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Author Topic: On Israel's Budgets and Economy
DrConway
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posted 04 December 2002 01:32 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
B'Tselem's Summary Relating Partially To The Government Budget

quote:
One of the mechanisms used by the government to favor the Jewish local authorities in the West Bank, in comparison with local authorities inside Israel, is to channel funding through the Settlement Division of the World Zionist Organization. Although the entire budget of the Settlement Division comes from state funds, as a non-governmental body it is not subject to the rules applying to government ministries in Israel.

Lack of accountability regarding spending by redirecting money? Hmm. Sounds a lot like Paul Martin's budgetary shenanigans.

An Overview of Israeli Finances To the 1980s

quote:
By 1988 the government had been operating under a deficit for more than a decade. Between 1982 and 1984, the deficit equaled between 12 and 15 percent of GNP. After the implementation of the July 1985 Economic Stabilization Program, the government succeeded in balancing its budget (see The Economic Stabilization Program of July 1985 , this ch.).

12 percent of GNP?! By comparison, the highest Canadian government budget deficit on record in terms of percentage of GDP, post-WW2, was approximately 8 percent of GDP in 1983, and generally has been much smaller than that.

It is especially significant that Canada's national production (GDP) is significantly larger than Israel's, and so Israel's foreign indebtedness is thus more of a danger to the overall fiscal capability of the government than Canada's foreign indebtedness (in Canada's case amounting to about 25% of the federal debt).

Of course, the webpage here is out of date, but it is to be remarked upon that Israel's budget deficit climbed as high as it did.

Current Budgetary Data

The cumulative budget deficit for the year is 14 billion shekels, while the projected appears to be 13.8 billion shekels.

Thus it seems that given the data to date, Israel's government is in a worse financial position than was assumed in the beginning of the fiscal year.

It appears that the predominant reason for the higher budget deficit is increased "Defence" spending over and above projections for the year, while on the revenue side, it would appear that the taxation revenue, while not complete for the fiscal year, seems to be coming in substantially under what was projected.

If someone here would be so kind as to direct me to the national accounts for Israel (which gives GDP statistics and a breakdown of its components) I would be delighted.

Addendum: The reason I posted this in "news" as I did is because the recent breakdown of the Labor-Likud coalition government was over financial matters and it would do us all well to have an in-depth understanding of the exact nature of the budgeting.

[ December 04, 2002: Message edited by: DrConway ]

[ 16 March 2003: Message edited by: DrConway ]


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peacepiper
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posted 04 December 2002 01:47 AM      Profile for peacepiper     Send New Private Message      Edit/Delete Post
Does this affect the budgeting?

http://www.worldpolicy.org/projects/arms/reports/israel050602.html


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Smith
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posted 04 December 2002 01:48 AM      Profile for Smith     Send New Private Message      Edit/Delete Post
Wars are expensive.

Even when they're not official.

What are the long-term prospects for Israel if this doesn't improve?


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Arch Stanton
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posted 04 December 2002 02:16 AM      Profile for Arch Stanton     Send New Private Message      Edit/Delete Post
Ask the US taxpayers.
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Smith
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posted 04 December 2002 02:19 AM      Profile for Smith     Send New Private Message      Edit/Delete Post
Mmm. But the US is big enough to destroy anyone who wants to punish them for their big-ass debt, and Israel isn't.

Although if the US backs them, maybe they are.


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DrConway
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posted 04 December 2002 02:20 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
In the past, Israel's heavy borrowing requirements and use of the printing press, have introduced substantial distortions into Israel's economy by biasing Israel heavily towards military spending and creating high inflation on occasion.

The current exchange rate is 4.64 shekels to the dollar, so $3 billion US per year translates into somewhere around 13 billion Israeli shekels, a substantial component to a government budget comprising about 200 billion Israeli shekels.

Incidentally, I cannot find exchange rates before 1995 for the US dollar to the Israeli Shekel. Was there a currency reform? If anyone can point me to exchange rates going back to 1948 I would be grateful.

[ December 04, 2002: Message edited by: DrConway ]


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satana
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posted 04 December 2002 06:07 AM      Profile for satana     Send New Private Message      Edit/Delete Post
Currency reform? From the lira to the pound to the shekel to the new shekel. I don't know much about economics, but I can tell you their coins have changed more than any other country I know of.
I hope these links are useful:

Bank of Israel - Foreign exchange rates

Bank of Israel - Exchange rates table, 1948 - 1977

International Economics - Historial Exchange Rate

Israel Ministry of Foreign Affairs - Israel's Economy

Jewish Virtual Library - Israeli Inflation

[ December 04, 2002: Message edited by: satana ]


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DrConway
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posted 04 December 2002 10:41 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Hmm. While this is off-topic, I find it interesting that Israel has not been able to effectively maintain a fixed exchange rate. Even during the Bretton Woods era the par values changed noticeably. The only other nation to more than halve or double a par value was Finland when it chopped two zeros off the Markaa-USDollar exchange rate in the 1950s.

Undoubtedly its relatively small economy, large dependence on capital inflows and foreign trade, and heavy military requirements have made the use of a fixed exchange rate impractical unless in an international regime such as Bretton Woods that favors the maintenance of fixed exchange rates.

My conclusion is that Israel should not adopt the Euro, as it must maintain an independent fiscal-monetary policy in order to let the exchange rate rate take the shocks to its economy, as Canada does. Unlike the Bretton Woods regime, the Euro-adoption does not allow for the use of exchange controls as a substitute for very restrictive fiscal and monetary policies that are demanded to fix the exchange rate as a prelude to adopting the Euro.

[ December 04, 2002: Message edited by: DrConway ]


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satana
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posted 05 December 2002 07:48 PM      Profile for satana     Send New Private Message      Edit/Delete Post
Bretton Woods? par values? exchange controls?...
I don't know anything about economics.
I wish I could understand what you're saying.

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DrConway
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posted 05 December 2002 08:42 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Sorry bout that.

quote:
Bretton Woods? par values? exchange controls?...
I don't know anything about economics.
I wish I could understand what you're saying.

Bretton Woods is the name given to a system of fixed exchange rates set up after World War 2 that was designed to keep those rates fixed except if an emergency of some kind demanded changes in the exchange rate(s).

The "par value" was the name given to the specified exchange rate with another currency, usually the US dollar. For example, the Japanese Yen's par value was 360 to the US dollar.

Exchange controls are restrictions on the ability to bring money in or out of the country and turn it into a different currency. The idea is to make it harder to affect the value of a currency by slowing or stopping capital inflows/outflows. A modern example of this is Malaysia's system which requires the declaration of any ringgit being brought into or taken out of the country, and so on.

That help?

And now back to the topic of Israel's budget.


