Archive for September 2010

My economy will slow to under 4% growth! Help?

September 29, 2010

Yesterday, the Bank of Israel released its revised predictions for 2010 as well as for 2011. The economy will leap forward by only 3.8% next year, and that “lowish” estimate even allows for a downturn in orders from Europe and America.

How many finance ministers and bank chiefs in the OECD would settle for even half of that?

The Israeli economy is doing well. For 2010: –

  • Exports will jump up 11% (compared to a 10.2% dip in 2009)
  • Unemployment will drop to 6.3% (7.6%)
  • Personal consumption has soared by over 5% (1.7%)
  • Commercial gas (and maybe oil) supplies have been confirmed
  • OECD membership has begun to generate new sources of investment

There are still headaches for the planners. As the economy moves ahead and the housing market is bubbling, the central bank is using interest rates to curb the demand. But a higher cost of money will pull the shekel stronger, and thus weakening the profitability of exports. An awkward balancing act.

In parallel, the economy is dependent on export markets overseas. Again, while America, the UK and others are moving in the right direction, the progress is fragile. A potential Portuguese or Irish financial crisis could knock many off balance. And Israel will catch some of that fall out.

Avi Temkin in “Globes” newspaper wrote an interesting into to a piece on the economy.

Next week when Governor of the Bank of Israel Prof. Stanley Fischer travels to Washington D.C. for the annual meeting of the International Monetary Fund, he will be envied by many of the other central bank chiefs. ………. Fischer can mingle among the other central bank heads with an imaginary tag around his neck saying “2% interest rate and still rising.”

…and still in control.


Management, procrastination, self reflection

September 28, 2010

Three separate and true incidents, yet one major lesson for how we run our private and professional lives.

1) My friend is retired from a life dedicated to academia. About a decade ago, he embarked on a private research project. His aim is to publish the work on the internet, where it will be available to all. Most chapters are complete. Some are already on the web. “But I am stuck. I cannot complete it,” he complained to me this week. This has been the situation for weeks, even months.

I quickly slipped in to my mentoring mode. “Did he have all the info” and other relevant questions. “Yes, yes”, he fobbed me off, dejectedly. And then rather impatiently, I prodded further. “What have you got lined up after this?”  The blank, negative look told it all; a painful question, which he was not ready to face. Busy all his life, the what next factor had been ignored for too long. Why?

2) Moshe Feiglin is a well-known local politician n Israel, dedicated to one particular issue. He is not popular in all corners. However, his family received amazing support, when their 16 year old son was rendered unconscious 3 months ago as a result of a car crash. Last week, 15 minutes before the onset of the holy Day of Atonement, the lad woke up.

The Feiglins had spent hours by their son’s bed, reflecting on why they had ended up in this situation. In an interview in Hebrew, Moshe referred to the fact that at the age of 48, he now appreciates how he has spent too much time away form the family in the name of supposedly important subjects. And when handling those issues, he had ignored the individual at the expense of longer term aims.

In effect, Moshe was saying that both his own private progress and his work was being hindered by his own self-mindedness. Why had it taken his son’s distress to allow him to face the truth?

3) As I was finishing my morning workout earlier, it suddenly occurred to me. “That lecturing project” – the one I had not pushed through to conclusion – I do not like it. I do not want to do it. Why am I wasting my time and that of others? Why can’t I be honest with myself?

How often have we all seen people procrastinate, at home or in the work place? Maybe a better word for procrastinate is “cover up”. If we will allow ourselves to be more “genuine”, how much could we benefit?

Management, sports industry, & Middle East peace talks

September 27, 2010

All over the world, small – even medium sized – enterprises struggle to manage and forward themselves on minimal budgets and resources. Most are aware of the restrictions, while determined to seek the best future possible.

When it comes to sports management, somehow the laws of economics seem to adopt a new “elasticity”. And never was this more true than in Israel, September 2010. In today’s newspaper with a sports’ supplement of 11 pages, half were devoted to management fiascos, costing clubs – and the taxman – millions. For example: –

  • The owners of Hapoel Tel Aviv football club are fighting amongst themselves, whilst blaming the coach, who in turn has publicly lambasted his players. Yet tonight the team has an important challenge match against European opposition, worth multi bucks to one and all. Quelle surprise, but the training has been limited, as more important issues are tackled (sic!).
  • The leading Arab-owned football, Bnei Sachnin, has employed 5 coaches in 24 months, and wonders why nobody is tempted to take on the yet-again vacant position. The club is not bottom of the league, only because the one team below it has had points deducted.
  •  Many of my Israeli friends have rarely regarded the national Olympic Committee as one portraying patriotism and determination. It is seen as a group of “jobs for the boys”. You feel that those few successes have  been achieved despite the bureaucracy.

