Cleaning Up Financial Speculation Mess: Will It Affect Israel's Sound Business?

Nochi Dankner is today's financial shenanigan villain

If you follow the Israeli business papers, it seems like every week, some banker or fund manager is accused of some wrongdoing. There was a case of the “Israeli Madoff”, a broker who swindled about a hundred investors of millions. There is a case of Bank Leumi, Israel's oldest bank, announcing a write-down of a three billion shekel loan to Nochi Dankner's IDB companies. There are questions of sudden loss of value in the most conservative private retirement accounts in most Israel's biggest companies. In general, it seems like strange things are happening, yet regulators and senior executives are vague about what exactly happened. Israelis react in a wide range of responses. There are the angry and vindictive type, asking to prosecute finance executives as common criminals. Others are more philosophical, essentially accepting the losses as part of the risk of investing in any retirement fund involves in market speculation.

But Israeli regulators and politicians seem to take financial shenanigans too lightly. As in other countries facing financial collapse, which presumed separation between the financial and the business worlds, Israeli regulators seem to think the same. Unfortunately, no such isolation exists. Actually, for Israelis with above average agitated behavior, minor bad news ripples quickly through the economy. Hidden behind the slick exterior, Israel's economy is slowly slowing down. Supermarket and retail chains are already reporting drops in sales not seen in a decade. With losses predicted for the next six months. Some retailers are not waiting for losses to show up at end of year reports. They are closing shops and laying off workers. Manufacturers, from giants like Straus and Tnuva (dairy products) to Willi foods (canned goods and staples) to microbreweries, are striking back with sales and deep discounts, also some products are discontinued. In today's complex – interdependent economy, nothing happens without ripples in other sectors.

On the good news side. Looks like the technology sector, especially the mobile and internet fields are starting to show growth. Big and small deals, selling companies and products to foreign investors are starting to gather speed. The last big deal, Google buying Waze for $1.1 billion, was a sign of positive life in the Israeli economy. In Israel, there is nothing to bring positive attitude like money and success. Yet, these positive signs do not fix the losses and mistakes made by speculation when the financial market was hot. On Tel Aviv streets, the story of speculators losing control of their companies to creditors is old news. Old news, tends not to impress anyone. Nochi Dankner and his type, are mostly ignored today. Old heroes, even in the business world, just fade away...