Archives for May, 2008

Today’s real economic news

The interest rate was raised 0.25% yesterday. I would expect to see another rise next month. The rate was too low. For most mortgage holders, the refinancing window of opportunity closed weeks ago. Now it is sealed shut. For new buyers, it doesn’t make a lot of difference, as the rates are still very attractive, and will be even if the core rate rises another few times. The rate rise was expected, so I don’t really consider it news. The real news lies elsewhere. You can read it about here in Globes ,Israel has become an official member of the international CLS clearing system. While this is also no surprise, it is very important. One of the reasons for the continued strength in the...
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banks

The Party’s Over

A few thought about the recent inflation figures. I think that the recent price hikes were disproportionate. The supermarkets took advantages of slight rises in prices to jack up prices exceedingly. The price of pasta, for instance, went from around 6.50 NIS for a half kilo to around 10. The price of specialty breads went from 10 to 15 (Mazkeret Batya prices). This was done at the same time that the shekel strengthened against both the dollar and the euro. This fleecing of the consumer has backfired on the supermarkets, greatly reducing demand. They have already started to lower prices. Look out for an abundance of “second for half price” or “3 for the price of 2” sales. Next month they will return the...
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inflation

Bang! Kaplow! We told you so!

We told you so, we told you so, we told you so!Read the official announcement here:מדד לאפריל Jump straight down to page 15 of that link and read the real story. 4.7% inflation since last April.We’ve been seeing this happen, and have been warning clients away from the dangerous inflation linked mortgages. The average Israeli mortgage right now is close to 500,000 NIS. Someone who owed that much yesterday owes 507,500 NIS today. In a typical situation, only this difference is greater than the principal being paid on the loan, and they end up owing more after their payment than after the previous payment. This is what happens to people who get “the best rate” or “the cheapest loan”. Most of our clients are...
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banks

Leumi @#$%^& mortgage holders

We’ve been swamped with work lately, and I haven’t had enough time to write here. Luckily, I caught this gem while waiting for a client a few days ago: כלכלה nrg – “לאומי מפר הוראות הפיקוח על הבנקים” The problems with the “early repayment penalties” is that they are so difficult to calculate, that you have no way of knowing if the bank is over charging you or not. You assume that someone has checked their computer program to make sure that it is consistent with the law and the terms of your contract, but you have no way of knowing. Now we find out that it was inconsistent, and surprise-surprise, there were errors in the bank’s favor. Not too long ago we saw...
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banks

מסתמן: פעולה בבנק באינטרנט תעלה שני שקלים

Get ready for a new blindside: Ynet מסתמן: פעולה בבנק באינטרנט תעלה שני שקלים – כלכלה I have discussed this in the past, but you will be hearing a lot about in the coming days, so here’s a head’s up. The banks, with the blessing of the regulators, are about to start charging 2 NIS for every internet transaction that we do (currently free at most banks) and 5 NIS for every transaction with a banker (currently 3). This is great for the banks. They’re not going to all of a sudden have a huge profit jump because of additional fees. These are just things that the press can complain about instead of concentrating on the real problems: ridiculously high interest charges. The interest...
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