It has emerged that Yael Arad, a former medalist, is to stand for the position of Chairperson. She is being opposed by the vested interests of old. So, I suppose that if she were to lose, Israel’s Olympic standards will remain where they are. At least the “boys” will be happy.

  • The national swimming board is constantly refusing to pick Nimrod Shapira, one of the country’s realistic hopes for medals. Why? I don’t have the patience to follow the pathetic mismanagement of human relations. The Minister of Sport herself has been called in to sort out the children. Amazing!

Meanwhile, on the front page of the newspaper, I read how Prime Minister Netanyahu is concerned with trivial matters like peace negotiations and the safe future of the state. But if his cabinet cannot even supervise an Olympic committee or is prepared to interfere in the petty squabbles of swimmers, what chance……………..

New sources of funding – who to ask

September 26, 2010

I recently wrote about how the role of venture capitalists is being displaced by large industrial groups, operating their own funds to support innovation.

Similarly trends are emerging in the non-profit sector, where donors are increasingly demanding more of a return for their buck. And one reason is that the donors are often based in the commercial community and not just old-fashioned do-gooders. Welcome Marc Zuckerberg!

Last week, I received  from Peter Kelley, Pegasus Financing, research from the UK re Angel Investments in 2009.

    • Average Mean Investment: £192,634
    • Number of businesses receiving funding: 233
    • Average number of investors: 2.5
    • Mean per investor per deal: £77,053
    • % of all business plans received presented to investors: 10%
    • Deals greater than £500K: 8%
    • First round deals: 32% of total

While substantial, these figures are not overwhelming. You feel that there is more money elsewhere. Back to those large prowlers, the big industrialists.

Fuad Abu Hamed, the IMF & the Palestinian economy

September 22, 2010

21C is an excellent Israeli website. It recently featured Fuad Abu Hamed, a rags-to-riches story of the Palestinian economy. His latest success in training Palestinian women has won him an award from the Hebrew University in Jerusalem. His bio is impressive.

But does one individual triumph should not allow to draw conclusions about the rest of the Palestinian economy?

The World Bank, the IMF and many other international institutions have spent much of the past decade producing streams of stats on the Palestinian economy. The latest report has come from the UN Conference on Trade and Development (UNCTAD), which estimates that the gross domestic product (GDP) rose by 6.8 per cent in 2009.

Encouraging, but the documented concluded that: –

….. the Palestinian economy is loosing some $800 million a year as the result of the Israeli closure and blockade policies, and that the 2008-2009 Gaza War drained a further $1.3 billion from the territory’s economy. 

….. the per capita Gross Domestic Product (GDP) was still 30 percent below what it was 10 years ago and at least 30 percent of the Palestinian workforce remained unemployed. Some 80,000 jobs are lost each year due to the Israeli closure and blockade policies, the report found.

“Basically the Palestinian economy has lost a third of its productive base that was there 10 years ago,”  ….

Sad. Gaza specifially, a historically fertile region with an educated population, suffers from high unemployment. But there is another side to the equation of logic.

Much of the economic growth has been registered in the West Bank, where a decrease in violence has enabled roadblocks to be removed. Nearly 2 years ago, a small but growing Israel Palestinian Chamber of Commerce was initiated through Ramallah. Tony Blair is actively encouraging tourism projects. Boutique shops in Ramallah, a cinema complex in Jenin, an emerging stock market – times are a changing.

So, the IMF et al are correct that Israeli restrictions impede Palestinian growth. that’s a given in any war scenario. But they conveniently forget that the policy is forced on Israel out of security concerns – the week of September 7th alone saw another 9 rockets fired at Israel. And as proven repeatedly, once there is a demonstration to show peace, Israel removes the impediments and in rolls the money.

As I said logical; simple and obvious. But there is also another reason why Palestinians find their economy lagging behind others.

I am not referring to the continuous corruption or the disappearing millions of foreign aid or the on-going funding of incitement against Israel – all resulting in the abuse of the generosity of Western taxpayers.

It is the internal lawlessness of Palestinian society, often exploited by a ruthless leadership, that appears to cause desperate harm to the average Palestinian’s financial status. Last week, the Ramallah-based Palestinian Independent Commission for Human Rights issued a damning press release of on the subject of repression. For example: –

….. on September 15, 2010 the (Palestinian) police shut down the Restaurant Hotel and Café of the Orient House ….. …

ICHR has monitored several incidents like these during the same period, as the General Investigation Force disrupted on 7/9/2010 a cultural event organized by the Cinema Forum in the gallery of Asamak Restaurant, ……

On 12/9/2010, a force of the General Investigation Unit disrupted a cultural eve organized by the Association of Community Colleges Graduates in the gallery of Al-Bieder. ….

