workers with no rights December 2, 2009
Posted by jonnydegani in economics, finance, job search.add a comment
Many workers in Israel receive no rights whatsoever. Employers take advantage of payroll law in order to sneak in the payments to cover legal rights that an employer should pay and then consider it part of the overall pay. This system is often used to deprive workers of pension payments, vacation days, sick days, and even transportation to and from work.
How is this done? There are a couple of ways to do this. It can be done by writing long contracts that stipulate a lower wage amount than the amount originally presented. Then afterwards the legal amount for each right is added. For example, let’s say I advertise that I am looking for someone to work for 60 shekels per hour. I can write a contract that states that the worker will get 30 shekels + transportation, which I value at 15 shekels. + pension substitute + vacation substitute + sick day substitute = 60 shekels (note: I am making up the numbers here). Alternatively, a contract can be written only paying for the hour worked, by the hour, even if it is a part or even full time job.
So what’s wrong with this? Doesn’t the worker get his money anyways? Yes and no. When one sees a job that pays 45 shekels per hour for 10 hours a week, he or she expects 450 shekels plus the legally required minimal benefits. But in this case, the worker expects one wage, then gradually understands all the different items that the wage covers, effectively lowering the wage that the worker gets paid. The worker, usually lower level, thinks he or she is finally getting a break and not earning the minimum wage, just to find out that they actually are. Most people do not do the math, so it is really the corrupt taking advantage of the complicated legal jargon in order to drown the average worker.
What is the real danger of this system? Economically speaking this system moves the burden of all of these programs and payments that should be covered legally onto the shoulders of the worker. In English, this system is a form of deception abused in order to steal from the poor. Also, these “by the hour” contracts are also used to fire sick workers, pregnant women, and pretty much anyone at anytime without any recourse.
So why is this legal? This system is legal because it allows small businesses to hire people for occasional services without the worker being an independent business by himself. Imagine what a pain in the neck it would be for me to have to open a tik or register as a worker, even if I am just working one time for a couple of hours. The problem is that this system is taken advantage of by clever lawyers and corrupt businessmen who have no regard for their workers.
If you’ve been following this blog, you’re probably looking at me now saying “okay mr. smarty pants, what’s the solution” Well, I’m glad I asked.
As always, knowledge is the key. But in our case a tool is needed in order to provide this knowledge. This brings me to my current pet project, the job payoff index. The job payoff index is an index whereby any job can be evaluated for what it really pays, including all benefits, in order to give a worker one solid number that he or she can use to compare jobs and measure what each one really pays, looking past all the legal mumbo jumbo. Dishonest employers would no longer be able to tout large deceitful hourly wages once the truth is opened wide and set for all to see.
Additionally, the index would also help job seekers looking for a subjective way to compare the payoff of several offers. For example, this system would allow me to compare one job that offers a car with another that has a better pension plan and more vacation days.
The job payoff index would use the following formula: The salary and benefits paid by a job minus the minimal salaries and benefits that must be paid by law. Obviously, I just listed a very hard bunch of variables that need to be defined. For example, what is the real price of having sick days? What is the cash equivalent of not getting a pension? What is the price or stability and being warned before being fired? I have to work this out.
If anyone out these is a numbers nerd, an economic nerd, or a current employer who knows the laws, I’d greatly appreciate your help. You can e-mail me at jonnydegani@gmail.com and I’ll tell you where I am holding, what I think I need, and ask for your opinion on the matter.
I thank everyone in advance for considering helping. I think we could work together to really make a difference. Thanks and Kol Tuv.
High Holidays on a low budget: Hannukah (part 1) December 1, 2009
Posted by jonnydegani in budgeting, holidays.2 comments
I know, Hannukah, isn’t technically one of the High Holidays, but it is one of the most expensive ones. And to complicate things more, finding gifts for our loved ones is not only expensive, but difficult as well.
Hannah from A Mother in Israel reminded me of the obvious truth that many overlook: when considering a gift, look for something personal that appeals to the recipient. Apparently, it is the thought that counts. Some ideas like a massage at a spa, or something that has to do with the receipt’s hobby will always have a personal touch.
Sometimes, the personal touch is not limited to what you can buy, but what you can make. Miriam from Israeli Kitchen wrote in the following idea.
