What is true with cholesterol also holds true with the economy, and Steinitz and Netanyahu have to act more responsibly.
At one time, about ten years ago, 160 milligrams per deciliter was considered the maximum tolerable level of bad cholesterol. Anyone with blood levels above that was advised to go on a diet to improve his health. Since then, attitudes have become even stricter. Bad cholesterol has become a decisive variable in the battle against heart attacks, and the maximum acceptable level has been lowered to 130 milligrams.
If an individual has several risk factors, however, the maximum permitted level goes down to 100 milligrams, and if he has experienced cardiac-related incidents in the past, his level should not exceed 70 milligrams. In any event, that same individual is directed to go on a diet, quit smoking, exercise and even take medicine. In other words, he is supposed to completely change his behavior.
That's exactly what is happening with the global economy. Standards are changing right before our eyes and becoming more stringent. And anyone who isn't taking note of this is going to pay for it big-time. Until recently, no one would have believed that huge American banks could go bankrupt. Now it is already taken into account and their stability is not considered a certainty.
Until the recent global economic crisis, many countries could allow themselves to maintain debt levels exceeding 100% of their gross domestic product as well as huge current budget deficits. Investors worldwide ignored the high risk that this entailed and continued to loan these countries additional billions, which allowed them to amass even higher levels of debt and improve the standard of living of their citizens.
Now, however, everything has changed. Today the world views high debt and deficit levels differently. If a country gets into excessive debt and deficits, the markets react immediately and don't allow the country to raise additional capital. Such a country will therefore face a serious crisis in its finances which will then cause a more general economic crisis, forcing it to make drastic budget cuts. This, in turn, will lower the standard of living of its population. That is precisely what is happening now in Greece, with salary reductions and a blow to Greek pensions.
Greece was the first, but it won't be the last. Greece taught other countries that they cannot wait for a crisis and the time to act is before that. That is why the Portuguese government has proposed major budget cuts, and the government of Spain announced public sector wage cuts of 5 percent. The chancellor of the exchequer of the new Conservative-Liberal Democratic government in Britain has not remained indifferent to the situation either. Immediately after taking office, he announced 6 billion pounds (about NIS 33 billion ) in budget cuts as a first step, as he said, in dealing with the deficit his government inherited from the Labour Party. It turns out the world is more dangerous and less stable than was previously thought.
But of all times, during this difficult period Finance Minister Yuval Steinitz and Prime Minister Benjamin Netanyahu have found it appropriate to change course and do precisely the opposite of what is needed. While the world is cutting back, the Knesset last week approved the budget bill, which will boost spending by 2.7 percent a year, compared with the current pace of 1.7 percent. The projected budget deficit is also too large, at 3 percent of gross domestic product. That's because the two want to be "good" and give out money they don't have.
Steinitz and Netanyahu are continuing to revel in a fool's paradise. It is precisely the way they talk about our diplomatic posture being good, that our relations with the United States are excellent and that we shouldn't get too excited about the deaths on the flotilla that was bound for Gaza or the crisis in relations with Turkey. So, too, they don't want to understand that a public debt level of 80 percent, as Israel has, is large and dangerous.
Just look at Spain with its 53 percent debt, and it is in trouble. And Portugal at 77 percent, and it is in really dire straits.
Those at the helm of the Israeli economy must be mindful of the fact that Israel faces security risks that other countries don't. Here war or an intifada could break out, with major ramifications, and then in one fell swoop Israel could become a dangerous country that the world could decide cannot meet repayment of its debts and the result would be a major crisis similar to what Greece has been facing.
This must be avoided. Therefore what is true with cholesterol also holds true with the economy, and Steinitz and Netanyahu have to act more responsibly. They must adopt an approach that will quickly lower bad cholesterol - meaning public debt - to 50 percent of GDP, because no one want to suffer a sudden heart attack.
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