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satana
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posted 06 December 2002 06:53 PM      Profile for satana     Send New Private Message      Edit/Delete Post
Thank you, DrConway.
But, what how does all this affect Israelis in their everyday lives? What are their concerns?

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DrConway
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posted 09 December 2002 12:26 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
The whole point I was making is that Israel's government has had to grapple with economic problems that are peculiar to its location and its history. The high inflation rates of the 1970s and 1980s partly brought on by high oil prices and exacerbated by heavy military spending and the printing of money were a product of needing to keep a large military active (relative to the ability of the nation to carry that military).

Similarly the Israeli currency has had to be allowed to fluctuate to absorb the effect of the inflation, which means its exports can fluctuate in price over time. For a relatively small country such as Israel it is sometimes better to have certainty in the export prices of goods.

So the average Israeli has been buffeted by inflation, must deal with an economy that is very sensitive to the level of military spending (empirically once it gets to about 20% of GDP Israel starts to experience slower economic growth for a variety of reasons, the primary one being that the government is diverting too much spending into, essentially, no investment), and relatively high tax rates compared to other parts of the Middle East. The top marginal rate in Israel is 65%, or thereabouts.


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Michelle
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posted 08 January 2003 06:08 PM      Profile for Michelle   Author's Homepage     Send New Private Message      Edit/Delete Post
Moving to the Middle East forum...
From: I've got a fever, and the only prescription is more cowbell. | Registered: May 2001  |  IP: Logged
DrConway
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posted 02 March 2003 02:01 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
josh mentioned this in another thread.

I would like to zero in more specifically on some details of the budget:

quote:
Nethanyahu will today be offering Histadrut labor federation leader Amir Peretz a package deal that will include massive layoffs and wage cuts in the public sector. Netanyahu will meet today with Peretz, the governor of the Bank of Israel, David Klein, and treasury officials.

Netanyahu reportedly intends to support massive budget cuts - but not the allocations to settlements. He plans to ask Klein to implement a more expansionary monetary policy, and to conduct regular meetings with him.


Netanyahu is thus trying to light both ends of the candle, as it were. He wants to conduct a contractionary fiscal policy and balance it with an expansionary monetary policy. In this way he hopes to avoid the economic fallout from budget cuts.

The danger is that Israel, as it did in the 1970s, would resort to the printing press for the majority of its budgetary expenditures and see inflation rates of 100% per year.

Over here we have the current budgetary situation as it is in Israel right now.

They are forecasting a smaller budget deficit than last year: approximately 15.3 billion NIS as opposed to the 17.6 billion incurred last year.

It is to be noted that the Defence Ministry last year got 51 billion NIS over the projected 43 billion, while the collective Social Ministries got 91 billion NIS over the projected 89 billion.

In short, in absolute and percentage terms, Defence got a bigger share of the larger-than-projected expenditures than social services.

This is a worrying trend if one expects the Israeli government to focus on pressing domestic issues such as welfare, pensions and the like.

PS. Would someone clarify to me what are "Payment to NII and Credit Subsidies"? 39 billion NIS has been allotted to this, and it seems to be a substantial portion of the budget, comprising approximately 20% of the ~NIS 200 billion total spending.

[ 02 March 2003: Message edited by: DrConway ]


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josh
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posted 02 March 2003 03:42 PM      Profile for josh     Send New Private Message      Edit/Delete Post
Dr. C., don't forget the tax cuts and massive privitization Reagan-disciple Netanyahoo wants to undertake:

http://www.haaretzdaily.com/hasen/spages/268262.html


From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 03 March 2003 09:07 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
More on Netahyahu's program and general stuff on Israel's finances

quote:
It added that Netanyahu will support the ending of the foreign currency exchange rate that sets limits for how far the shekel can appreciate and depreciate, Yedioth said.

What I want to know is what the hell this will accomplish. The band is already so wide the NIS effectively freely floats.


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DrConway
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posted 16 March 2003 02:55 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Ha'aretz Article: Frenkel urges Knesset to back emergency economic plan

quote:
Former Bank of Israel governor Yaakov Frenkel urged lawmakers Sunday to back the treasury's new economic measures, as there was "no choice."

Finance Minister Benjamin Netanyahu met with Frenkel for consultations on his new emergency economic plan, which includes a budget cut of over NIS 2 billion, the day before the finance minister presents it to the Knesset.


I wish to add another snippet that highlights the stupidity of the budgeting philosophy under NetanyaHOO.

quote:
Among the measures in the emergency plan, which aims to solve Israel's deepening economic crisis are raising the retirement from 65 to 67 and cutting the salaries of government employees earning more than NIS 6,000 a month by 4-10 percent.

...

According to the list, salary allocations for pensions will rise by 2 percent, child benefits will be significantly cut and disability benefits will be frozen. In addition, the Education Ministry budget will be cut by NIS 1 billion and all other government ministries will undergo a NIS 3 billion cut in total. Tax benefits to residents of the Negev, the north and settlements will be cancelled.


So the net effect of this program is to cut government spending as Israel heads into, at best, a recession, and at worse, near economic collapse.

Oh, you are such a smarty man, Netanyahoo! You are such a smarty man, Mr. Sharon!

The only good thing I can see coming out of this budget is the elimination of some of the preferential treatment given to residents of settlements, but this could have been accomplished without cutting social spending.

And on top of this, isn't Netanyahoo cutting the top marginal tax rate? So rich people in Israel will benefit from the overall budget philosophy while the poor and middle class suffer.


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satana
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posted 20 March 2003 02:28 PM      Profile for satana     Send New Private Message      Edit/Delete Post
US offers Israel billions in aid
From: far away | Registered: Jun 2002  |  IP: Logged
josh
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posted 20 March 2003 02:49 PM      Profile for josh     Send New Private Message      Edit/Delete Post
Israel's reliance on the US teat is what keeps it afloat. Plus, Netanyahoo thinks he's the second coming of Margaret Thatcher. So the Bushites love him even more.

If the US were to condition its aid on Israel withdrawing from the west bank, the occupation would be over as fast as you can say AIPAC.


From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 04 April 2003 04:08 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Ha'aretz Article on Netanyahu's Actions as Finance Minister

quote:
The rich and discriminated sector

By Ariel Rubinstein

In light of its success, there's no choice but to challenge the finance minister's rhetoric. Benjamin Netanyahu has some very impressive fables that he uses to explain the economy. At the press conference where he presented his plan he said, "Our economy is sick, very sick." So what should be done? "The first step ... is to stop the bleeding, the second step is to rehabilitate the patient."

I can't emphasize how much I hate stupid analogies like this.

I hate, hate, hate, HATE such moronic analogies.

This is like the idiot that claimed economies needed purging, as though throwing people out of work and closing businesses was just "taking a high colonic". At least when you take a high colonic all you do is make your digestive system go bonkers for a day or something. When an economy "takes a high colonic", or as we normally say, goes into recession, people lose their ability to feed, clothe and house themselves.

