Search This Blog

Translate

Search Tool




Jun 23, 2012

NYT Global Update: Greek Coalition Outlines Plan to Renegotiate Loan Deal

Global Update




TOP NEWS

Turkey Vows Action After Downing of Jet by Syria

By LIAM STACK
Turkey's president said his country would do "whatever is necessary," complicating a tense relationship.

Greek Coalition Outlines Plan to Renegotiate Loan Deal

By NIKI KITSANTONIS
The new government aims to revoke certain taxes, suspend planned layoffs in the bloated public sector and extend by two years the deadline for imposing additional austerity measures.

Former Russian Minister Warns of Economic Ebb

By ANDREW E. KRAMER and DAVID M. HERSZENHORN
Aleksei L. Kudrin, the former minister of finance, warned at a news conference that Russia was in danger of falling into a recession.
N.Y. / Region

Video: New York Wrecks Inspire Aquarium Design

Scientists from the Wildlife Conservation Society are exploring shipwrecks off the coast of New York to help architects accurately design a new facility at the New York Aquarium.
Opinion

Latitude

Pakistan's Ménage à Trois

By HUMA YUSUF
While Pakistan's politicians, generals and judges play tug of war, each in the name of the people, no one is looking out for the country's welfare.
WORLD

Killings Curb Reporting of Mexican Crime Wave

By RANDAL C. ARCHIBOLD
The recent death of Víctor Báez, a longstanding police reporter, has added to a climate of fear among journalists in Veracruz State, a center of increasing drug violence.

Wave of Violence Swallows More Women in Juárez

By DAMIEN CAVE
Ciudad Juárez became infamous for attacks beginning in the 1990s that left hundreds of women dead. International attention moved on, but the killings have continued.

Senate's Vote Ousts Leader of Paraguay After a Clash

By SIMON ROMERO
The vote to remove President Fernando Lugo from office, after a deadly clash between squatters and the police, plunged the country into a political crisis.
BUSINESS

Chinese Data Mask Depth of Slowdown, Executives Say

By KEITH BRADSHER
Corporate executives and economists say officials in some Chinese cities and provinces are falsifying statistics to mask the extent of the downturn in the nation's economy.

Leaders Vow to Defend Euro, but Hint at Rifts on How

By ELISABETTA POVOLEDO and STEVEN ERLANGER
The leaders of Germany, France, Italy and Spain said they would use all means necessary to protect the common currency, but there is clear disagreement over what measures to take.
TECHNOLOGY
The iEconomy

Apple's Retail Army, Long on Loyalty but Short on Pay

By DAVID SEGAL
While consumers tend to think of Apple's headquarters as the company's heart and soul, a majority of its workers in the United States are hourly wage earners selling iPhones and MacBooks.

To Settle Lawsuit, Facebook Alters Policy for Its Like Button

By SOMINI SENGUPTA
To resolve a class-action suit, Facebook has agreed to give its users the choice to avoid potentially appearing in advertisements just for clicking the social network's like button.
Cultural Studies

It's as Easy as 123!@S

By JACOB BERNSTEIN
As our dependency on the Internet has grown, so has the complexity of its restrictions. The end result: a mind-boggling array of personal codes.
SPORTS

A Triple Threat in Decathlon

By SAM BORDEN
Bryan Clay, Trey Hardee and Ashton Eaton give the United States a legitimate shot at a medals sweep in the decathlon at the London Games.

You Want Linsanity? It Could Be the Knick Point Guard's Trademark, Literally

By RICHARD SANDOMIR
The plan to trademark Linsanity formed quickly inside Jeremy Lin's legal and marketing team and started with filing a claim to the United States Patent and Trademark Office.

