"The crisis is at its height and there will many more conclusions one way or another. We're still at the learning stage. We're talking about a huge event," said Ministry of Finance director general Yarom Ariav at the Prime Minister's Conference for Export and International Cooperation this morning.
Ariav added, "We've witnessed the collapse of institutions we thought would never fall. We've seen the fear index rise and panic spread. This is precisely why it's important to keep cool and thoughtful. We're under incredible pressure to stop trading on the Tel Aviv Stock Exchange (TASE). All in all, the system has shown maturity and responsibility, and we've weathered the first wave intact, even wondrously.
"The Israeli financial system handled the first stage of the crisis superbly. We're not seeing bailouts for financial institutions here. Even under the pressure to do something, our conduct proved itself. The regulatory system took charge and proved itself. Obviously, after the first financial wave, a crisis will follow in the real economy. It's already here. It doesn’t matter what we'll do, we'll get wet. There is no umbrella large enough to protect us from this storm."
Ariav went on, "I'm not talking about a policy of sit and do nothing. There is a place for government influence. There's a need for the government to navigate an exit from this, and to take measures that will cause a minimum of damage. There's a need to integrate fiscal and monetary policy. Monetary policy, as we saw yesterday, is possible so long as there is fiscal discipline, as long as the fiscal side is protected. It's possible to survive this crisis thanks to three pillars: a tight control on fiscal discipline; tax cuts; and structural changes. This does not mean to say that we'll have more modest growth than we had before. We have a responsive business sector."
Published by Globes [online], Israel business news - www.globes-online.com - on November 12, 2008
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