Economic retreat is worst since '48, says Bank of Israel

[bemildred]

Bank of Israel governor Stanley Fischer presented a plan to help Israel counter the recession, and took advantage of the occasion to also present a grim picture for the economy this year.

If the plan described yesterday is not adopted, Fischer warned, Israel's economy could face its worst contraction since the state's founding in 1948

In January, the Bank of Israel predicted that the Israeli gross domestic product would shrink by 0.2% this year. But if the government scorns its recommendations, it's now predicting contraction of 1.5%. It was the fifth time the Bank of Israel had changed its economic growth forecast inside 12 months. Not that adopting the Bank of Israel plan will entirely solve the dilemma: Even if the government goes with it, the economy will probably contract by 1.1% this year, Fischer said. Unemployment will average 7.3%, whereas if the government scorns the plan, joblessness will rise to an average of 8% this year, peaking beyond that level in the last quarter.

Fischer also forecasts that the government will run a deficit of 5.2% of GDP this year, which far exceeds the government target.

http://www.haaretz.com/hasen/spages/1070088.html

[CLANG]

1. Then it's obviously time to nuke somebody!

[xchrom]

2. wouldn't it be ok to add this to the economy forum?

all divisive political considerations aside -- it's still a bell weather report for the world.

[bemildred]

3. I suppose. It's a global problem, one of the results of "globalization".

The biggest ignored problem with "globalization" it that it creates these companies that are "too big to fail". In other contexts these are called "single points of failure" and "bottlenecks", and are considered to be design flaws. Robust systems are not centralized, and are redundant. But you cannot extort the highest returns, in the short term, that way. Parasites short-circuit controls in their own self-interest.

The question is exactly how shitty it has to get before people wise up.

[xchrom]

4. not just companies that are too big to fail -- but trade policies

that allow companies -- companies of all sizes to do business in a way that undermines labour in the home country.

there is an illness that pervades up and down and sidways here.

[bemildred]

5. That's a different issue, the lack of regulation.

But also a sound one. Robust systems have feedback that maintains stability, and the feedback has to be negative. Stability does not happen by accident, equilibrium is not maintained by accident, there are always specific mechanisms.

Edit: to be fair, that is what I was mentioning with the bit about parasites, so your comment is apropos.

[xchrom]

6. indeed -- one is getting more than their fair share of say so in the other. nt