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Tears of the rich: the false alarm of the heads of the economy - voila! Of money


The Israeli economy is in excellent condition, but those who claim to be its leaders ran to the president: ostensibly to warn against the consequences of the legal reform, but in fact to protect their profits

The protest against the legal reform.

Let's recall that the high-tech crisis has nothing to do with legislation (Photo: Reuven Castro)

The Israeli economy is currently the strongest in the world

, before the next upheavals to its detriment right now.

Israel's current account surplus in 2022 was a whopping $19.8 billion, according to my calculations about 3.7% of GDP, among the highest in the world.

This is after a surplus of 21.4 billion dollars in 2021 and a surplus of 22.7 billion dollars in 2020.

Within three years, Israel had a cumulative surplus in the current account of about 64 billion dollars.

It is interesting to note that the current account surplus in the last quarter of 2022 was $5.25 billion, higher than the previous three quarters.

We will break down the current account into its four parts.

the excess in the utility account;

Mainly the high-tech industry, shrank to $9.42 billion in the last quarter of 2022, after it was $11.65 billion in the third quarter of 2022. Note that the decrease in high-tech revenues is mainly due to the global weakening of the industry, due to the increasing difficulties in raising capital (against the steep increase in financing costs in the US "b and in the world). The sharp interest rate hikes by the Fed in the US and consequently also in the rest of the world, caused the NASDAQ stock index to crash last year by 33%. Yes, a third of its value.

Shekels and dollars.

It is the world that owes Israel money and not Israel to the world.

That is why the interest rate that continues to rise around the world is good for Israel (Photo: Reuven Castro)

It has nothing to do with reform

The damage to the high-tech industry, as you can see, has nothing to do with the new government in Israel that began to function at the beginning of the year, nothing to do with the crisis that is now emerging in Israel in the high-tech industry, and nothing to do with the demonstrations of high-tech that the global ground began to drop from under their feet in the world already last year.

Now some of the hi-techists are betting their situation in the government and legislation on the legal reform.

the deficit in the primary income account;

Another item in the current account that includes financial investments and wages between Israel and the world, decreased from minus 2.3 billion dollars in the third quarter of 2022 to minus 0.62 billion dollars in the last quarter of 2022, which means an improvement.

The improvement is simply due to the fact that the Israeli economy has a surplus of investments abroad, so with an increase in interest rates and yields in the world, the interest income of the Israeli economy increases, Israel enjoys income from interest that it has not experienced for many years during the period of low, almost zero global interest rates.

in the secondary income account;

Money transfers without consideration, were not material movements.

in the goods section;

A change for the better, a deficit against Israel of $6 billion in the last quarter of 2022 after a trade deficit of $7.77 billion in the third quarter of 2022. The overall surplus

in the current account indicates the possibility of a renewed strengthening of the shekel's exchange rate in the coming year, after the shocks in the world markets subside and, if there is Calm also in Israel in the political field.

Before the upheaval in high-tech, in the last quarter of 2022, direct investments in Israel rose to a record of $9.4 billion compared to $0.6 billion in the last quarter of 2021. Direct investment is defined as an investment that allows

control of the company or property in which the money was invested, such as the right to appoint directors on the board of directors and, of course, the right to property.

The higher the foreign direct investments, the more attractive the economy is considered.

In the entire year of 2022, foreign investments in Israel were 27.8 billion dollars, after standing at 21.5 billion dollars in 2021, 23.1 billion dollars in 2020 and 17.4 billion dollars, in 2019 - the year before the Corona.

In other words, within four years, foreign direct investments reached a huge amount of 89.7 billion dollars, which caused a very sharp increase in wages among high-tech workers and, as a result, a huge rise in apartment prices, especially in the Dan area.

We will also note that the world owes the Israeli economy, net, in debt products, 208.3 billion dollars after an increase from 196 billion dollars at the end of the third quarter of 2022, yes, the world owes the Israeli economy, not us ever!.

The highest interest rate in the world will benefit the Israeli economy as a result.

The surplus in the state budget in the last 12 months before February was 0.2%.

It will grow towards a deficit following the approval of the budget, it is not material.

The government debt in relation to GDP is among the lowest in the world and will decrease next year to about 58%.

The direct investments of the Israeli economy abroad during the aforementioned four years were 31.8 billion dollars, of which in 2022 the Israelis with direct investments abroad of 9.2 billion dollars, almost unchanged compared to 2021.

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factory worker.

An improvement in productivity means that his employer made more money.

Earned - and ran to the president to cry (Photo: ShutterStock)

Productivity improvement

It has been argued for many years that although Israel is a high-tech country among the leaders in the world, labor productivity here is low and hence the low wages in non-export oriented sectors.

These very days the Central Bureau of Statistics is publishing recent data that sheds encouraging light on the subject.

In 2021, the excess labor productivity, which does not result from a change in the capital stock or the number of working hours, i.e. real productivity, increased by 3.9% after an increase of 1.6% in 2020, i.e. an increase of over 5.5% within two years.

The compensation for employees, in simpler words the salary for a unit of product, actually decreased in 2021 by 3.7%, after an increase of 0.6% in 2020, meaning a decrease of about 2.9% within two years.

