"First of all, it is necessary to understand that we didn’t create this problem, and we won't solve it. It was created in the US," former Governor of the Bank of Israel David Klein told “IDF Radio" (Galei Zahal) today. "If we understand that the solution to the problem isn't in our hands, we shouldn’t exaggerate in throwing money into the economy."
“IDF Radio": Are we throwing too much money into the economy?
Klein: "Not yet, but we have to be very careful not to pour money."
The things we're hearing - that this is how things are done in the world outside, and that governments should inject a lot of money into the economy to stimulate it - are wrong?
"There is no bigger error. As you know, the Israeli economy is connected by an umbilical cord to the global economy, and until the problem there is solved, it will be hard for us to emerge from the problem. Some people say that the US economy is doing too much and that it's doing it in too unfocused a way, although it will succeed in the end. Let there be no doubt about that."
What do you think about Governor of the Bank of Israel Stanley Fischer's NIS 4.4 billion economic recovery plan?
"The problem isn't its size, because it's quite modest. It's not good to propose a plan and to 'talk about the rest later'. The financing has to be secured. You shouldn’t create the impression that there is always more."
Is it acceptable to you that the Bank of Israel submits a budget plan at all?
"It's completely acceptable. It's happened before, such as the appreciation plan more than 20 years ago."
But that involved full cooperation between the Bank of Israel and the Ministry of Finance. I don’t see that happening now.
"I completely agree with you."
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2009
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