AIPAC's
Fed candidate Stanley Fischer (Dual-citizen) on a Warpath against
Iran
(1)
Stanley Fischer will be #2 at the Fed? ('a dual national'), by Col.
Pat Lang
(2)
Israel's Fischer picked to be next Fed vice chair
(3)
AIPAC's Fed candidate Stanley Fischer (Dual-citizen) on a Warpath
against Iran
(4)
Stanley Fischer on Israel's Inflation in 1980s, caused by military
spending (25% of GNP)
(1)
Stanley Fischer will be #2 at the Fed? ('a dual national'), by Col.
Pat Lang
Date:
Fri, 27 Dec 2013 02:41:33 +0900
Subject:
Stanley Fischer will be #2 at the Fed? ('a dual national') by Col.Pat
Lang
From:
chris lancenet
<chrislancenet@gmail.com>
http://turcopolier.typepad.com/sic_semper_tyrannis/2013/12/the-sudden-rushed-campaign-to-insert-stanley-fischer-straight-from-his-post-leading-israels-central-bank-into-the-number.html
Stanley
Fischer will be #2 at the Fed?
The
sudden, rushed campaign to insert Stanley Fischer straight from his
post leading Israel's central bank into the number two spot at the
Federal Reserve has allowed little time for research into the
appointee's controversial achievements or for informed public debate
about his record. That may be the
point.
http://www.IRmep.org/fischer_aipac.htm
During
his long career working indirectly and directly on behalf of Israel,
Fischer has:
1.
Overseen the transformation of U.S. aid to Israel from repayable
loans to outright grants.
2.
Pushed unilateral trade concessions that benefit only Israel, but not
America.
3.
Exempted Israel from the very same conditions and controls he imposed
on Mexico, Argentina, Russia and Brazil.
4.
Become
an Israeli citizen
in order to impose additional sanctions on Iran from Israel's central
bank, despite their growing harm to American jobs and exports.
5.
Benefitted from a long series of deceptive AIPAC PR campaigns about
his record.
The
Fed policies that discourage the employment of non-citizens as Fed
bank examiners are based on valid considerations that should apply to
Fischer. While AIPAC may view his rushed insertion into the Fed as a
"wedge" toward increased flows of openly dual Israeli
nationals working in top American government and quasi-governmental
posts, American voters should immediately contact their senators and
oppose Fischer's appointment with the same energy they exhibited in
their opposition to the rushed AIPAC campaign to attack Syria based
on deceptive premises.
Please
feel free to circulate and post IRmep's copyright-free analysis of
Fischer's AIPAC-powered career "AIPAC's Fed Candidate Stanley
Fsicher on Warpath Against Iran: Dual-Citizen nominee's lifetime
beneift to Israel comes at a heavy cost to America"
(2)
Israel's Fischer picked to be next Fed vice chair
From:
"Sadanand, Nanjundiah (Physics Earth
Sciences)"
<sadanand@mail.ccsu.edu>
Date:
Wed, 18 Dec 2013 13:26:39 -0500
December
11, 2013
By
Steven Scheer and Jonathan
Spicer
http://www.reuters.com/article/2013/12/11/usa-fed-fischer-idUSL1N0JQ1HQ20131211
(Reuters)
- Stanley Fischer, who led the Bank of Israel for eight years
until
he stepped down in June, has been asked to be the Federal
Reserve's
next vice chair once Janet Yellen takes over as chief of the
U.S.
central bank, a source familiar with the issue said on
Wednesday.
Fischer,
70, is widely respected as one of the world's top
monetary
economists.
He is seen as a pragmatic policymaker and has praised the
Fed's
extraordinary steps to boost the U.S. economy. At the
Massachusetts
Institute of Technology, he once taught current Fed
Chairman
Ben Bernanke and Mario Draghi, the European Central Bank
president.
Yellen,
the Fed's vice chair, is expected to win approval from the
U.S.
Senate
next week to take the reins from Bernanke, whose term ends
in
January.
Fischer,
who was born in Zambia and has Israeli and U.S. dual
citizenship,
would also need Senate approval if he accepts the offer
from
the White House. "He's been offered the job" said the
source, who
declined
to be named.
The
White House declined to comment. A Fed spokeswoman said the
White
House
was responsible for nominations.
Fischer,
who could not immediately be reached, has held top-level posts
at
the World Bank and the International Monetary Fund, and was
credited
with
guiding Israel through the global economic crisis with
minimal
damage.
For the Fed, he would bring the fresh perspective of an
outsider,
especially on communications, yet offer some continuity too.
He
is "difficult to characterize with a term as obtuse as 'hawk'
or
'dove'
because he takes a balanced, academic approach to various topics
of
debate," said Thomas Simons, an economist at brokerage
Jefferies.
"However,
given that he played an instrumental role in helping Ben
Bernanke
form his views on monetary economics, his presence at the Fed
would
represent some consistency in this time of transition."
Fischer
would arrive at a U.S. central bank starting to navigate a
return
to normalcy after taking dramatic and unprecedented steps to
emerge
from the Great Recession of 2007-2009.
