This would actually be good news if there was a real alternative.  In a clear case of "just because you are paranoid doesn't meant they're not out to get you, Bibi is probably right that the Obama administration wants him out of office.  But at this particular moment--and things here do change rapidly--there isn't a clear alternative on the horizon.  

Labor has become a total joke.  It's a club of opportunistic rivals.  The "rebels," led by Yuli Tamir and Shelly Yachimovich, failed to block Barak from joining the coalition and have shown little interest in causing much trouble since.  Barak is personally deeply unpopular and does not seem to have grown out of the suicidal autocratic tendencies that torpedoes his own government back when he was seen as the great hope ("and he is a brilliant pianist to boot!") and "Rabin's successor.  Regardless, they have a measly 13 seats.  Yachimovich is promising.  I saw an interview with her the other night and was impressed.  Socio-economically and with regards to the Palestinians, she is the best representative of Labor's moribund social-democratic/neo-liberal tradition.  Unfortunately, she only entered politics a few years back after making a name for herself in TV jounalism (no Palin though, she was well respected.)

Livni is actually the most likely contender.  The problem is that her number two in Kadima, Shaul Mofaz, a hawkish former Ramatkal, Commander of the Joint Chiefs of the IDF is also an opportunist who only broke from Likud because he thought his own prospects were better in Kadima.  He lost the leadership to Livni quite narrowly, is very bitter, and is a constant threat to bolt, and take some central members with him.  Faced with a choice between a key spot shoring up Netanyahu and continuing to play second fiddle to Livni, whom he recently slammed with "she's a nice person, but she can't make the hard decisions" (and you all thought the sexism in US politics was bad), everyone thinks he'd run to Bibi.  That might spell the end of the Kadima experiment.  And though Livni is more of a realist and has displayed the temperament of potential quality statesperson, she's quite an entrenched nationalist herself.  If she could pull together a coalition, however, she might use Bibi's proclaimed "national consensus" on a "demilitarized Palestinian state" as cover for concessions leaning toward the left.  This past week she slammed Bibi's "state" talk as the height of hypocrisy.  Politically motivated, of course.  But likely spot on.  On the other hand, Bibi's position, if sincere, is probably not much to the right of where Rabin himself would ultimately have drawn the line.  That's the view of the Oslo skeptics on the left anyway.

Some have called for a Labor/Kadima merger.  I think it highly unlikely, due to the ambitious personalities of their leaders.  But it's not completely impossible.  But then there's that Oslo skepticism that doubts such an alignment would have the interest and the will to sign on to something that would be acceptable to the Palestinians.

Beyond that, I'm not sure there is much on the horizon at the moment.  Meretz is off the rails.  It is so identified as the "leftist" party that it would never command enough seats to be a central player.  And as a flank, it's support for the Gaza disaster has discredited it and it's support on the left has dwindled.  HADASH, a party I support, is too wedded to its communist heritage to be a true liberal option for most.  It weds progressive socio-economic perspectives to environmental initiatives and a strong support for two states.  HADASH, as a mixed Jewish-Arab party actually coined the phrase "Two States for Two Peoples," or at least popularized it.  One would think they'd be bi-nationalist, but as one of its MKs, Dov Henin argues, the idea of formally combining a first world economy with a third world economy overnight would lead to explosions, and he might be right.  But even most center-left Israelis see it as an "Arab party," which makes it moot, unfortunately and despicably.

So the only hope in the near term is that Bibi's instability might produce something unpredictable.  Perhaps his desperation will make him do something productive.  It's more likely to make him hole up in his bunker.  As a true neo-con, he sees history as primarily sinister and hazardous and does not recognize that it also presents possibilities.

All this could change next week.  Things are notoriously volatile in Israeli politics.  On the other hand, the past few decades seem to demonstrate the old adage that "the more things change the more they stay the same."

Don't want to pull a MainStreet and completely take over the comments section of an I/P diary, but here is an excerpt of Gideon Levy's related piece, entitled "Netanyahu's 'weakness' is good for Israel."  I find it a bit overly optimistic, but as always worthy of consideration:

If Netanyahu persists in his malleability, perhaps there is some hope on the horizon. In 100 days, it has already brought us a prime minister who champions the solution once advocated by the radical left - two states for two peoples. He has yet to do anything to advance the magic formula he has suddenly discovered, with horrifying belatedness, but perhaps just a little more pressure on the squeezable premier is what is needed for something to move around here.

Something will move here only if Netanyahu continues his impersonation of a weather vane, changing direction with every breeze. If Washington continues its pressure on him, perhaps there will be a real settlement freeze and then the start of evacuations. This would conflict with his worldview, if he indeed has one, but it would be an encouraging bit of news, and to hell with the slanderous accusations of being squeezable.

A frightened, scared Netanyahu could also prevent an unnecessary Israeli adventure in Iran. May God protect us from a "strong" prime minister, one who shows contempt for the entire world and the dangers inherent in such an operation and orders our wonderful pilots to set out on their way. It should be remembered, to his credit, that during his first term of office, Netanyahu avoided launching any wars or operations - not even a miniature Operation Defensive Shield.

http://www.haaretz.com/hasen/spages/1098 870.html