“Responding to your appeal for Hannukah gifts that are easy on the pocket, I’d say that good-quality home-made food and drink is always acceptable.
A pretty papier-maiche box full of cookies, 3 kinds
Home-made Kahlua or Irish Cream – recycle an attractive bottle or break down and buy one. Recipes widely available on the Net.
Two loaves of home-baked bread, 1 whole-wheat and 1 white.
Chocolate milk mix: 2 Tblsp. cocoa, 3 Tblsp. sugar, 1/2 tsp. cinnamon, 1 package vanilla sugar. Put all into an attractive cellophane bag or small ziploc bag. Stick a label on the bag instructing to put the contents in a blender with a liter of cold milk, blend for a few minutes, serve.”
What I like about this is how gourmet this is, how thoughtful it is, and how inexpensive it is (this is a blog about budgeting after all…). Miriam’s idea takes the idea of a several hundred shekel gift basket and makes it warm and personal, all while breaking the supply chain in half.
While I am talking about this idea, I’d be remiss if I didn’t share my recipe for Jonny’s Irish Cream. It’s good, parve, and can even be made Kosher for Pesach.
1 container of non-dairy creamer (about 4/5 of a pint)
3-4 eggs
1 cup of vodka
6-8 tablespoons of sugar
3 tablespoons of chocolate syrup
2 teaspoons of instant coffee
1 teaspoon of vanilla extract
1/2 teaspoon of almond extract
This recipe makes approximately 1 liter of Irish Creme.
When preparing be sure to use an electronic mixer – otherwise there will be little egg bits which are not too nice. If you do not have an electronic mixer, then pour the finished product through a strainer in order to remove the little egg bits.
I know this post is a bit heavy on the food. I plan to go through some other Hannukah ideas over the next week or so. Right now, I suddenly feel very hungry.
what’s really holding back our water November 30, 2009
Posted by jonnydegani in economics.add a comment
Back in NY I used to leave the water running when I washed dishes, thought nothing of washing my car, and never turned off the shower while applying shampoo. But in Israel the reality is different. Israel’s scarce supply of water makes it important to increasingly curb water usage. But curbing water usage alone will not solve the water crisis. The Israeli government will need to take some serious steps in order to solve the current water crisis. These steps will have to go far beyond the standard strategy of throwing money at the problem; they will have to address fundamental changes in management and government corruption.
The first step Israel has to take in solving the water crisis is forming a clear strategy for building desalination plans and enforcing it ruthlessly. I do not refer to the current policy of “I think they’ll be built by 2012” that the government follows. A cursory glance at the center of town in Jerusalem will show that setting an approximate finishing date as a deadline is not only incompetent, but financially burdening to all those affected. If the construction of the desalination plants will be anything like the train, we’ll be lucky if our grandchildren get to see it. Israel needs to make specific strategies and look to best practices in order to streamline the construction of its plants. A contractor that does not meet a milestone should be fined and then instantly replaced by someone who will not repeat the mistake. Contracting bids should not be accepted on the basis of price alone, but on the basis of speed and reliability as well. Remember, this is national emergency, not another pet project. As long as speed it not a goal, it will never be reached. As long a mediocrity is not acknowledged, it will never be stopped.
The next challenge Israel needs to face in order to increase its water supply is corruption and market failure. Mekorot, Israel’s national water company, supplies 90% of Israel’s drinking water and 80% of its agricultural water. Most of the time, this makes sense; most of the time we can only have one supplier of a utility; the chaos of having two companies build pipes in our houses would be just too expensive. But when it comes to building plants, the business should be given to the one who can build the plant the quickest, fastest and cheapest, not to the one who controls a tangential market. This issue came to the for in June 2008 when a court ruled against a contract given to Mekorot for building a plant in Ashdod for the simple reason that they won the bid without even making an offer. Apparently, a deal was struck behind closed doors and in clear violation of the law. And of course afterwards there was no investigation, no scandal, just a return to business as usual. This cannot continue. Israel must treat its water projects as sacrosanct, and root out any corruption that affects them. As long as corruption will haunt the entire process or building desalination plants, the process will be slower, the cost higher, and the quality of the plant lower.
