The financial storm befalling American markets seems from Tel Aviv to be a foreign crisis whose connection to Israel is minor compared with the drama overseas.
The diseases revealed on Wall Street stem from a financial apparatus resting on a real estate market that was inflated for years. The minute the real estate market there fell, the financial system that fed it with cheap, available cash collapsed, and the stability of enormous institutions was undermined.
The fall of old-time investment banks such as Bear Stearns, which was sold, Lehman Brothers, which went bankrupt, and Merrill Lynch, which was forced to sell itself to the Bank of America, will change the face of Wall Street and bring with it strict regulation of U.S. markets. The nationalization of the two mortgage agencies Fannie Mae and Freddie Mac is a defining moment for the U.S. government, which had sanctified the free market and now will have to deal with its decision for a good many years.
