Subscribe to Print Edition | Fri., October 10, 2008 Tishrei 11, 5769 | | Israel Time: 01:42 (EST+7) web haaretz.com   Back to Homepage Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate Easy Start Travel Week's End Anglo File

A new government - now By Haaretz Editorial Tags: Ehud Barak, Tzipi Livni  The crisis that began in the United States after the real estate bubble burst has turned into an enormous financial crisis that has brought down Wall Street investment banks, and from there moved on to become a worldwide financial crisis. The reason for the worsening is the market's total lack of faith: Banks are unwilling to lend money to other banks, or to businesses. They are digging themselves fortifications with liquidity to be prepared for bad news that may soon come - that is how the credit crunch has led to a halting of economic activity, because money greases the wheels of the economy, and without money the wheels stop. This is why the Bank of Israel lowered interest rates yesterday by half a percent in a surprise move. The reduction will make providing loans more worthwhile and less risky, and ease the liquidity situation. The Bank of Israel also announced it would continue to buy dollars even after it reaches its $40 billion target for foreign-currency reserves, in order to support exports and economic growth. Advertisement These are interventions in the right direction, and the exact opposite of other proposals made recently by Labor Party head Ehud Barak, Histadrut labor federation chairman Ofer Eini and Manufacturers Association president Shraga Brosh. They were pushing the cabinet this week to spread a safety net for the public's savings in provident, pension and education funds. No country in the eye of the storm has used such a safety net because it is a populist proposal to curry favor with the public - and impossible to implement. Such talk of an immediate safety net is irresponsible when it comes from a senior politician such as Barak because it becomes a self-fulfilling prophecy. If there is really a need for an immediate safety net, why shouldn't the public rush out and withdraw all its savings? Labor's demands for an additional NIS 2 billion for next year's budget is dangerous. In a time of uncertainty, when there are fears of a recession, the cabinet must restrain the budget and keep its promises. After all, only a short time ago the cabinet passed the 2009 budget, without the additional NIS 2 billion. The public also knows that 2009 is expected to show a big budget deficit because of the drop in tax revenues. Therefore, if the government increases spending now, it will be forced to present a "New Economic Plan" soon, which will include harsh decrees, new taxes and a sharp cut in all the extra spending - and no one wants to repeat that mistake. In this period of uncertainty and financial crisis threatening to become a recession, the cabinet must prepare an emergency plan, but it needs to do so in secret, without talking about it in the media. But to carry out such plans there must be a new government as soon as possible, a government that will last for two years, until the scheduled 2010 elections. It is clear that the good of the country is the top priority for Barak and for Shas chairman Eli Yishai, both of whom now need to put aside all the so-called achievements for their voters they were trying to win, and establish a government whose plans and makeup reflect the fundamental guidelines of the outgoing government. Bookmark to del.icio.us   A man of peace Vatican defends wartime pope Pius XII against charge he turned blind eye to Holocaust. Feminine features An Iranian motor company unveils plans to design cars specifically tailored to women.   1.   Election first before government 15:57  |  Brod 08/10/08

Read & React Bradley Burston: For the journalist, on Yom Kippur Responses: 123 Edgar Bronfman: Judaism must recognize mixed marriages for Israel's sake Responses: 136 Arab lawyer detained after refusing to remove pants during airport check Responses: 185 Nadav Shragai: Settlers have become punching bag of the media and the left Responses: 65 Acre sees worst violence in years as Jews and Arabs resume clashes Responses: 171 More Headlines 00:10 Acre sees worst violence in years as Jews and Arabs resume clashes 22:25 Israeli Arab lawmaker: Acre violence is Jewish pogrom against Arabs 00:02 Russia hints it won't sell advanced missiles to Iran 18:03 Fatah says Hamas stalling on Palestinian unity plan 01:14 Israel on standby as global financial rescue takes shape 22:51 Syria releases two U.S. journalists who entered state illegally 23:46 New Nazi parody aims to smash German Third Reich comedy taboo 22:36 N.Y. rabbi: Animal rights backers threatened me over Yom Kippur chicken slaughter ritual 14:22 Germany launches nationwide crackdown on neo-Nazi youth group 23:57 Lebanese union to sue Israel for 'claiming ownership' of falafel 18:30 Nasrallah: We have not abandoned plan to avenge Mughniyeh 20:15 Vatican defends wartime pope against charge he turned blind eye to Holocaust 16:06 Delegation of Israeli doctors to Gaza denied entry 17:01 Left-wing terrorist turned neo-Nazi tried for Holocaust denial Previous Editions Select Day 09 oct 08 oct 07 oct 06 oct 05 oct 03 oct 02 oct 01 oct 30 sep 29 sep 28 sep 26 sep

Special Offers Advertisement Fattal Hotel Chain Perfectly located hotels on best resorts of Israel. Dial 013 for your long-distance calls and get all your money back US CITIZENS Vote for real change. Request your ballot today! Eldan Rent a Car Israel's leading car rental company offers you a 20% discount on all online reservations Jewish Singles Personal Ads Find the love of your life on JDate.com Israel's Premier Real Estate Website www. israel-property.com Hebrew Summer courses From $39.95 Junkyard Junk a car - get free towing nationwide and a tax-deductible receipt

Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Underground | Site rules |

Real Estate in Israel | Travel to Israel with Haaretz | Hotels Israel | Restaurants Israel | Tourist attractions Israel | Shops Israel

birthright Israel | Search engine marketing

Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.

© Copyright  Haaretz. All rights reserved