Israel's econo & me

History Repeating

2006-07-22T15:13:00.000+03:00

I found some caricatures from the year 2000.
Look familiar?

A "War"k in the park

2006-07-21T11:31:00.000+03:00

I feel this is a relatively easy war for Israel.
Lebanon's army is week and is not participating in the fight together with the Hezbollah (even though it can). Israel is fighting via air strikes, therefore no soldiers are getting hurt, and in Tel-Aviv we feel nothing. Nothing at all.
My heart goes to the people who live in northen Israel - they are "fighting" our war. They suffer casualties in body and in property and therefore they are this war's heroes.
But this is no Iraq no. 2. We can still live a normal life. This is not the "classic" war where you see armed men running in the streets, smoke everywere and ruins on ruins.
In the crazy place I live in, I know this is not the end. When this is all over, we may have quiet for a few monthes, years or decades.
People of Israel, don't think it will be so easy next time (even though I consider myself as optimist, the reality is stronger than me now and I'm almost positive there will be a next time).

Don't forget we still have the Iranians nuclear bomb ahead...

Know your enemy

2006-07-19T11:59:00.000+03:00

I wonder if we can refer to the "war" between Israel and Hezbollah as a war of mutual respect between enemies.
(I wrote the word 'war' in quotes because no one knows if it is a "special situation" or a "conflict" or any other weird title, or simply "war".)
What I mean when I say a war of mutual respect is that we know that the Hezbollah rockets are very accurate, and if they want, they can target our chemical factories in Haifa and cause a huge amount of casualties due to the spread of chemicals in the air.
On the other hand, we are using our air force and navy only when targeting the Hezbollah and the infrastructure. We can enter Lebanon with our infantry by land, but we don't.

As long as this weird respect between us remains, the situation (In the short term at least) will not escalate to the extreme.
But, in my opinion, if the Hezbollah feels it's the end of the organization, I'm afraid all hell will break loose.

My premonition did not miss

2006-06-14T11:56:00.000+03:00

Just a month ago, in one of my previous posts on May 04th 2006, I wrote about a hunch I had.
About the fact that the market will drop about 10% from 900 points to 810.
Well, I'm sorry to say my gut feeling was accurate.

Too bad I don't put my money were my gut directs me.

Do not panic!

2006-05-24T20:55:00.000+03:00

The world is not coming to an end.
What did you expect? For the market to climb forever?

The last two weeks were poor. The market is losing its height and all I hear around me is panic.
No, this is nothing like the 2001 crisis (I hope).
The stock markets climbed rapidly during the last 24 months and it's about time investors claim their profits.
I listen to the analysis of key players in the market, and they say the economy is strong and they see no special reason for these drops in the stock market but two. The one I mentioned earlier (investors claiming profits) and the second one is the interest rates - the higher the interest rates, the more the stock market suffers, and we witnessed several interest changes upwards.

If you are too nervous to cope with the current readjustment of the market, stay out till it climbs back again. It could be tomorrow, next week, next month or next year...
The sooner the better.

Ouch

2006-05-06T20:57:00.000+03:00

I feel like I just got a slap in the face telling me to WAKE UP!
Just a few days ago I wrote that I don't get it. I wondered how come the market is rising dispite some supposedly negative events for the economy. And along comes Warren Buffet, the second richest man in the world, and buys the Israeli company "Iscar". This is the largest business deal for an Israeli company ever and Buffet's third largest.
I think it says a lot about the Israeli economy's strength.

Buffet is considering buying more Israeli companies.
Well, I wish him good luck with his last purchase and want to thank him for the slap in the face.
I needed it.

Market, High, Good

2006-05-04T10:15:00.000+03:00

I just don't get it...
Last July, before the disengagement plan from Gaza, the stock market was at about 700 points.
The treasury minister resigned, the coalition fell apart, Sharon had a stroke and Israel went to election before the end of the term.
In between, there were suicide explosions, the rise of Hamas as the Palestinian leaders and other bad events that should have badly affected the economy.
And what do you know... the stock market is rising and rising, getting very close to 900 points, currently at the highest point ever.

As the famouse Stevie Wonder song goes: "...I hope my premonition misses...", but I think we are close to dropping back to 810 points.
No special analysis, just a hunch.

I'm back

2006-05-03T19:33:00.000+03:00

Ok, where were we?
Oh, yes. I guessed in February that Israel's next government will be a capitalistic one.
I was partially correct.
Avoda - the socialist party, formed a coalition with the winning capitalistic party - Kadima.
All of that is old news, but the main thing (for me at least) is that the treasury ministry stays in capitalistic hands.
The socialist's left wing party took the ministry of defense, which as far as I'm concerned, means more good news.
I see in the near future that we will remove all of the illegal settlements, something investors will like.
Less money will go that ministry (which nowadays gets more than 40% of the budget) and will go elsewhere.

All in all, good news.

WOW

2006-02-10T18:20:00.000+02:00

So I haven't had the chance to write till now and a lot has happened.
"Hamas" was elected to the Palestinian Authority and the Israeli Economy has been affected.
"Hamas" represents extreme anti-Israel views, therefore the economic euphoria that lingered in the Israeli market for the past few months has been suppressed.
The stock market dropped by about 3% in three weeks and the local currency (NIS) lost some of its power to the US Dollar. It's true that the USD strengthened all over the world, but still, I live here and I need the NIS to be strong (so I can travel around the world for cheaper).

Politics and Economics - Part II

2006-01-16T18:31:00.000+02:00

As a continuation from the last post...
After the media announced that Sharon suffered a severe stroke, the stock market lost more than 5% in one day, and a lot of people feared that the market might lose more points.

