Bellwether Banker

December 12th, 2013 by admin

Bank of Israel Governor Stanley  Fischer–a mentor to top U.S. policy  makers–acted faster than his  colleagues to cut interest rates and  help an export-driven economy avoid a deeper recession. Now, he’s tightening credit to fend off the next bubble.


Photograph by MORAY LIBERMAN/Getty Images lien U.S. Treasury Secre­tary Timothy Geithner landed in Istanbul for a global economic summit on Oct. 2, his first meeting among the finance ministers and central bankers invited from more than 150 countries was with a man who controls an econ­omy smaller than Missouri’s.


The private dinner discussion—details of which were withheld from the press—was a sign of how Bank of Israel Gover­nor Stanley Fischer’s influence exceeds the impact of his nation’s $200 billion gross domestic product. Fischer, 66, is a former Massachusetts Institute of Tech­nology scholar who has been a mentor to a group of U.S. policy makers trying to lead the world out of the worst recession in 60 years.

Bank of Israel Governor Stanley  Fischer

Fischer, in his Tel Aviv office, is regarded by some analysts as indispensable to Israel’s economy.


Among his former students: Lawrence Summer$, director of U.S. President Barak Obama’s Na­tional Economic COuncil, and Fed­eral Reserve Chairrnan Ben S. Bernanke, whom Fischer advised on Bernanke’s gradnate thesis in 1979. As first deputy managing di­rector of the International Mone­tary Fund during the 1990s, Fischer worked with Geithner and Sum­mers, then U.S. Treasury officials, to resolve financial crises in Mex­ico, Russia and Southeast Asia.

“Many central bankers value him as a thinker about central banking, about monetary and fi­nancial policy,” says Nobel Memo­rial Prize–winning economist and MIT professor emeritus Robert So-low, one of Fischer s own mentors.


FISCHER ALSO EARNED a repu­tation as a trailblazer after he cut Israel’s benchmark interest rate by 50 basis points to 3.75 percent on Oct. 7, 2008—acting the day before col­leagues in the U.S., the U.K. and the euro zone. (A basis point is 0.01 percentage point.) He then re­duced the rate seven more times to a record low of 0.5 percent by April 2009. On Aug. 25, Fischer became the first central bank governor in the world to raise rates in response to signs of a financial recovery and to support title loans options. Bank chiefs in Australia and Nor­way have since followed his lead.


In 2008, Fischer—in an effort to save Israel’s export-driven econ­omy—ordered the Bank of Israel to buy dollars in unprecedented amounts to drive down the value of the shekel. From March 2008 to October 2009, he built foreign cur­rency reserves to $61.2 billion from $28.5 billion. The purchase pro­gram weakened the shekel against the dollar by 22 percent during two quarters of econoinic contraction, helping companies such as Petah Tikva, Israel–based Teva Pharma­ceutical Industries Ltd., the world’s biggest maker of generic drugs. Following the rate cuts and dollar purchases, Israel attained growth of 1 percent in the second quarter of 2009, snapping six months of recession. The coun­try’s GDP expanded 2.2 percent in the third quarter.

“The Bank of Israel has built strong credibility over the years for being ahead of the curve both in easing and tightening cycles,” says Turker Hamzaoglu, a London-based economist for Bank of Amer­ica Corp.’s Merrill Lynch & Co.

Eskimo Life a Struggle for Survival

November 9th, 2013 by admin

Black smoke rises out at sea; it is the tanker S.S. Manhattan, smashing her way through the sea-ice barrier that once warded off civi­lization nine months of the year.* A knock at my door; it is the special constable Kayak, come to ask if I know the best model of radio-telephone for his boat. Swift indeed comes the change.

I have always sought out the Eskimos in their igloos to learn their ways, approaching them not only as priest but as hunting com­panion, as amateur doctor, and as anthro­pologist. I have been their teacher and they have been mine. Often I have felt that I understood them well. But then, always, some small incident will convince me that I still have much to learn.

Once on a sled trip in northern Baffin Island, I stopped at the igloo of my friend Utak. As is usual in the Arctic, I offered him food—some of my biscuits. Seeing how slen­der was my supply, he refused, and took from his own larder a chunk of igunaq, walrus meat that had “cured” in a summer cache. It was streaked with vivid colors—indigo, yel­low, deep green—that would have graced the palette of a van Gogh, but not the palate of the hungriest of men. We began eating our respective meals. When I had finished, hunger unsated, I watched with growing fascination as he ate. Finally I accepted a small piece of his colorful fare. Pride forced it down, but barely.

Noting my disgust despite my best efforts to conceal it, Utak confided calmly, “I dislike this rotten meat too. But igunaq is all. I have. “Traditional Eskimo life is, in truth, a strug­gle for existence. Neither the tundra, swept by the northwest winds, nor the mountains, still encumbered by glaciers, are inviting to man. The life of the Eskimo is a marvel of adapta­tion to a fierce environment.

Experience has taught him that flexibility is more effective than force in the fight for survival, that the way of the reed is better than that of the oak. Like the judo expert, he turns each threat of his relentless adversary, the cold, to his own advantage.

Lost in a blizzard, an Eskimo does not plunge ahead but—fully aware of the snow’s insulating qualities—builds an igloo for shel­ter and waits it out. Realizing that glossy sur­faces slide best on snow, he glazes his sled runners with ice. If he lacks wood to fashion a frame for his sled, here again he makes use of the cold: He soaks a seal skin in water, then wraps it around several split fish and lets the cold transform the bundle into a rigid beam.

Like the budget-wise housewife, he assigns priorities to his meager resources. He knows that, if his supply of fat is small, he can sur­vive longer by eating it than by burning it to keep himself warm.

Nothing Insulates Like Caribou Hairs

In years past the Eskimos obtained almost all their food by hunting. This still holds true for the few who remain in the camps. Settle­ment dwellers, however, rely on game for only about a quarter of their diet, obtaining the rest from the shelves of alluring goods at the Hudson’s Bay Company store.