TLR 159 – Messy, Maybe Murky, part 2
This issue has been delayed quite a while by health problems – I had to have an eye operation — but thank God that is largely behind me now and I hope to get clearance soon to fly abroad, in which case I look forward to seeing many of you in London next month.
Meanwhile, much has happened on many fronts so that there is a good deal to catch up with. I intend to send material as I complete it, starting with the political update which is the first part of this issue; hopefully the economic analysis will follow shortly. There is much to say about corporate developments, too, and I have some very interesting material on trends in the banking system.
There is no shortage of developments in the geo-political sphere either, but they will simply have to wait their turn. The Iranian presidential election and its surprising result which left all the ‘experts’ floundering, proves that no-one knows very much about what is going on in Iran. The warm US and European response to Hassan Rowhani’s victory suggests that they are very eager to cut a deal with the new government. Any such deal will not be satisfactory to Israel, but it will probably have to go along with it, and the military option will become even less likely. On the other hand, the Syrian imbroglio continues to worsen, with more countries becoming involved, directly or indirectly.
In Section B: Domestic Politics, the kaleidoscopic confusion after the elections has begun to assume some kind of shape, but the picture is still far from clear – indeed, in some respects the Knesset is becoming more fissiparous, not less. The analysis here reviews the developing political scene as the new government tries to get into its collective stride, and considers whether the stumbling and bumbling to date are merely teething problems, or whether the new-born government, with its new and revamped parties and new leaders actually has severe developmental problems.
The main focus of the issue is C] Macro-economics, within which I discuss three topics. First and foremost, the budget proposal – including some background on how the deficit got to be so big, but especially why the measures being proposed to deal with the deficit are proving so contentious and what the critics are proposing instead. I then discuss the outstanding non-event of the last few weeks, namely the failure of the Prime Minister to announce a new governor for the Bank of Israel and how this imbroglio may resolve itself. In sharp contrast to the woes of fiscal and monetary policy-making, the third topic is the positive trends and bright outlook for Israel’s external sector, why this economic strength can co-exist with a burgeoning budget deficit and yet why most people are aware of, and unhappy about, the budget situation and its impact on them personally, but are ignorant of the country’s strong economic fundamentals.
B: Domestic Politics
a) Lapid and Bennett go to school
b) Bibi and Shelli under growing pressure
a) The brouhaha over the budget deficit
b) No new Governor
c) But it’s all right now, in fact, it’s a gas!