Bank of Israel Governor Stanley Fischer yesterday mounted a multi-fronted attack on the casual attitude Israel's business barons have developed toward debt.
"Haircuts - if we don't feel like it, we won't pay - is a dangerous trend," Fischer said yesterday in an interview with Channel 10 television. "There has to be a way to assure that haircuts are a last resort." One possibility is to employ the tax system to deter casual haircutters, he said.
One day earlier he addressed an economic forum in Ashkelon and counseled casual investors against flings in areas they don't understand - again targeting tycoons in his answers to questions from the audience.
"Bonds have become something you repay when one feels like it," Fischer said, urging casual, non-expert investors to stick with safe vehicles such as CPI-linked government bonds. Certainly, he said, they shouldn't dabble in stocks.
"To investors, I say that if you don't really know what you should invest in, it's best to be safe [and] place your faith in the government, not in people."
The Israeli Finance Ministry is studying the Chilean model whereby people over 50 can't invest in anything but bonds, Fischer said. It is not beyond the realm of possibility that Israel could adopt a similar model.
Before the interview, Fischer yesterday addressed the Knesset Finance Committee on a more positive note. "The Israeli economy is in relatively good macroeconomic condition, mainly because of policy taken by the various governments in recent years," the governor said.
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