Ultimately, great fear will overcome smalltime politics. When there is no other choice, and right now this is a no-choice war, even lazy governments undertake bold moves.
What happened in the House on the eve of Rosh Hashana, when it voted against the bailout plan, was perceived as a protest vote; an opportunity to vent. Now that the venting has been done, they can get back to work. The bailout plan was expanded, some changes were made, and on Thursday the US Senate passed the revised plan.
No random vote in the US Congress or any other legislature can prevent a responsible regime from saving the economy from collapsing; salvaging the savings of billions of people, as well as their jobs, welfare, and future.
The bailout plan is merely a distant light at the end of a dark and long tunnel. The tunnel is still ahead of us. The coming year is expected to be a difficult one. There is nothing new in the statement that Israel’s economy is affected by what goes on in the world. The same is true for our banks, provident funds, and pension funds. All of us are affected.
Considerable slowdownThe Israeli economy is expected to enter a year (at least) of considerable slowdown. Exports will slow down, private consumption will decline, and investments will go down. The budget deficit will grow because the Treasury will not able to collect taxes from the stock market, real estate market, and large corporations whose profits will shrink.
So what can we do? Encourage local private consumption and view it as the economy’s engine, particularly in the face of the sharp drop in oil prices.
The government and the Bank of Israel have thus far adopted a policy of “sit and don’t make any waves,” based on the reasonable perception that any change in regulations or legislation may be interpreted as a negative signal to the public. I am not sure that this approach, despite all the advantages it entails, would be proper for the days to come.
The finance minister and the Bank of Israel governor must carefully weigh the option of declaring government guarantees of all the deposits and savings accounts of private citizens in banks and financial institutions that are not banks, for a limited time. It is also possible to restrict, for a limited time, very large withdrawals from provident funds on condition that there are government guarantees for those funds.
At times, there is only a thin line between averting panic and disregarding the dangers.