The
Fed is now wrestling with the decision of when to scale back its
huge
bond-buying program that sought to drive down long-term
borrowing
costs
and swelled its balance sheet to some $4 trillion. It
buys
$85-billion
a month in Treasuries and mortgage bonds in its current,
third
round of "quantitative easing," or QE3.
At
an IMF economic forum on November 8, held in Fischer's honor,
he
suggested
he is a strong believer in the effectiveness of the
Fed's
unconventional
policies.
"It's
very hard to reach the conclusion that the unorthodox measures
are
ineffective,"
Fischer said of the bond buying, acknowledging the policy
is
controversial.
"They
appear to be effective and they essentially do that by working
off
either
the provision of liquidity in markets where liquidity has
effectively
dried up, or by changing interest rates other than the
central
bank interest rate," he said on a panel seated next to
Bernanke.
As
Fed vice chair, Fischer would have a strong hand in shaping
policy.
Yellen,
who has held the post since 2010, was a driving force behind
the
Fed's
adoption last year of an inflation target, an important
policy
milestone
for the bank.
One
possible source of tension may be how to telegraph the Fed's
policy
intentions.
While Yellen and Bernanke have tied a rate rise to future
levels
of unemployment and inflation, Fischer has publicly warned
about
central
banks giving so-called forward guidance that is too precise.
"He's
going to think outside of the box, he's going to push the Fed
a
little
bit, and that's not a bad thing," said Diane Swonk,
chief
economist
at Mesirow Financial in Chicago.
Fischer
"is very cognizant of what you can and can't communicate,
and
I'm
not sure the Fed is always so sensitive about that."
Bloomberg
News and Israel's Channel 2 earlier reported Fischer as the
front
runner for Fed vice chair.
If
he takes the job, it would be the second time this year a
major
central
bank made a high-profile hire from abroad. The Bank of Canada's
chief
Mark Carney earlier this year became the first foreigner to lead
the
Bank of England.
'NEARING
A DECISION'
The
Fed's seven-member board is depleted and risks thinning
further.
Elizabeth
Duke stepped down in August, Sarah Raskin is set to leave for
a
job at the U.S. Treasury, and Bernanke is expected to depart when
his
term
as chair expires January 31.
With
Yellen set to become the first woman to take the helm,
some
economists
and investors had speculated that Jeremy Stein, a
well-respected
Fed governor and former Harvard professor, would be
tapped
to replace her. Some observers expect that he too could leave
and
return
to Harvard if Fischer steps in.
Next
week, the Fed holds a highly-anticipated policy meeting at
which
officials
could announce the beginning of the end of QE3, given the
improvement
in the U.S. labor market. It will be Bernanke's second-last
as
chair.
Fischer
"is a very qualified and very solid vice chair candidate, and
I
don't
see on what grounds his nomination would fail," said
Roberto
Perli,
a partner at economic research firm Cornerstone Macro and a
former
senior Fed official.
"He
seems to complement and balance Yellen pretty well ... and he
is
probably
more sensitive than Yellen to financial stability issues, and
that
is a good thing."
Fischer,
a naturalized American citizen, quit his job as head of
Israel's
central bank on June 30, three years into his second
five-year
term.
Asked
about his next job at a conference in Tel Aviv on Monday, he
said:
"The
advice I received was not to accept a position until I had waited
at
least six months, which is in three weeks, so it seems like I
am
nearing
a decision."
Once
chief economist at the World Bank and then first deputy
managing
director
of the IMF from 1994 to 2001, Fischer was a key figure in the
IMF's
Mexican bailout after the peso crashed in the mid-1990s and
the
fund's
main firefighter as it sought to douse the flames of the
Asian
financial
crisis.
At
the time, he negotiated repeatedly with troubled countries,
jetting
from
one to the next as a financial storm swept through the
world's
emerging
markets. Robert Rubin, the influential former U.S.
Treasury
secretary,
once described Fischer as the "unsung hero" of the
crises.
During
his tenure in Israel, the country's economy performed better
than
most.
Despite a focus on fighting inflation, Fischer slashed rates and
went
against his own policy of staying out of financial markets by
buying
up tens of billions of dollars to weaken the shekel and help prop
up
local exporters.
While
he began cutting rates in 2008 before other major central banks in
a
bid to head off the worst of the recession, he also was among
the
first
to raise them, a year later.
He
"was very proactive with a dovish bias when necessary,"
said Benoit
Anne,
head of emerging-market strategy at Societe Generale. "Fischer
will
bring a valuable awareness of the impact of Fed policies on
the
outside
world, including emerging markets (meaning) the process of Fed
policy
exit may be better managed from a collateral damage
perspective."
Fischer
was a vice chairman of Citigroup prior to joining the Bank of
Israel.
He had sought the top job at the IMF in 2011 but was
disqualified
due to his age.
