This week, Bank Hapoalim posted a massive 4th quarter loss. Deutsche Bank is concerned that Israeli banks are hiding too much bad debt, whose significance has yet to be fully appreciated. And in a troubling conversation, a private banking analyst told me that the Israeli public has yet to internalise fully the depth of the world recession.

Crisis? Well, the jury is still out. Yoram Ariav, the DG at the Finance Ministry, has gone on record saying that he knows of no Israeli bank in trouble. Good! And most banks have yet to cut the pay packets of the humble board members, as is happening in other countries.

This week, I spent some time with a specialist in private banking, who occupies most of his time in European financial centres. Having conducted several days of back-to-back meetings in Israel, he finished his visit totally confused. Why aren’t the Israelis worried, he pondered.

To paraphrase his comments: There is a financial downpour soaking the global economy. Yet, Israelis are not reaching for an umbrella and waiting under a bus stop. They are running forward to get to the next stage in the economic cycle.

They want to know how to invest anything, somewhere, in order to be ready for the next sunny day. He may not have understood the pysche,  but I felt that he had had a successful trip. 

It is not all rosy in Israel. But this story is more than simply anecdotal inference. Shimon Peres, the President of Israel, believes that Dell will consider a large investment in the Jerusalem region. Daniel Vasella, the CEO of health giant Novartis, will raise their presence in the Holy Land.

Israel entered this recession with a fine economy. Since the mid 1980s, the banking system has been reformed consistently and sensibly. Wise and measured domestic policy will see the country through the rough. These factors indicate why there is cause for cautious optimism.