The two analogies are not comparable and Netanyahu deserves a bit fat whack with a ClueBat(TM) for doing it.

quote:
Netanyahu makes an original distinction between the public sector ("they don't produce money, they consume it") and the productive one ("those who produce the money are in the productive sector, the factories, the tens of thousands of small businesses, the commercial companies and the like"). But his intention is exposed as he goes on: "So, therefore, what we have to do is shrink the public sector and grow the private sector."

In other words, "productive" means "private." Teachers, doctors and the workers at Israel Military Industries are not productive. Bankers, stockbrokers and economists are productive. Thus the finance minister blurs his real intentions: the sell-off of government companies does not necessarily increase the productive part of the economy, but it does grow the private sector, and handing over state-funded well-baby clinics to the private sector doesn't "produce money."


This is another moronic statement that Netanyahu doesn't seem to realize went out of style with Margaret Thatcher and Ronald Reagan. The idiotic notion that the "public sector just bleeds money" from everybody else is akin to claiming that teachers, doctors, firefighters and police have no redeeming value whatsoever, and that spending money on them does not enhance national production (GDP) one iota or enhance public safety and health.

Which, as anybody who's ever gotten medical treatment from a doctor can tell you, is absolute hooey and nonsense.

Grr. I'm so mad I could reach from here and whomp Netanyahu's fat head with a ClueBat.


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josh
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posted 04 April 2003 04:15 PM      Profile for josh     Send New Private Message      Edit/Delete Post
As I said above, Netanyahoo thinks he's the second coming of Thatcher. I should have realized it at the time, but he would have done a lot less damage to the country had he been named foreign minister.
From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 10 June 2003 10:53 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Hmm. Israeli budget update, brought to you by Pseudopandas Anonymous.

Here is the most current budgetary situation.

There is a 4 billion NIS difference between the projected total expenditures for the year and the actual expenditures on an annualized basis.

Interestingly enough most of the discrepancy can be attributed to a rise in the "General Reserve", which I assume is some kind of contingency fund the Israeli government uses for unforeseen expenses.

Furthermore I find it instructive that Defence expenditures appear to be just about "on target" on an annualized basis while the Social Services expenditures are currently short by 2 billion NIS. Now, correct me if I'm wrong, but isn't the Israeli economy in bad shape right now? Social services spending usually goes up in recessions, not down.

Why the hell isn't Labor raising a ruckus about this?


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
josh
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posted 14 June 2003 10:20 PM      Profile for josh     Send New Private Message      Edit/Delete Post
Government moves to privatize two major banks. Netanyahoo in full neo-liberal heaven:

http://tinyurl.com/ec50


From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 13 July 2003 02:29 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
How did I fail to notice this before? Privatizing banks, indeed! I see that Israelis will have no remaining government-owned bank to deal with, which really sucks.

quote:
Netanyahu was hosted by investment bank Lehman Brothers in New York to celebrate the closure of Israel's $750 million bond issue. Netanyahu also stated after meeting with credit rating agency Moody's that he received support for the government's economic plan and no downgrade of Israel's sovereign credit rating is expected

I wonder how much Lehman Brothers bribed Netanyahu and Sharon to get the banks privatized, because I smell a rat. If Lehman gets preferential dibs on buying up the banks, then they get access to a sophisticated financial system in the Middle East plus the profits from the two major banks Israelis deal with.

ARG!

Owning a bank in almost any reasonably well-off nation is a licence to print money, and the fact that private corporations reap such profits in the Canadian and US banking systems is no reason for Israel to go the same route.

Where's my long-range whiffle bat when I need one?

As for this:

quote:
Netanyahu said the government is making
preparations to privatize the banks, oil
refineries, state-run phone company Bezeq and
anything else that can be privatized.

Oh, good lord. Is Netanyahu an idiot? I mean this honestly. Has he been hypnotized by Ralph Klein and Gordon Campbell?

[ 13 July 2003: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
josh
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posted 13 July 2003 10:04 AM      Profile for josh     Send New Private Message      Edit/Delete Post
No, by Margaret Thatcher.

I have to say that I was wrong in celebrating Netanyahoo's failure to become foreign minister. He would have done a lot less damage in that position, than in the one he has now.


From: the twilight zone between the U.S. and Canada | Registered: Aug 2002  |  IP: Logged
DrConway
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posted 13 July 2003 02:23 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
The worst of it all is that he's ramming this through because Israelis are distracted and scared, and Sharon can simply point to "The Wall" and say "I made you safe; don't complain about my other policies!"
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evenflow
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posted 14 July 2003 01:19 PM      Profile for evenflow        Edit/Delete Post
quote:

If the US were to condition its aid on Israel withdrawing from the west bank, the occupation would be over as fast as you can say AIPAC.


Thats a very good quote. The US makes many demands on the Palestinian authorities but never makes the same demands on Israel. Birds of a flock cliche applies, I suppose....


From: learning land | Registered: Dec 2002  |  IP: Logged
DrConway
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posted 01 October 2003 11:13 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Quarterly Update Time!

Israel is, from the looks of it, about 10 billion NIS over planned total expenditures on an annualized basis from current projections.

Defence spending alone has gobbled up 5 billion NIS in excess of budgetary projections on an annual basis, while the "economic" and "administrative" ministries account for about two more.

The remainder of the excess is dispersed among the general reserve and the NII/Subsidies which I still don't understand fully.

That's not important. Bottom line is, Israel is spending money like water, and it's going mostly to the armed forces.

The Social ministries continue to be about on the nose in terms of projections on an annualized basis, which does not surprise me in light of the Netanyahu program of pursuing a Reaganite change in the Israeli government's traditionally moderate fiscal-monetary stance.

All in all a rather disappointing summary, as clearly the excess of 5 billion NIS (about $1.2 billion US) in military spending is taking its toll on the ability of the Israeli government to adequately provide for its poor amid general budgetary restraint.

It also appears that the budget deficit for the current year, projected on an annual basis, is in excess of that originally planned by about 1 billion NIS. This is not good, as it may negatively impact Israel's continued ability to borrow abroad without the cushion of United States direct transfers of monies.


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majorvictory
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posted 29 October 2003 12:19 AM      Profile for majorvictory     Send New Private Message      Edit/Delete Post
Orlev: Bank of Israel responsible for unemployment, poverty

quote:
By Einav Ben Yehuda

Minister of Labor and Social Affairs Zevulun Orlev
on Tuesday said one of the major reasons for the
growing poverty statistics in Israel was the
high-interest policy of the Bank of Israel.

