"It Can't Happen Here": Israel and the Global Financial Crisis

by Yacov Ben Efrat

The world's credit markets are clogged, a situation unprecedented in the capitalist era. And what about Tel Aviv? The captains of Israel's economy soothe the public: our banks are not "exposed" to the same degree as America's. But will the crisis pass us by? True, the United States was unique in making an industry out of financial speculation. But in the era of the global village, distances shorten. Wall Street determines the ups and downs of its Israeli equivalent, Ahad Ha'am (the name translates, ironically, as "One of the People"). The immune system of Israel's economy is weaker by far than America's, while its dependence on the latter is great.

That dependence is not just economic. It is also ideological. In the 1980s, Israel abandoned the worn-out Zionist-socialist creed in favor of an even older one, which produced two world wars and fascism. This is capitalism—but served up in modern dress, global and computer-based. Like post-Soviet Russia, Israel has privatized itself, selling a cooperative economy for peanuts to a few tycoons. Such tycoons have sprouted up among all nations and religions. Until the present crisis, they ran the global economy.

To make money one needs money: generous credit at low interest. In order to get credit from the world's big banks, states have to pass certain entrance exams. These are administered by credit-rating agencies in Washington, which are supposed to ensure that loans will be repaid and that investments will yield good profits.

The credit-rating exam is simple. It hinges on fulfillment of the monetary policy dictated by Washington: reduce the national budget, reduce welfare payments to the poor, be generous toward the rich. The economy must be structured for maximal privatization. It must be proof against workers' demands. It must be open wide to foreign investment.

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And very relevant to the UK.