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November 23, 2014 / 1 Kislev, 5775
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Posts Tagged ‘Stanley Fischer’

Stanley Fischer Hospitalized Overnight

Wednesday, June 26th, 2013

Outgoing Governor of the Bank of Israel Stanley Fischer was rushed to a Tel Aviv hospital Tuesday night after complaining of exhaustion, but he is being released on Wednesday. He was suffering from dehydration.

“The Governor is now feeling better. He remained in hospital overnight for observation and will be released to go home today,” according to a spokesman at the Bank.

Fischer, 69, will leave his post in mid-term on Sunday to return to the United States. He will be succeeded by Prof. Yaakov Frenkel, who held the post for nine years until 2000.

Prof. Yaakov Frankel to Return as Head of Bank of Israel

Sunday, June 23rd, 2013

Prof. Yaakov Frenkel, who headed the Bank of Israel from 1991-2000, will return to his old job and replace outgoing Bank Governor Stanley Fischer, who is going back the United States with his social and political agendas he tried to impose on Israel.

Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid’s decision to put Frenkel at the helm of the Bank is conditional on the approval of a committee headed by retired Supreme Court Justice Yaakov Turkel. No opposition is expected.

Frenkel won the Israel Prize in economics in 2002 and has been chairman of JP Morgan since 2009. Netanyahu had wanted to give the job to Harvard Prof. Elhanan Helpman, an Israeli, but he refused, as he did seven years ago when the Prime Minister brought Fischer overseas.

“Frenkel brought the American mentality of managing monetary policy to the Bank, which in we estimate also eventually brought the search for a foreign Bank governor like Fischer,” Alpha Platinum Mutual told the Globes  business newspaper.

Frenkel stood his ground against populist opinion when he headed the bank 15 years ago.

Fischer has been widely praised for his management, but he also has proven to be an opportunist, taking the job as Governor with a lot of fanfare by making aliyah, only to turn his back and go back to the United States in before the middle of his second term of office. He reportedly would like to replace Ben Bernanke as head of the Federal Reserve Bank even though his age virtually puts him out of the running.

After Fischer was firmly in the saddle at the Bank, he often used the economy as an excuse to advertise thinly disguised support for a Palestinian Authority state based on all or most of its territorial demands.

He also frequently criticized the Haredi community for not participating more in the job market.

More than a few critics have warned that Fischer is leaving behind him a troubled housing market and that he did not take enough action to bring down the price of housing.

Economist: Fischer Left Scorched Earth, Deep Recession Coming

Wednesday, June 12th, 2013

“Stanley Fischer leaves behind scorched earth, which, together with the Finance Minister’s policy of economic edicts—coupled with the latter’s almost complete submission to the Bank Governor—is taking the economy into a deep recession,” financial analyst and venture capitalist Avi Tiomkin told the financial website Kalkalist.

“These moves are liable to undermine exports and significantly reduce manufacturing activity, ushering in a massive rise in unemployment, accompanied by social unrest,” Tiomkin concluded.

Financial analyst and venture capitalist Avi Tiomkin

Financial analyst and venture capitalist Avi Tiomkin

According to Tiomkin, “the monetary policy of the Bank of Israel in recent years was to tighten the reins, focusing mostly on the fear of inflationary developments. This trend was influenced primarily by the perception of the Governor’s decisions by his counterparts around the world. It ended up causing Israeli exports – which constitute some 45 percent of the GDP – to be on the verge of collapse, with an all-time trade deficit record.”

In Tiomkin’s view, the policy of the Bank of Israel’s Monetary policy regarding interest and its method of intervention in the markets (purchasing billions in U.S. dollars) and the fact that the interest rate in Israel is significantly higher than that of the leading Western markets, have led the NIS to become one of the strongest currencies in the world.

This means that Israel’s two main industries, manufacturing and agricultural exports and tourism have a harder time competing in the global markets.

Tiomkin predicts:

“If you add to this the fact that economic activity is weakening among Israel’s larger trading partners, Europe and the U.S., and taking into account the global effects of the emerging crisis in China and the economic deterioration in Asia, it means the dreams of finding new export markets will fade quickly, and the decline in exports will increase and damage the economy critically.”

“Unfortunately, the choir comprised of Israel’s best economists and senior academics still lives in a world that no longer exist,” says Tiomkin. “The classic academic models have already collapsed in reality, while they continue to chant the mantra that a budget deficit is a major disaster. Needless to say, that elite has not predicted the financial crisis, never understood the extent of its depth and length, and expected that large-scale money printing by the world’s central banks would cause an inflation—when in reality the opposite happened. Likewise, when they predicted that increasing budget deficits would raise long-term interest rates – the opposite happened.”

Tiomkin also believes that the Israeli government overall policy should undergo a significant course change. “The classical Capitalist world no longer exists,” he says. “I remind the Prime Minister that Ronald Reagan is no longer President. I think that the Prime Minister’s perception that the policy of privatization, free market, spending cuts and minimized budget deficits are the solutions to the current problems, is anachronistic. This solution was good 20 years ago.”

