The Israeli economy, which was among the last to feel the global hit, is now only starting to feel the pain.
By NITZAN COHENshekels good 88(photo credit: )
The stream of economic reports over the last few days has been worrisome. The worst of them was the report noting a sharp increase in the unemployment rate in Israel, which jumped 3 percent in April.
The Israeli economy, which was among the last to feel the global hit, is now only starting to feel the pain. April figures indicate the country will have to deal with a fearsome rate of 25,000 new unemployed people every month - until who knows when.
But the local stock market has recovered significantly from the bottom hit in March. Such a rally, however, shouldn't fool anyone by now.
The risks to the global and the local economies are huge. This is a once-in-a-lifetime crisis: the kind that writes new negative records each day - from the biggest bankruptcy to the highest levels of defaults on loans.
Many in Israel have yet to understand the magnitude of the economical earthquake the world has been hit by. It has been a sad reality for over a year now for hundreds of millions of people in the world's richest countries.
Lucky for us, Israel has suffered much less than many of the more wealthy markets, but there is no hiding this time. This ugly wave is big - and it isn't going to pass by anytime soon.
So far, the heat has been mainly felt in the export sector and, to some extent, the financial industry. These are the sectors, with hi-tech industries leading the way, that fired 120,000 people in the last six months. Now we are about to see the consequences.
These unfortunate people probably lived on their compensation (if there was any) and savings during the first months of unemployment. But most likely, in the end they were forced to dip into money allocated for basic living expenses.
This poisonous spiral feeds itself and soon spreads to the domestic sector.
The local business community, unfortunately, is more occupied with the local western: "The good the bad and the girl." Bank of Israel Governor Fischer, playing as Sheriff Goodman, just shot down bad guy Hapoalim chairman Dan Dankner, who bravely took the bullet for majority stockholder Shari Arison. Dankner decided to resign after realizing the only way to fight the central bank is through an ugly war in the courthouse. Hapoalim and Arison cannot afford this kind of fight, so the beleaguered chairman had no choice but to quit.
Some day, someone might investigate what was this all about: A chairman of Israel's biggest private bank was decapitated in broad daylight and nobody really knows why. But never mind that; the bank itself is virtually decapitated for at least a couple of months, being run in a managerial vacuum without a new CEO, with a paralyzed chairman and a confused board. And all of that is happening at the worst time possible.
After getting his pound of flesh, Fischer should concentrate on minimizing the damages caused to the bank over the past stormy months. It is crucial to quickly appoint a new CEO, whose first and most important job is to handle the credit portfolio properly and cautiously. Many defaults, both from businesses and households, are about to come due; revenues will fall and bad credit provisions will rise.
The whole fuss around Hapoalim started with the swift appointment of Zion Keinan as the new CEO. There is no one who is more familiar with the bank's credit portfolio or its 11,000 employees than Keinan. Arison showed surprisingly bold character in her struggle against the central bank. The odds were clearly against her, but she resisted with dignity.
Fischer and Supervisor of Banks Rony Hizkiyahu can revel in showing everyone who is the boss, as they celebrate Dankner's resignation and let the bank's board decide who will be the next CEO of the second-largest bank in Israel.
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