Orlev was referring to a Bank of Israel survey published earlier the same day, according to which the number of Israeli families living below the poverty line tripled from 1988 to 2001.
The central bank is one of the factors that have caused damage to the workforce, increased unemployment and caused many families to cross the poverty line, Orlev said.

During the 13 year period examined by the
survery, the number of families living below
the poverty line increased from about 100,000
to 300,000, the central bank researchers found.
The National Insurance Institute defines the
poverty line as half the median income.

The NII's capacity to combat poverty was
hampered by the violent fluctuations in the
economic environment, as Israel veered between
sharp acceleration and deceleration of economic
activity, the central bank wrote. The problems
were exacerbated by demographic changes.

Although the NII helped support an ever-widening
swathe of the population, the central bank
found that more and more people defined as
"potentially poor" - not receiving allowances -
crossed the line into poverty. The conclusion,
says the central bank, is that giving
allowances to increasing numbers of people
cannot solve the problem of poverty.



From: Toronto | Registered: Jul 2002  |  IP: Logged
April Follies
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posted 02 November 2003 08:49 PM      Profile for April Follies   Author's Homepage     Send New Private Message      Edit/Delete Post
Israel Prepares for Public Sector Strike

quote:
Workers are protesting government plans to overhaul the country's venerable welfare state, which for decades has shielded them from the uncertainties of a free market while keeping public sector employment high. ...

Finance Minister Benjamin Netanyahu, a disciple of the free-market policies of former British Prime Minister Margaret Thatcher, is leading the effort to privatize state-owned industries, reform the pension system and drastically reduce welfare payments.



From: Help, I'm stuck in the USA | Registered: May 2003  |  IP: Logged
majorvictory
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posted 04 December 2003 03:39 AM      Profile for majorvictory     Send New Private Message      Edit/Delete Post
He's not an economic magician

quote:
By Benjamin Ben-Eliezer

Like every Israeli, I watch with concern as the government, since it was established, manages to mislead the citizenry in practically every sphere of life: in politics, economics, and social affairs. There's no growth, no work, no pride, and worst of all - no hope. The gaps between the rich and poor in Israel are reminiscent of the Third World. There are 1,312,000 people living below the poverty line and every third child in the country is poor. Crime is rising, and in international comparative achievement tests, our children show up in the lowest ranks.

The government's response to this situation is to pass an antisocial budget, which includes painful economic decrees that will cause intolerable harm and damage to many - but most of all to the weak. This budget is a grave indictment against the government, which behaves like an ostrich hiding from reality.

The economic program's decrees hit practically everyone: Another 1,500 public sector workers will be fired, tax will be imposed on pensions, and the retirement age will rise. Some NIS 250 million will be cut from the medical services basket and another NIS 200 million will be cut from the Education Ministry budget. Nothing remains of the promise to lower VAT to 17 percent.

The plan also does enormous harm to the middle class. Estimates say some 70,000 small and self-employed businesses will have gone under by the end of this year. How does Shinui, which made defending the middle class the main plank in its electoral platform, remain silent in light of this?

Finance Minister Benjamin Netanyahu, with twisted, misleading speeches, promises to put the people on the path to success and growth. He says, "We are in the middle of surgery. I happen to be the doctor who must save the body and make it healthy. I am sure that during surgery, people are angry at the doctor, but everyone knows the change must be made."

As long as the finance minister chooses to present himself as a doctor, he should remember the old saying, "the operation was a success, the patient died." Apparently, that's the best way to describe the type of operation the finance minister wants to conduct. We can only hope he doesn't end up as a pathologist.



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Ice Foot
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posted 04 December 2003 12:42 PM      Profile for Ice Foot     Send New Private Message      Edit/Delete Post
25% of Israeli population lives in poverty

quote:
Like every Israeli, I watch with concern as the government, since it was established, manages to mislead the citizenry in practically every sphere of life: in politics, economics, and social affairs. There's no growth, no work, no pride, and worst of all - no hope. The gaps between the rich and poor in Israel are reminiscent of the Third World. There are 1,312,000 people living below the poverty line and every third child in the country is poor. Crime is rising, and in international comparative achievement tests, our children show up in the lowest ranks.

The government's response to this situation is to pass an antisocial budget, which includes painful economic decrees that will cause intolerable harm and damage to many - but most of all to the weak. This budget is a grave indictment against the government, which behaves like an ostrich hiding from reality.

The economic program's decrees hit practically everyone: Another 1,500 public sector workers will be fired, tax will be imposed on pensions, and the retirement age will rise. Some NIS 250 million will be cut from the medical services basket and another NIS 200 million will be cut from the Education Ministry budget. Nothing remains of the promise to lower VAT to 17 percent.

The plan also does enormous harm to the middle class. Estimates say some 70,000 small and self-employed businesses will have gone under by the end of this year. How does Shinui, which made defending the middle class the main plank in its electoral platform, remain silent in light of this?

Finance Minister Benjamin Netanyahu, with twisted, misleading speeches, promises to put the people on the path to success and growth. He says, "We are in the middle of surgery. I happen to be the doctor who must save the body and make it healthy. I am sure that during surgery, people are angry at the doctor, but everyone knows the change must be made."

As long as the finance minister chooses to present himself as a doctor, he should remember the old saying, "the operation was a success, the patient died." Apparently, that's the best way to describe the type of operation the finance minister wants to conduct. We can only hope he doesn't end up as a pathologist.

The government claims there's no money? But there's plenty of money for construction in the territories. It's incredible that Israeli children are being neglected while the settlements are protected. Much money was spent on their construction, filling them with inhabitants, maintaining and defending them. Placing them in the heart of populated Palestinian areas required enormous security investments. According to the special Haaretz report on the settlements published in September this year, some NIS 2.5 billion a year in extraordinary spending goes to the settlements.



From: Waterloo | Registered: Apr 2002  |  IP: Logged
DrConway
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posted 04 December 2003 05:02 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Jesus. Jumping. Christ.

A 25% poverty rate in Israel and the idiots running the place want to encourage wasteful separation walls and military spending?

What. is. wrong. with. these. people?


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Smith
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posted 04 December 2003 06:41 PM      Profile for Smith     Send New Private Message      Edit/Delete Post
Well, isn't that how right-wing governments generally work? I mean, look at the economic situation the U.S. was in when Bush decided to cut taxes for rich people and spend $87 billion on a "pre-emptive" war.

Hell, look at Canada - our poverty rate ain't that wonderful either, although to be fair we don't seem to be spending our money on the military instead.

[ 04 December 2003: Message edited by: Smith ]


From: Muddy York | Registered: Oct 2002  |  IP: Logged
DrConway
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posted 18 December 2003 07:23 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Latest update.

As of mid-December, when the November data was in, Israel was in hock by over NINETEEN billion NIS, clearly indicating a deteriorating revenue situation and either inability to make cutbacks, or cutbacks have been made, and yet spending continues in other areas.