(3)
AIPAC's Fed candidate Stanley Fischer (Dual-citizen) on a Warpath
against Iran
http://www.IRmep.org/fischer_aipac.htm
AIPAC's
Fed Candidate Stanley Fischer on a Warpath against Iran
Dual-citizen
nominee's lifetime benefit to Israel comes at a heavy cost to
America
By
Grant F. Smith, Director of Research, IRmep
The
rushed campaign to insert Stanley Fischer straight from his
position
leading
Israel's central bank into the number two spot at the Federal
Reserve
has allowed little time for research into the appointee's career
or
for informed public debate about his record. Like the failed
recent
Obama
administration-Israel lobby pincer move to ram approval for
U.S.
military
strikes on Syria through Congress, avoiding such due
diligence
through
velocity may actually be the only means for successful
Senate
confirmation.
Some
of Fischer's accomplishments—from co-authoring a seminal
textbook
on
macroeconomics to handling economic crisis at the IMF
have—not
surprisingly—been
recalled by his many supporters. Other doings that
shed
light on Fischer's controversial attributes—such as overhauling
how
U.S.
aid and trade packages are delivered to Israel—have been
mostly
ignored.
Appointing an openly dual Israeli-American citizen into
the
most
important central bank in the world could be a watershed
moment.
While
the doors of federal government have long swung open for
Israel-lobby
appointees focusing most—if not all—their energies
on
advancing
the interests of a foreign state, any who were actually
Israeli
dual citizens have traditionally kept that a closely-guarded
secret.
Fischer's long-term boosters, including the American Israel
Public
Affairs Committee (AIPAC), likely want to accustom Americans
to
openly
dual citizens circulating between top roles in the U.S. and
Israeli
governments. A closer examination of Fischer reveals
that
average
Americans have good reason to oppose his appointment, because
his
lifelong achievements for Israel have imposed high costs and
few
benefits
to the United States while making peace more difficult to
achieve.
Economics
Stanley
Fischer was born in Northern Rhodesia in 1943. He studied at
London
School of Economics and received a PhD in economics from MIT.
He
taught
and chaired the MIT economics department and co-authored a
leading
macroeconomics textbook with Rudiger Dornbusch. Fischer joined
the
World Bank in 1988 and became the first deputy managing director
of
the
International Monetary Fund (IMF) in 1994. He oversaw
emergency
bailout
lending and austerity programs over Mexico, Thailand,
Indonesia,
Russia,
Brazil and Argentina. High flying Citigroup—under the helm
of
Sanford
"Sandy" Weill—recruited Fischer in 2002. There he
rose to become
vice
president with a seven-figure pay package.
Israel
Fischer
has not only been an ardent supporter of Israel, his
professional
efforts began when he took sabbatical leave to Israel in
1972
and 1976-1977. He was a visiting scholar at the Bank of Israel
in
1980.
More importantly for Israel, Stanley Fischer won an
appointment
to
the Reagan administration's U.S.-Israel Joint Economic
Discussion
Group
that dealt with Israel's 1984-1985 economic crisis. In October
of
1984,
Israeli Prime Minister Shimon Peres arrived in Washington asking
an
initially reluctant Reagan Administration for an additional
$1.5
billion
in U.S. emergency funding—over and above the
already-promised
aid
$5.6 billion aid package.[i]
The
help amounted to U.S. taxpayers funding each Israeli citizen
$1,650.
Another
key component of the plan called for a largely unilateral
lowering
of U.S. tariffs and trade barriers to Israel, a program
initially
called "Duty Free Treatment for U.S. Imports from Israel"
but
later
repackaged and sold as America's first "free trade"
agreement.
Over
time the FTA reversed a previously balanced U.S.-Israel
trading
relationship
for one that has produced
a
<http://www.globalresearch.ca/israel-a-huge-liability-on-american-foreign-policy-balance-sheet-indyk-aipac-secret-theft-from-american-industry-reaches-100-billion/5344479>
cumulative
deficit to the U.S. that passed $100 billion in 2013.
Seventy
American industry groups opposed to the give-away in 1984
were
disenfranchised
when Israeli Economics Minister Dan Halpern and AIPAC
illegally
obtained a classified compendium of their industry, market and
trade
secrets to use against them in lobbying and public relations. An
FBI
espionage and theft of government property investigation was
quashed
before
it could narrow in on those inside the U.S. government who
delivered
the secrets to Halpern.
The
U.S.-Israel Joint Economic Discussion Group fundamentally
transformed
U.S. aid to Israel forever. Before the Reagan
administration,
most U.S. aid to Israel took the form of loans that had
to
be repaid with interest. After the input of Fischer's
team,
subsequent
U.S. aid was delivered in the form of outright grants paid
directly
from the U.S. Treasury—never to be repaid or conditioned
when
Israel
took actions the U.S. opposed.
Like
many of Fischer's later IMF austerity programs, the Joint
Discussion
Group initially announced that strings attached to the aid
would
make it temporary. Secretary of State George Shultz
insisted
during
a 1985 address to AIPAC that "Israel must pull itself out of
its
present
economic trauma . . . . No one can do it for them . . .our help
will
be of little avail if Israel does not take the necessary steps to
cut
government spending, improve productivity, open up its economy
and
strengthen
the mechanisms of economic policy. Israel and its government
must
make the hard
decisions."
