9. Hard Times in the Hebrew City
I had left the bubble of the Hebrew immersion course and the small town in the desert. In Tel-Aviv, my new home base, I was beginning to take notice of some very unpleasant developments — and of the people around me, who were reacting with growing anger and frustration.
The Lebanon War. The incursion into Lebanon, which started in 1982, was dragging on with no end in sight. This was considered by some to be Israel’s first “avoidable” war, and demonstrators for and against were clashing in the streets. Meanwhile, young soldiers were continuing to return from the front in body bags.
Hyperinflation. Israel’s mismanaged economy was in an inflationary spiral, reaching mind-boggling rates of 500% annually. This led to the widespread adoption of questionable economic practices, as people learned to spend their monthly income on the day it was received, and found it advantageous to take out loans and pile up debt. If Israel had an annual buzzword-of-the-year competition, the winner for 1984 would be “overdraft”.
On a personal level, mailing letters to my family meant waiting in line at the post office each week to buy new stamps, as the price of the delivery would increase by about 20 percent since my previous mailing.
The bank share collapse. In a Ponzi-like scheme, Israeli banks made an explicit promise to investors that they would support the bank’s stock prices by buying up shares. The general public caught on, understanding that they could buy shares with no downside risk. But as with all such schemes, the bottom eventually dropped out. Institutional investors suddenly decided to take a profit, and began selling shares and investing the proceeds in foreign currency. Stock prices collapsed, and the government was forced to step in and bail out the banks, effectively nationalizing them. Small-fry investors who hadn’t cashed in on time lost 50% of their savings overnight.
In this unstable environment, people became increasingly jittery, and one never knew when and where the next meltdown might occur.
By the summer of 1984, I’d had enough of the tension, and threw in the “Israel” towel. I’d been accepted to begin graduate studies in New York, and decided to haul ass back to the states.
