NYC Real Estate Wipes Out Israel's Pension Funds

It’s not only your investments and 401(k)s that have been syphoned off in the economic crisis. Retirees and about-to-retire workers in other countries are suffering, too. But not because of the Madoff scheme. He’s off the hook this time.

Israeli pension funds saw $5.1 billion disappear as US and UK real estate investments, made by Jewish billionaires from those countries. with the retirement money, lost their value. Israel is on the verge of a strike because of it.

Even the New York City real estate market is not a safe bet anymore.

Bloomberg: Israeli pension funds helped diamond mogul Lev Leviev snap up Manhattan real estate, including the former New York Times building, in 2007. Now they’re sharing in his losses as property prices plunge, dragging down the value of corporate bonds that backed the deals.

Fellow billionaire Yitzhak Tshuva has the same problem after the foray by his Delek Real Estate Ltd. into British property and roadside restaurants helped force its bonds down 73 per cent. Pension funds and individual investors lost about 20 billion shekels ($5.1 billion), or a quarter of what they had invested in corporate bonds, as yields fell in the four months to November.

…”These real estate tycoons imported the global financial crisis to Israel,” said Gill Beeri, managing director of Ramat Gan, Israel-based Ayalon Financial Solutions Ltd. Its Smadar fund lost 14.1 per cent in the first 11 months of last year. “There’s increased concern that these companies may default.”

Tel Aviv Stock Exchange TA-25 Index fell by 41 per cent in the past year as fears of bankruptcy of Israeli firms spread among investors. The government is hashing out a bailout to compensate for the retirement funds in response to strike threats by Israel’s largest union over the pension losses.

We wonder whether the Israeli retirees would really get some of the bailout money promised by their government. So far ordinary folks that lost money in the U.S. because of the economic crash haven’t seen a dime.

See Also:

Protesters Crash Diamond Billionaire’s Party

New York Real Estate Market Finally Crashing

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.