The Israeli financial newspaper ‘Globes’ had a look at Poland’s economy since the judiciary had become less independent.

The verdict? High inflation, Less investment. Uncertain future. But the people in power seem happy and content.

Is that what would happen in Israel, if all / most of the propsed legislation goes through in the next month or so?

What follows is a summary of an interview with Former US Federal Reserve chairman Ben Bernanke, who won the Nobel Prize in economics last year. I took the story from the website of ‘Arutz 7′, which itself is highly identified with the present government and its policies. Bernanke warned in a conversation with Israel TV Channel 13 News that the judicial reform being promoted by the government will harm the Israeli economy.

“Israel is a small and open economy that depends on international trade and international investments for economic growth and prosperity. There will be tremendous damage to the security of foreign investors, trading partners, and Israeli entrepreneurs as a result of sudden institutional changes that will increase uncertainty, create new legal and political risks, and jeopardize the rights of minorities,” Bernanke was quoted as having told Channel 13 News, which only provided a Hebrew translation of the comments rather than the original English.

“In order to ensure that Israel’s extraordinary economic success continues, Israel needs to move slowly and build a broad consensus regarding any significant change in its legal system or form of government,” he added.

Former US Treasury Secretary Lawrence Summers, whom Prime Minister Benjamin Netanyahu sought to harness to support the judicial reform, warned in an interview with Channel 12 News this past week of possible economic damages that could be caused by the plan.

“There is a sense that, this judicial reform, not because the idea of judicial reform is being pursued, but because it is being pursued in a so divisive and so rapid and so extreme way, that it will undercut confidence in ordinary commercial relations, and what has been a great accomplishment of Israel building a ‘Start-Up economy’ will be undermined,” he said.

“My sense is that Israel is, in a sense, walking too close to a ledge in the way this is being done, and by the time you’re sure that you’re too close to that ledge, it’s too late to repair the situation,” added Summers.

The Arutz 7 post is noteworthy. After all, an Israeli hedge fund has just witnessed a ‘tidal wave’ of Israeli shekel-denominated assets.

It seems that key investors are starting to bet against the Israeli economy, just as the Finance Minister is starting a course in 101 Economics. There again, like most of the other ministers in the Israeli government, they seem ……….happy and content.