Subscribe to Print Edition | Fri., November 21, 2008 Cheshvan 23, 5769 | | Israel Time: 02:49 (EST+7)   Back to Homepage web haaretz.com Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate GA 2008 Travel Week's End Anglo File

Treasury under pressure to provide safety net for pensions By Eytan Avriel Yesterday was a day filled with bad economic news - but the most dramatic event of the day proved to be the least significant. The drama was supplied by the Tel Aviv Stock Exchange, where the blue-chip TA-25 index, which had been trading down about 7 percent, suddenly plunged to a loss of 11 percent in the space of a few minutes. More coverage, TheMarker Page A10 Later in the day, however, it turned out that the entire drop was due to a single trader who temporarily lost his cool and placed a sell order worth tens of millions of shekels for every stock in the index. Following the 45-minute shutdown mandated by the bourse whenever it falls by 8 percent or more, the market itself corrected for the error. Advertisement The leading index ended the day down only around 5 percent, similar to the previous day's losses in the United States and yesterday's drop in Europe. TASE chairman Sam Bronfeld called it a tempest in a teacup, though even 5 percent drops are nothing to sneeze at if this rate of loss continues. Yet there was also a stream of worrisome economic data yesterday - not only from the United States, as has become almost routine, but for the first time from Israel as well. The Bank of Israel published a revised forecast predicting that gross domestic product would grow by only 1.5 percent next year, down from its earlier estimate of 2.7 percent. That translates into a decline in GDP per capita because Israel's population grows by about 2 percent a year. The central bank also cut back its growth forecast for this year, a sign that the global crisis is already affecting our economy. It also raised its unemployment forecast for next year to 7 percent. In addition, one of Israel's largest companies, Africa Israel, announced a loss of NIS 1.7 billion for the third quarter - the largest quarterly loss an Israeli firm has ever posted. The cause was a huge decline in the value of its real estate assets worldwide, alongside large financing costs. The company's bonds, like those of other Israeli firms, also continued falling yesterday. This translates into losses for the public because most provident, mutual and insurance funds invest in corporate bonds. The corporate bond losses are increasing pressure on the Finance Ministry to submit a new emergency economic plan, on top of the one it unveiled earlier this week, that would provide a safety net for the public's long-term savings. The Histadrut labor federation, leading industrialists and economists have been urging this step for some time, and yesterday they were joined by Foreign Minister Tzipi Livni, the Kadima party's candidate for prime minister. That puts Livni on a collision course with Finance Minister Roni Bar-On, hitherto one of her strongest supporters in Kadima. The treasury remains opposed to any intervention in the capital markets at this stage, but treasury officials are starting to realize that it may be necessary at some point, and have begun examining options for providing such a safety net. According to treasury sources, the current thinking is that a safety net would be granted only to people at or near retirement age, and therefore need their savings soon. For these people, the government would provide a minimum guaranteed return on their investments that would cover some of the losses of the past year, as well as some of the losses that night occur next year. As for the bad news from the United States, this included a 20 percent plunge in shares of Citigroup, one of America's two largest banks, prompting fears that the financial crisis may worsen again after having briefly appeared to have stabilized. There was also a 30 percent plunge in shares of General Motors, virtually ensuring the venerable carmaker's demise, and news that new unemployment claims had hit a 16-year high. Surprisingly, however, the dollar strengthened against other currencies, even briefly crossing the NIS 4 mark for the first time in a year before falling back to NIS 3.998. Bookmark to del.icio.us   The King is dead Archeologists find new evidence for King Herod's tomb site. Al-Hasbara Israel launches Arabic YouTube channel to bypass Arab media.

Read & React Israel to boycott 'Durban II' anti-racism conference Responses: 154 Latest poll gives Likud big edge over Kadima Responses: 84 Peres: Evacuation of settlements may lead to civil war Responses: 69 IAEA: Syria site bombed by Israel bore features of nuclear reactor Responses: 101 Defense Min. turns blind eye as Israelis sell arms to enemies Responses: 28 More Headlines 00:10 Hebron settler mob caught on video clashing with IDF troops 23:25 Experts argue: How close is Iran to its first nuclear weapon? 23:41 Livni vows Kadima won't 'sell' Israel to the ultra-Orthodox 20:42 IDF troops foil attempted stabbing attack near Nablus 23:57 Arise Sir Shimon: Peres receives honorary knighthood from Britain's Queen 19:18 Qassam hits Negev as Ashkelon residents protest Gaza rockets 20:52 Record Number of Jews slated for next U.S. Congress 02:43 Restoration of Lebanon synagogue in danger despite rare Hezbollah support 18:49 Barak: West must unite with Russia, China against Iran 22:02 Hezbollah to Iraqi lawmakers: Reject 'damaging' U.S. pact 23:52 Tel Aviv stocks suffer sharp losses; TA-25 sheds 4.9 percent 22:38 Revealed: Police used mole to probe sex for favors case at gov't ministry 17:17 Nobel laureate Maguire: UN should suspend Israel membership 21:01 Michael Jackson to testify over Bahraini sheik's $7m lawsuit 23:08 IDF envisions army of animal robots for rescue missions, military ops Previous Editions Select Day 20 nov 19 nov 18 nov 17 nov 16 nov 14 nov 13 nov 12 nov 11 nov 10 nov 09 nov 07 nov

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