it seems nothing can stop it.
Nevertheless the Israeli economy, although relatively separate from others is tied into the US economy, and so share losses are expected. Already retirement funds here have lost ca. 100 million shekels (NIS), equivalent to ca. m$30. But this is chicken feed compared to the current situation elsewhere in the world, for example in the UK the Government has agreed to provide b$500 towards supporting a slew of Banks whose financial situation is precarious, including the Royal Bank of Scotland and several other well known British Banks such as Lloyds and HBOS. In little Iceland the biggest Banks have failed and the Govt. there has refused to bail them out, thus leading to b$2 additional losses in the UK. In Japan, the market is in melt-down, having lost ca. 10% of its value in one day, and in Russia the bourse has had to be closed twice to stop a sell-off of shares.
It seems that the b$700 rescue/bail-out of Banks and financial institutions in the US, although it has been passed by Congress and signed by Pres. Bush, is taking time to be implemented, and so the market has crashed another 8%. What do the traders expect, that it could be implemented in a day, it will takes weeks to months at least. In each case there have to be hearings and or decisions regarding how much of the debt the Govt. should buy-out and at what cost.
It is most notable that in the list of prospective hearings in Congress, on such private companies as AIG, there are no hearings scheduled on Freddie Mac and Fannie Mae, the two giants of the loan/mortgage industry, that have been administered by the Govt. and Congress and that have been heavily involved with the Democratic Party. It was their loans of millions of mortgages to people without sufficient credit that was largely responsible for causing this subprime crisis in the first place.
All the losses listed above must be multiplied several fold in the few days since I wrote that! The market is falling fast, and until the money voted comes on line it seems nothing can stop it.
posted by Jack Cohen at 8:44 PM
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