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"2011 has been a year of crisis in Europe, and I believe that it would be a great achievement if global activity in 2012 stays as is, without a slide into severe recession," said Bank Hapoalim (TASE: POLI) CEO Zion Kenan at the "Globes" Israel Business Conference "2012 - unfinished agenda" plenum session today. "I am very worried about developments in the Eurozone and common institutions' inability to deal with the crisis. Six problem countries need to raise €1.2 trillion over the next three years."
Kenan continued, "A global economic storm has been waging this year, jeopardizing the Israeli economy. The social protest was a wake-up call for businesspeople and politicians. The global economy is going through an unemployment crisis, a debt crisis, and financial crisis, and everyone is bashing the European economy."
Kenan nevertheless believes that the Eurozone will survive. "There has been a crisis of confidence in the banking system, which is heightening the risk of recession. To stabilize the situation, coordinated action by international bodies is necessary. I believe it is too soon to write off the euro; I believe that it will survive."
Turning to Israel and Governor of the Bank of Israel Prof. Stanley Fischer's concern that plunging real estate prices could destabilize the economy, Kenan said, "In contrast to 2007 and 2008, there are domestic risks. Israeli companies have financial problems and it is to be hoped that the fall in home prices, if they happen, will be measured and controlled. The social protest was spontaneous and powerful, which is why it won the support of the majority of the public. I wish to say absolutely clearly: the social protest had, and will have, achievements, and I say this publicly for the first time.
"Home prices in Israel are high relative to purchasing power: more than 120 gross salaries are needed to buy an apartment. An average young couple has almost no chance of buying an apartment today, and the government should intervene in the real estate market to make apartments accessible to young couples, possibly including tax cuts."
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