Every day when we recite the shma, we confirm our belief that the supply of water is greatly connected to the People of Israel’s following the Torah. And while the skeptics mock that piety and prayer will not water our fields, it should be made clear what damage is being caused by deceit and corruption. In fact, after looking at the problems that are holding up Israel’s production of water, it seems that the words of the Torah are more alive than ever.
how to make a budget November 26, 2009
Posted by jonnydegani in budgeting.6 comments
One of the most important monthly rituals in my house is making a budget. My wife and I sit down somewhere between the 10th and 15th of the month in order to determine how much we can spend in the coming month and how we will build our life. I personally prefer to make a budget from the 15th to the 14th of the next month, because by that point I know how much money I already received from my primary source of income (by Israel law, employees must be paid no later than the 10th).
It is important that both the husband and wife work together to agree on this budget. This does not mean the wife just lets the husband do what he wants and she agrees; she must be part of it. I have heard plenty of couples who financial problems start with the fact that one spouse controls all the money.
Making a budget means assigning an address to every shekel you earn, telling it to do before it tells you. In order to do this you need to determine two things: your inflow of money and your outflow of money
inflow:
Include any money you have received in the past month. This includes any money you earn, your spouse earns, and any money you receive as a gift. For example
| ₪300 | from Bob’s birthday |
| ₪100 | from Sue babysitting |
| ₪3000 | Sue’s paycheck |
| ₪2000 | Bob’s paycheck |
| ₪5400 | total |
As you can see, we’re dealing with only ₪5,400. No more. There is no spending anything above this without going into savings, or even worse, debt. If you need more, then realize what you will have to do, and consider how you will need to pay it back.
The next thing is to list our outflows of money. I prefer to list them by order of flexibility. For example, I cannot change the amount I pay for rent, but I can change how much I eat out. Obviously your list will vary. It may even vary every month; that’s fine. The important thing is that every dollar you have has an address.
Finally, fill in the amounts starting from the least flexible to the most
| ₪2600 | Rent |
| ₪150 | Internet |
| ₪500 | Electricity |
| ₪200 | Water |
| ₪100 | Phone |
| ₪300 | Transportation |
| ₪100 | Medical |
| ₪1000 | Groceries |
| ₪50 | Clothes |
| ₪100 | Eating out |
| ₪100 | Misc |
| ₪100 | Charity |
| ₪100 | Savings |
| ₪5400 | total |
Your inflow must equal your outflow. Every shekel you make has to have an address. If you get some extra money during the month, you can either choose to add it to your current month (add the money to you inflow and outflow) or save it for the next, but do not do what most people do and spend it both times.
A wise woman once told me that every budget is a fiction; it’s just a matter of how historical your novel is. If you see that something is not working in your budget, or that you are going to have to break a limit on something, then call an emergency budget meeting with your spouse where you both determine what you will have to change in order to ensure that your inflow still equals your outflow of money.
I personally keep an excel file on the desktop of my computer than will automatically subtract any money I type in and tell me how much I have left. Some people I know like to keep a countdown of how much thay have left to spend in each catagory on the fridge. The important thing is to be aware. Once you have a budget, you’ll be surprised how much more easygoing you’ll be about spending money. No more guiltly meals out and regretful splurges. Next time you go out, you’ll kow that it is exactly what you can and should be doing with your money.
my best and worst financial decisions November 24, 2009
Posted by jonnydegani in finance, happiness.2 comments
Recently my sister convinced my wife and I to begin watching a Canadian show called Being Erica. The show is about a 32-year old woman who feels that her life is a compilation of bad decisions. She meets a ”therapist” who asks her to list her regrets and sends her back in time once an episode to redo some of what she considers the most pivotal points in her life, when she made some of her worst decisions.
I could not help but think when watching this show about some of the pivotal financial decisions I made in my life and what kind of impact they have.
Here are some of the best and worst financial decisions I have made, and how I think they have affected my life.
My best financial decisions:
Pushing off aliyah for a year: I pushed off my aliyah from August 2005 to August 2006 in order to take a job as a teacher for a year. While this did not fill the coffers indefinitely, it did give me the proper cushion I need in order to make it in Israel. This money would serve as a down payment on the apartment I currently rent, and help me support myself though what was one of the most difficult times to be involved in a job search.