This means that the employers pocketed 8.4% of the workers' productivity at the expense of the hardworking workers in the economy!

It is therefore no wonder that following the decrease in compensation for employees in relation to GDP and despite the increase in taxation of net production, the operating surplus in the net business output, according to the calculations of the Central Bank, increased in 2021 to 30.9%, after 30.7% in 2020. The rate of return on capital of the employers increased in 2021 to 27% after 26.8% a year earlier.

The CBS data also shows that the gross product per working hour increased in terms of purchasing power in Israel, for eight years until 2021, at a cumulative rate of 19.9%, while the increase among the countries of the European Union was at a rate of only 7.8%.

But Israel has not yet caught up in terms of GDP in 2021 with the average of the countries of the European Union, our output was 8.7% lower.

It's strange that those who engage the public of workers and the public of savers call themselves with great pleasure the heads of the economy, they are the ones who came to the president's house to support him in a compromise outline on the issue of legal reform.

The bankers and industrialists called the meeting with the president an "emergency meeting" on the subject of the struggle between the protesters and the government and the coalition over the future of Israel's legal structure and not on the other emergency issue that had room to be raised, the continued exploitation of the saving public by the bankers.

The bank managers who came to the presidency take away interest from the public's current accounts and deposits and raise credit interest at a tiny rate compared to sharp increases in debit interest, which led to record profits for the four major banks. These totaled NIS 22.2 billion, a jump of nearly 32% compared to A year earlier, an all-time record according to Yehuda Sharoni, "Maariv". Almost a third of Bank Hapoalim customers' money, NIS 193 billion, was lying in non-interest-bearing accounts, according to Uri Tal Tana of the Calcalist newspaper.

So what do the heads of the banks fear from the judicial revolution or the blow to their bloated pockets that explode with a lot of profits?

And there is no compensation here on this issue.

A weak voice of obedience was also heard from the Bank of Israel.

Managers and owners of marketing chains, shopping centers and malls as well as owners of office towers also came to the meeting with the president.

They did not talk to the president about the fact that they raise prices unjustifiably and cause inflation that the public cannot withstand, which forces and drags the Bank of Israel to continue to raise interest rates and burden the mortgage holders who are squeezed and pressed under tremendous forces that they cannot withstand, until beyond their capacity.

The absurdity, as mentioned, is a decrease in real wages precisely while they, the workers, are increasing labor productivity with great effort and learning while working.

The absurdity is also unthinkable price increases while the handlessness of the current and previous governments is visible to all.

The Israelis are happy, at least most of them.

Only the media won't tell us that (Photo: ShutterStock, Shutterstock)

in happiness and poverty

The average Israeli is strange.

Although he is busy, despite the crazy apartment prices that have risen in the last three years by about 35%, he is happy, the UN happiness index for the year 2023 published this week points to Israel as a Scandinavian country: Finland in first place, Denmark in second place, Iceland in third place and Israel in fourth place The Netherlands is in fifth place, Sweden in sixth place and Norway in seventh place.

Israel's defense exports have increased sharply due to the war in Ukraine, the Germans and the Israelis are asking the US, which is responsible for the research, development and production, to allow the export of Arrow 3 to Germany, which is seeking to arm itself against possible attacks by Russia .

So far, Israel has been prevented from exporting the Arrow or other systems in the development of which American capital was involved.

The deal with Germany is supposed to be worth 2-3 billion euros.

More European countries are actually asking for Israeli weapons systems.

In addition, there is a growing demand for equipment and weapon systems from Southeast Asia, mainly from Japan.

Perhaps the happiness stems from this, not from the CBS data, because we are already close to the GDP per capita in the European Union, the GDP per capita according to my calculations in

2022 was already 54,703 dollars, higher than many countries in the European Union.

Threats from various sectors to economic and business stability, as a result of the legal threats. It must be assumed that some of those who threatened to take money out of Israel lost due to the collapse of several banks in the US, others folded their tails between their legs, quietly, after realizing that the banking system in Israel is stronger and safer than that of Europe and the USA, and there are those, without shame, who are now asking for government aid against the background of the weakness of high-tech in the world.

The partisans will say that the financial and economic data as well as the happiness of the Israelis are no longer relevant to what is happening today.

The Central Bureau of Statistics came and in the middle of the month published the consumer confidence index for the month of February this year, when the protests were at their peak.

It found that the economic and economic confidence of consumers is in eighth place among 23 countries in the European Union and Great Britain.

The consumer confidence index, calculated according to an international methodology of the European Union, includes parameters such as how the consumer feels about the change in the household's economic situation in the past year, what is the expected change for the household for the coming year, what is the expected change in the economic situation in Israel in the coming year - and the last section: the intention of the household to purchase large purchases such as furniture and electrical products in the coming year compared to a year before.

The improvement in February was among those who are not employed and also among academics.

The relative consumer confidence index also jumped in February to 85 after 70 in January.

Maybe you didn't hear about these figures in the media, as you didn't know you were happy?


  • Of money


  • High tech

  • Nasdaq

Source: walla

All business articles on 2023-03-24

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