Haifa's Tent City

by CARMIA

Though Haifa's "tent city" can't compare to Tel Aviv's, it has grown from three tents to about 50. But not only has the number of tents increased - a real culture has sprung up, along with hierarchies and role divisions, and local norms. The infrastructure has expanded to include chemical toilets, an ecological dish washing system, a living "room" and kitchen, and other amenities.

The kitchen includes a full-sized refrigerator which is constantly stocked with donated goodies from local cafes, restaurants, and bakeries. Trash is sorted into compost, plastic, paper, and waste.

In the living room area, discussions are held, as well as spontaneous jam sessions. A stocked bookshelf contains literature on socialism and other topics.

Some of the alternative values that have taken hold at the tent city are reflected in this "free market." People leave items they no longer want and may take whatever they want ("freecycling").

There's even a "playroom" for the young protesters, though I haven't seen too many of those. Most of the tent city inhabitants seem to be in their mid-twenties to mid-thirties.

Information in the tent city is transmitted through several vehicles: on-site leadership, detailed bulletin boards (including a dynamic events-calendar which lists extra-curricular activities, lectures, and more), and Facebook groups.

In addition to the various lectures, the diversity of the activities is pretty amazing: poetry night, acrobalance, professional massages, workshops on stress and other topics, guerilla gardening...

One thing that has characterized the protests until now (including the tent city and the demonstrations that have been taking place up to three times a week) is their peaceful nature. I haven't heard of any incidents of violence or looting, which is reflected in the atmosphere at the tent city: quiet but determined, respectful but opinionated.

It's been 23 days since the tent protests began in Haifa. The protest grew quickly from three tents to an almost functioning microcosm of a (tent) city.

The Syrian Economy

Please take a look at this excellent post by Ehsani for Josh Landis's Syria Comment on the economic reforms in Syria. The process described in this post are much more important than the blips on Zvi Bar'el's radar.

Hamas Economy

I'm not holding my breath for a popular uprising in Gaza against Hamas, but I found this article by Avi Issacharoff and Amos Harel interesting because it highlights the economic and political structures on which Hamas, like the Palestinian Authority, depends for its hold on power. Apparently, Hamas has been unable to pay its many "civil servants" their wages for the past two months.

Goldman Case Difficult

Binyamin Applebaum reports in the NYT that

Several experts on securities law said fraud cases like this one, which focuses on context rather than content, are generally more difficult to win, because it can be hard to persuade a jury that the missing information might have led buyers to walk away.

Goldman Sachs is reporting its quarterly earnings tomorrow, and chances are that the firm made a lot of money. Today would probably have been a good time to buy Goldman stock at a discount.

SEC Sues Goldman: WSJ vs. NYT

I generally prefer the New York Times over the Wall Street Journal, but I was disappointed to see how the NYT's lead article about the Securities and Exchanges Commission's announcement that it would sue Goldman Sachs. I really hope the Times is not pandering to the sentiments of its misinformed online commenters. Compare the leads of the two papers to see what I mean.

Wall Street Journal:

WASHINGTON—The Securities & Exchange Commission on Friday charged Goldman Sachs Group Inc. with defrauding investors by allegedly marketing a financial product tied to subprime mortgages without telling them a big hedge fund was on the other side of the trade.

New York Times:

Goldman Sachs, which emerged relatively unscathed from the financial crisis, was accused of securities fraud in a civil suit filed Friday by the Securities and Exchange Commission, which claims the bank created and sold a mortgage investment that was secretly devised to fail.

It is unclear to me how this particular derivative was "devised to fail." Goldman had no control over whether the housing market really would collapse. Credit default swaps and other derivatives always involve one side "betting against" the other. More precisely, companies and investors try either to reduce risk or increase potential rewards by entering into these kinds of contracts. Anyone who invested in this kind of highly speculative financial instrument would have had access to information about the ratings of the underlying mortgage bonds.

The WSJ story puts the emphasis on the heart of the suit:

"Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc., with economic interests directly adverse to investors in the [CDO], played a significant role in the portfolio selection process," the complaint said.

The complaint said Paulson had an incentive to stuff the CDO with mortgage-backed securities that were likely to get into trouble. SEC enforcement chief Robert Khuzami alleged that Goldman misled investors by telling them that the securities "were selected by an independent, objective third party."

The S.E.C. alleges, in other words, that Goldman misrepresented Paulson & Co.'s role. The Times buries this fact in a later paragraph:

Goldman told investors in Abacus marketing materials reviewed by The Times that the bonds would be chosen by an independent manager.

Instead, it focuses on the money that Goldman made - "unfairly," - from the housing market collapse:

The instrument in the S.E.C. case, called Abacus 2007-AC1, was one of 25 deals that Goldman created so the bank and select clients could bet against the housing market. Those deals, which were the subject of an article in The New York Times in December, initially protected Goldman from losses when the mortgage market disintegrated and later yielded profits for the bank.

As the Abacus deals plunged in value, Goldman and certain hedge funds made money on their negative bets, while the Goldman clients who bought the $10.9 billion in investments lost billions of dollars.