Nasty.

(since then...)

HOLY JESUS CHRIST ON A BICYCLE!!!!

TWENTY FIVE BILLION NEW ISRAELI SHEKELS!

The budget deficit soared 6 billion shekels in one month. I'm ready to fall over in shock.

The fiscal situation is absolutely untenable. The Israeli Government, in defence spending alone, spent 7 billion NIS more than was budgeted in the beginning of the year.

Even welfare spending finally went over budget by a billion NIS, and administrative expenses went over by 2 billion.

The bottom line: Israel budgeted for a 15 billion NIS deficit and wound up 10 billion NIS over budget. Something's gotta give, and it isn't going to be pretty.

[ 07 January 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Stephen Gordon
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posted 18 December 2003 10:49 PM      Profile for Stephen Gordon        Edit/Delete Post
quote:
Originally posted by DrConway:

If someone here would be so kind as to direct me to the national accounts for Israel (which gives GDP statistics and a breakdown of its components) I would be delighted.

The national accounts are here.

The main Central Bureau of Statistics page is here

Incidentally, you might want to take a look at http://www.rfe.org/. A very useful resource, particularly for data sources.


From: . | Registered: Oct 2003  |  IP: Logged
DrConway
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posted 19 December 2003 01:50 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Not that I can read a word of Hebrew, but thanks anyway.
From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 07 January 2004 05:45 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
*Bump* Read revised expostulation on the 2003 year-end summary.
From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 31 January 2004 05:34 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Strike by local authorities, Histadrut to close schools Sunday

quote:
The Union of Local Authorities and the Histadrut intend to begin a strike Sunday that will bring the school system and municipal services to a halt. No end has been set to the strike, at this point. As has been the case in the past, the school strike will not affect special education services.

quote:
Cuts worth NIS 670 million in the 2004 budget to education and social welfare spheres are a major reason for the strike.

Growth needs more support

quote:
The 14 years that have passed since 1990 can be divided equally into seven fat years and seven lean years. The years 1990-1996 were years of growth, with gross domestic product (GDP) up by an average of 2.5 percent per capita each year. The seven lean years began in 1997, with GDP tumbling by 0.26 percent per annum.

It is customary to attribute the lack of growth primarily to the deterioration in the diplomatic-security situation. Indeed, the terror attacks and the diplomatic stagnation were factors behind the recession; but research conducted at the Interdisciplinary Center in Herzliya has found that during the three years of the intifada, terror attacks have had a very limited effect on the economy (Haaretz, January 28, 2004, Hebrew edition).


quote:
These factors were joined (and exacerbated) by a stringent policy of restraint - particularly in the monetary sphere - that began in 1996 during the tenure of former Bank of Israel governor Jacob Frenkel, and has continued under the stewardship of the present governor, David Klein. This policy of high interest rates caused the appreciation of the shekel, harmed exports, caused local demand to shrink and led to a slowdown in investments.

Exactly what's happened in Europe. Sagging growth rates and anemic domestic demand caused by a central bank overly concerned with inflation and with money instead of unemployment and output.

quote:
Interest rates are being lowered at a miserly rate, such that at the beginning of 2004, interest was 5 percent - absurd in a deflationary economy. Consumers are facing overdraft interest of 11 percent, which stymies demand, while interest rates of 9-10 percent for manufacturers and merchants are depressing business. Exporters are trying to cope with an integrated exchange rate that remained practically unchanged in 2003 (the basket of currencies appreciated by just 0.36 percent).

The above reads like a recipe for all the ways to screw up the way a normally functioning country's economy is supposed to work.

Canada has also experienced the madness of the Don Quixotes that are our central bank governors. Tilting at the vanished windmill of inflation, they have imposed high interest rates (real, not nominal) and in the process created anemic growth and sagging domestic demand.

Israel, in particular, should learn from this and avoid those mistakes. They need growth, not stagnation. Israel's poor should not be asked to bear the burden of eliminating persistent budget deficits.

[ 31 January 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 06 February 2004 03:18 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Woo-hoo, we're off with a bang.

20 billion NIS deficit projected for the year. Boy, these guys sure don't skimp. What's this make, the fourth or fifth deficit in a row?

Hey, wait a whole gosh-darned minute. Social ministries had 89 billion NIS spent last year, and this year that amount is going down to 83 billion. Something ain't right with this picture, folks. Last time I looked, Israel's economy wasn't going anywhere anytime soon, and there's still the poor, the homeless and the unemployed to take care of. Oh yeah, and backing inflation out of this year's figure would make the cutback of about 6 billion even worse in real terms.

Defence spending was 50 billion NIS last year, this year they say it'll be 44 billion. Not bad, but judging from the way it went over budget by 6 billion-ish last year, I'm not going to dance any tunes yet.

Another funny thing: In 2001, actual receipts of direct taxes (income taxes) pretty much matched what the Israeli government expected to get.

In 2002 and 2003, the Israeli government has been, in each year, 10 billion NIS short on direct tax revenues.

Why are they budgeting for revenues they aren't collecting? Netanyahoo's gotten tax cuts passed; why is the Ministry of Finance not taking this into account when planning the budgetary projections?

Furthermore, Indirect taxes (sales tax, customs duties) have always matched projected revenues.

Clearly, the Israeli tax system is also becoming more regressive if indurect taxes continue to proceed apace and income tax receipts are falling.

Well, I guess rich Israelis aren't complaining about the Raygun clone they got over in the Knesset.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Rufus Polson
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posted 06 February 2004 05:32 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
So, about this bit in one of the recently-quoted articles:

quote:
It is customary to attribute the lack of growth primarily to the deterioration in the diplomatic-security situation. Indeed, the terror attacks and the diplomatic stagnation were factors behind the recession; but research conducted at the Interdisciplinary Center in Herzliya has found that during the three years of the intifada, terror attacks have had a very limited effect on the economy (Haaretz, January 28, 2004, Hebrew edition).

OK, so they say terror attacks have had a very limited effect on the economy. What about the responses to them? Military spending aside, was it not the case that for some time, cheap Palestinian labour was very useful to the Israeli economy? Is it not now true that it's very difficult for Palestinians to get to Israel to work on any kind of consistent basis? I understand they've been bringing in replacement cheap workers from other regions, but surely the dislocation would have messed up the economy somewhat. Might that not be a factor in recent Israeli economic decline?

Spending on the military like the Soviets is likely to have had something to do with it as well; in the end perhaps the intifada will succeed by getting Israel to spend themselves into political collapse.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
Rufus Polson
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posted 06 February 2004 05:40 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
quote:
Originally posted by DrConway:

20 billion NIS deficit projected for the year.

(snip)

Hey, wait a whole gosh-darned minute.