<http://www.irmep.org/fischer_aipac.htm#_edn2>[ii]
Shultz
wanted to make the huge American cash transfer conditional on
major
Israeli economic reforms, but intense AIPAC lobbying in
Congress
threatened
to make the State Department influence irrelevant. In the
end,
Congress delivered aid without Israeli sacrifices, such as
selling
off
bloated state-owned industries and spending belt-tightening.
The
proposed
privatization of $5 billion in state enterprises threatened too
much
bureaucratic "turf" and too many jobs, so Israel put them
on hold.
Fischer
apologetically characterized the Likud years as a "wasted
opportunity
by a government that should have
known
better."<http://www.irmep.org/fischer_aipac.htm#_edn3>[iii]
Not
until 1996 were Fischer's proscribed economic remedies adopted
by
American
neoconservative consultants to Benjamin Netanyahu as minor
points
in the
"Clean
Break"<http://www.irmep.org/policy_briefs/3_27_2003_clean_break_or_dirty_war.html>
manifesto
for Israeli regional hegemony. They remain among the
few
unimplemented
tasks in a plan that called for military action against
Iraq,
Syria, and Lebanon.
<http://www.irmep.org/ila/AIPAC/awarchive.pdf>
Despite the absence of
any
real economic reforms that would take Israel off the
American
taxpayer
dole, Fischer co-wrote a blustering 1986 article for the Wall
Street
Journal called "Israel Has Made Aid Work" that AIPAC
circulated
widely
as <http://www.irmep.org/ila/aipac/awarchive.pdf>
an official
memorandum
of its achievements. "Israel is the largest single
recipient
of
economic aid from the U.S. This is partly because the
economic
stability
of Israel is uncertain and is important to U.S. national
interests.
Therefore a report on the progress of the Israeli economy
is
relevant
to policy decisions to be made here."
Fischer
never bothered to substantiate his premise, that U.S.
national
interests
were somehow served by the bailout or that any aid given to
Israel
produced tangible benefits. Instead Fischer delivered
a
fusillade
of dry and all but unreadable statistics about Israel's
temporary
economic performance. Issues of long-term importance to
most
Americans,
such as returning U.S. aid to the traditional format of loans
to
be repaid and the likely impact of the FTA on U.S. jobs
went
unaddressed
by Fischer. Fischer's core achievement—that
the
transformation
of aid from loans to outright taxpayer give-aways—has
been
unchanged since 1986. The premises behind this
ever-increasing
entitlement
and one-sided FTA performance are likewise never reexamined
by
Congress—despite the fact that a majority of polled Americans
have
come
to oppose aid increases to Israel. Fischer's rare admonitions
that
Israel
be held to account, unlike the economies he transformed
through
biting
IMF austerity programs, have remained nothing more than lip
service.
At
the end of 2004 Israel's U.N. ambassador recruited Fischer to
become
the
head of Israel's central bank, asking, "Why not be
our
governor?"<http://www.irmep.org/fischer_aipac.htm#_edn4>[iv]
Fischer
accepted and initially provided endless amusement to reporters
by
insisting on speaking Hebrew during press conferences and refusing
to
speak
English. Initial concerns that Fischer's global stature
and
experience
would overshadow and chafe the relevant players in Israel
proved
unfounded as Fischer moved energetically into his new role.
AIPAC
continued
to trumpet Fischer's accomplishments steering Israel through
the
global financial crisis, though beneath the surface hewas
performing
far
more serious tasks for Israel and its global lobby.
Iran
Sanctions
As
Bank of Israel governor, Stanley Fischer played a central role
in
coordinating
the implementation of AIPAC-generated sanctions
against
Iran—ostensibly
over its nuclear program. Stuart Levey, the head of the
U.S.
Treasury Department's division for "Terrorism and
Financial
Intelligence,"
an
office
<http://dissidentvoice.org/2008/09/from-irgun-to-aipac-israel-lobbys-us-treasury-follies-hurt/>
created
after heavy AIPAC lobbying, met often with Fischer in
Israel
alongside
the Prime Minister, Foreign Minister and chiefs of both the
Mossad
and Shin Bet to explore how to "supplement" UN sanctions
and
end-run
Russian and
Chinese
opposition.<http://www.irmep.org/fischer_aipac.htm#_edn5>[v]
The
Levey-Fischer strategy was "to work outside the context of
the
Security
Council to engage the private sector and let it know about the
risks
of doing business with Tehran" particularly against European
banks
that
had only partially drawn back their business dealings with Iran.
In
2010, Israel dispatched Fischer to meet with Chinese and
Russian
"counterparts"
in order to financially isolate
Iran.
<http://www.irmep.org/fischer_aipac.htm#_edn6>[vi]
Fischer's
final official duties for the Israeli government included
drilling
for "big crisis" scenarios—specifically, Fischer told
an
Israeli
television station—the unavoidable financial fallout of
a
military
attack on
Iran.<http://www.irmep.org/fischer_aipac.htm#_edn7>[vii]
"We do plans,
we
do scenarios, we do exercises about how the central [bank] will
work
in
various
situations."
