Will current Bank of Israel head Stanley Fischer be leaving Israel for the New York Fed? According to a report in the Wall Street Journal, Fischer is considered to be a dark horse to fill the vacancy left by Timothy Geithner, who is joining Pres. elect Barack Obama as Treasury Secretary.

According to the Journal, “Outsiders who could be considered include Peter Fisher, a former Treasury official who is now a senior executive at BlackRock Inc.; Stanley Fischer, an economist who runs Israel’s central bank; and Roger Ferguson, a former deputy Fed chairman who is now chief executive of TIAA-CREF, an investment firm that specializes in serving academic institutions.”

The question is whether if this is so, does this mean the Israeli economy is about to go into the gutter. Fischer has a history of bailing out just in the nick of

The Bank of Israel surprised analysts by cutting interest rates a full 50 basis points to 2.5% This is the lowest level rates have ever been in Israeli history. Clearly this is a signal that the BOI is expecting much slower economic growth moving forward. Coupled with non-existent inflation it appears that the BOI felt that a bigger rate cut than was expected was justified to hep jump-start the economy.

As a result the Shekel looks to be weakening slightly and look for a move up in Israeli bonds tomorrow.

Please see our Disclaimer HERE.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

Trading halts were triggered in Tel-Aviv as the TASE dropped more than 11.2%. After curbs were lifted the market jumped to close down about 5%. It appears that one institutional investor dumped a ton of stock at the market price triggering the sell-off.

Keep in mind that much like in the US, where bailouts and stimulus have done nothing to stem market drops the same things appears to be happening in Israel as well. I’m Right..You’re Wrong has a great post about the Israeli treasury’s economic recovery plan. Clearly the market hasn’t taken well to the proposal to spend over 21 billion Shekel on government works projects.

The TASE major indexes are off about 50% YTD, and keep in mind that the general public is just waking up to this fact. Many have just started to cash out their pension plans and put them into government bonds. If this trend continues,

I clearly remember Israeli industrialists begging for the Bank of Israel to intervene in forex markets in order to pick up exports. We were told that a strong shekel caused a loss of over $2 billion in lost business, because Israeli goods were more expensive abroad. Industrialists got their wish and there was central bank intervention and not only that but the USD made a big move against most major currencies. Sounds like great news for exporters, right?

Wrong. Globes is reporting that Israeli exports actually fell in October, the first drop in 5 years. ” exports of goods (excluding diamonds) of 3.4% and an annualized increase in imports of goods of 2.8% in August-October 2008, the Central Bureau of Statistics reported today. This is the first drop in exports in five years, although there have been slowdowns in the rate of growth.”

If i am not mistaken, the Shekel

As we have mentioned here more than once, the Israeli economy may not be in as great shape as our leaders have let on. Tonight’s surprise 50 basis point cut, bringing rates down to just 3%, indicates that even the Bank of Israel is worried about a potential economic slowdown or even a recession.

With analysts lowering their ‘09 growth forecasts, Fischer who has until last week remained unrealistically optimistic, appears to have thrown in the towel an admitted that things aren’t all that rosy, and is trying to add liquidity to the Israeli banking system to try and prevent the same type of credit crisis gripping the global banking system.

While I think the local economic slowdown will continue, this aggressive move by the Bank of Israel will help stem the damage to the economy that a prolonged recession could cause.

Please see our Disclaimer

Will the real Bank of Israel Governor please stand up? A week after telling us that everything is just peachy re: the Israeli economy and Israeli banking system, all of a sudden Globes is out with an article that Fischer is now ‘worried.’ The article says, “We expect 2.7% growth in 2009, and we’re accused of over optimism. In such times, if you want to be serious, you should be worried, and I am really worried. Wise men won’t tell you that there is nothing to be worried about,” said Governor of the Bank of Israel Prof. Stanley Fischer last week during a meeting of the EU-Israel Chambers of Commerce and Industry held at the home of the Ambassador of France.”

I guess Fischer figures that the Israeli public isn’t fluent in French. As posted here last week Fischer said that Israeli banks were in good shape. If so

Well that didn’t take long. The love affair with President elect Obama, certainly didn’t reach Wall Street as the market suffered the worst drop ever after a presidential election. Yesterday the S&P 500 closed down 5.3%. I guess soaring rhetoric and calls for unity didn’t sway investors. It appears that investors don’t think that words about change and the fact that many new babies born in Kenya that were named Michelle and Barack, will actually cure an ailing economy.

Investors are waiting to see which Obama we are going to see. Will we get ‘Senator Obama’, who had one of the most liberal voting records in the Senate, or will we get the ‘campaign Obama’ who ran on a more moderate economic plan? If we get ‘campaign Obama’, then investors will be more at ease and the potential exists for a market rally. If we get ‘Senator Obama’ who will

Stanley Fischer, Governor of the Bank of Israel, spoke yesterday on the stability of the Israeli banking system. Fischer, along with many other public figures has gone out of his way to keep telling the public that the local banking system is sound. While scaring the public about bank failures is irresponsible, don’t Israelis deserve to be told the truth about what is going on? How about a little honesty from our leaders.

If everything is so rosy, then why does the BOI have a plan to stream money to the local banks in the event of a credit freeze? Is this prudent planning, or cause for worry?

As reported in Globes, Fischer spoke about how disciplined the local Israeli banks have been. “In addition, Israel’s banks had no sub-prime exposure. “Israel’s banks said ‘No’ to this paper,” said Fischer.”

Really? That’s not how I remember it. Bank in March Bank Hapoalim

I’d like to point out a couple of very interesting reads that I stumbled upon today. the first was actually written by my brother, Abe. It appears in the Jpost In the article Katsman compares the current situation in Iraq to that of Vietnam. Politically, similarities abound. “Some quick history: Finally concluding that they could not defeat the American-backed Republic of South Vietnam, the communist North Vietnam signed the Paris Agreement in January, 1973, which called for cessation of attacks by the North and recognition of Saigon’s fragile democratic government. America withdrew its troops, but continued air support and arms to the anticommunist, increasingly stable South Vietnamese, as well as to its neighboring anticommunist Republic of Cambodia.

But a hated President Nixon resigned in scandal, and his obsessive, personally vindictive critics then elected to Congress in 1974 could not bear to support

With the stock market getting pummeled investors have run for cover. Panicking after losing significant chunks of their savings, investors are looking for any reason to jump back into the stock market. Unfortunately instead of rewarding investors, companies are trying to fool them. As if we haven’t seen enough corporate irresponsibility, the new trend of corporate stock buybacks artificially increases EPS, thus fooling investors into thinking the company is actually growing.

It’s funny that this trend towards buybacks has taken hold as Barack Obama has surged in the polls. Much like Obama’s economic policy, share buybacks are cosmetic solutions but often nothing concrete to reward investors. Sort of like running a campaign on hope and change!

Enough trickery, investors have suffered enough. It’s time to start rewarding investors. How? Remember that old time word they used to use,  ‘Dividend.’

I know that share buybacks are ‘tax efficient’ as well as they fatten