Budget deficit lowest since August 2011
Former prime mnister Ehud Olmert attacked all sides in the current election campaign.
Former Prime Minister Ehud Olmert today fired barbs at Labor Party chairwoman MK Shelly Yachimovich, saying that her calls to raise taxes on the wealthy were populist and would harm the economy. "Six weeks before elections, it is already possible to make out the political message: hit the business world and save the economy. This is popular, and if you add to this, take the money from the rich, abuse them, and burden them with high taxes, it is even more populist. This style and atmosphere and this populist dialogue have nothing to do with economic recovery or stability, or with flourishing business, and may backfire. A country cannot have economic growth without a thriving business sector with a chance of making profits," he said.
In his criticism of Yachimovich, Olmert said, "Already, one of the big political parties has submitted a new economic plan that increases government spending by NIS 28 billion a year over the next five years. How is it possible to talk about increasing spending? Every year, we have to cut spending to achieve an acceptable deficit. And without a word on cutting defense spending? Such proposals are superficial and irresponsible populism which is seeking popularity and standing at the expense of responsibility toward the nation and the Israeli economy… I hear populism from the candidates, and if this process continues, the deficit will grow at a price that could shock the Israeli economy."
Olmert did not spare Prime Minister Benjamin Netanyahu either, saying, "Anyone who thinks that it is possible to manage defense policy in isolation from the international arena, and that this will not affect the Israeli economy, is not giving himself a true report on the reality in which we live. I am not running in these elections, so I am not trying to persuade you to vote for me. Israel is walking down a dangerous diplomatic road. We are maintaining a policy which fundamentally contradicts Israel's existential interests.
"In a country like ours, to assert that it is possible to manage its affairs severed from international economic, security, and diplomatic relations is a mistake and misleading. We have now seen that when it is necessary to make small ceasefires with Hamas, you need Egypt's president or the secretary general of the UN… and my good friend Avigdor Liberman stands with tears in his eyes hugging Egypt's president who contributed to the ceasefire."
Olmert said that the Israeli government was strengthening extremists and weakening the moderates. "The real decision facing Israel is a security-diplomatic decision, talking with our Palestinian neighbors and negotiating for peace. In the past few years, what this government been doing has been to empower Hamas and other terrorist forces and to weaken the moderate forces with which it may be possible to make peace."
Olmert warned against the collapse of the Palestinian Authority, saying, "Do you remember the intifada? Do you remember those scenes? We're not far from this."
In response to Olmert's remarks, Labor Party candidate Michael Rosenthal said, "Not only does the Labor Party not hate the rich, but it actually encourages the business vast majority of Israel's people. It is no coincidence that Olmert, a man who for years participated in the capital-regime party and who in his various capacities gave hundreds of millions of shekels to Israel's wealthy, now stands behind them. As a man who has been convicted of breach of trust, and as a man who no longer walks around with envelopes filled with dollars, Olmert should avoid commenting on these matters and disappear from Israeli public life."
We're at a dangerous point in the eurozone
After Olmert's introduction, the "Changing Rules of the Game" panel was held. Participants were the Governor of the Czech National Bank Dr. Miroslav Singer; Prof. Tyler Cowen of George Mason University, named by "The Economist" as one of the most influential economists of the past decade, and by "BusinessWeek" and "Foreign Policy" as one of the top economists in the US and one of the world's 100 most important economists in 2011; Prof. Steve Keen of the University of Western Sydney, and one of the economists who predicted the economic crisis, the high-tech bubble, and European sovereign debt crisis. Makhteshim Agan Industries president and CEO Vigodman was the panel moderator.
"We live in a world of uncertainty," Singer said, "The US and eurozone economies are fragile and the survival of the eurozone will only be possible by unconventional policies and tough measures."
Cowan said, "We are a dangerous point in the eurozone and the window of opportunity is small. Look at the shocks in Italy (the resignation of Prime Minister Monti), in Spain (separatists winning the Catalonia elections, jeopardizing the country's stability), and more. For three years, the eurozone has been at the edge, and the question is for how long will it be possible to act this way without falling. Nonetheless, the dismantling of the eurozone is still far off, but we must act quickly and with determination. The problems can be solved, but stable governments are needed to do this."
Keen spoke about how the huge sovereign debt bubble burst. "The sovereign debt problems, which are making it harder for European countries to function, developed steadily in recent years. During this time, we saw almost no attempts or successes by the countries to reduce their huge deficits, and this line must change."
Keen added, "The rate of growth of the debts and the countries' economic growth closely resemble the Great Depression of the 1930s. We're repeating the same patterns." He said, however, "Stimulus programs, not austerity, rescued us from the Great Depression."
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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