If only Israelis had the luxury of addressing one crisis at a time - the turmoil in Acre, for instance, or the failure to form a new government; or signs that Fatah and Hamas are burying the hatchet, or freeing Gilad Schalit. That's even harder to do when the worst worldwide financial crisis in generations insists on monopolizing the headlines. Israel is not immune to the economic tremors shaking the rest of the world. After a four-day holiday weekend, the Tel Aviv Stock Market opened an hour late Sunday to give traders time to take a deep breath. Even so, the market still suffered its biggest drop since 1997. Though closing steeply down, it managed to stabilize during the day as sellers discovered - lo and behold! - that there were still buyers out there. MUCH HAPPENED while our markets were closed over Yom Kippur. Stocks worldwide plunged, with the Dow Jones industrial average falling 18 percent. Companies were hard-pressed to find lenders. Having expended its dwindling political capital on persuading a reluctant Congress to allocate $700 billion for the purchase of stocks tied to bad mortgages, the US Treasury seemed to radically revise its approach: The US government is now poised to, in effect, partially nationalize certain banks to "unfreeze" the credit markets. Meanwhile, Iceland practically went bankrupt; its government said it would protect the deposits of its own citizens, but not those held by foreigners, including a number of local authorities in London which found themselves out in the cold. While Israel enjoyed its trading hiatus, the Federal Reserve, the European Central Bank and the Bank of England finally managed to coordinate an interest-rate cut. And British Prime Minister Gordon Brown, whose popularity is as low as the market itself, found himself widely applauded for producing a genuinely systematic plan to address the crisis. Basically, it promises to guarantee new loans, in addition to providing cash to British banks. This could serve as a model for other nations. Speaking in the Rose Garden on Saturday as finance ministers and central bankers from the G-7 nations stood stony-faced behind him, President George W. Bush declared: "All of us recognize that this is a serious global crisis, [which] therefore requires a serious global response." Those gathered around him generally agreed to coordinate their efforts to find a way out of the crisis since actions taken unilaterally - a la Iceland's - will only make a bad situation worse. With 20/20 hindsight, we can speculate that America's failure to bail out Lehman Brothers catalyzed the current crisis. Looking back further, a convincing argument is being made that the American financial establishment's love affair with the poorly understood and grossly under-regulated tools known as "derivatives" contributed to the meltdown. AS TO the here and now, Industry, Trade and Labor Minister Eli Yishai wanted Sunday's cabinet meeting to consider creating an "economic kitchen cabinet" that would address how to guarantee the safety of savings in our banks and the need to raise yields on government bonds. But, ridiculously, Cabinet Secretary Ovad Yehezkel pointed to a rule that requires agenda items to be submitted three days in advance. To be fair, the government has been effectively grappling with how to steer Israel through this crisis emanating from beyond our shores. And analysts agree our economy's exposure to mortgage-related debt and derivatives is minimal, and that the biggest dangers are psychological. To that end, Finance Minister Ronnie Bar-On reassured Israelis that his ministry and the Bank of Israel would intervene as necessary. They are reportedly indeed weighing plans to offer deposit insurance and, if necessary, inject capital into the banking system. If anything makes people nervous, it is being told not to panic. And yet, Prime Minister Ehud Olmert is quite correct to tell the public just that. If, rather than letting fear prevail, Israelis adhere to the "buy low and sell high" mantra, chances are we will all emerge to trade again another day. Authorities here are doing their utmost to stem panic by making it clear that if necessary, they stand ready to intervene in a timely fashion. The rest of us can help by not getting caught up in the hysteria swirling around us.
TA stock exchange generic 224.88(photo credit: Bloomberg)