Trying new ideas: When I was in Chicago, I was diagnosed with a herniated disc (very painful). My doctor insisted that the only thing he could do was give me cortisone shots and a ton of vicodin until I would be able to raise $20,000 for back surgery. I did not sleep for nearly a year and was on the verge of taking out a high interest loan in order to pay for the surgery. The vicodin made me very edgy and snappy (I started watching House because 3 people independent of one another told me that I reminded them of House during this period.) Finally and in desperation, at the insistence of a family friend, I read a book and followed the program of Dr. John Sarno, head of rehabilitation at NYU medical center. Within 6 weeks I was completely healed and have had no back or leg pain since (my seasonal allergies and lactose intolerance went away as well.) If you suffer chronic pain, I highly recommend reading one of his books. You should be skeptical; I was, but an open mind saved me a ton of money.
Learning in Bar-Ilan’s Kollel instead of getting a job: During my MBA, I had to choose one of two options in order to make money (1) get a part time job or (2) learn in Bar-Ilan’s Kollel. After calculating how much the Kollel would be paying an hour, I realized that it would be paying more than a part-time job. More importantly, learning in an Israeli Kollel gave me the opportunity to learn at a much more advanced level. Finally, my ability to work in my job today is partially the result of the Hebrew I picked up learning in the Kollel.
My worst financial decisions:
Not knowing what I wanted to do in college: My generation is defined by desiring a plethora of opportunities so much so that it leaves many of us unable to make a decision. I took some business courses in undergrad, but I probably should have majored in business in undergrad, as opposed to going for an MBA. I really don’t think it would have made a difference in the job market and probably would have saved me a ton of money. This of course brings me to my biggest regret financially…
My student loans: All my life I have heard that student loans are “a fact of life” and “good debt.” I no longer believe there is such a thing as “good debt.” Unless you are certain that the additional education will get you a job that will pay back the loan in spades, I strongly recommend against taking out a student loan. I went to an inexpensive undergrad, so I am not worried about the loans from there, but the loans from business school are finally beginning to catch up with me. If I were to do it all again, I would only go to undergrad, and try to make sure my loans were paid off as soon as possible. And for grad school – I would only go if I were to be subsidized, sponsored (often times employers will foot the bill), or if I saved the money to pay for the entire thing up front.
I remember back in yeshiva that one of my Rabbis told me that he never missed a day of putting on tefillin since he was 20. Not 13, but 20. He said that just because he messed up when he was young does not mean that he cannot learn from it and make sure his future is what it should be. When he makes it to 120, I think the angles will be more impressed that he wore tefillin every day for 100 years than upset that he missed a bunch of days the first 7. Taking the right step now, religiously, socially and financially is the best thing one can do. Not only will it make up for past mistakes in time, but it may bring forth new opportunities and possibilities that will make the journey worthwhile.
this Hannukah break the supply chain November 22, 2009
Posted by jonnydegani in happiness, holidays, shopping.4 comments
At least once a holiday season, I walk past the shuk and see the beautiful baskets on sale for the holidays. It takes me a short moment for the pleasantries to sink in, but when it does, I usually have the following reaction:
“90 shekels?! This person is selling bamaba, two mikupelets and a bad bottle of wine in a basket for 90 shekels?! Who in their right mind would pay for this?”
But of course someone does pay for this; otherwise the sellers wouldn’t make the gift sets every holiday. These sellers are making money by utilizing the supply chain.
The supply chain refers to the various steps needed in order to purchase, produce and distribute an item. If you were making cars, your supply chain would include your goods from suppliers, your assembly equipment, your assemblers, your delivery people and your sales people.
The same principle can be applied to buying Hannukah presents. In the case of a Hannukah present, the supply chain includes the items for the present, the compilation and the delivery. And while everyone loves one stop shopping you’d be surprised how much you can save by breaking apart the supply chain. Let me give a few examples:
Sending photos abroad: If you have a mother or grandparents abroad, few presents can compare to sending some pictures of yourself (or more importantly, your kids) via snapfish.com or a similar service. Sending photos allows you to share your time and life with someone abroad in a more tangible way than phone calls alone. But if you look at these sites, you’ll notice where the supplier strikes it big: packaging. Frames on these sites are typically jacked up as much as 300% retail price, and sometimes over 500% of what you can find in a local store. I would recommend (1) finding a frame from another source (amazon.com, ebay.com) and sending it separately or (2) not sending a frame at all. Your mom and grandma already have lots of frames sitting around in the house.