<http://www.irmep.org/fischer_aipac.htm#_edn8>[viii]
After
years targeting Iran, Fischer became convinced in his final months
in
Israel that sanctions alone were not enough to collapse its
economy.
Fischer
reluctantly concluded that even as Iranian economic
prospects
"continue
to go down" the country would likely "find a way to
continue
to
keep economic life
going."
<http://www.irmep.org/fischer_aipac.htm#_edn9>[ix]
Fischer
suddenly resigned and left the Bank of Israel on June 30,
before
completing
his second five-year term.
Israelis
into the Fed and then where?
The
last time Fischer's name was floated to lead a major organization
was
during a rushed Bush administration attempt at damage control.
In
2007,
the controversial architect of the Iraq invasion and later World
Bank
President Paul Wolfowitz was engulfed in an ethics scandal over
his
pay
and promotion package for Shaha Ali Riza. In two short
years
leading
the institution, Wolfowitz catalyzed the alienation of most
divisions
within the bank and the distrust of economics ministries
around
the world. Fischer, along with Robert Zoellick and
Robert
Kimmitt
and a handful of others, was considered as an emergency
replacement
while the administration and stakeholders strategized on how
to
ease Wolfowitz out with a minimum of
scandal.
<http://www.irmep.org/fischer_aipac.htm#_edn10>[x]
In the end, Fischer
stayed
put in Israel.
It
came as a surprise to many when The Wall Street Journal and
Israel's
Channel
2 news simultaneously reported in early December 2013 that the
White
House was "close to nominating" Fischer to be appointee
Janet
Yellen's
second-in-command at the U.S.
central
bank.<http://www.irmep.org/fischer_aipac.htm#_edn11>[xi]
Media reports
initially
indicated that Fischer's candidacy-to-Senate-confirmation
would
proceed on greased skids—with no Senate debate—taking
only a week
so
that the pair could quickly take over the Fed in January.
However,
the
Senate concluded its 2013 business without taking up the matter.
The
earliest date the measure could be put up for a vote is January
6,
2014.
Even that date might slip since Senator Rand Paul and
Minority
Leader
Mitch McConnell plan to delay the vote unless a
long-languishing
measure
to
"<http://www.politico.com/story/2013/12/rand-paul-janet-yellen-101241.html>
Audit
the Fed" is also put up for a vote.
This
rushed approach has meant relatively little reporting on the
deeper
implications
of having an openly dual Israeli-American citizen a
heartbeat
away from Fed chairmanship. That is unfortunate, since
Israel
and
its U.S. supporters have many hidden reasons for wanting
stronger
influence
at the Fed that they wouldlikely prefer not to discuss.
That
the Fed is a key player in Iran sanctions implementation is
certainly
no secret. The Fed has been an equal partner in
levying
hundreds
of millions in fines against foreign banks such as R.B.S,
Barclays,
Standard and Chartered and H.S.B.C. which were charged with
violating
the Iran sanctions regime. Although AIPAC never mentions
it,
American
exporters have been seriously hurt by sanctions on Iran and
the
punitive
secondary boycott. A coalition representing the US Chamber
of
Commerce,
the Business Roundtable, Coalition for American Trade, the
National
Foreign Trade Council and others urged Congress not to
enact
sanctions
provisions they estimated would
cost
<http://www.nam.org/~/media/0997C854147F4B2DA1689FE151E7D9B3/Iran_Sanctions_Study_and_letter.pdf>
$25
billion and 210,000 American jobs. (PDF) Keeping such a
costly
regime
in place despite thawing relations and any hard evidence of
an
Iranian
nuclear weaponization program has therefore required immense
ongoing
efforts by Israel lobbying groups.
An
equally important target for Fischer and Israel may
be—somewhat
ironically
given their pro-boycott programs—anti-boycott activities.
In
the
1970-80s the Federal Reserve played an active "moral suasion"
role
chastising
and corralling U.S. banks away from any activity that
Israel
construed
as compliant with the Arab League economic boycott. An
expert
with
deep experience enforcing the international boycott of Iran,
Fischer
is likely aware of the many active American grass-roots
campaigns
aimed at ending the Israeli occupation of Palestinians
through
targeted
boycotts. These boycotts range from efforts to get retailers
to
stop carrying manufactured goods produced in the occupied West
Bank
(Ahava
and Soda Stream), to overturning contracts with firms
providing
services
in occupied territories (Veolia), to academic boycotts and
even
efforts
to get labor union pensions to divest from Israel bonds.
Working
more closely with Israel and AIPAC, the Fed could become a vital
node
for reinterpreting and enforcing old or new laws aimed at
outlawing
and
punishing groups organizing such grass-roots activities by
targeting
U.S.
bank accounts and freezing their financial flows.
Fischer
may also want to launch "exercises" to prepare the
U.S.
financial
system for the fallout of Israeli military attacks on Iran.
