Day: October 20, 2013

ISRAEL APPOINTS NEW CENTRAL BANK CHIEF

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JERUSALEM (AP) — Israel appointed the country’s deputy central bank chief as the institution’s next governor on Sunday after a months-long process in which two previous selections were forced to withdraw.

Karnit Flug succeeds former central bank chief Stanley Fischer. Flug will be the institution’s first female head, and had been leading the Bank of Israel on an acting basis since Fischer left his post in June after eight years on the job.

Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid announced their decision after meeting Sunday.

“We have been impressed by Dr. Flug’s performance as acting Governor in recent months and we are certain that she will continue to assist us in moving the Israeli economy to additional achievements in the face of the global economic upheaval,” the two men said in a joint statement.

Flug, 58, studied economics at the Hebrew University in Jerusalem and earned her doctorate at Columbia University in New York. Most of her career was at the Bank of Israel where she served in senior positions. In the mid 1980′s she was an economist at the International Monetary Fund. She speaks Hebrew, English, Spanish and Polish.

“The Israeli economy faces significant challenges,” Flug said in a statement, adding that she looks forward to working with the bank and the government to “meet these challenges.”

Her appointment still needs government approval, a step that is largely procedural and is expected to take a few days.

Fischer, who is widely credited with steering the Israel’s economy safely through years of world financial turmoil, had recommended Flug for the post. But she was not Netanyahu’s first choice.

Jacob Frenkel, a former central bank chief and Wall Street titan, withdrew in July after a committee questioned a shoplifting incident at a Hong Kong airport seven years ago. Frenkel said he mistakenly thought his companion paid for an item he was carrying.

In August, designated chief Leonardo Leiderman announced he was withdrawing. He did not give a reason, but the announcement came a day after an Israeli television channel reported that Leiderman regularly consulted with an astrologist.

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Flug must come out of Fischer’s shadow

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Flug must come out of Fischer’s shadow

By Stephen Darori
If it turns out that Stanley Fischer continues to pull the strings at the Bank of Israel by telling his successor what she ought to do, she will suffer for it.
20 October 13 17:20, Stella Korin-Lieber
Now the real problem begins, which is far more substantive than the months without a Bank of Israel governor. The governor’s main job is to be the government’s economic adviser. The government’s economic team is the team that chooses the governor-adviser, and that is Prime Minister Benjamin Netanyahu and Minister of Finance Yair Lapid. But today, they made a decision under duress; a compromise. Compromise sounds like tepid, neither hot nor coldNetanyahu and Lapid made a decision without enthusiasm or a sense of coming to terms with it. Under these circumstances, they will find it very difficult, to the point of impossible, to accept the governor of the Bank of Israel as their senior economic adviser. As it is, they are convinced that they were born knowing everything.If they consulted with previous governor, Stanley Fischer, with his great stature in the world and among the Israeli public, heard to what he had to say, but did not always listen (in recent years, the Bank of Israel has repeatedly mentioned, as part of its supreme goals, the increasing of the governor’s standing as the government’s economic adviser). But why should they listen to a governor appointed as the default option, after the failure to pick an American star? Why should they value her? Why consult on matters critical to the Israeli economy? Why should they take seriously the findings of her Research Department?The answer is that it depends on Dr. Karnit Flug. Especially on her. Flug, who was chosen as better for the job than Mario Blejer, Zvi Eckstein, Victor Medina, and others. (As for Larry Summers, whom Netanyahu reportedly recently approached, we can only say that the approach should not have been made. It is inappropriate to invite the leavings of President Barack Obama in view of the public criticism that prevented Summers from succeeding Ben Bernanke as chairman of the Federal Reserve Board.)Flug was chosen after she proved, even to Netanyahu and Lapid, that she was ready for the job. If she wallows in anger, insult, and bitterness over the months she was exposed to the freezing winds from the Prime Minister’s Office, she is liable to sink and not free herself for economic achievements and breakthroughs.The time is over when a central bank governor was just a monetary man protecting the government’s inflation target. Macroeconomic expertise is not enough. The personal and professional standing that the world’s central bankers establish among the public and decision-makers in the country and worldwide are also important. It is not just an innate charisma (which was conspicuously lacking among the four finalists), and definitely not work by sophisticated media advisers. Fischer is the founding father of the new governorship model. The general public recognized him; he was “the responsible adult”, “the king of the Israeli economy”. He was the man who could be relied on in times of trouble and uncertainty.

This was not just because he was an American star who landed in Israel, but because he had absolutely no political affiliation. Public trust in him had a decisive influence on the government (notwithstanding considerable criticism of his professional decisions) was based on his personality, his style of speaking, his clear language, the distance he maintained from the wearying day-to-day language, the speeches which were always portrayed as pro-public. More than that, Fischer emerged from the anonymity of setting the interest rate and keeping the government’s inflation target and greatly expanded the central bank’s areas of engagement to jobs, exports, housing, education, the cost of living, competition, banking credibility, and more.

Fischer’s position on each of these issues made him an important player in it. In this way, broader swathes of the public were exposed to his public standing. This resulted in another unique phenomenon: his personality and unequivocal identification with the Israeli economy brought to Israel international praise that far exceeded the country’s proportionate share in the world. It also resulted in the soaring of his stature as a top global figure, about whom the foreign media wrote and national leaders sought to meet, and his central banker peers consulted with on a daily basis.

Can Flug strengthen this position? That depends on how she will perform, how she will build herself as an independent figure who does not have to make too much of an effort to be Fischer’s Siamese twin, but as a person who preserves, in her own quiet, unassuming, and less charismatic way, her standing in the government and the public, and Israel’s standing in the global economy. Difficult, but possible.