Sending flowers abroad: 1-800-flowers makes their money on pretty much every piece of the supply chain. They charge more not only for the flowers, but for the vase and delivery as well. Alternatively, you can call your local store (which may even be the safe affiliate 1-800-flowers uses), tell them your limit (including tax) and then build the bundle of choice. Want free delivery? Ask your old neighbor lives next to the recipient to lend you a hand a pick it up. He or she will probably be glad to be part of the giving process and will end up saving you $15.
Sending a gift basket to a local friend: So here we are, right where we started. Just compare the cost of buying a basket (₪3 shekels) cellophane (₪2 shekels) and candy (₪10 shekels) and some wine (₪20 shekels, ₪40 if you’re really generous) to buying a pre-made basket with bad wine for ₪90 shekels. Similarly, if you shop at a place like beauty care and a local super-pharm, you can make a nice basket with massage oils, creams, and beauty products for around ₪50 shekels.
The trick is to use your imagination. And most of all, next time you see an item for sale and think “I can make it for half the price,” go out and do it.
On a similar note, I am trying to put together a post for some good gifts for Hannukah, and extract some money saving ideas. If you would not mind, please contact me with some of the successful presents that you have either given or received. You can e-mail me at jonnydegani@gmail.com or just leave a reply below (note: if you reply to this message with a gift idea, I will not print it below in this post, but save it for the coming post.) Thanks.
what kind of health insurance do you use? November 18, 2009
Posted by jonnydegani in budgeting.7 comments
Every time I watch the health care mess in America, I think to myself, “thank God, Israel’s health care system doesn’t look like this.” Likewise, every time I have to sit in an emergency room in Israel for 3 hours to see a doctor, one of my few comforting thoughts is that in America, I used to wait much longer. At the same time, our healthcare system is tumultuous and confusing; I am still trying to work out all the kinks in order to know which kind of service to get and what sort of insurance.
Just to make it more complicated, not every healthcare plan (kupat cholim) in every city is equal. Some cities have better doctors for different healthcare plans than others. For example, maybe the best gynecology department in Petah Tikvah is in Meuchedet, but perhaps in Rishon lesion it could be in Leumit. This means that when evaluating my healthcare plan, I first have to know the doctors where I am living.
Additionally, there is extra insurance you can buy in order to supplement your insurance. The lower level extra insurance (meduchedet adif, maccabi silver, clalit mushlam, and leumit silver) basically gives you a discount on some drugs and some lower level, once in a while procedures (including a very limited dental insurance.) The higher level insurance (meuchedet si, maccabi magen zavav, clalit platimum, and leumit gold) includes coverage for more surgical procedures and the hospitalization that you will spend afterwards. Some of the health insurance funds (most notably macabbi) also offer fringe types of insurance; for example, maccabi offers insurance that provides discounts on natural healing products.
So how much insurance should you get? I remember an episode of Third Rock from the Sun when John Lithgow’s character said he would never get insurance, “it’s just a wager against myself,” he said. That’s true, but at the same time, we need to be realistic and be prepared in case something happens.
I personally follow the middle path: I get more insurance only for the ones who are more likely to need it. Those with a specific chronic illness, women of childbearing age, and the elderly are the most likely to need the benefits of additional insurance. In my family I have the lower level additional insurance (I’m American; I believe drugs will fix whatever is wrong with me), while my wife has the higher level one.
What kind of insurance do you have? How has it been working out for you?
how the Israeli pension system works November 17, 2009
Posted by jonnydegani in finance, taxes.1 comment so far
Yesterday I received an e-mail from one of the readers about my post explaining the Israeli tax system. She brought it to my attention that I made a mistake about the pension amounts I mentioned in the post. I confused what is a common Israeli practice for adding more to a pension with what is the actual minimum that one receives for a pension. In this post I plan to explain how a pension works in Israel. Additionally, I corrected my two previous posts (1) Israeli tax system explained - salaried worker and (2) the Israeli tax calculator. So without further delay, how the Israeli pension system works:
To begin, an emplyer only begins paying the worker’s pension after 6 months of work.
