the global economy is moving eastwards, to where it was 200 years ago, from which it was temporarily displaced by the industrial revolution and that ’ s a factor, one of many factors that we in israel have to take account of, as we think about how the rest of the world affects us. there was a european theory that you should get 1 – 2 countries out of the eurozone, so that the other countries would realize it could happen to them, but they ’ ve given that up for a very good reason – if you start a process like that it could really get out of hand. but they made that decision that they wanted to save the euro. mario draghi made the decision ; he said that the european central bank would do what it had to do to save the euro. well what it has to do is clear – provide some way of providing support directly to governments. find some way of keeping the finances of governments more or less whole. we should understand that greece in the end defaulted on its debt in a negotiated way. not every government has to be forgiven its debt, but it has to be guaranteed support in negotiations over its problems. in any case, europe is in a recession ; over the next year we ’ ll probably see slightly better growth than we were expecting to have in the second half of 2013. on the capital markets side, interest rates have been low for a very long time. that situation will continue until we begin to see signs of growth or signs of inflation. in 1994 the fed changed its monetary policy from being very expansionary, and it raised rates unexpectedly and caused a temporary slowdown in global growth, because people were simply caught bis central bankers ’ speeches unawares. that should not happen now. the fed has been telling everybody that it ’ s got to be ready for a change like this. by the beginning of 2015 interest rates should possibly begin to rise. i won ’ t go into the argument on currency wars, or if there aren ’ t currency wars. it is a simple fact, whatever the motivation, that interest rates are zero, it ’ s a simple fact that it ’ s harder for us to deal with an environment in which global interest rates, in countries which account for more than half of global gdp, are essentially zero, but that ’ s not a fact that we ’ re going to change by complaining. so what do we do in the israeli economy? at the ceremony when i got this job, in the house of the

president, in may 2005, i said that this is a strong economy, they said i didn ’ t understand it. but this is a strong economy – it has been through more shocks, including military campaigns, the resignation of the person responsible for changing the economic strategy in 2003 – then - finance minister netanyahu, in august 2005, the change of prime minister after the stroke of prime minister sharon, hamas winning the palestinian elections, in july 2006 the second lebanon war – i can continue listing more events – but the israeli economy faced all of them impressively and growth continued at a rapid pace. it also went through the global crisis very well. where does all this come from? it comes from good fundamentals. part of that is the banking system that is strong ; it ’ s a very conservative banking system, and people mostly don ’ t like that, they wish the banks would take more chances, until something happens, then they wish they hadn ’ t taken chances. so in 2008 and 2009 our banks were heroes for having been conservative, by 2010 the heroism effect had worn off already, and the public was complaining – which is what the public does about banks around the whole world. but it is important that our banking system continues to lend, but continues to lend taking account of risks. if i can say something i ’ ve said more than once before, we are accused very frequently of supporting stability of the banks over stability of the consumers. the short answer is, we take care of stability of the banks because we care about consumers. in the united states, and in other countries, we have recently been witness to a banking crisis. we had such things in israel as well in the 1980s. i am certain israeli citizens who remember the crisis of the 1980s would not want to find themselves in such a crisis again, and that they are happy about the fact that we have not been forced to deal with such a crisis since then. that should continue to be the situation. the short run situation of the israeli economy is very good except in one respect. i ’ ll give you the very good part first. unemployment is at a 30 - year low, the balance of payments essentially is balanced, inflation is a little below 2 percent, which is the center of the target range, banks are still in good shape, poverty is actually declining – though no politician gets credit for that, and increasing participation in the labor force, a larger and larger share of the population has been going out to work