1. Readying for a drop: As a brewing US-China trade war sends Wall Street tumbling into an abyss after months of gains, there are signs that Israel may heading toward a similar chasm.
- On Monday, the Finance Ministry said Israel’s growth rate was estimated to have dropped to between 1 and 2 percent in the second quarter, according preliminary data (the actual numbers will be released on August 18).
- This comes “after a spike in the first three months of the year due to car purchases ahead of a tax hike on autos,” Reuters reports.
- The Yedioth Ahronoth daily calls the forecast “another strike” after a series of bad beats on the financial front.
- The numbers come days after the S&P affirmed its AA credit rating for Israel and gave it a stable outlook, though it warned political turmoil could change that.
- Though Asian markets notch sharp drops on Tuesday morning, after the Wall Street bloodletting on Monday, the TASE in Ramat Gan is mostly flat as of 11 a.m.
2. Asleep at the wheel: The Globes business daily notes that the ministry also reported unemployment rose to 4.1% in June, from 3.7% in May, and quotes the Treasury raising alarm over “warning signs,” with June being the worst month of the second quarter, according to the preliminary data, pointing to a downward trend.
- In Yedioth Ahronoth, columnist Sever Plotzker writes that the possible coming financial storm is not the result of a single catastrophe, but a series of mounting problems that the government has refused to deal with.
- “Despite repeated and dire warnings, in the last two years the Treasury has not taken any steps to prepare for crisis. The minister is busy with his [first time homebuyers scheme], officials argue between themselves and the prime minister is busy with his legal issues,” he writes. “It’s clear that after elections the public will have to pay for the government’s abandonment of the economy, and pay big time.”
- Yedioth leads off its tabloid with the financial warnings, but the Finance Ministry numbers get little to no play elsewhere, reflecting the fact that the warnings may still not be taken seriously.
3. Bearish or bullshit? In Globes, former MK and current businesswoman Ayelet Nahmias Verbin writes that new Bank of Israel chief Amir Yaron’s apparent commitment to not intervene to stabilize the exchange rate is “unfortunate.”
- “Israeli business people already understand that we are in a ‘fan effect’ — we are standing against the wind knowing that the first gust might not blow us over, but more and more will come after it,” she writes.
- In Haaretz, columnist Nehemia Shtrasler dismisses the idea that the government should keep the shekel weak compared to the dollar and wants Yaron to be more like former BoI chief Stanley Fischer, who bought oodles of dollars to keep the exchange rate high and whose policies are widely credited with inuring Israel to the 2008 financial crisis.
- “Every time the exchange rate drops significantly, industrialists abandon their lathes and start ‘working’ on the government. They always warn of rising unemployment, which never actually materializes,” he writes.
4. Caught between Washington and Beijing: Channel 13 news reports that the US-China trade war is affecting Israel in other ways, with the Foreign Ministry warning top ministers that there could be a direct clash with US President Donald Trump.
- Prime Minister Benjamin Netanyahu decided to postpone a vote planned for July 24 on establishing a mechanism for monitoring Chinese investments in Israel, and ordered discussions in order to revise the plan so that it would satisfy the White House, according to the report.
- Netanyahu has been dragging his feet on establishing the mechanism, for fear of curbing Chinese investment in Israel, a subject he has been trying to push.
- In The Marker, Daphne Maor writes that those overly worried about US China tensions can take solace in the fact that it’s almost an election year for Trump: “A year and a half before the vote is a dangerous time to enter a consumer or financial crisis … It’s not clear what the impulsive president will do, but he loves to brag about Wall Street gains as a personal victory and so will act to support them.”
5. But who is Netanyahu loyal to? If Trump is worried about elections, then it’s doubly true for Netanyahu.
- Even the paper supposed it in his pocket, Israel Hayom, runs a front page editorial urging him to commit to only forming a right-wing government, after he forced Likud members to commit to backing him.
- “Netanyahu, it seems, needs to make a stronger public commitment that he will pursue that – not a coalition that has leftist components – and so do his future coalition partners,” columnist Mati Tuchfeld writes. “Such a commitment must be crystal clear and include the promise of the appropriate nominations, such as minister who will not hesitate to carry out right-wing policies with respect to foreign affairs, security, and the judiciary; and coalition partners who will back not only extensive settlement construction across Judea and Samaria, but also potential annexation and installing Israeli sovereignty across the entire land of Israel.”
- Haaretz’s lead editorial, though, accuses Netanyahu of fostering a commitment not to the right, but to the top, from ministers to bureaucrats.
- “Netanyahu’s ‘spirit of the commander’ – the choice of subservient regulators, yes-men – is permeating the other government ministries,” it reads. “A government of weak officials is the overt aspiration of the Netanyahu government.”
6. Deputy minister of protecting pederasts and dangerous pathogens: One minister, or rather deputy minister, Yaakov Litzman, is finding himself in a heap of trouble Tuesday after police recommend indicting him for protecting accused pedophile sexual assailant Malka Leifer and for bribery.
- According to the police, Litzman leaned on a psychiatrist to testify that suspect Malka Leifer could not stand trial for an extradition hearing.
- Channel 12 news reports that Liefer used to work with Litzman’s wife and is friendly with her.
- Dassi Erlich, a Leifer accuser who launched a campaign to extradite her former principal back to Australia, says in a statement Tuesday that “We are feeling so grateful that the questions we continually raised through the #BringLeiferBack campaign resulted in one more step to achieving justice.”
- Litzman, who possesses many authorities of a full minister despite serving as a deputy, denies any wrongdoing, says he has an open door policy to welcome in anybody who seeks his help or counsel, not just members of his Hasidic sect who worked with his wife, or pedophiles.
- According to Walla News, the main place he would welcome people is a Jerusalem restaurant called Goldies, which is where he ran things from, not unlike a mafia don. And he made sure the place stayed open, even though eating there could be worse for your health than turning down an offer from Don Corleone.
- “Between 2012 and 2015, the food division of the Health ministry received evidence that Goldies was an epicenter of salmonella and listeria outbreaks, which could endanger lives,” the news site reports. “According to info received from hospitals, at least three people were hospitalized after eating there, and a pregnant woman even miscarried.”