On 5/9/2010, the Attorney General ordered a jockey club closed in the area of Shiekh Ajlin in Gaza city for (21) days claiming it doesn’t have the necessary licenses.

On 2/9/2010, the police shut down the Restaurant and Café Shop of “Sma Gaza” for three days because it let women smoke water pipe (“Nargile”).

I bet that Fuad Abu-Hamed does not love Israel. However, he has found a non-violent way to better the lives of his fellow Palestinians. His story is just one example of what can be done effectively, splicing aside the rhetoric of Hamas and the spin of exploitive NGOs.

It would seem that there is a Palestinian economy waiting to be noticed. Could it be that the interests of politicians are preventing it from shining through?

Ignore the skill of time management & it will cost you

September 21, 2010

Busy, they are. Working efficiently, they are not.

It is less than 2 weeks ago, since I wrote this about busy managers, who paddle in circles. And despite the short space of time, the same scenario has keept charging back at me from different clients.

Earlier this week, I was mapping out a course with a prospective client. Committed to their cause, the CEO complained that they did not know where to start. There was just so much to do.

I pointed out that the company had been established because they had become fed up doing the same things for others, who did not seem to appreciate them. Agreed.

So I asked what it was that would get them to appreciate the value of their own time, and thus encourage themselves to become organised? “Are you able to visualise what you are missing out in the meantime?” I received a pained look in response.

A few days earlier, a friend was discussing a new enterprise, which they had been trying to kick start for a long time. One of the main drawbacks had been the lack of time. All spare moments are invested current commercial practices, and I was subjected to a full explanation.

Fine, but this ignored how much they were looking forward to a change. The potential money-making opportunity was given second place to the on-going management of something which they did not necessarily enjoy……and again I eventually received another set of awkward looks.

Dan Kennedy has a mega track record in mentoring young companies. He has observed that:  –

I organize everything with predetermined start and end times; if someone has a phone appointment with me, they know in advance when it will end, not just when it will start–and the call does end as scheduled, even if in midsentence. I have trained and conditioned myself to be hypersensitive to time, and I train my clients to respect my hypersensitivity about it. Why?

Because last year’s bank balance and your satisfaction or dissatisfaction with it is more a reflection of how you invest your time than of anything else. In reality, time is one of the few assets the entrepreneur owns outright and has total control over.

Entrepreneurs only? No – all of us.

Is oil a friend or enemy of Israel?

September 19, 2010

Spot the contrast.

On one side of the page, Israel is reducing its dependence on oil. For example, Better Place is the world’s foremost company in the electrical car revolution. It has alrady secured commitments from over 55,000 owners, who are seeking to replace their oil guzzling vehicles.

And a ministerial committee is promoting a joint public and private sector initiative worth a billion dollars. The aim is to seek commercially viable oil alternatives. Impressive, at least on paper.

But in the other column, we find that vast chunks of Israel’s countryside are being cut up and replaced with oil wells. Yes, Israel is in the middle of a speculation boom in the search for black gold.

A typical story emerged at the end of last week, concerning one of the country’s leading tycoon’s, Yuri Ofer.

(His) new oil exploration venture hasn’t struck oil yet, but after numerous announcements and hullabaloo, it finally struck its first deal in the industry. TheMarker has learned that Ofer bought 10% of the Sarit drilling license for offshore Ashdod last night from Jacob Luxenburg’s Lapidoth Heletz.

The Israeli government has voiced its concern at the prospect of a shares bubble. There is to be a temporary halt in the granting of new gas and oil licenses. Prices of stocks in the sector  plunged on the news.

Who was effected by the fall? Market analysts believe that it is mainly speculators, who are involved in the trading. The “average person” is seen as reluctant to get his hands dirty. This feeling was confirmed, when one Hebrew newspaper reported that the local mafia was connected to some of the exploration companies.

If oil was to be discovered in commercial quantities, the country’s economy will quickly take on a different appearance. I fear that Dubai will have a strong rival in the opulence stakes. 

And now for irony number two. Yesterday, Israel recalled the anniversary of the 1973 Yom Kippur war, which led to a quadrupling of oil prices on the world market. The economic power of her enemies soared beyond belief. 

Nearly 4 decades later, Israel has yet to learn if she wants to copy her neighbours or find an alternative way to economic and social achievement.