Nobel Prize laureate Prof. Robert Aumann has praised the non-interventionist policies of Bank of Israel governor Stanley Fischer and Finance Minister Ronnie Bar-On in the current situation.
"In Israel there is no financial crisis," he said. "There are no banks collapsing here and our situation is different from the US. What we have here is a psychological crisis and not an economic one. If they were to intervene here without any need to, they would only endorse the feeling of crisis, while creating a real crisis. It is good that they haven't done so.
Prof. Robert Aumann, 78, was awarded the Nobel Prize in Economics in 2005 for his work on game theory economics. In contrast to his praise for Israel's economic leadership he was critical of US Federal Reserve Chairman Ben Bernanke and US Treasury Secretary Henry Paulson for their policies. ""The intervention by Bernanke and Paulson to save financial institutions wasn't smart. They are just giving incentives to the institutions to again take uncalculated risks and collapse again."
Regarding the current situation Prof. Aumann hinted that prices are fair. "There is a negative bubble. I'm not recommending anything but I'm not selling. I'm neither buying nor selling. I'm not giving my broker any instructions at present."
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2008
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