Tiomkin has few good words for the departing bank governor:

“Governor Stanley Fischer will be remembered as the Israeli Alan Greenspan. It won’t be long before everyone realizes the magnitude of his mistakes, and the fact that the responsibility for much of the financial crisis in the country rests on his shoulders.”

In Tiomkin’s opinion, the Bank of Israel must immediately lower the short-term interest rate to 0.5%, similar to the global level. This would reduce borrowers’ financing costs on mortgages, slow down the pace of decline in real estate prices and reduce lenders’ fears of mortgage defaults by borrowers.

World Financial Honchos to Attend $30,000 Bye-Bye Bash to Fischer

Friday, May 31st, 2013

Former U.S. Secretary of the Treasury Larry Summers will join several other world financial leaders on June 18 for a $30,000 farewell party for Bank of Israel Governor Stanley Fischer, the Globes business newspaper reported Thursday.

Fischer is leaving in the middle of his second term of office after having made aliyah to take the post as Bank Governor in 2005.

European Central Bank President Mario Draghi, Central Bank of Ireland Governor Patrick Honohan, Central Bank of Chile Governor Rodrigo Vergara, JPMorgan Chase International chairman and former Bank of Israel governor, Jacob Frankel and world monetary expert reportedly will be among those at the party.

Fischer began his term as Israel was riding a wave of strong economic growth and unprecedented stability and low inflation.

He is leaving behind a fractured economy and a housing shortage that has angered Israelis.

Dizzy Dollar Dumps the Shekel

Wednesday, May 22nd, 2013

The shekel-dollar rate has soared 4 percent in the past two weeks, with the latest jump today (Wednesday) prompted by expectations that the Bank of Israel will lower the interest rate again in June.

The rate crossed the level of 3.69 shekels to the dollar on Wednesday after having dropped under 3.55 shekels to the dollar earlier this month.

After Bank of Israel Governor Stanley Fischer announced a plan for a $2 billion buying binge to purchase dollars, the rate jumped towards 3.60 and then moved up again when he sprung a surprise mid-month quarter of a percent cut in the interest rate. The Bank almost always decides at the end of the nth on the interest rate for the following month.

A lower rate makes the shekel less attractive to investors and helps exporters, whose revenue Finance Ministry dollars will be worth more shekels after conversion.

Expectations of another cut to be announced next week caused speculators and investors to dump shekels Wednesday. Analysts are divided on whether the new upward trend of the shekel-dollar rate will continue or if the shekel will regain strength, partly due to plans to export natural gas from offshore discoveries.

Fischer Cuts Interest Rate and Says Bank to Buy 2 Billion Dollars

Monday, May 13th, 2013

Bank of Israel Governor Stanley Fischer announced on Monday a surprise cut the prime interest rate as part of his battle to fight the appreciation of the shekel and help the economy to keep growing. The financial markets responded with the shekel-dollar rate rising more than 1.5 percent to the level of 3.61 shekels to the dollar.

Fischer announced the interest rate cut two weeks ahead of the usual end-of-the-month decision on whether to change the rate.

The dollar was worth only 3.55 shekels last week, dropping over the past several weeks from the relatively lofty level of 3.8 shekels to the dollar.

A lower shekel-dollar rate hurts exports because foreign buyers have to pay relatively more dollars than they would when the shekel is worth less. In addition, exporters make less money after converting foreign dollars into shekels.

Factors in the lower rate are the anticipation of tax revenue from Israel’s natural gas bonanza, which came on-stream several weeks ago, Warren Buffet’s $2 billion purchase of the remaining shares of the Israel-based Isracar tool-making company, the possibility of a $1 billion buyout of Waze by Facebook, and the relatively stable Israeli economy.

Fischer cut the rate by a quarter of a percent, with the new 1.5 percent rate making the shekel less attractive to foreign investors.

After the Bank of Israel’s two small purchases of dollars the past three weeks in an effort to keep speculators from forcing the shekel-dollar rate any lower, Fischer announced on Monday a massive dollar-buying plan on the scale of his purchases several years ago when the shekel-dollar rate sank to 3.30.

The Bank of Israel said the decisions to lower the rate and buy dollars was made “in light of the continued appreciation of the shekel, taking into account the start of natural gas production from the Tamar gas field, interest rate reductions by many central banks – notably the European Central Bank, the quantitative easing in major economies worldwide and the downward revision in global growth forecasts.”

The Bank of Israel added that global growth forecasts, especially for Europe and China have been revised downward, which effect Israel’s economy.

It explained that the program to buy dollars takes into account “the effects on the financial account resulting from the natural gas production” that will result in foreign exchange payments by the gas companies.

“As in the past, the Bank of Israel will continue to operate in the foreign exchange market in cases of exchange rate fluctuations which are not in line with fundamental economic conditions, or when conditions in the foreign exchange market are disorderly,” the Bank of Israel added.

Printed from: http://www.jewishpress.com/news/fischer-cuts-interest-rate-and-says-bank-to-buy-2-billion-dollars/2013/05/13/

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