New
bills in Congress drafted by AIPAC call not only for
additional
sanctions
aimed at thwarting a fledgling deal on Iran's nuclear
program
(favored
2-to-1 by Americans). AIPAC's bill forces the U.S.
to
"<http://www.lobelog.com/kirk-menendez-schumer-wag-the-dog-act-of-2014/>have
Israel's
back" in the event of a unilateral Israeli strike. If
Israel
has
already decided to attack Iran, it would benefit immensely
from
having
Fischer inside the Fed, protecting the financial flows Israel
now
regards
as all but a birthright from its primary global underwriter.
Less
well-known is the Fed's authority to authorize foreign
bank
acquisitions.
Any future Israeli campaign to further entwine its banks
into
the U.S. financial system through acquisitions would likely find
a
much
more welcoming regulator in
Fischer.
<http://www.irmep.org/ila/AIPAC/AIPAC_Vital_Assistance.pdf>
Whatever the
real
motivation for Fischer's sudden, inexplicably rushed insertion
into
the
Federal Reserve, it is also worthwhile to note longstanding
Fed
policies
have correctly considered U.S. citizenship to be preferable for
at
least one key position, "because of the special nature of
the
supervisory
function, the need to ensure confidentiality of information,
and
the delegated nature of the function." Unfortunately, that
policy
preference
covers only
Fed
<http://www.federalreserve.gov/boarddocs/srletters/1994/SR9440.HTM>bank
examiners
rather than top
leadership—the
<http://www.federalreserve.gov/aboutthefed/fract.htm>Federal
Reserve Act
is
silent on the wisdom of installing a revolving door forreturning
U.S.
citizens
who took on dual citizenship as a condition of serving a
foreign
government.
AIPAC,
Fischer's co-author of harmful U.S. economic policies on behalf
of
Israel, likely sees the Fischer appointment as an important test
case
to
assess American tolerance for openly dual Israeli-American
citizens
running
key U.S. federal agencies. In 2009 former AIPAC
research
director
Martin Indyk, who was at the center of AIPAC's research
division
during the FTA
push,
<http://original.antiwar.com/smith-grant/2012/10/05/spy-crisis-launched-aipacs-think-tank/>said
that
"the US-Israel Free Trade Agreement served as a wedge that
opened
up
the Congress to free trade agreements across the world, including
the
NAFTA
agreement." Likewise, if Fischer can be "wedged"
into the Fed,
it
begs the question of why former Israeli ambassador to the U.S.
and
historian
Michael Oren could not someday lead the Near East division of
the
State Department. From AIPAC's perspective, having
qualified
Israelis
directly run key divisions of the U.S. Treasury such as
Terrorism
and Financial Intelligence, rather than indirectly
through
<http://dissidentvoice.org/2008/09/from-irgun-to-aipac-israel-lobbys-us-treasury-follies-hurt/>
AIPAC-vetted
appointees such as Stuart Levey and his hand-picked
successor
David Cohen, could probably boost the volume of taxpayer
give-aways
while improving coordination with Israel. Given AIPAC and
Israel's
overly large influence on U.S. military initiatives in the
region,
the lobby may now feel the moment is right for appointing
Israeli
generals into the Joint Chiefs at the Department of Defense.
This,
AIPAC may well reason, would be much more convenient than
constantly
arranging visiting Israeli military and intelligence
delegations
that increasingly serve as sole briefers (rather than DoD or
the
American intelligence community) of members of the US Congress.
Soon
after word of his Fed nomination spread, Fischer again
made
uncharacteristically
harsh statements about Israel at an NYU Law School
forum.
As reported
in
<http://www.thejewishweek.com/blogs/political-insider/fischer-israel-not-doing-enough-find-peace>The
Jewish
Week, Fischer told the audience that Israel is not seeking peace
"to
the extent that it should" and that it is "divided between
those who
want
to settle the West Bank and those who seek peace." Fischer—who
had
every
chance to pull U.S. and Israeli financial levers that could
have
forced
Israel out of occupied territories or forced compliance
with
International
law—never did. Adding to suspicion that the statement
was
simply
more empty "lip service" aimed at building popular support
among
Americans
tired of war, was the reporter of the quote—former
AIPAC
lobbyist
Douglas Bloomfield. In
<http://irmep.org/ila/economy/02131986DB.pdf>
1986 Bloomfield was
grilled
as a key suspect (PDF) in the 1985 FBI investigation of AIPAC
for
espionage during the FTA negations
If
Americans were ever polled on it—and they never are—the
majority who
now
object to increasing aid to Israel would also likely object
to
quasi-governmental
and governmental positions being staffed by people
who—by
citizenship or sheer strength of identity politics—are
primarily
occupied
with advancing Israeli interests rather than those of the
United
States. It is obvious that the real reason AIPAC and
its
economic
luminaries such as Fischer never substantiate any of
the
<http://www.irmep.org/ila/reagan/>advertised
benefits the U.S.-Israel
"special
relationship" delivers to America in return for all of the
costs
is simple—there simply aren't any. As greater numbers
of
Americans
become aware that the entire "special relationship"
framework
is
sustained by nothing more than Israel lobby campaign-finance
and
propaganda
networks, the harder the lobby will have to work to forcibly
wedge
operatives like Fischer into positions where they can thwart
growing
public opposition—whether it takes the form of boycotts
or
grassroots
opposition to the U.S. fighting more wars for Israel. In
the
very
short term, Americans can only fight such undue Israel
lobby
influence
by again—like during the drive to attack Syria—staging a
mass
action
to demand their senators reject Stanley Fischer's nomination.
