The greatest robbery in history
Shelly Yachimovich must be happy. The financial crisis made her dream come true. The wealthy people she despises so much have been hit hard.
Shelly Yachimovich must be happy. The financial crisis made her dream come true. The wealthy people she despises so much have been hit hard. The stocks in which they are invested fell, and their savings were cut.
The middle class also suffered a blow. For the poor, in contrast, nothing has changed. After all, they don't have mutual funds or retirement accounts.
In other words, the gap between rich and poor has narrowed, and the distribution of income has become more egalitarian as a result of the crash. Could anything be better than that?
There's another reason why Yachimovich should be happy. The wealthiest Israelis, such as Lev Leviev, Yitzhak Tshuva and Shari Arison, are also the ones who were hit the hardest. They lost hundreds of millions of shekels. Not only that, but their entire business empires are in jeopardy.
Leviev runs from one newspaper to the next explaining that everything is great, and during television interviews beads of sweat form on his upper lip, due to stress. Tshuva is trotting the globe in an effort to obtain credit lines and perhaps even sell off Phoenix in order to rescue himself from the quicksand. Could there be better news than that? The Day of Vengeance is upon us. Now let them suffer, let them sweat.
But apart from the schadenfreude (a rather despicable human characteristic), we must also determine whether Yachimovich and company have learned anything new. Do they understand now that business is a risky thing, that business does not mean money in the bank and that today even money in the bank is not a sure thing.
When the world economy is thriving, everything that you buy today is worth more tomorrow. And so, fairly quickly, you're considered a big success story and are showered with public hatred. People say about you that "The rich always profit, in every situation and in all conditions." They tell you, "The state always sells its assets to the rich for cheap," with a bonus comment on "the corrupt connection between business and government."
But now it is clear that this did not help them one bit. Bank Hapoalim, for example, is now worth less than what Ted Arison paid for it 10 years ago. So maybe the state didn't sell it so cheap? Only a few days ago, Bank Mizrahi-Tefahot asked Shari Arison to increase her collateral for the loan she took to pay for shares of the bank that were bought about a year ago at a price double their current value.
If we're in for a long recession, perhaps Yachimovich and her friends will come to understand that when the big tycoons fall, the economy goes down with them. If we go into recession (and I believe that it won't come to that), we will start praying that Dankner, Fishman, Leviev or Tshuva will come back and build some new neighborhood or invest in some big, new shopping mall or perhaps a petroleum refinery - because there will be serious unemployment.
Maybe then they will realize that the despised tycoons were also the big developers who took the big risks, founded companies, took out loans, employed thousands and had the vision that marched the Israeli economy forward over the past five years.
The international crisis also changed the distribution of income throughout the entire world. For the past seven years the United States has been celebrating the great festival of shopping that began after September 11, when the governor of the Federal Reserve Bank cut interest rates to a low of 1 percent a year and American consumers began using credit like there's no tomorrow. They bought homes and cars and electrical appliances. The Bush administration joined in the spending spree, with enormous budget deficits and tax cuts. The result was a huge balance of payments deficit that someone has to pay for.
That someone is Chang, who rises every morning in order to tend his rice paddy, and his friend Chin, who left his village to work in a factory in the city. They are the exact opposite of Uncle Sam. They worked hard for years and put away a significant proportion of their earnings, too. They are the ones who created China's giant balance of payments surplus, and with that surplus the Chinese government bought bonds issued by the U.S. government as well as bonds issued by banks, investment houses and other financial institutions - all thought to be very safe investments at the time.
That is how the simple Chinese laborer paid for Uncle Sam's home, car and high salary. That is how the Americans raised their standard of living, while all the Chinese have to show for it is bonds - in other words, pieces of paper.
And when the crisis came, some of those bonds lost value together with the dollar, while others simply disappeared into the ether of the financial crash. The upshot is that the securities, those papers held by the Chinese, are now worth half of their former value - and we are talking about several trillion.
That's how the greatest robbery in history was carried out. Without war, without weapons and without bloodshed, and with only the stock market crash.
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