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It is the nature of communist economies to be remarkably stable. Capitalist economies, on the other hand, are volatile. They swing up and down. "And right now, we're down," said Eli Yones, chief executive of Mizrahi-Tefahot and former alpha executive at Bank Hapoalim, at the CFOs Forum conference in Eilat yesterday.

Yones predicted a protracted economic slowdown, followed by a rally. As for the status of Israel's banks, he presented papers by Merrill Lynch and Deutsche Bank, which believe that Israel's banking system is stable.

Consumer behavior is also expected to remain stable for the moment - at least until after the holidays. Despite the jitters evident at investment firms, retailers say that sales have not slowed. "There is no question that the global crisis will affect consumption, but only after the holidays," predicted one retailer.

Fashion outlets also report that sales remain firm, or even that they are up ahead of Rosh Hashanah: Honigman and Hamashbir both said sales were up by 20% to 30%. But retailer confidence regarding the future is shaky and the economic outlook is anything but clear. Israel isn't even likely to start the year 2009 with a budget in place, and isn't likely to get a budget until the new Knesset is elected.

Meanwhile, for all Yones' long-term optimism, bank stocks took a pasting this week, and yesterday brought no relief. Bank Leumi stock lost 23%, diminishing its market capitalization by NIS 4.5 billion, to NIS 15.5 billion. And Hapoalim was down 25% for the week; its market cap shrank to NIS 12.5 billion as more than NIS 4 billion in value evaporated. Israel Discount Bank lost 17%, causing NIS 1 billion in value to vanish.

And what about Mizrahi-Tefahot, the bank that Yones runs, which is considered to be an island of stability? Its shares rose 1% on heavy turnover of NIS 45 million yesterday.