[i]
Oberdorfer, Don "Will U.S. Dollars Fix Israel's Economy?"
The
Washington
Post, June 9 1985
[ii]
Oberdorfer, Don "Will U.S. Dollars Fix Israel's Economy?"
The
Washington
Post, June 9 1985
[iii]
Passell, Peter "Need Zionism Equal Socialism?" The New York
Times,
July
2, 1992
[iv]
Maital, Shlomo "Stanley Fischer: the man and the plan,"
The
Jerusalem
Report, February 7, 2005
[v]
BBC Monitoring Middle East, March 5, 2007
[vi]
Keinon, Herb "Russia won't back crippling sanctions."
Comment comes
day
before high-level US-Israel meeting on Iran" The Jerusalem
Post,
February
25, 2010
[vii]
Williams, Dan "Iran Stepping Up Its Atomic Efforts" - The
Gazette,
August
13, 2012
[viii]
"Bank of Israel governor: Sanctions won't collapse Iran
economy.
Islamic
Republic will likely find way to 'keep economic life going,'
says
Fischer in interview with CNBC" The Jerusalem Post, October 24,
2012.
[ix]
"Bank of Israel governor: Sanctions won't collapse Iran
economy.
Islamic
Republic will likely find way to 'keep economic life going,'
says
Fischer in interview with CNBC" The Jerusalem Post, October 24,
2012.
[x]
Weisman, Steven R. "Wolfowitz Said to Push for Deal to Let Him
Quit"
The
New York Times, May 17, 2007
[xi]
"Fischer set to be tapped as vice chair of US Federal Reserve"
the
Times
of Israel, December 11, 2013
(4)
Stanley Fischer on Israel's Inflation in 1980s, caused by military
spending (25% of
GNP)
http://digitalcollections.library.cmu.edu/awweb/awarchive?type=file&item=486097
{Jews
are prominent in the financial sectors of other countries, where
they
are a small minority. This article is interesting because it
shows
how
the economy of a Jewish state worked}
AIPAC
Memorandum 500 North Capitol Street, N.W. Suite 300 Washington,
D.C.
20001 . (202)
638-2256
The
Wall Street Journal
Wednesday. February
26. 1986
Israel
Has Made Aid Work
By
Stanley Fischer and Herbert Stein
Israel
is the largest single recipient of economic aid from the U.S.
This
is partly because the economic stability of Israel is uncertain
and
is
important to U.S. national Interests.
Therefore a report on the pro
gress
of the Israeli economy is relevant to policy decisions to be
made
here.
A
common view, supported by some experience, is that the availability
of
foreign
aid prevents the recipient country* from taking the steps
required
for its own economic health. The story of Israel suggests that
there
may be exceptions to this dismal lesson. . On July 1.1985.
Israel
introduced
a radical stabilization program designed to bring the
inflation
rate down from 1000% to 20% a year or less. Success was swift.
Within
two months Inflation was down to less than 4% a month; in
November
and December 1985 it averaged only 1% a month. But there Is
still
a long way to go before success is assured.
The
Israeli inflation rate rose by stages from 2% per annum In 1967-70
to
the 1000%-per-annum area at the end of 1984. The pattern was for
an
inflationary
shock to kick the inflation rate up to a new plateau, at
which
it stabilized before the next shock.Underlying the Israeli
Inflation
were massive budget deficits averaging 15% of gross national
product
for more than a decade, fueling, and fueled by. a
fast-growing
national
debt and rapid monetary growth. At the heart of the
government's
budget problem is defense spending of 25% of GNP. Despite
large-scale
U.S. aid. the government found it increasingly difficult to
borrow
at home or abroad in 1984 and 1985. and was forced instead to
print
money.
More
than anything else, it was the difficulty of borrowing that
forced
the
government to undertake the stabilization program.
Three
Policy Positions Argued
Widespread
indexation of assets and of wages made living with
inflation
tolerable.
As Inflation persisted from 1979 to 1983 in the 100%-130%
range.
Israelis explained to foreigners that they had found a way of
living
with high but non-exploding inflation.
Three
policy positions were argued during this period. A first group
was
willing
to live with Inflation. Another group wanted steady
disinflation
through
gradual reductions in the budget deficit and money growth. A
third,
shock-treatment group argued that only a comprehensive
program
designed
to move the economy immediately to a sustalnable low
inflation
equilibrium
could succeed.
The
livlng-with-lnflation group evaporated as inflation hit
the
20%-a-month
range In 1984.
Tough
anti-inflationary policy was widely expected from whichever party
won
the July 1984 election. But it failed to materialize.