Mmmmph. OK, so looking at all your points about discrepancies, just to make things graphic, I got a projection of:

20 billion projected by government
6 billion likely spent above projections on social services
6 billion likely spent above projections on military
10 billion less revenue than projected
------------
=42 billion unofficial DrC projection
Not counting any actual increases in military spending, or any further reductions in revenue due to tax cuts.
Um, is that a lot relative to the Israeli economy?


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
DrConway
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posted 07 February 2004 05:12 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Hmm. Well, thanks to the CIA Factbook, Israel's overall GDP is $117 billion at purchasing power parity.

PPP is loosely related to the exchange rate, and since I can't find GDP values stated directly in NIS, we'll have to run with that figure.

Rufus asked about the workforce. Sometimes the best answer comes from the horse's mouth.

Over here, we have the following snippet:

quote:
The construction sector, comprised of about 30% Palestinians, and the agriculture
sector, with 12% percent Palestinian workers, were also affected. It should be noted,
however, that these two sectors already experienced difficulties due to the structural
changes that the Israeli economy has undergone. The damage to the Israeli economy
from the security events is estimated at about 1% of Israel's GDP. Forecasts for 2001
indicate a growth rate of 1%, and are based mainly on the slowdown in the US's economy.

The website is also revealing in that Israel's total debt obligations are of Japan-style proportions at around 100% of GDP.

The (budgetary projected) government deficit is thus about 4% of GDP, while Rufus's accounting of my - let's call it a pessimistic projection - would double that to about 8% of GDP.

Again, in comparing to Canada's situation, our total debt is around 45% of GDP, and budget surpluses have persisted for seven years even in the face of sagging world economic growth and uncertainties over United States actions with regard to steel, softwood lumber, and so on.

Quite an interesting contrast.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 07 February 2004 05:18 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
The budget speech for 2003.

quote:
In order to preserve stability, we endeavored, first and foremost, to continue working according to the rules of international market economics. Countries whose markets are open to trade and foreign investment, assume the rules of the international game, which requires, first and foremost a reasonable fiscal deficit. This is the reason that we, like any household that has suffered a drop in income - have had to adjust to lower revenues a different rate of expenditures, and to drastic cut-backs in government spending.

Idiot. If Israel has economic problems, it has much more latitude than any other nation because of the special imprimatur granted to it by the USA, to do a lot of things that would otherwise get the USA sending the IMF wolf-pack at the throats of the target nation.

For example, Israel can peg the exchange rate, control capital flows, and if necessary even print the money it needs to pay the armed forces.

Nothing is requiring Israel to follow economic orthodoxy except some weird notion that Likud has to ape the Republican party.

[ 25 March 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 06 May 2004 12:28 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Quarterly Update.

I wonder if some smart cookie over at the Israeli Ministry of Finance realizes I'm actually analyzing these stupid summaries.

Let's check out the actual vs projected for expenditures; so far the social and defence ministries are over budget by a billion NIS each. It looks like the government anticipated this and set aside 4 billion NIS in reserve, which has, as you can see, fallen by 2 billion to account for the higher than usual level of spending in the first few months of this year.

I suspect the deficit will be higher by about 5 billion NIS compared to what the government figured.

[ 06 May 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 09 June 2004 10:09 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
The red ink, she piles up like you wouldn't believe.

And crap, would you look at that. Defence spending is through the roof! On an annual basis they'll spend 5 billion more NIS than they originally budgeted for. What in the name of providence is wrong with these guys?

Any other country spending money it doesn't have at the rate Israel is doing (except for the US and Japan) would be getting an insta-overhaul by the IMF right now.

However, we should pause and be impressed that for one quarter in 2004, the Israeli Government registered a small surplus.

This hasn't happened, to my knowledge, since 2001.

---

A note:

I find it interesting that the Israeli Government is promising to precipitate an even worse budgetary crisis, as outlined here, by terminating subsidies to businesses in favor of outright tax breaks with no ceiling.

What's worse is that the sneaky bastards would back-load the tax break, so that the tax expenditure doesn't ger reflected in the current budget, but simply shows up as a drop in anticipated revenues down the road.

In addition, in the past, as I have noted, Israel's Government has traditionally tended to overestimate income tax revenue, contributing to its budgetary woes when the final bills come in.

[ 09 June 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Rufus Polson
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posted 10 June 2004 03:14 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
I wonder where the breaking point is?
I can envision a situation where Israeli plutocrats, making out like gangbusters from the tax breaks, lose confidence and start shoving that money out of the country because of the economic and political instability and the insolvent government finances. Capital flight, economic collapse. Alternatively, the US steps up aid to make up for it. But that pit could be bottomless if the Israeli elites kept siphoning and fattening their Swiss accounts. Could become interesting.

Meanwhile--so they're spending tons. How about the revenue? I remember you figuring they were overprojecting revenue. How's that looking?


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
DrConway
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posted 09 August 2004 04:58 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
This reminded me to do the next quarterly update.

The piddly surplus recorded for the first quarter has entirely given way to an accumulated 7 billion deficit for the year, so far. If I charitably assume that the average deficit will be 1 billion per month then over the next 5 months we can expect the accumulated deficit to be 12 billion NIS - well short of budgeted, but still nothing to be impressed about given the almost ingrained fiscal irresponsibility of the Netanyahu-Sharon government. Indeed, this figure may be far too optimistic, as the annual-basis stated spending of the various ministries appears to be well over budget across the board. The "Economic" and "Social" Ministries, even after the Netanyahu cutbacks, are still reporting annualized spending well over budgeted.

Why is the Sharon government interested in making things worse for the average Israeli? Clearly the tax cuts for the rich have been of no help, and certainly the redirection of needed social-assistance monies to a Security Barrier is not helping either.

Until the next quarter, or other news.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 15 September 2004 11:59 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Yup, still chugging along at a billion NIS a month. Am I good or am I good?
From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 02 October 2004 12:24 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
IMF predicts 3.6 percent growth

3.6 percent, my ass. And with unemployment at 10% in Israel, the likelihood that economic output will be better than anemic is, in my opinion, not very good.

Netanyahu: Economic reforms are vital

Translation - "Netanyahu: I'm an idiot".

My obvious opposition to his economic policies aside, this kind of crap is utterly inadequate and wrong-headed:

quote:
"Everything we are doing now has already been done over the past 20 years in other countries that have surged forward, from New Zealand to Chile," he said. "In the past, Israel was a `bad' country for business - with its Histadrut, taxes, welfare - and things could not go on this way.

Chile? New Zealand? Two countries that have been trying to shake off the 'reforms' that were imposed on them by extremist right-wing ideologues who didn't care about the harm they inflicted on the poor and unemployed.

Chile routinely elects Socialist presidents now, and its lower house, to my knowledge, is dominated by center-left parties.

