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Are they afraid of inflation, or just jealous? By Moti Bassok Tags: israel news Ehud Olmert's government has been a lame duck for months, and this includes Finance Minister Roni Bar-On. When a finance minister is a lame duck, the entire treasury is also lame. There's a lot of potential, but very little action. And all this is happening during a major economic crisis, when the economy is crying out for leadership that is wise, effective and innovative. But nature abhors a vacuum, and the Bank of Israel has entered the void left by the treasury. And for the past four years, the Bank of Israel has been a one-man show, featuring the governor, Stanley Fischer. The relations between the central bank and the Finance Ministry have never been good. They have too many major disagreements. Nonetheless, both at the bank and in the ministry, they found it difficult to explain why anyone would want to make a big deal about this now, of all times. Advertisement At the Bank of Israel, the explanation is the treasury's jealousy over Fischer's success and status in the eyes of the public and media. At the treasury, they see the flare-up as an attempt to stop Fischer from dictating his terms for continuing as governor to the new prime minister and finance minister. There are two types of disagreements between the two sides: long-term, continuing issues such as wages and the new Bank of Israel Law; and specific, ad hoc problems over more immediate issues, such as the economic crisis. The present global economic crisis requires the two institutions to work together. At first, both agreed on passivity as the response, but last September when Lehman Brothers collapsed, the two realized they needed to go on the offensive and act, which is when the disagreements started. The biggest bone of contention, for now, concerns the bank's purchases of government bonds in the markets. The bank is about to exhaust its two traditional, and main, weapons - interest rates and foreign currency purchases - and it needs new tools. In addition to questions of ego and jealousy, there are also serious economic issues involved, first and foremost inflation. Will the bank's moves bring back inflation? At the treasury they think so, and believe Fischer is moving too fast to copy what the United States is doing. Bookmark to del.icio.us   Gilad or Gilad? Olmert is too focused on the wrong Gilad. Take this waltz "Waltz with Bashir" was not made for Hollywood, it was made for human beings.

Read & React Bradley Burston: Winslet, 'Waltz,' and how Hollywood likes its Jews Responses: 42 Israel's new Iran policy: Sway Obama on Tehran talks Responses: 44 Amnesty urges freeze on arms sales to Israel Responses: 21 Amir Oren: Israel must accept its loss of influence in U.S. Responses: 9 Olmert: Corruption probe against me is none of Diaspora Jewry's business Responses: 19 More Headlines 00:03 Olmert aide, Shin Bet chief to replace ousted Gaza truce mediator 22:24 'U.S. plans to pledge $900 million for Gaza' 23:03 Netanyahu to meet Bar-On in apparent bid to bypass Livni 18:33 ANALYSIS / Olmert is too focused on the wrong Gilad 22:06 Hamas: Fatah used Google Earth to pinpoint Gaza targets for IAF 22:14 'Today shoes, tomorrow guns,' says IDF officer heckled in Holland 01:52 GOP Jewish group blasts U.S. role in lead up to Durban II 16:37 British exhibit unveils Jewish gems hidden during Black Death 14:09 Winslet, 'Waltz,' and how Hollywood likes its Jews 17:22 Israel: Amnesty report on Gaza ignores fact Hamas are terrorists 20:29 Court: No house arrest for mother accused in murder of daughter, 4 15:40 Al-Qaida No. 2 urges Hamas: Don't agree to Gaza truce 15:39 Archaeologists unearth relics from eras of First and Second Temples 00:54 Bahrain's crown prince: Britain is too pro-Israel Previous Editions Select Day 23 feb 22 feb 20 feb 19 feb 18 feb 17 feb 16 feb 15 feb 13 feb 12 feb 11 feb 10 feb

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