The Iranian Debacle, The Flytilla, And The Cost Of An Israeli Big Mac


UPDATE (10 pm Sunday): Qassam rocket fired by terrorists in Gaza strikes near Sha’ar Hanegev in southern Israel 20 minutes ago.

UPDATE (7 pm Sunday): No terrorist events reported in Israel in the last 24 hours.

TWO FOLLOW-UPS:

Yesterday your humble servant blogged about the appeasement debacle in Istanbul where the powers-that-be fell all over themselves praising Iran. This morning, PM Netanyahu issued the following statement:

“My initial impression is that Iran has been given a freebie. It’s got five weeks to continue enrichment without any limitation, any inhibition. Iran needs to stop all uranium enrichment immediately, to take all the enriched material out of the country, and to dismantle its nuclear facility at Qom.”

Netanyahu is absolutely right. Iran has once again played the West for suckers and bought more time for its nuclear weapons production program.

Two days ago, your humble servant blogged about the flytilla of self-proclaimed “peace activists” attempting to enter this weekend. The flytilla has been stopped dead in its tracks.  Herewith the conclusion of an editorial this morning from the leftist Haaretz newspaper:

“A country that respects human rights in the territories under its control, including the right to nonviolent protest against foreign occupation, must invite peace activists to visit anywhere and welcome them with flowers.”

Nonviolent protest? Welcome them with flowers? What Haaretz is upset about is that the Israeli leftists who read Haaretz will not have foreign “activists” to go out with them and Palestinians for the next few weeks to throw rocks and burning tires at Israeli security personnel.  Three cheers for the Israel government stopping these violent demonstrators from entering Israel!

TODAY’S BLOG:

As you may or may not know, dear reader, The Economist magazine publishes a quarterly “Big Mac index”. To quote the January issue of the Economist, the index is based on the theory of purchasing power parity:

“. . . in the long run, exchange rates should adjust to equal the price of a basket of goods and services in different countries. Our basket consists of one McDonald’s Big Mac, and we’ve compared it with the average price in America, $4.20. According to our burgernomics [see table below], the Swiss franc is 62% overvalued: the exchange rate that would equalise the price of a Swiss Big Mac with an American one is 1.55 francs to the dollar; the actual exchange rate is only 0.96.”

Courtesy: The Economist. The graph only shows selected countries.

It turns out that on the above Economist Big Mac index, Israel (not shown) had the 13th most expensive Big Mac in the world ($4.13). This was far less than the cost of a Big Mac in Switzerland ($6.81) and Brazil ($5.68), but on the other hand, far more than the cost of a Big Mac in Turkey ($3.54), Russia ($2.55), China ($2.44), and India ($1.62). According to this Big Mac price, the Israeli shekel was around 2% undervalued against the U.S. dollar.

This morning, McDonald’s announced that it is lowering the price of the Big Mac in Israel from 16.90 shekels to 12.90 shekels (the equivalent of $3.43 at the exchange rate of 3.76 shekels to the dollar today). According to a McDonald’s press release,  McDonald’s made the decision “in order to broaden the price range of meals” and to make the prices more in line with those at McDonald’s in most European countries.

The net effect of his in terms of the exchange rate in relationship to the Economist’s index is now that the shekel is even more undervalued against the dollar (which is good for Israeli consumers insofar as Big Macs are concerned!)

 

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