Israel Matzav: As America slides deeper into recession, Israel grows

As America slides deeper into recession, Israel grows

The Bank of Israel issued a revised economic forecast for 2010 on Monday, raising its growth projection from 2.5% to 3.5%.

The bank said the recovery of the global economy has increased demand for Israeli exports, though it cautioned that it could scale back the forecast if the recovery slows.

Israel has for the most part weathered the world financial crisis, thanks largely to a conservative banking system that had little exposure to mortgage-backed assets or risky loans.

The Bank of Israel was among the first in the developed world to raise interest rates after the global economic crisis.

Meanwhile, America under Obama is falling deeper into recession.

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

Read the whole thing. Those of you who can may want to think about moving to Israel.

The picture is the Bank of Israel (local equivalent of the Federal Reserve) headquarters.

By the way, the banking system here is miserable for consumers. This is the only country in the Western world where the banks make most of their profits by fees charged to consumers like you and me.

But at least the banking system isn't collapsing.

Israel Matzav: As America slides deeper into recession, Israel grows