New Zealand has surged to the left in recent years and its Prime Minister is unabashed about reversing the "reforms" of the 1980s that left New Zealanders worse off, by and large, than they were in the 1970s.

Netanyahu's a fucking idiot. And I stand by those words. Especially with that comment about Chile. Geez, what an absolute doofus. Chile didn't undertake its "reforms" voluntarily. New Zealand at least is a legitimate example since its populace voted in a new government and presumably gave it the mandate it felt it had.

Pinochet just kicked out Allende, had him bumped off, and ruled Chile with an iron fist for 17 years.

Where's my ClueBat?!

Added to add: Geez, it's even worse than I thought. Check this pile of bilge out:

quote:
He returns to the Histadrut as Nemesis. "What does the Histadrut want exactly to happen here, do they think someone will let us live like this? We'll just get trampled over by billions of Chinese and billions of Indians...

Gee, "yellow peril" kind of went out of style in the 1950s there, Benny boy. Maybe you should quit recycling used turds there.

quote:
"Who could come to a country of high taxes, insane bureaucracy and swollen unions? Who would come to such a country? What are they thinking in the Histadrut, that they'll send us back to Clerksville? Histadrutstan? Welfare-handout-land? We simply don't have an existence if we do not make these necessary changes."

Gee, Sweden seems to do well. It has a government that still intervenes where it feels it should, and it has good, solid, labor unions. Basket-case, my ass.

This is scaremongering and half-assed tripe. NETANYAHU, YOU ARE SO FIRED. You hear me? FIIIIIIIIIIRED.

-----

No quarterly update yet, so nothing new on the budget deficit front.

[ 02 October 2004: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 02 December 2004 02:51 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Israeli parliament rejects Sharon's 2005 budget

quote:
BEJIJING, Dec. 2 (Xinhuanet) -- The Israeli parliament has voted against Prime Minister Ariel Sharon government's 2005 budget, plunging the ruling coalition into turmoil.

The budget, which envisaged welfare spending and social program cuts, was killed on its first reading by a 69-43 vote among the 120-seat Knesset.

Under Israel's law, if a state budget could not pass by the end of March, early elections should be held to select a new government.


And to round out the fun, we have an update.

November actually posted a surplus. Second time this year. Impressive.

Mostly it's due to a strengthening of revenues come November, for reasons I'm not entirely clear on. We'll have to wait for January 2005 for the full Q4 2004 to come in, and for the final numbers to pile up so we can pick over the bones of the Israeli government's spendthrift habits.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
miles
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posted 02 December 2004 12:00 PM      Profile for miles     Send New Private Message      Edit/Delete Post
It seems that the Sharon government will survive another day.

quote:
JERUSALEM (CNN) -- The head of Israel's opposition Labor Party signaled Thursday that his party is willing to join a unity government with Israeli Prime Minister Ariel Sharon because it backs his plan to pull out of Gaza and parts of the West Bank.


Israel's Labor Chief: Party willing to join Sharon


From: vaughan | Registered: Oct 2004  |  IP: Logged
Rufus Polson
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posted 02 December 2004 04:24 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
quote:
Originally posted by DrConway:
Mostly it's due to a strengthening of revenues come November, for reasons I'm not entirely clear on.

Maybe Sharon passed the word to cool it on the embezzling until the heat dies down.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
DrConway
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posted 08 January 2005 02:19 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
For the record. Final Quarterly Update of 2004.

Holy crumpets!

They certainly bled a lot of red ink in December. However, impressively enough (?) the budget deficit was smaller than projected, even though both revenues and expenditures are down from projected as well.

This is a worrying sign of a government not committed to Keynesian principles in an uncertain economy (revenues falling short tends to be indicative of a recession, while expenditures simultaneously contracting is the sign of a government prioritizing a balanced budget over maintaining social services - i.e. automatic stabilizers - and overall demand conditions).

There is one thing that bothers me.

It's the "Budget Changes" column that has a gap in it for most of the way down, and then has numbers in it near the bottom. If you take the 223 billion NIS figure as being true for expenditures, then the "true" budget deficit is not 17 billion NIS, but 40 billion (Which is oddly close to what RPolson assumed that the Israeli government would run up).

If this is true, then the Israeli government is lying about its true fiscal position, which opens the dangerous road to printing money in large amounts to cover budget deficits. This way lies economic collapse, and you can forget any occupation then.

The 2005 budget has not yet been brought down, so I cannot yet do an analysis of the Sharon-Netanyahu plans for the next year. Presumably we can expect more tax cuts for wealthy Israelis, and significant pandering to large corporations that dominate (and are in the process of cementing this further) the Israeli economy.

"No Strength To Implement Reforms"

Interestingly, bad checks are becoming a major problem in some areas of Israel. Bad checks may be a sign of stagnant wages and high unemployment that is not revealed in the official figures (the "stagnant wages" part mostly). And certainly the article makes the case that businesses are paying their suppliers with checks they know are no good, just to try and keep sales up so that they "MIGHT" be able to cover them later.

If this spreads throughout the country the danger of mass business bankruptcies provoking an economic depression cannot be overlooked.

This article, indirectly, points up the unique problems faced by a government that is faced with the requirement to be secular, but in actual fact, has to frame its responses to requests for financial support in a heavily religious culture. The only parallel that exists is the United States, and not even then.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Phonicidal
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posted 08 January 2005 03:16 PM      Profile for Phonicidal     Send New Private Message      Edit/Delete Post
Well, it's good to see that everybody here is so concerned about Israel's financial well-being.
From: Thornhill, Ontario, Canada | Registered: Dec 2004  |  IP: Logged
DrConway
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posted 08 January 2005 04:49 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
If Israel were to economically collapse, this would change the power dynamics of the region and possibly have widespread repercussions, so spare me your sarcasm, Phonicidal.

[ 08 January 2005: Message edited by: DrConway ]


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 03 February 2005 01:43 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
2005 Budget.

This red ink thing is, y'know, getting old. 14 billion NIS deficit projected for the year. If this was Glen Clark and the NDP the Israeli media would be doing the world's biggest hatchet job on them right now.

However, amazingly enough they ran a nice fat surplus in January. Of course this is due to entirely fortuitous factors such as the timing of inbound taxation, and so on.

We shall see if they can replicate this success later.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 15 March 2005 01:15 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Nope, back into the red. Par for the course.

Some interesting sidelights:

Hapoalim joins in easy credit stampede

quote:
Want to buy the latest plasma television for your living room? A new car? Maybe a short trip abroad? It has never been easier to get bank credit to finance these purchases. The three major banks have launched marketing campaigns in the past few weeks to encourage the use of credit by private individuals.

I don't know how much overall personal debt is carried by Israelis in general, but this expansion of credit at the same time as businesses are passing insolvent checks (see link, above) en masse smacks of desperation.

