In a surprise move, Bank of Israel governor Stanley Fischer cut interest rates to 3%. Citing increasing challenges to the local economy and even a potential recession (maybe he read some of my posts!), Fischer made the unexpected move in order to help stem the economic slide.
With analysts lowering their '09 growth forecasts, Fischer who has until last week remained unrealistically optimistic, appears to have thrown in the towel an admitted that things aren't all that rosy, and is trying to add liquidity to the Israeli banking system to try and prevent the same type of credit crisis gripping the global banking system .
As a result of the cut, the US Dollar soared almost 2% against the Shekel. For consumers the rate cut is helpful. It will mean lower rates that you need to pay on overdraft, lower rates for loans and other types of credit. On the other hand, investors in Israeli bonds will receive less interest on their investment.
Showing posts with label Stanley Fischer. Show all posts
Showing posts with label Stanley Fischer. Show all posts
Tuesday, November 11, 2008
Sunday, November 9, 2008
And Now Fischer is Worried?
I give up. Last week as I wrote Bank of Israel Head Stanley Fischer said everything was great with the Israeli economy as well as the Israeli banking system. Keep in mind that I pulled news reports that showed how, factually, it's just not true. Well, after heeding my call to come clean with the Israeli public Fischer now says that he is 'worried' about the health of the Israeli economy.
According to a report in Globes, "We expect 2.7% growth in 2009, and we're accused of over optimism. In such times, if you want to be serious, you should be worried, and I am really worried. Wise men won't tell you that there is nothing to be worried about." I guess that means I am a wise man!!!! I have never been accused of that before.
Did something actually happen in the last 72 hours to change his mind? This is getting crazy. If we can't trust Fischer to tell us the truth about the Israeli economy who can we trust?
The Globes article continued that Fischer warned of rising unemployment as well as worsening credit conditions and raised the prospect of companies having a hard time getting financing. In English we call that potential bankruptcy!
Gov. Fischer, if the banking system is so sound, why should companies have trouble accessing local credit markets?
My feeling is that the banking system is not all that healthy and as customers, you had better watch out.
According to a report in Globes, "We expect 2.7% growth in 2009, and we're accused of over optimism. In such times, if you want to be serious, you should be worried, and I am really worried. Wise men won't tell you that there is nothing to be worried about." I guess that means I am a wise man!!!! I have never been accused of that before.
Did something actually happen in the last 72 hours to change his mind? This is getting crazy. If we can't trust Fischer to tell us the truth about the Israeli economy who can we trust?
The Globes article continued that Fischer warned of rising unemployment as well as worsening credit conditions and raised the prospect of companies having a hard time getting financing. In English we call that potential bankruptcy!
Gov. Fischer, if the banking system is so sound, why should companies have trouble accessing local credit markets?
My feeling is that the banking system is not all that healthy and as customers, you had better watch out.
Thursday, November 6, 2008
Credit Crunch and Israeli Banks
Stanley Fischer, Governor of the Bank of Israel, spoke yesterday on the stability of the Israeli banking system. Fischer, along with many other public figures has gone out of his way to keep telling the public that the local banking system is sound. While scaring the public about bank failures is irresponsible, don’t Israelis deserve to be told the truth about what is going on? How about a little honesty from our leaders.
If everything is so rosy, then why does the BOI have a plan to stream money to the local banks in the event of a credit freeze? Is this prudent planning, or cause for worry?
As reported in Globes, Fischer spoke about how disciplined the local Israeli banks have been. “In addition, Israel’s banks had no sub-prime exposure. “Israel’s banks said ‘No’ to this paper,” said Fischer.”
Really? That’s not how I remember it. Bank in March Bank Hapoalim wrote off hundreds of millions of dollars. According to Reuters, “Hapoalim, whose shares have slid some 30 percent so far in 2008, said it posted impairments of 1.18 billion shekels, or $334 million, for its U.S. asset-backed securities portfolio. It had previously said it would write off around $300 million in the fourth quarter due to a decline in the value of its U.S. structured investment vehicle (SIV) holdings.” Other local banks also wrote off smaller amounts.
In the aforementioned Globes article Fischer also said, “Also the banks applied responsible credit policies.” Really? Is loaning money to the wealthiest ten families so that they can spend billions of dollars on international real estate, at the height of the real estate bubble, called responsible lending?
Shouldn’t the central bank head come clean with the Israeli public?
If everything is so rosy, then why does the BOI have a plan to stream money to the local banks in the event of a credit freeze? Is this prudent planning, or cause for worry?
As reported in Globes, Fischer spoke about how disciplined the local Israeli banks have been. “In addition, Israel’s banks had no sub-prime exposure. “Israel’s banks said ‘No’ to this paper,” said Fischer.”
Really? That’s not how I remember it. Bank in March Bank Hapoalim wrote off hundreds of millions of dollars. According to Reuters, “Hapoalim, whose shares have slid some 30 percent so far in 2008, said it posted impairments of 1.18 billion shekels, or $334 million, for its U.S. asset-backed securities portfolio. It had previously said it would write off around $300 million in the fourth quarter due to a decline in the value of its U.S. structured investment vehicle (SIV) holdings.” Other local banks also wrote off smaller amounts.
In the aforementioned Globes article Fischer also said, “Also the banks applied responsible credit policies.” Really? Is loaning money to the wealthiest ten families so that they can spend billions of dollars on international real estate, at the height of the real estate bubble, called responsible lending?
Shouldn’t the central bank head come clean with the Israeli public?
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