While Americans are huge consumers of energy, Israelis are stingy. And, tax policy is why! The duty on all new cars is 100% (yes, 100%) and gas costs about $7.25/gal. As a result, most cars are small and get great mileage. Israeli’s also recycle 75% of their water (Spain’s next with at 25%). Coincidently, water prices have risen dramatically in the last few years! Would we tolerate such tax policies in the USA?
Tag Archives: econ70.com
Israeli Gas Prices
On the 2nd to last day of each month the Israeli gov’t determines the maximum price gas may be sold for the next month. So, on the 29th of June the gov’t announced that the maximum price gas may be sold for in July would be 8 cents less than in June. The cost of gasoline is 36% of the retail price. The gov’t also allows 9.5% of the total sale price to cover costs for selling, marketing and advertising, the rest; taxes and gas company profits.
Boycott Brings Benefit
Sorry about not blogging yesterday; I was floating in the Dead Sea. As for the cottage cheese boycott; it’s over. Two days ago the largest dairy in Israel caved in to the nation-wide boycott and reduced the price by 21%. Not surprisingly hours later the second biggest dairy followed suit and soon after that Tara Dairy also fell into line. There are only 3 dairies here. On Monday I will tell you how gas is priced.
Booming Israeli Economy
The Israeli economy is booming! Unemployment is 6%, house prices are rising at a healthy clip and construction activity is ubiquitous. In 2 days, I have counted over 100 over cranes in use and new multifamily construction is literally, skyrocketing. The city of Modi’in, halfway between Tel Aviv and Jerusalem has a population of 90,000; it didn’t even exist 15 years ago! If you can build MF, move here fast!
Cottage Cheese Boycott
Greetings from Jerusalem! Amazingly, the big issue here is the high cost of cottage cheese! An 8 oz tub costs $2, twice the price it is in Europe. Consumers are outraged and are boycotting all cottage cheese. The high price is the result of a panoply of monopolies and cartels that dominate a wide range of business sectors in the country due to the pro-business policies of the this and the previous government.
Car Rental Rationality?
Airlines and hotels charge cancellation fees but not car rental firm. Why? I think it’s because car renters usually arrive by plane and then go to a hotel. The car rental agency can thus free ride on the cancellation policies of the others. That is, to cancel the car you have to cancel your trip and that’s expensive due to the fees imposed by the airline and hotel.
New House Sales Slide
You are in a whole new universe when existing and new housing sales slide 3.8% and 2.1% in a month and it’s treated as good news! The peak in new sales was 1.39 million in 7/05. The Median price of a new home fell to 222.6K, it’s just 166.5K for existing homes; a huge price gap! And, first time claims for unemployment rose to 429K! I predict Q2 GDP @ 1.7%
Unfunded Liabilities
Advanced economies with aging populations have made lavish spending promises that are unafforadable absent huge tax increases. In Canada the “unfunded” amount is 7 times GDP. In Korea it is 6.8, in Spain it is 6.5, here in the USA it’s 5, in Australia it’s 4.8, in the UK 3.3, in Germany 2.8. France 2.7, in Italy 1.7 and Japan 1.6 times GDP. These huge burdens will require very unpleasant policy adjustments.
Moral Hazard
Ideally Greece would leave the Euro, default on its debts, and get on with its economic existence. But, leaving the Euro would be a disaster for the Euro zone. So the Europeans won’t let it happen. Neither will the Chinese as they do not want the US Dollar to be the only reserve currency. Since the Greeks know this they have no incentive to financially behave because they know they will get bailout out.
Weak in Review
Weak in Review: The latest jobless claims numbers are still troublesome. The key takeaway is that first time claims have now exceeded 400k for 10 weeks in a row and the four-week moving average is stuck at 425k. Moreover, the Philly Fed index at -7.7 along with the similar -7.8 print on the NY Empire, is consistent with a 47 reading on ISM — not exactly constructive for the once-hot industrial sector.