The money paid into a pension can be divided into three groups:
(1) the amount the worker invests
(2) the amount that the employer matches
(3) the amount that the employer sets aside for compensation. This is similar to (2), except that if the employer is no longer working for the employer, he or she can take out this money before reaching retirement age (67 for men, 64 for women).
In recent years, the Israeli government has made laws changing how much must be paid in. By 2013, 5% of the base salary will be set aside for each of the categories mentioned above. In the meantime, in order to ease Israeli businesses into the rise, the following rates exist:
What does this mean? In short, this system will mean that employees will be “forced” into saving more, but will be rewarded greatly. After 2013, the average worker will be able easily save have over 2,000,000 shekels for his or her retirement (that’s the power of compound interest).
In the coming weeks, I plan to go over evaluating different pension funds and what tools you can use in order to secure a good retirement.
the falling dollar November 16, 2009
Posted by jonnydegani in budgeting, finance, taxes.add a comment
I was honored to be e-mailed a question from one of our readers about a personal finance issue she is facing in Israel. With her permission, I would like to respond to this e-mail publicly, as to help other facings a similar dilemma.
Disclaimer: I do not advise any specific financial course of action that one should take. The information presented on this site is for informational purpose only; consult a financial advisor as you finances may vary.
Reader: “…I had the strangest conversation in the park with some American who lives in Chashmoniam (but didn’t make Aliyah?)–he said that he thinks the dollar will weaken even further against the shekel and will wind up at 2.9 NIS, even lower than last summer. We should put as much money as possible into NIS ASAP. At this point I had to wrangle my kids and didn’t get to ask him why he thinks so.
Do you have any insight? We have a fair amount of money still in the US (retirement funds, funds for our kids, proceeds from the sale of our apt–this just went through in the past few weeks–which we hope to put into an apt/house here in the next 2-3 yrs).
I fully admit to not having a really clear understanding of how the strengthening/weakening process works, for the record 
”
Shomer Shekalim: This is one the biggest questions facing American Olim. Many are unsure where the dollar is going and begin to panic, not knowing if their move will net big profits or ruin a good retirement plan. I have a friend who, a few years ago, said the same thing as your friend from Hashmonaim. He moved his money from dollars to shekels when the rate was $1: ₪3.2, netting a huge loss.
I personally have no idea where the currency rate will go. On one hand, the United States is throwing out money like it is nothing, so there should be inflation, which will bring down the value of the currency. On the other hand, other countries do the same and all exchange rates are relative. Also, since most countries are heavily invested in the dollar, they could not take a crashing dollar taking all of their exporting business. And, as always, politics will play behind the scenes in ways that no one can know, so it becomes even more difficult to see what will happen.
Like any investment, the way to safety is diversification. Dividing your money between a few currencies, specifically those are likely to rise when the dollar falls, will minimize your risk. Many people have differing opinions about what is the “best” currency: some believe it is the euro, some say the yuan, some say the pound, and others the franc. Since you are working with dollars and shekels, I’d begin with these two. Your bank account should not look like the UN, but diversifying even a bit would minimize your risk. But remember, diversification is not a tool to make you money. Some currencies will rise and some will fall, but overall, a diversified account should keep you at about the same amount of money.
A few notes:
(1) If you have debt in US dollars – keep money in the United States to pay off that debt. Don’t play around with money designated for a debt. Remember, whether the dollar rises or falls, your money in US Dollars and your debt will offset one another.
(2) If your money is in an IRA, you might be better off not touching it. You mentioned in the question that you are afraid of your dollars loosing 25% of its value. Well, if you take it out of your IRA it will be taxed and you will loose around 25% of the value (check with you accountant to see what rate you’ll be taxed). In this case, you’d only be increasing your risk by moving this money.
(3) Foreign currencies are not an investment. No matter what currency you put your money into, you need to set up a sort of tax exempt retirement account that will make you money for your retirement. For that, you need to speak to an expert in the field in America and in Israel. Hope this helps.
