Fischer with his newly acquired Israeli ID in 2005
Stanley Fischer, PhD advisor to Bernanke in U of Chicago, left Citigroup before its collapse, and took the job of Governor of the Bank of Israel, which he held from 2005-2013.
It appears that his legacy is a real estate bubble and a looking banking crisis in Israel.
Sounds familar?
Today, following his departure, new reports were issued by Bank of Israel, which show how precarious the Israeli banking system is today: [1]
* About 35% of the volume of mortgages held by the banks are variable interest mortgages.
* The average mortgage almost tripled from 2003 to 2013, and most of the increase took place over the past 5 years.
* Between 2008-2012 average pay increased 20%, but average assessed real estate values increased by 54%
* From 2003 to 2013 average mortgage payment rose by more than 150%.
* Percentage of homeowners who spend over 40% of income in monthly mortgage payments is 17% - an all time high.
* Percentage of homeowners who spend over 50% of income in monthly mortgage payments is 8% - an all time high.
In conclusion the study says that any recession or significant inrease in interest rates is likely to cause a masive defaults, under which the banks would not be able to liquidate the assets, and will be exposed to heavy losses.
All of this took place in parallel to other government policies, which impoverished the majority of people in Israel, and concentrated control of the economy by a handful of "Tycoons". A recent OEDC report says that income and asset distribution in Israel is inconsistent with nations under democratice regimes.
In parallel, in a recent sutdy 70% of Israeli adults reported that they would not be able to handle an unexpected expense of about $1,000.
And on the side, Fischer permitted to Israeli banks to enage in criminality, and placed them above the law. [2]
One is only left to wonder: Did the student Bernanke learn it from his teacher Fischer, or did Fischer leanrt it from Bernanke.
LINKS:
[1] 13-09-16 Bank of Israel study - concern of massive mortgage default
[2] 12-10-23 PRESS RELEASE – Petition alleges Bank of Israel Fischer patronizes criminality at Bank HaPoalim, BM
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