"At this stage, any attempt to try to figure out how the story in Europe will end is not serious. It's a bit like the butterfly flapping its wings in China and causing a tornado in the US, said Psagot Investment House Ltd. chief economist Vered Dar at the "Globes" Capital Markets Conference held in Tel Aviv yesterday, in conjunction with BDO Ziv Haft.
Dar said that what is happening in Europe was the question of the day, with answers ranging from "countries will work harder" to "Lehman Brothers will pale in comparison to what's happening here. The euro will disappear, and Europe will become a black hole on the map."
Dar added, "The decision by the German voter on Sunday will affect the yields in Spain, and I will go so far as to say on yields in Israel, too. I believe that the Greek plan will fail and that the country is en route to some kind of debt settlement."
As for the recovery in Israel, Dar said, "It's impossible to talk about recovery in Israel without talking about its partners for a rapid recovery - the US and emerging markets. Current growth is very rapid and very impressive, but what we're seeing now in Israel and the US is only the jump out of the hole. I believe that the recovery will continue at the root level. After the jump, further growth will be more difficult."
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2010
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