Sharon ran a capitalistic government (which investors like) and was attempting to begin the process of ending the conflict with the Palestinians (which investors liked even more), and the uncertainty of the new situation caused a panic amongst them.
Ehud Olmert, along with leaders from the entire political spectrum, made sure that the stability of the government remains.

Olmert, acting prime minister and new Kadima leader is pro-capitalism and investors (mainly foreign) felt reasured while seeing him as Sharon's heir. After the 5% loss, the market bounced back during the last week is almost back at the starting point. This was reassurance that political system under Ehud Olmert's leadership is strong.

Both the Kadima leader and the Likud leader, Benjamin Netanyahu, are capitalists and they might form a coalition in the next government. Therefore, as it seems now, the next government's economics views will be capitalistic ones.
But it is too early to tell - elections are 10 weeks away.

Politics and Economics - Part I

2006-01-15T00:00:00.000+02:00

Last week, elections within the Likud party took place. The elections were held in order to form the party's list of leaders for the upcoming national elections.
Likud had 40 (out of a total of 120) seats in the former parliament.
Ariel Sharon was the leader of that party, but left it along with other members to form the Kadima party about 7 weeks ago.

Prior to Ariel Sharon's stroke, surveys showed that the Likud only had 16 seats, while Kadima got 38. After Sharon's stroke, a lot of people thought that Kadima might lose power to Likud since Sharon was the founder and engine of Kadima. In last weekend's survey, Likud had 13 seats, while Kadima got 42 (!).

A lot of the credit for this goes to Ehud Olmert, the acting prime minister.
In the past week, Olmert made all the right decisions and showed the people that Kadima is much more than just Sharon, but the vision of many more leaders.

I'll talk about the influences of this regarding the economics in my next post.

The Israeli stock market review

2006-01-11T14:58:00.000+02:00

In 2005, the Israeli stock market went up by more than 35% and reached its highest point ever (850 points) - it was a great place to invest.
One of the main events that contributed to the Israeli stock success was Ariel Sharon's disengagement plan, the Gaza strip pullout.
The Israeli military's unilateral withdrawal from the Gaza strip, along with the pullout of the Jewish settlements, gave the market a boost and created an optimistic atmosphere amongst investers.

In 2005 there was a major reform in the Israeli economy. The government reduced the tax on foreign shares and reduced the interest (two things that made investors look for other alternatives rather than put their money in the bank). There was a huge reform in the pension funds. Stanley Fisher, who has a big reputation amongst foreign investors, was nominated as Governor of the Bank of Israel.
These economic reforms helped the stock market to go up for the third year in a row.
Lets hope that 2006 will be the fourth...

Ariel Sharon

2006-01-07T15:17:00.000+02:00

Ariel Sharon, the Israeli prime minister, suffered a severe stroke on the 4th of January. The media around the world has been covering the situation almost every hour since.

Israel and the Palestinians have been engaged in an ongoing conflict over land for over 35 years. The Gaza Strip and the West Bank are the main conflict areas. Most of the Palestinians live in these areas, and up till recently they shared it with Israeli settlers. The Gaza Strip contained 1.3 million Palestinians and only 8000 Israelis. Since 1967, Ariel Sharon was the main character who was responsible for building these settlements and encouraging Israelis to move and live there. This was one of the reasons that many people in Israel and around the world considered Sharon to be a right wing leader. This opinion on Sharon changed a few years ago.
Sharon took a brave turn towards the center of the Israeli political map and engaged the Gaza Strip pullout. The majority of the Israeli people supported this action and last August, Sharon ordered the army to leave Gaza and to evacuate all the Israelis from that area.
This action was considered to be a revolutionary event that gave hope to the Israelis and the Palestinians. The area saw the beginnings of peace, and the Israelis, along with leaders from around the world, believed that Sharon would be the leader to bring peace to the region.

Ariel Sharon started a new party for the upcoming election (which is supposed to take place on the 28th of March, 2006), which comprised leaders from both sides of the political map. Election polls showed that Sharon's party was massively favoured. Hope was in sight. And then, the unexpected happened -Sharon's stroke.

At the moment, he has gone through 3 brain surgeries and doctors are fearing for his life.
I hope he will be strong and recover from the horrible situation that he is in.
I don't think it is appropriate at this time to discuss the economic influence this event will have, although it will definitely have a short and long term influence that only time will tell.
I wish him all the best and hope to see him leading this country to a good future.

Israel's profile

2006-01-07T14:06:00.000+02:00

Let me tell you a little bit about my lovely, active country - ISRAEL.
Israel is located in the Middle East and borders Egypt, Jordan, Syria and Lebanon.
Israel is a little country, about the size of San Diego, Slovenia, and only a little larger than the Kruger National Park in South Africa - not too big at all, but very dominant in world news.

Israel's population is approximately 7 million, comprising about 5 million Jews, 1.5 million Muslims and 0.5 Christians and others.

We have no oil wells that would enable us to export oil in order to richen our country's bank account, like other countries in the area. Nor do we have minerals to trade; all we have to rely on is our human resources.

Israelies, for the most part, are hard workers, talented and have creative minds. Of course, I'm not the most objective person in the world, but still, this combination helps us to compete with the biggest, most powerful countries in the world in many areas, such as agriculture, science, hi tech, anti-terrorism, military equipment, etc.

Well, that was a little taste of Israel. I know it's not enough, but you will hopefully understand more aspects from future posts.

Welcome

2006-01-03T19:10:00.000+02:00

This blog is a peep hole into the Israel's economy.
I will try to update regularly about the upcoming events that might influence the market, answer questions, clear up issues, and of course, talk a little bit about myself.

More to come...