January2, 2007: The Israeli economy continues a three year expansion. While unemployment is still about eight percent, that's a ten year low. The economy was supposed to grow 5.4 percent last year, but only did about 4.8 percent because of the Hizbollah war last Summer. That conflict devastated the Lebanese economy, cutting GDP by at least five percent. The Palestinian economy shrunk by over ten percent last year because of the continued internal conflicts, and terrorist campaign against Israel.

Overnight, a raid in the West Bank yielded eleven terrorist suspects, and a cache of terrorist supplies, including fifty Israeli army uniforms.

January 1, 2007: Negotiations, over the release of an Israeli soldier captured by Hamas in Gaza last Summer, are stalled because the Palestinians are demanding the release of 1,500 prisoners. Many of these are skilled terrorists, and putting them back on the streets means more Israelis are likely to get killed. Israeli counter-terror tactics have stopped the Palestinians, but part of that was because of the identification, and arrest (or killing) of key terrorist leaders and technicians. Letting too many of those guys out of prison means some more terrorist bombs are going to go off inside Israel. That sort of thing is political poison for Israeli politicians, so the prisoner exchange deal has to be handled very carefully. The Palestinians, as usual, don't much care what the Israelis are up against, and will ask for the impossible.

Al Qaeda leaders have denounced Fatah and Egypt for "collaborating" with Israel. Al Qaeda backs Hamas.

December 31, 2006: Israel looked the other way as Egypt shipped 2,000 assault rifles, and over half a million bullets, to Fatah forces in Gaza. This allows Fatah to arm more of its supporters, and give it an edge in any showdown with Hamas. The U.S. is also offering to help train Fatah security personnel, while Israel is releasing a hundred million dollars (taxes collected by Israel for the Palestinian Authority) to Fatah.

December 30, 2006: Nine more Kassam rockets were fired into southern Israel, one of them damaged a buildings. Israel counter-terrorist forces continue to find and arrest Palestinian terrorists in the West Bank and Gaza. Most of those arrested or killed lately were affiliated with Fatah.

December 29, 2006: Lebanon says that 1,123 Lebanese died during the war Hizbollah began with Israel last Summer. Hizbollah now admits that 250 of those dead are Hizbollah fighters, although Israel insists that at least 600 of the Lebanese dead are Hizbollah operatives. Hizbollah tactics included using civilians for cover as much as possible. Hizbollah fighters did not wear uniforms, so it was difficult to tell if the dead were involved in the fighting, or just civilians compelled to stick around to provide protection, or, if killed, a propaganda boost for the terrorists. The Hizbollah war also left 159 Israelis dead. Meanwhile, for all of 2006, about 600 Palestinians were killed in Gaza and the West Bank, while 23 Israelis were killed by Palestinians. Thus for the entire year, Arab terrorism against Israel left 172 Israelis, and 1,700 Arabs, dead. Arabs consider this a victory, because only ten Arabs were killed for every Israeli. The ratio has been higher in the past, and this trend is seen as a sure sign that eventually the Arabs will prevail.

December 28, 2006: The new security fence between Israel and the West Bank is becoming a battleground. Technicians performing maintenance on the fence (actually a series of obstacles, including a wall) sensors have been fired on by Palestinians, and, in some cases, the technicians are given a military escort.