Crooked are the ways of the world. Fischer great stature brought Flug to the job, but also delayed her appointment. Fischer took care to foster and emphasize that he raised Flug as his successor, that he recommended her for the job. This put Netanyahu, the man with the authority to appoint the governor and who is supposed to work closely with her, in a bind. As if the prime minister is a docile automat who does only what he is told by someone of renown. Ego is something that the prime minister has, and a lot of it, and there is nothing to do about it.

Fischer was supposed to know when to stop intervening. He has not been in Israel for months, he resigned from his post, he was no longer a public figure. Had he released Flug from the umbrella he held for her, the appointment might have come much sooner. This means that another of Flug’s critical jobs will be to become independent, including from her mentor. If it turns out that “Fischer won”, as people are saying today, and that he continues to pull the strings at the Bank of Israel by telling his successor what she ought to do, when and by how much, she will suffer for it.

Some appreciation for Netanyahu. Neither Flug’s femininity nor her reports from the remote past influenced Netanyahu when he did not accept Fischer’s recommendation to appoint Flug months ago. It was differences in economic thinking; Netanyahu is an aficionado of the free market to a far greater than degree than Flug. Nonetheless, it must be completely said in Netanyahu’s favor that he is prepared to learn about Flug and admit that she is right for the job, especially compared with the other three finalists, and he was prepared to swallow his pride and change his mind. Even if he feared the criticism and media ridicule that will unquestionably come, he did what he thought was right.

Another point in Netanyahu’s favor: he did not have to depend on Lapid. The Bank of Israel Law stipulates that the prime minister chooses the Bank of Israel governor after consulting with the finance minister. The advice does not have to be taken; sometimes is means to notify. Nonetheless, Netanyahu walked hand in hand with Lapid, even though Lapid’s political power is waning.

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Facebook, Google Reach Surprise Detente On Advertising

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Facebook, Google Reach Surprise Detente On Advertising

by Stephen Darori in

Zion

Deutsch: DoubleClick-LogoPhoto credit: Wikipedia

By Stephen Darori in Zion Ever since Facebook FB +3.85% launched its advertising exchange last year, allowing advertisers to target consumers more easily while they’re onFacebook, one big playerhasn’t been allowed to participate: Google GOOG +13.8%. That’s about to change. Google announced today that after a year of getting excluded from the Facebook Exchange, its display-ad buying software will be able to place ads on the exchange within a few months. Google’s DoubleClick Bid Manager, formerly Invite Media, is one of the largest so-called demand-side platforms that helps advertisers buy ads on many websites through ad exchanges such as Google’s own DoubleClick exchange. In the next few months, according to a blog post today by Payam Shodjai, a DoubleClick senior product manager, advertisers using it will also be able to use Bid Manager to buy ads on the Facebook ad exchange. That means advertisers will be able to use the Google service as more of a one-stop shop for buying ads online. The website AdExchanger.com later reportedthat Facebook has also granted Amazon.com AMZN +5.86%, which operates its own ad buying unit called Amazon Advertising Platform, access to the Facebook exchange, though Facebook has not confirmed that. Since it launched in June 2012, FBX, as it’s known, has allowed advertisers to “retarget” customers who browsed or shopped on their site and then clicked over to Facebook, using the targeting markers called cookies. This was a very big deal for advertisers, because people spend so much time on Facebook, thus creating a huge amount of ad inventory. Facebook has never discussed why it has excluded Google from FBX. But it has been assumed that it didn’t want such a huge, direct competitor to get access to its users on its own site, or the data Google could glean on Facebook ad campaigns, or at least that it didn’t want to do anything to make Google and DoubleClick an even bigger force in online advertising. But it appears that they’ve come to some kind of agreement, though Google declined to reveal more details. There may simply be a recognition by Facebook, too, that anything that gets more ads on the service helps Facebook, at the very least by creating more competition among advertisers, raising ad prices in the auction-based exchange. AllThingsD’s Peter Kafka notes that the impetus could have been Facebook’s ad partners hammering the social network to make their lives easier. At least one of those reputed hammers sounded happy. ”This is good news for open marketplaces and the ability to provide clients with choice,” Kurt Unkel, president of Publicis-owned digital ad agency VivaKi Nerve Center, said in an emailed statement. “We applaud Facebook for opening up access to Google (and Amazon) and we are excited for the possibilities.” David Rodnitzky, founder and CEO of digital agency 3Q Digital, said the move should be a win for Google, Facebook, and their advertisers and indicated it might not be the last example of cooperation: “Facebook has built numerous ad units that are driving positive ROI for advertisers so it wouldn’t shock me if this is just the first of many integrations we see between Google’s ad platform and Facebook.” Facebook’s ad partners also sounded an optimistic note. ”It’s a positive sign to see market conglomerates working together to help define the future of advertising,” said Dan Slagen, senior vice president of marketing for Facebook ad partner Nanigans. Why the change now? Google’s not saying, and neither is Facebook, but in recent months, a couple of developments have forced the two companies to work together more closely. Google bought the social ad firm Wildfire to manage Facebook campaigns in July 2012. For its part, Facebook bought the ad serving firm Atlas from Microsoft MSFT +0.11% in February, and that technology serves ads on Google’s ad network and uses its search ad software. The change could affect the business of other demand-side platforms such as Turn, which have benefited from Google’s absence on the Facebook exchange by stepping in to provide services instead.

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