My Home is My…

A fascinating aspect of the debate that erupted around the latest proposals to bring down housing prices in Israel was the underlying assumption – made explicit by some interviewees in some of the programs and articles – that people, especially young couples, have a right to own their own home.

Even in the context of the rights-oriented modern era, this is remarkable, while the corollary – which is that governments have an obligation to assist people (and especially young couples) to realise their inherent right to own a home – is nothing less than a recipe for national bankruptcy. In the unlikely event of a country surviving the consequences of its citizens’ supposed right to have rapid access to ALL the available medical technology, services and products that modern science can generate, it will surely be doomed by any attempt to facilitate the right to own your own home.

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Trivial Pursuits

The world is locked into a ‘1984’ mode, in which the mass of people – the sheeple – are ruthlessly manipulated by the controlling elite into patterns of behavior and thought that are designed to keep them usefully productive or, failing that, then at least quiescent. The main tool for this is, of course, the mainstream media, which keep the sheeple’s addled minds focused on drivel and trivia, thereby preventing any possibility that they might ask the wrong questions and reach the wrong conclusions.

This week has seen multiple examples of this process at work.

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Crimea Revisited

The financial markets around the globe gyrated this week in line with the crisis in the Crimean Peninsula and the wider Ukrainian imbroglio. That is as it should be, and the recent spate of articles and programs about 1914 — marking the start of what is likely to be a prolonged media focus on the centennial of the First World War — provided an ideal backdrop for heightened concern about crises in Eastern Europe.

However, for most Europeans, and surely all Russians — but surely not most Americans — Crimea resonates for reasons that have nothing to do with the First World War, or even the Second for that matter, during which Stalin expelled the peninsula’s ethnic inhabitants. For Russians, British, French and anyone who is obliged to learn European history in high school, Crimea is a noun that is synonymous with war, as in ‘the Crimean War’.

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Contrariwise

The key concept underlying the Purim story – highlighted by the critical word in Megillat Esther – is “contrariwise”. Everything turns out to be the opposite of what it had seemed or had been intended. That much is clear from the narrative of the megillah but, beyond the principle, little of the detail and almost nothing of the forces at work is spelled out. Probably because it was written and distributed within the Persian Empire, the megillah’s authors self-censored and made sure that numerous sensitive topics were only hinted at.

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Current Account Data For 2013

Bottom line: The current account for 2013 posted a surplus of $7.2bn, far more than in 2012 or 2011 ($0.8bn and $3.3bn respectively) and equivalent to 2.5% of GDP. Given the arrival of offshore energy (from March 2013), this suggests that large current account surpluses will henceforth be the norm for the Israeli economy.

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GDP for Fourth Quarter and Second Half of 2013 (First Estimate)

Bottom line: The latest GDP data are very confusing and should be handled with care. This is the first time we have seen fourth quarter (Q4) data on their own, and they present a very different picture to the second half (H2) data that the CBS press release (and hence the media reports) focused on. Our starting point is our comment on the Q3 data in November that “the weakness should be offset in the fourth quarter, as exports rebound”. We were right about exports (see below) but weakness in the domestic economy meant that overall growth was not much improved. In the event, Q4 did offset Q3 but, taken together, they produced the mediocre second half performance that the data reflect.

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Inflation Data for January 2014

Bottom line: Don’t get carried away. The seemingly sharp drop in the January CPI, of 0.6% and which caused a stir among some economists, is not more than an exaggerated seasonal phenomenon. The index usually drops in January; this year it dropped by more than usual, but mostly because of transient distortions caused by the weather (see below for some examples): January 2014 was the driest on record and warmer than usual, too. The underlying trend remains toward lower levels of price inflation, but no dramatic change in this trend occurred in January.

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Changing the Prescription for Israel’s Teva – an article at Knowledge@Wharton

(Was Originally Published at Knowlegde@Wharton)

Changing the Prescription for Israel’s Teva

On 11 February, when Erez Vigodman stepped into the corner office at Teva Pharmaceutical Industries, he didn’t come as a stranger to the company. He has been on the board since 2009 and this exposure should hold him in good stead. Vigodman has been brought in not as a pharma man but as a turnaround specialist. His knowledge of the company is something he will need if he is to prescribe an effective new dosage for the global pharmaceutical major.

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Budget Data for January 2014

  • Bottom line: The Treasury hit a home run in January, getting its budget performance in 2014 off to a very strong start. The key features were strong revenues, even after accounting for one-off items and the impact of tax rises enacted last year, as well as continued restraint in spending. Obviously, the question is whether these trends will be maintained during the year. This seems unlikely, but January suggests that is by no means impossible.

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