Here are some somber thoughts for the eve of Yom Kippur. The euphemistically named "financial crisis" AKA looming depression may spell very big trouble for politics all over the world - that includes especially the Middle East
and the situation of Israel
. It is still not too late to stem the tide, but world leaders seem to be looking the other way for the most part. The US is preoccupied with its election. The Europeans are preoccupied with being Europeans. The reaction of investors is characterized by panic and irrationality. U.S. legislators first turned down the $700 billion bailout, causing stock values to plunge. Then Congress approved the bailout, and the stock market plunged once again. In Europe, leaders failed to take any concerted action to save their banks, and even criticized Ireland for doing so.
In all the poorer countries of the world, food prices have been rising. If the economic slowdown also brings on unemployment, the effect may be political chaos, and the rise of regimes and leaders that would make Mr. Ahmadinejad seem like a reasonable moderate.
The stock market crash is not just hurting "rich people." It is going to hit the middle class and the poor most cruelly. Pension funds and institutions are invested in those stocks. Property values are plummeting. Old people can't sell their homes and retire The downturn will inevitably mean a rise in unemployment as well, and in poorer countries it will bring famine. Nobody is really preparing for these possibilities.
Worst of all for us, a specter is haunting over Europe and North America. It is the specter of anti-Semitism
. Just as the world economic crisis of 1929 was blamed on the s, so this one is being laid at the door of the eternal scapegoat. The evil Jewish conspiracy caricatured by Snoopy the Goon
is all too real in the simple minds of many people, who don't understand where their money went, and don't understand how modern banking works. It is easy, as ever to blame the Jew
s. The basic lie behind the propaganda is that the Jews and "international financiers" own the banks, and the banks own the Federal Reserve System, which was created, according to sources like the "Zeitgeist" film, so that banks could print money and charge interest for it. The Hamas
, an organization which ironically is the darling of certain "progressives," was not remiss in blaming the Jewish Lobby
for the financial crisis, because the Jewish lobby controls America according to them. Of course, anti-Zionism is completely different from anti-Semitism, right?
As Franklin Roosevelt said, "We have nothing to fear but fear itself." But fear can be pretty scary. The proponents of market economy picture a rational market in which valuable commodities are traded, based on supply ad demand. But the most important commodity traded in modern financial markets is paper. The paper is worth something only because people have confidence that it can be traded for something tangible. The crisis began because government regulators were asleep on the job. They let financial institutions engage in shady practices, give risky mortgages and issue dubious bonds that got AAA ratings. The crisis continues because governments have not decisively seized the initiative, and because certain speculators want it to continue. If you have shorted stocks, you make money when they go down. Many billions have been bet on the proposition that stocks are going to go down. "Newsletters" explain that there are trillions of dollars in outstanding debt "just like" the debt of the failed investment companies, that has no coverage. Of course, there are always trillions of dollars of outstanding debt - that's how the banking system works. If confidence is maintained in the economy, most of that debt it will eventually be paid, even though only a fraction of it has coverage.
The Ayatollah Jannati opined that the financial crisis is Allah's punishment of the infidels.
The Hamas and Mr. Jannati have something there. If the U.S. economy had been run according to strict principles of Sha'aria
law, there would be no crisis. There would be no banks, because Sha'aria forbids the charging of interest. With no banks of course, there would be no economy.
The West chose a different route, that can bring about rapid economic growth, if it is done right, but governments and societies are failing in their duty. Bailout packages are not enough. The regulatory system in the United States and Europe has to be fixed, and perhaps some price and trading freezes are in order. The crisis is reminiscent of the Israeli economic crisis of the 1980s. Inflation soared to nearly 600% annually, and stocks plummeted. It seemed nothing could stop the free fall. Then the government stepped in, froze prices, bought a stake in the banks and guaranteed the stock prices.
Around the world however, all the economic gurus are feeling their way cautiously and doing too little and too late. Israeli economic experts likewise seem to be all too reassuring about the economy. They are mistaken. Even if the economic crisis has only minimal effects in Israel, we need to be prepared for the political upheavals it may cause in the Middle East, in Europe and South America, where Jews may be endangered by radical regimes.
Maybe it is all just a bad dream, and in a year everything will be put right. Even if that is so, governments should always be hoping for the best and preparing for the worst. Ami Isseroff
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Replies: 1 Comment
Sitting here watching this crisis evolve, I am reminded of a speech that Shimon Peres gave many years ago in which he condemned the young men who wasted their days ******** rather than working in something constructive. He was referring to those indolent chaps in the Tel Aviv Stock Exchange.
I always had some sympathy for that perspective, and now it seems he may have been right.
We have all convinced ourselves that we could make a quick buck for virtually no effort and having sown the seeds we're reaping the harvest.
Rod Davies, Wednesday, October 8th
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