Gloom and doomers warn that war with Iran could cripple the economy, but Israel has a weapon: $70 billion in dollar reserves.
Many international financial wizards scoffed at Bank of Israel Governor Stanley Fischer three years when he bought billions of dollars, ostensibly to keep the then-mighty shekel from growing even stronger. Israeli exporters were suffering from low revenue due to a lower shekel rate for the dollar and the euro.
Globes reported that a senior Bank of Israel official said, “We have $76 billion in foreign currency reserves, which says it all. It does not conceal the fact that some of the reasons for its accumulation of foreign currencies over the past four years, from $27 billion to $76 billion, have been due to Israel’s geopolitical challenges.”
Whether intentional or not – and some say that Fischer saw the future – that hoard of dollars may be Israel’s saving grace if any military attack on Iran plunges the Israeli economy into a deep recession.
If a war between Israel and Iran were to cause a panic among foreign investors selling shekel investments, the local currency could plummet. Fischer then could come to the rescue, using the hoard of dollars to buy up shekels and prevent the collapse of the currency.
“An uncoordinated attack is liable to cause an economic catastrophe that will include a severe recession and sharp depreciation of the shekel,” said foreign currency trader Atrade, quoted by Globes.
An attack could cause world oil prices to double, causing a spike in manufacturing costs. Long-time disaster forecaster Prof. Nuriel Roubini sees nothing but disaster on the horizon.
Israel survived previous wars, but the Yom Kippur War and the Intifada had a significant impact on defense spending, which soared.
“The defense establishment has been riding the Iran wave for three years now, in order to ask for budget supplements, a top economist, who has been involved in defense budget discussions for years, told Globes.
@ Ira Curtis:
A- we make most of what we got ourselves.
B- we have square miles of American pre-placed stores in underground warehouses if we need them.
C- last option, (my first: is to nuke em all to hell)
Yes We Can. 🙂
It’s never too late.
If Israel attacks Iran before the elections and Obama does not screw it up he will be the next president in Landslide. Even without an Israel attack I think he will beat the daring duo.
Israels Choice is facing a nuclear Iran with even money on Obama as the next president or guaranteeing Obama will be the next president without a nuclear weaponized Iran.
BB is the most anti Jewish Pro Arab leader we have ever had….so far.
Engaged Couple Forbidden to Fix Up Caravan
An engaged couple from the Hevron region was slapped with a stop-work order after trying to fix up their caravan.
Did it ever occur to you that if we attack Iran NOW, we will have to shoot them with Dollar bills paper balls, all 70 billion of them, as no one will sell us any arms or ammunitions. We really need a miracle, don’t kid yourself. We, at this point of time cannot do it on our own. We simply lost the moment
Obama’s administration has long made it very clear that they are on the Jihad’s side. And unmistakably Obama is going to be the next president. U.K, is even worse.
God save Israel.(please)
My comment is in moderation….???????
August 7, 2012 Press Release
Foreign Exchange Reserves in the Bank of Israel, July 2012
On the dollars revaluation last month the BOI made a paper profit of around $5 billion dollars.
How much is American annual military aid????
I have long stated that we do noted American money. We don’t even need Jewish money.
I have long maintained that the only way Israel and her (sic) leaders with start to behave in a more normal economic context is if they are forced out of no choice to do so. Denial of American aid (free as opposed to sales as with other normal transactions) would reduce our dependency and increase our political and business/commercial freedom options and double if not triple our exports held back by American threats and restrictions.
I am not bullish on the dollar medium to long term but in the near-short term if there is a good possibility of war and global economic meltdown there will be a massive move to dafety to gold and silver but also the dollar. You can buy your basic needs and requirements with fiat dollars but not with gold or silver. I own physical gold which I bought when it was under $300.
Today I would invest in basic food commodities.
Fischer is the smartest guy out there and he could have run the IMF if he were not Gov of BOI. He didn’t need the Job and took a huge paycut for the honor.
If Fischer has brains, he would ignore his central bank mandate and buy oil futures before the attack!
Forgive me for questioning the wisdom of Stanley Fischer and the financial geniuses of the West, but why is the holding of US paper, in real or in digital format, such a good thing?
If the US wants to pay a foreign debt or invest in a green company, The US govt and the Federal Reserve ( which is neither Federal nor a reserve ), will increase the amount of dollars available via the purchase of a new issuance of bonds. US currency is not in limited supply nor does it take much physical effort to increase its supply. They can also easily burn and the more in circulation, the less value objects are worth, when measured in dollars. This has not lead to hyperinfaltion because of the easy credit still available; it is a $11 trillion market. But we will see it.
Whereas gold and silver are money before mankind began to measure time.
They are so precious that properties possessing gold, silver, copper, nickel, palladium, etc.. are measured by grams per ton of soil!!. In other words, to deliver 1 ounce of silver to market, requires, on average, 4 tons of soil. Over 8,000 lbs of soil must be dug up, sifted and monitored and the silver found ( as well as the gold, palladium, etcc.) must be purified and fused together, and shipped to a mint, monitored and cut and polished to make a 1 ounce coin.
Even if silver is a secondary by product of a gold mine, it is still a costly venture.
That 76 billion, or a big big chunk of it should have been invested in something that will STILL have value in the future, such as gold, silver, palladium, etc..
and the balance could be invested in other paper products such as bathroom tissue, paper towels or tea bags.
Stanley Fischer is a long time academic and I believe, was part of the committee that awarded Bernanke his PhD.
A horde of above ground bullion will ensure the value of the shekel, not an asset whose long term worth is dubious in all due respect to the Americans who read this. It is portable and pretty to look at vs. masionic symbols and numbers and dirty papers that passes on germs.
In Hebrew, the word ” kesef” means both money and silver. Are Israelis still aware of that?
http://www.silvergoldbull.com, http://www.apmex.com << better sources of long term wealth.
Israel has already traded the land and oil of the Sinai for paper. They still have a lot to learn. Sad.