The market's right.

(From Israel Business Arena)

Byline: Eliezer Carmel

Just three months ago the press's economic and financial pages were overflowing with negative superlatives. The critics' main points are: The three-year recession, rising unemployment, and miniscule business sector profits do not allow an improvement in the state's budget structure. The predicted budget deficit will necessarily lead to the downgrading of Israel's credit rating. The Ministry of Finance's increasing reliance on the bond market is liable to cause yields to soar and heavy capital losses to bondholders. The stock market is very risky. The possibility that a major bank will collapse is becoming more likely, due to rising problem debts.

Bank economists took a uniform view in their weekly economic surveys: Conditions were not ripe for a long-term rise by the Tel Aviv Stock Exchange (TASE), due to background noise, such as the Iraq War, the absence of growth, rising unemployment, falling tax revenues, social unrest, and impending strikes. They concluded that this was not a good time to enter …