Israeli News: A Daily Analysis

A Daily Analysis

By Marc Schulman

October 12, 2008- Effect of Ecnomic Crisis on Israel/Kadima and Labor Reach Agreement

The Israeli stock exchange opened for the first time in four days today–– due to Yom Kippur and Shabbat. It was feared that the market would drop over ten percent. In fact, the market only went down 4%. The Israeli government made it clear it has an emergency plan similar to the US plan. Bank of Israel Chairman Stanley Fisher went on TV and stated that no one in Israel will lose money in Israeli banks. Fisher further stated he continues to be against bank insurance, like FDIC, because, in his opinion it just creates unneeded bureaucracy. The newscaster asked Fisher whether that means there is insurance without having formal insurance- Fisher answered– Yes. The Bank of Israel expects that the Israeli economy will not grow next year as previously expected and that unemployment will rise. Fisher stated in the interview that this will be the first time in Israel's history that the cause of Israel's economic problems will not have begun from issues at home, but rather initiated from a crisis overseas.

Kadima and Labor have reached a coalition agreement. Barak is receiving the position as senior advisor to Livni, and Labor gets to appoint a representative to a negotiating team with Syria. Getting labor to agree was considered the easy part of coalition building. Now the hard part will be to negotiate with Shas. Livni agreed to give Shas 450 million shekels towards family support. So far, Shas has said that will not be enough.