The official charges by the SEC can be found here.

Osem to Enter European Dairy Market

"Bamba"

Gad Dairy, a subsidiary of the Israeli food manufacturer Osem has announced that it will enter the European dairy market. The subsidiary, which is Israel's fourth-largest creamery, will introduce its cheeses to the British kosher market first and apparently has ambitions to expand into the "ethnic food" sector (Ynet). Those who have tasted some of the country's other dairy products will probably agree that Israel turns out excellent supermarket cheeses and yogurts.

Gad Dairy's estimate for 2009 domestic and international sales is $70.9 million (270 million NIS). Its parent company, Osem, is the fourth-largest food manufacturer in Israel, after Tnuva, Strauss, and Coca Cola Israel, with sales at around 3,220 million NIS for 2009. Osem is also the maker of the infamous Bamba and Bissli snacks and invented "ptitim," which are often annoyingly referred to as "Israeli couscous."

Complaining about the inferior quality of American cottage cheese is something of a pastime among expatriate Israelis in the U.S.

Consortium Claims Biggest Natural Gas Discovery in Israel's History

Let's see if this holds up.

Israel`s largest-ever reserve of natural gas discovered off Haifa coast

Isramco announced Sunday that "extremely significant" reserves of natural gas have been discovered at its Tamar 1 offshore drill site 90 kilometers west of Haifa

Noble Energy Announces Significant Natural Gas Discovery at Tamar Well Offshore Israel

Noble Energy operates the well with a 36 percent working interest. Other interest owners in the well are Isramco Negev 2 with 28.75 percent, Delek Drilling with 15.625 percent, Avner Oil Exploration with 15.625 percent and Dor Gas Exploration with the remaining four percent.

התגלית  הגדולה מעולם: פי 3 מ"ים תטיס" ובערך כלכלי של 15 מיליארד ד'; תשובה: "נשלם את כל האג"חים

The Economist on Israel

I do not have time for an extended analysis of the Special Report on Israel in The Economist, but I will say that it is a 60th birthday present that the country can easily do without. Not content with a decidedly one-sided critique of Israel's security challenges, The Economist exerts itself to expose the weaknesses of Israel's economy and society, in what amounts to a rather eager prophecy of the coming end of the Zionist dream.

Take for example the following claim about the "mirage" that is Israel's "miracle":

Moreover, Israel's ability to capitalise on the internet boom was a lucky one-off. The big innovations of this century, argues Ze'ev Tadmor, of the Technion, a university in Haifa, will be in biotech, nanotech, smart materials, alternative energy and other things that the army's well-funded research units are not particularly interested in. Much of this kind of work must be done in academia, where Israel is weaker. Its seven big universities have a combined government research budget of around $100m, whereas America's Massachusetts Institute of Technology alone gets $950m from the federal government.

I'm sorry Mr./Ms Economist, but I can't think of a more misleading comparison than this one! To pretend somehow that this particular statistic exposes the mortal weakness of Israel's economy is ridiculous.

Squeezing the Central Bank

Stanley Fischer (Photo)

A coalition of populist (or demagogic) forces is pressuring Bank of Israel Governor Stanley Fischer to lower interest rates (see Ha'aretz). Those pushing for the change are the Israeli Manufacturers' Association, which is suffering because of the high shekel, on the one hand, and parliamentarians ranging from Shelly Yachimovich (Labor) to Amnon Cohen (Shas). They want to see a reduction in interest rates to help workers in the export industry. If implemented, their agenda would set Israel back two decades. This kind of short-sighted intervention in fiscal policy by politicians, concerned about upcoming elections rather than the long-term economic growth of the country, will severely undermine investors' confidence in the Israeli market. The Central Bank's role is to check inflation by maintaining a strong currency; it should not be instrument of particular economic and social sectors. The export industry will have to adjust, just like the exporters in other countries who have experienced increases in the value of their currency against the dollar.

Steal from the poor, give to the rich

Bank of Israel governor Stanley Fischer (Source: Bank of Israel)

UPDATE: The full interview is now up (Friday).

In an interview that will appear in the Ha'aretz Magazine on Friday, Stanley Fischer, the governor of the Bank of Israel (equivalent to America's Federal Reserve) confirms what many Israeli families have felt for a long time. Israeli banks are squeezing the little guy to offer better terms to the rich:

"In comparison to the international sphere, the big companies get credit at very good terms," he said. "Someone else pays for that. It's a case of cross-subsidization. The margin in one sector would appear to fund the margin in the second sector and subsidize it."

There is a widespread perception in Israeli society that the gap between ordinary people and members of the political and business elites has widened dramatically in the past decades. Many middle and working class families express frustration about the high levels of taxation (financial and social) that they have to endure, while a small class of very wealthy people drives around in American SUVs and sends its children to foreign universities.

The Tax Authority bribery scandal now in the news headlines will likely further strengthen this frustration. It is neither the first nor the last big-time corruption case involving the highest echelons of the state and big business.