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April 18, 2014 / 18 Nisan, 5774
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Tale of 2 Debts: Moody’s OKs Israel’s A1 Rating; US Sinks in Red

Hang on to your shekels. The Israeli economy is stable and Moody's okays its A1 debt rating. But in US, one economist says America’s debt is understated by 75 percent and is $70 trillion.
Close-up of Hundred shekels bills in Jerusalem

Close-up of Hundred shekels bills in Jerusalem
Photo Credit: Abir Sultan/Flash 90

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Moody’s Investors Service affirmed the Israeli government’s A1 debt rating Thursday and credited Israel’s stable economy, while in the United States, an economist claims that the national debt is a staggering $70 trillion, 3.5 times the admitted amount.

Moody’s said it is upholding Israel’s current rating because of the resilience of the economy, expectation of a lower debt and favorable diplomacy with, particularly with the United States.

“Growth in the small, open economy has been sustained even with shrinking demand from Europe, a key trading partner,” according to Moody’s. It cited Israel as being a haven for entrepreneurs and a leader in the high-tech industry.

Another strong factor in Israel’s favor is the export of natural gas, which will help reduce the national debt, reduce taxes and create jobs.

On the negative side is “Iran’s nuclear program being the largest threat to Israeli territorial security,” Moody’s added. “However, a certain status quo has been achieved by maintaining a strong military deterrent, close ties with the US and friendly relations between the Israeli, Egyptian and Jordanian armies, It also credited the resumed talks with “helping to reduce Israel’s international diplomatic isolation.”

Coincidentally, IBM announced on Thursday it is buying up the Israeli Trusteer data security company for an estimated $750 million. Previously this year, foreign companies have purchased several Israeli firms for a total of more than $3 billion.

Israel not only has been the eye in the center of the Middle East hurricane that has swept through Arab countries but also has one of the strongest and most stable economies in the Western world.

In the United States, a poll released Thursday by Gallup shows that President Barack Obama’s economy rating is at an all-time low of 35 percent, reflecting large scale unemployment that is not reported because so many Americans have given up looking for work.

In addition, Fox News reported that University of California at San Diego Prof. James Hamilton estimates that the U.S. national debt is $70 trillion, 3.5 times the official debt of $16.9

That works out to approximately $175,000, plus change, for every man, woman and child. And that does not include a tip for the president.

“Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds,” Fox reported. “Factoring in those figures brings the total amount the government owes to a staggering $70 trillion.”

Hamilton is not the first economist to estimate the debt to be so high, but the government prefers its own figures, for obvious reasons.

Eventually, say economists, the Treasury’s printing presses will be working overtime, leading to high inflation and interest rates, a double-whammy that can cause “stag-flation,” a recession with inflation.

The conclusion is that it would be wise to book early for a one-way ticket to Israel.

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About the Author: Tzvi Ben Gedalyahu is a graduate in journalism and economics from The George Washington University. He has worked as a cub reporter in rural Virginia and as senior copy editor for major Canadian metropolitan dailies. Tzvi wrote for Arutz Sheva for several years before joining the Jewish Press.


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5 Responses to “Tale of 2 Debts: Moody’s OKs Israel’s A1 Rating; US Sinks in Red”

  1. what's your point? that Israel should be providing US foreign aid instead of the other way around? that Israel should pay for all its weapons?

    Or is it just that you've decided to conflate 2 unrelated stories, one of which you attributed to "an economist" (who, for all we know, went to Touro College at night) with the setting of Israel's credit rating at "so-so".

    Grow up and either be a journalist or just sit home and watch Fox News and kvetch about the president.

  2. Avner Tzure says:

    Charles, you are not being fair.  He is just stating facts, as to how Israel was able to handle very difficult conditions successfully. Obviously, all the sane people of the world desire the success of the U.S..   However, sorry to say so but Mr Obama is not the man to the heights of the challenge.  Sorry if you voted for him.

  3. Shirley Gruenhut says:

    Well, as I’ve stated periodically – the US is in the toilet – methinks perhaps t’will be soon time to rethink living out my retirement here in the US. Sigh.

  4. Most of US military aid to Israel, as well as to other countries, is funneled back into the US military-industrial complex because Israel is required to use most of the money for purchase from US defense manufacturers. It is just as much domestic aid as it is foreign aid.

  5. CpaHoffman says:

    Avner Tzure actually, he was not just stating facts – the fact is that the US credit rating is higher than Israel’s, but he just mentioned Israel’s
     And it has zero to do with Obama except to the extent that the JP has evolved into FoxNews-with-a-kippah

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