Well, I'll be dipped in sheep dip. There's not even a budget.

quote:
Budget 1. Two and a half months have passed since the beginning of the year, and there is still no sign of a government budget, yet everyone carries on as usual. No government agency seems to be under pressure, and there is money for everyone. So why have a budget at all? Why not just carry on like this for another nine months, and save all the hassle and bother of writing a new state budget year after year?

(...)

Budget 2. The government is always short of money. It cannot update the health basket, increase state pensions or provide a subway for Tel Aviv.

This subway has been discussed for a generation. Now there are reports that it - or at least the first line - will be up and running by 2011. The slow pace of progress is due to the shortage of cash. It would entail sums of NIS 8-9 billion.

It is truly amazing that when we come across a political or military expense, like Operation Defensive Shield in 2002, or building the separation fence, or the disengagement - there is money.


I really, honestly did not know there was no budget passed; this just blows my fucking mind, that they can just go on like this out of sheer inertia and pull projections of spending and revenues out of thin air.

quote:
Budget 3. The year 2004 ended with a real 8.4 percent increase in tax revenues. This is an interesting phenomenon known as the Laffer Curve: When tax rates are reduced, tax revenues rise. This occurs when tax rates are very high, so that cutting them encourages more economic activity.

I call bullshit on this one. Personal income tax revenues in 2003 were budgeted at NIS 85.3 billion and came in at NIS 76.2 billion. For 2004, they budgeted it at 79.7 and came in at 79.7 (within rounding limits).

8 percent my fucking ass. That's a 5% increase, max, for one thing, and for another thing, the Laffer Curve is generally only applied to personal income taxes, not to consumption taxes or to corporate taxes, since it's assumed in the Laffer Curve model that the effort to gain personal income is the most sensitive to the tax rate.

Anyway most of the idiots that claim the Laffer Curve is gospel don't even realize that this idiot scrawled on a fucking napkin and by doing so set the economic course of one of the wealthiest nations of the world for a decade, and in doing so, gave his imprimatur to a bankrupt economic policy in more ways than one: The USA is staggering under the weight of social tensions and inequality that have been exacerbated by rising government debt and the deliberate crimping of the government's spending power to alleviate the lot of the poorest members of that country.

The same thing's gonna happen to Israel; well, hell, it already has, in some respects.

---

The bottom line: Precarious economy, lousy tax policy, and a government with its spending priorities all in the wrong place.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 26 March 2005 05:10 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Israel gets a Real Budget(TM)

quote:
JERUSALEM - A powerful Israeli opposition leader reached agreement with Prime Minister Ariel Sharon (news - web sites) late Saturday to support the state budget, removing the last major legislative hurdle to Sharon's plan to pull out of the Gaza Strip (news - web sites) this summer.

The support from the opposition Shinui Party would ensure Sharon a majority for his budget, which he needs to pass by Thursday to avoid the collapse of his government.



From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
DrConway
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posted 29 May 2005 10:27 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Hmm. Looks like PM the PM and AS the PM have some similarities. They both can't seem to quit ticking off their respective Auditors General, as seen here.

Quarterly Update. Please be impressed along with me at the existence of a sizable quarterly surplus.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Macabee
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posted 29 May 2005 07:48 PM      Profile for Macabee     Send New Private Message      Edit/Delete Post
This should probably be renamed:

Dr. Conway speaking to himself


From: Vaughan | Registered: Mar 2004  |  IP: Logged
Cueball
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posted 29 May 2005 08:07 PM      Profile for Cueball   Author's Homepage     Send New Private Message      Edit/Delete Post
Actaully I read this. Nice to have you drop in. Did you bother with the material, or did you just drop by to be smug.
From: Out from under the bridge and out for a stroll | Registered: Dec 2003  |  IP: Logged
Macabee
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posted 30 May 2005 12:17 AM      Profile for Macabee     Send New Private Message      Edit/Delete Post
I seemed to have dropped by for the same reason you have.
From: Vaughan | Registered: Mar 2004  |  IP: Logged
Rufus Polson
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posted 30 May 2005 07:06 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
I read it too, just by the by.
From: Caithnard College | Registered: Nov 2002  |  IP: Logged
DrConway
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posted 08 August 2005 01:40 AM      Profile for DrConway     Send New Private Message      Edit/Delete Post
Olmert's appointment may bring a softer edge to economic policy

quote:
The appointment of Ehud Olmert to replace Binyamin Netanyahu as finance minister indicates that the government will continue the latter's economic policy but with a softer edge.

Prime Minister Ariel Sharon has already said that he plans to continue Netanyahu's polices "without change" and to bring the 2006 budget for cabinet approval on Tuesday.


Budget cuts with a human face. Spare me, please.

quote:
"We must continue lowering taxes as part of the need to integrate Israel into the world economy. In Israel direct taxation is relatively high, does not encourage work, and does not attract companies to come and invest," he said in May.

Israel doesn't seem to have a shortage of companies willing to take advantage of a well-educated cohesive workforce that all speak the same language.

Quarterly Update. Welp, Israel wiped out the surplus it racked up in the first quarter and is on track to run up some more debt. These guys would make Ronald Reagan and David Stockman look like models of fiscal sanity.


From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged
Rufus Polson
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posted 10 August 2005 03:18 PM      Profile for Rufus Polson     Send New Private Message      Edit/Delete Post
But not George W. Bush.

So, here's something I'm wondering:
If there's really a real estate bubble in the US, and it busts, and the lack of productive work in the US (as in, doing useful stuff--making real goods) starts to bite, and the trade deficit and actual deficit really start to hammer the US dollar, and the whole thing spirals into major recession, what happens to Israel?
I mean, the US economy going into major tailspin seems very likely to me at some point in the next few years. If it does, at what point do they start reviewing the question of massive subsidies to Israel? For that matter, how big is the more conventional economic relationship between Israel and the US--will their trade be affected? If the US does start shorting the subsidies, what does that do to Israel's economy, or more specifically (since the subsidies go to the government) to their budget?

Note that this isn't really a gloat--whatever happens to Israel when the US economy heads south, Canada's going to get hit hard too, especially since the powers that be seem to have no interest whatsoever in taking steps to reduce our exposure.


From: Caithnard College | Registered: Nov 2002  |  IP: Logged
DrConway
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posted 11 August 2005 01:57 PM      Profile for DrConway     Send New Private Message      Edit/Delete Post
I think the US subsidies represent between five and ten percent of the overall Israeli budget. It's not huge but it's big enough that the bite would be felt if they were withdrawn. The US also delivers "in-kind" subsidies, such as military equipment and that sort of thing, which doesn't show up in the official figures on either side.
From: You shall not side with the great against the powerless. | Registered: May 2001  |  IP: Logged

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