A Daily Analysis
By Marc Schulman

December 24, 2008--70 Rockets Fall on Southern Israel, IDF Action Imminent

The situation on the third day of Chanukah has gone from bad to worse.
Southern Israel was hit by over 70 rockets and mortars, luckily there were no direct casualties, only victims of trauma from the shock caused by near misses. Instead of ratcheting down the firing, Hamas decided to retaliate for the death of 3 of its fighters who were trying to place an explosive device by the border but were intercepted and killed by the IDF. They did this despite the fact there were lines of trucks ready to enter Gaza which much needed supplies, that they knew would not be allowed in if they fired. The Israeli cabinet met, in special session, and approved plans of action the army put forth. Interestingly different Israeli analysts are giving very divergent interpretations of today's events. The military correspondents believe that both the Chief of Staff and Defense ministers are now convinced major actions need to be taken against Hamas. They believe Hamas cannot be allowed to get away with today's attacks without paying a high price. The Arab affairs correspondents believe this could be a step towards a renewed ceasefire, Hamas just wants to create a new reality.

In fact, there are no good options. Both the Egyptians and Jordanians fear the images that will be beamed by al Jazeerah, if Israel makes any type of large scale operation against Hamas in Gaza. Hamas has vowed that if Israel takes action it will expand the number of cities it attacks. Despite al of the ramifications, Israel will take significant actions against Hamas tomorrow once the weather clears.

The Bank of Israel announced a series of moves to try to encourage Israel's banks to lend more money. A report today noted that commercial banks are charging more in interest than the regulated grey marketers of the loans are allowed to charge. The Governor General of the Bank of Israel criticized the country's banks yesterday for not loaning money to help soften the expected recession in Israel. The Bank of Israel is finding the same problem in Israel that the Fed has found in the US. The normal methods of lowering interest rates to prime the economy do not work if the banks pocket the greater differential in interst rates, instead of loaning more and lowering the cost of borrowing.