The
election-led
to a coalition government that took nearly three months to
form.
The
first stabilization program of the new government was a package
deal
with
the Histadrut (national trade union organization) and
employers
whereby
wages and prices would be frozen for three months.
However,
devaluation
continued. The planned 1985/86 budget had sharply cut the
deficit,
but with the government spending Increasing amounts to maintain
the
prices of subsidized goods, the deficit did not fall. Nor were
other
planned
cuts in government spending implemented.
By
April and May of 1985 the package deal had fallen apart and
Inflation
was
back to the 400%-per-annum area. The balance-of-payments deficit
had
been
reduced from its 1983 level, but foreign-exchange reserves
were
falling
rapidly as Israelis switched Into dollars. The government
budget
deficit
was at an unsustainable level and the need for action was clear.
By
this stage the comprehensive approach was the only choice. The
aim
would
be to move the government budget, monetary and exchange-rate
policy,
and wages and prices all at once to a new, sustalnable level.
The
essential requirement for the stabilization was a sharp reduction
in
the
budget deficit. Without that, no amount of wage and price
controls,
sophisticated
exchange-rate management or clever monetary policy could
do
more than temporarily slow the Inflation.
The
program had three main ingredients:
•
A
cut in the budget deficit from 17% to 8% of GNP. The cut came
mainly
through
subsidy reductions.
•
A
large devaluation to be followed by a stable (though not
formally
fixed)
exchange rate against the dollar.
•
Introduction
of wage and price controls and suspension of wage
indexation
and other elements of existing labor contracts by
emergency
decree.
In
support of the program, monetary policy would control the growth
of
credit.
The
devaluation and lifting of subsidies caused a 28% jump in the
price
level
In July. Wage earners were not compensated for most of the
July
inflation,
with the result that the real wage fell about 20%.
The
government's main fear about the program had been that it
would
create
massive unemployment. Economists argued that a reduction In the
real
wage and devaluation would prevent unemployment and allow a switch
of
production into exports. The knowledge that a requested
supplementary
U.S.
aid package of $1.5 billion over the next two years was likely to
be
granted within a few months encouraged the government to
act
decisively.
In the belief that it would have a safety net of reserves
and
resources to use to Increase employment if things went badly
wrong.
Immediate
results of the plan have been positive. The data show the
inflation
rate coming down fast In January 1986 the consumer price
index
declined
1.5%. The budget Is doing even better than expected as the
reduced
inflation increases real tax revenue (tax receipts previously
lost
much of their value by the time they were collected). The
trade
balance
has maintained the Improvement that began with the
maxi-devaluaUon
at the end of 1983. The black-market exchange rate,
which
had been at a premium of 25%, has fallen to 5%. Price controls
have
not yet produced serious shortages.
Although
labor objected bitterly to the use of emergency decrees to
suspend
contract terms, a new voluntary wage agreement was reached
after
remarkably
little strife. The agreement allowed the real wage reduction
of
July to go through, but maintained partial indexation and
provided
for
nominal wage Increases of 4% a month from December 1985 to
February
1986.
Monetary
policy during the first months of the stabilization was
strongly
contractionary. The nominal interest even in October was still
13%
a month. Implying an annual real interest rate of more than
100%.
Several
large firms are in financial difficulties. The nominal Interest
rate
was brought down rapidly in November and is now 5% a month.
Contrary
to fears, unemployment rose only briefly in July and August,
and
has started back down again.
So
far, then, the plan is a total success. Public approval for
the
economic
policy, despite the immediate hardships it has caused,
is
widespread.
Prospect
of Inflation-Rate Rise
Nonetheless,
serious difficulties remain. The first is that the
government
budget deficit Is still too high. At 8% of GNP. it cannot be
financed
without increasing debt or printing money too rapidly. Yet
the
government
finds it increasingly difficult to cut spending. Because
government
revenue in Israel Is near 50% of GNP, the tax burden Is too
high
and taxes should be cut But without further spending cuts,
taxes
cannot
be cut. Further spending cuts are thus a high priority.
The
wage agreement will raise nominal wages at least 17% over the
next
three
months. Unless the government finds a way of neutralizing
that
increase,
the price level will rise as business costs increase. Price
controls
cannot contain such pressure, and in any event cannot be
success
fully maintained over long periods.
The
prospect Is that the inflation rate will rise back to
the
3%-4%-a-month
rate by the end of April, unless the government finds a
way
of dealing with the effects of the planned wage increases. There
is
no
way of doing so without further budget-deficit reductions. From
3%-4%
a
month inflation, the trip to 10% a month is easy, especially for
an
economy
that has been that way before.
Budget
decisions of the next few weeks will show whether the
coalition
government
can bring Itself to the measures now needed to protect the
gains
achieved by its decisive action of last July.
Mr.
Fischer is an economics professor at MIT and Mr. Stein is a
senior
fellow
at the American Enterprise Institute and a member of the
Journal's
board of contributors. Both are consultants to the U.S.
State
Department
on the economy of Israel.