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The machinations of one investment house sufficed to briefly crash the Tel Aviv Stock Exchange Thursday, despite the unveiling of the Treasury's new economic "emergency plan." It was so little, so late that the plan impressed no one and clearly does not obviate the need for a "safety-net" for savings.
Reluctantly and very tardily, Finance Minister Ronnie Bar-On and his staff have been forced to consider programs for shoring up sagging public confidence. They're expected to soon reveal whatever combination they manage to agree upon, but there is discord among Treasury officials themselves.
Some are leery of guaranteeing pensions, except perhaps those of almost-retirees. Others oppose government purchase of or guarantees for corporate bonds, which comprise the key holdings of nonspeculative funds. The objective, evidently, is a formula that will simulate intervention without costing much.
This may have been more possible early in the crisis, but Bar-On let the situation deteriorate for too long. His initial hands-off policy was followed by an irrelevant rescue plan, whose most disturbing aspect was an uncanny resemblance to another emergency plan concocted in late 2005, also just before elections, by Ehud Olmert.
Olmert's much-touted "emergency war on poverty," like last week's Bar-On version, was launched without a new state budget, a stable government or concrete specifics. At most it signaled intent to funnel more funds into the parched economy. Bottom line? Despite the hype, it was never implemented. Bar-On's recycled "revolutionary blueprint" will be just as forgotten.
Long-term solutions have their place, but they must not rely on wishful thinking. Bar-On's plan hinges on a whole set of wish-fulfillments, like mass conscription of yeshiva students, mass disappearance of foreign workers and mass transformation of jobless hi-tech specialists into school teachers.
Even worse than pipe dreams is overlooking the obvious: An emergency plan must actually deal with the emergency at hand. It must devote immediate attention to the here-and-now. This means short-term measures to calm the current panic - precisely the demands now foisted by public pressure on the disinclined Bar-On.
SIGNIFICANTLY, most of the country's political and economic leaders - whatever their differences - agree on this. The only ones who apparently don't get it are Bar-On and his ministry team, who insist that we are weathering the international financial tsunami magnificently.
The only problem is that stocks have halved in value and the most conservative bond investments have lost at least a quarter of their worth, severely affecting the savings of average citizens in pension, provident and mutual funds.
It's instructive to listen to industrialist Eli Hurvitz, Teva Pharmaceutical Industries Chairman and Israel Prize laureate. He argues that the "most critical present economic peril is the public panic" regarding massive losses in nonspeculative investment frameworks, yet "sadly the Treasury's emergency plan fails to address the issue. The government can easily soothe things by guaranteeing savings. Far more conservative governments, like the US, have done so... Panic leads to redemptions from funds, which in turn trigger far greater economic troubles."
Histadrut Chairman Ofer Eini enunciates the identical message, though more bluntly. The labor federation chief has characteristically seized the opportunity to threaten yet another general strike - in two weeks - charging the government is doing no more than "covering its rear end."
Along the political continuum, ideological antagonists are broadcasting on the same wavelength. Both former Labor leader Amir Peretz and current Likud chairman Binyamin Netanyahu want Bar-On to spread a safety-net out for conservative investors taking an unfair beating from the corporate bonds scare.
If the Treasury's languor is merely the product of Bar-On's failure of nerve, then a way must found to provide our finance minister with the backbone he needs to make bold meaningful moves - not minimalist make-believe steps - to restore peace of mind to hundreds of thousands of households.
To that end, we urge Bar-On to reach out to the leaders of the main parties, to political friends and foes alike from across the political and economic spectrum, to build a consensus for the kind of government intervention that industrialists and labor leaders, conservatives and liberals, agree is now warranted.
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