If anyone would like to send me any questions to answer, publically or not please feel free to e-mail me at jonnydegani@gmail.com
Disclaimer (another one): I am not a financial advisor; I do not advise on investments. I frankly don’t know what will go up and what will fall. But if you have any questions of how to manage your household money in Israel, I am your guy.
why I hate FXCM (and all Forex dealers for that matter) November 11, 2009
Posted by jonnydegani in finance.3 comments
A few years ago, when I was planning the honors to give to friends and Rabbis at my wedding, I called a friend of mine to ask him to be a witness. He gave a strange reply. He told me that I should ask my Rabbi if he (my friend) can be a witness; my friend hosts a weekly poker game and was afraid it would make him an invalid witness. I called my Rabbi and was told to play it safe and give my friend a different honor. My friend recited the sixth bracha under the chupah instead and my marriage is not suspect.
I have nothing against gambling. I know the dangers, and society, both religiously and secularly, has done a pretty good job explaining them to me. But what I do mind is gambling when I do not intend to. Worst of all, I despise those who prey on the poor, misrepresent gambling and draw the innocent into an addiction against their will. This is why I hate Forex.
Forex dealers to not honestly present risk, causing many to gamble and loose what they do not intend. Forex is dishonestly advertised as being easy to understand, with sites and courses teaching people how easy it is to make money. They tell people to look at interest rates, trends, and other basic financial tools. The truth is that in the real world, these tools are speculative at best; so many political issues play behind the scene that it is nearly impossible to figure out exactly when the currency will change. But even if someone were to use the tools advertised to teach in minutes what economists spend years learning and still fail to fully grasp, the model of Forex sites would still be a gamble. All of the tools for understanding where a currency rate is headed can only help one learn what it will be in the long run. If one were to invest as a day trader, the way most people do on foreign currency sites, then they are only interested in the short run. One may as well ignore all of those intelligent economic tools and just look for political surprises and natural disasters; these are the only two tools that will be able to measure what will happen to a particular currency immediately. But foreign currency sites will never tell their customers that they are taking completely unintelligent shots in the dark and should only think 30 seconds in the future – because that would make their sites look like the simple gambling sites they are.
Forex dealers manipulate their customers in order to turn a profit. Foreign currency sites do not make money if the cutomer gains or looses money; they make money when the customer moves money, irrespective of whether he or she wins or looses. So, in order to make more money, Forex dealers have to get their customers addicted and enable them to trade greater sums. The weapons of choice are up to the minute news and leverage.
The news on a foreign currency site is designed to get the customer nervous and feel that he or she knows the inside scoop, so that he or she will make more trades immediately. Foreign currency trading sites try to balance this by putting forth a warning to their customers not to get addicted. Imagine inviting someone over for drinks, warning him that drinking is addictive, and then enticing him for drink after drink until he is an addict. Clearly there is no good in telling him drinking is addictive if you are not only feeding, but causing his addiction.
Leverage is designed to enable customers to trade much larger sums than they have available and reach levels or risk that would make a roulette player nervous. Sites offer customers the option to “buy” up to 100 times what they have, which can amplify profits tremendously, but offer financial ruin as well (again, sites give a warning in order to cover themselves legally, but they still entice the customer.) Not that the Forex dealers care; their only concern is that the customer converts more money so that they can earn more money on the conversion.
So why do I hate FXCM, specifically? Although they prey alongside an industry of snakes, they themselves offer what some call a best case scenario. Their customer service is considered good, their technology is considered fantastic, and their pricing is better than most. What gets me about FXCM is their marketing of snake oil to the poor. Recently, the heads of FXCM got a seal of approval from Rabbi Shmuel Eliezer Stern, on behalf of Rav Vosner’s Beit Din, approving of their practices, and allowing them to make gambling with foreign currencies permissible in the Haredi world. I cannot imagine any Halachic authority taking the steps necessary for something this dangerous to begin to plague an already destitute community. I can only imagine that the esteemed Rabbi is unaware of the dangers on which he is signing off, and will, upon realizing them, retract his decision. Unfortunately, many in the Haredi community will have to suffer addiction and financial ruin in order for its leaders to take action.
If the lottery is a tax on poor people, then foreign currency trading is an albatross placed around the neck of the innocent to weigh them down and kill them. If you know anyone engaging in such an activity, please plan an intervention and get him or her out of it. If you know any Rabbis that have any influence, please bring this to their attention. The millions of dollars you will save the poor will be one of the greatest forms of tzedakah you ever give.
