Taking stock of the political and economic situation after the fall.
By LIAT COLLINSlehman bros 224.88(photo credit: AP)
There are some pieces of advice destined to be passed down from one generation to the next. It might not be conventional, but one of the pearls of wisdom that my grandfather handed on was: Never gamble with more than you can afford to lose. Another piece of unspoken advice - never voiced because it should be so obvious: Don't gamble with anything that is not yours to lose.
My grandfather's "play-but-play-it-safe" approach came naturally to mind this week as the world's financial markets all but crashed.
It turns out that somebody - in fact a large number of corporate nameless somebodies - had been taking risks with money they didn't really have and which didn't really belong to them.
THE SIGNS have been around for a long time. There has been a domino effect in the world markets. And some people have been getting very rich gambling as if this was all a game. Israelis are not immune to this global collapse, although not as hard hit - yet. A few weeks ago, however, when I received the statement of a small pension plan, I tried to call the bank to find out how come this year I actually owed it money. I wasted even more hard-earned cash as a taped voice told me to press this button for that department, as if all clients know which unit to dial to complain about poor investment strategy. When I finally got through to a human being - who I assume was sitting in Tel Aviv but for all I know could be a Hebrew speaker in New Delhi - she was flummoxed. No one else had called to ask this question, she assured me. She subjected me to another long wait while the receiver played irritating tunes in my ear before taking my number. Somebody higher up did indeed return my call but did not have any answers.
Mr. Higher-Up suggested I put my question in writing. I don't suppose this piece is what he had in mind but I don't owe him anything. On the contrary.
Israelis, like other residents of the global village, have suddenly had to get used to a whole new world with its own jargon. I eavesdropped this week on a conversation in which one elderly bus passenger earnestly discussed the collapse of "Meryl Streep." I half expected him to talk about the Lehman Brothers as if they were some kind of comedy team. But this is no joke. The conversationalist and his partner - presumably unaware that half the bus was listening - briefly flirted with the idea of pulling their money out of the bank and hiding it "mitahat labalatot," under the floor tiles. I toyed with the idea of telling them that the same bank that had lost some of their money would also charge them a large fee for removing what was left.
Obviously the more you have, the more you stand to lose. Ditto the more you gamble with - even unwittingly. Even when you have invested it in as solid a savings program as you could find. When giants fall, ordinary people are likely to get squashed and a shadow is cast over everyone else.
FOR THE most part, Israelis watched the drama on Wall Street, in London and elsewhere much as we watched the reports of the rains in North America and Britain. As the weather here continued to sizzle, we looked but found it hard to believe that so much storm damage was possible. The difference, of course, is that the weather is what insurance companies like to refer to as "an act of God," while a financial storm is, any insurance company still standing should admit, the result of human error and human frailties. The generation that American-idolized the get-rich-and-get-famous-quick culture looked at a bubble about to burst and saw only something big and shining.
Local well-paid financial experts have been issuing warnings and advice which seem to boil down to: work hard at keeping your job. This seems especially sound if your pension plan is actually decreasing in value. But my grandfather could have offered that advice for nothing.
Israel was distracted by the economic situation. In a military crisis we know the terms (or more often the abbreviations) and freely offer advice. A political crisis? Katan aleinu, as Tzipi Livni would put it. That's nothing. A financial crisis, however, is frightening in part because it demonstrates how dependent we are on the rest of the world. If America, our biggest trade partner, stops buying, there will be less money in our banks however responsibly they behave.
I looked around downtown Jerusalem, one mammoth construction site at the moment, and wondered what happens if the investors digging the foundations of more and more luxury housing projects suddenly find the bottom has fallen out of the world market and there are no more funds.
THE MAN in the Jerusalem street - where one day, hopefully, the light rail will run - instinctively knows, like my grandfather, that he has to be careful and not gamble with more than he can afford to lose.
That message, however, might be too simple for some of our sophisticated leaders to accept. In any sphere.
While the world markets were collapsing and on the eve of the Kadima Party primaries that would replace him, Prime Minister Ehud Olmert parleyed with Palestinian Authority President Mahmoud Abbas last week in Jerusalem. Ignoring the economic meltdown, it was business as usual. The prime minister pledged to continue with the diplomatic process until a new government is sworn in by the Knesset, which could be anything from a few weeks to several months.
The ongoing dealing is even more disturbing when taken in the context of global events. It's easy to see why Olmert, Abbas and their mate George W. Bush would like to get together regularly for a chat. They are perhaps the only ones who truly appreciate each other. But Olmert, sooner or later, will have to vacate the official residence for his controversially purchased home nearby. Bush is also so close to the door on his way out that it makes no difference to him if he stumbles. And it's doubtful that even Abbas's most optimistic advisers would consider his term in office a long-term investment.
WE HAVE yet to see who will lead either Israel or the US in the Jewish New Year and civil new year. Olmert would be wise to avoid discussing Israel's future before he leaves office as if it were just another real-estate deal. And his successor should also take the opportunity for a reality check.
The world leaders should be busy fixing their own homes. We should be very careful that they don't try to boost their stocks and standing by trying to leave their mark on the Middle East diplomatic process - a quick fix. Trading in futures is very risky. Ask your investment banker, if you can reach him.
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