World War II Soccer Match Echoes Through Time

By JERÉ LONGMAN and ANDREW W. LEHREN
During the German occupation of Ukraine, which began in August 1942, a group of Ukrainian soccer players defeated a military team of Germans. The story begins after the match.
U.S. NEWS

With Wild West Spirit, Tombstone Fights for Its Water

By FERNANDA SANTOS
When the government placed restrictions on repairs to pipes on federal land, a volunteer posse set out to do the work by hand and make a point about a storied Arizona town.
White House Memo

Wearing Brave Face, Obama Braces for Health Care Ruling

By JODI KANTOR
Though optimistic in public, the White House in private is weighing its options in case the Supreme Court invalidates all or part of the health care law.

More Stringent Requirements Send Nurses Back to School

By RICHARD PÉREZ-PEÑA
With more hospitals requiring nurses to have a bachelor's degree, colleges see growth potential in programs catering to registered nurses seeking to upgrade their credentials.
OPINION
Sunday Review

The Third Intifada Is Inevitable

By NATHAN THRALL
Mahmoud Abbas's strategy of security cooperation with Israel has failed and violence will eventually fill the void.
Opinion

Mexican Democracy's Lost Years

By JO TUCKMAN
Two elections after one-party rule ended, the old regime is the party to beat.
Op-Ed Contributor

The Only Way to Help Congo

By SÉVERINE AUTESSERRE
The international community has failed to stabilize Congo because it has neglected a main cause of violence: local power plays.

GATA | THE GATA DISPATCH: In India gold pits the people against the government -- as it does almost everywhere

In India gold pits the people against the government -- as it does almost everywhere

Gold Always Glitters in India: Will Curbing Its Import Save the Economy?
By Sreeja Vn
International Business Times, New York
Saturday, June 23, 2012
http://www.ibtimes.com/articles/355601/20120623/gold-imports-india.htm

"An inch of time is an inch of gold, but you can't buy that inch of time with an inch of gold." Is this Chinese proverb proving correct in the case of Indians who invest in the yellow metal for good times tomorrow? Or is the craze for the glittering object really ruining the country's economy?

Time and again the Indian government, economists, and experts have ridiculed the people's obsession with gold and pointed out the need to curtail imports of the yellow metal to reduce the nation's trade deficit.
Indians have an irresistible temptation to buy gold -- either as ornaments or as investment. Their obsession with the gold jewelry has roots in their culture, tradition, and in the economic realities in the rural and grassroots levels of society. As an investment, gold has been an easier bet to hedge against inflation and other risks. Indians have been buying and trading in gold since time immemorial, and they continue to buy even now, when it is more expensive than ever.


The government and experts believe that high gold imports are fatal to the economy and Indians should stop investing in gold. They say this would solve India's economic problems, erase the current account deficit, appreciate the rupee, and boost growth. They say the country's balance of payments is negative because of gold import.
"Quantum of import of gold ... is a clear indication that a large section of community ... wants investment in a dead asset only with expectation that the value would appreciate," Finance Minister Pranab Mukherjee said at a function in Mumbai last week. He added, "There is a need to spread financial literacy to encourage people to invest in market instruments" and to dissuade them from investing in gold.
The government believes that India's common people can easily save the country's faltering economy by sacrificing their passion for gold.
However, the people who have spent their fortunes on gold and a section of analysts have a different point of view. They say that though gold imports affect the country's balance-of-payments position in the short term, India's gold reserves will benefit the people and the country in the longer run. They feel that there is no justification for saying that gold is an idle asset. "From the investors' point of view, gold is not an idle asset. When it is appreciating, it is not a dead asset for the holder," says Jayesh Nathwani of FXWire.
To understand both the standpoints, one needs to understand what gold means for Indians and the cultural and economic reasons associated with this:

-- India is the world's largest importer of gold. India accounts for nearly a third of total world demand for gold. India's gold imports were higher than those of 12 of its states' gross state domestic products in the year 2010-11.

-- Gold's share of the total import bill of the country has gone up from 8.1 percent in 2001-02 to 9.6 percent in 2010-11. The average rate of growth in gold imports in the last three years was 26.8 percent. At this rate, the gold import bill will be approximately $100 billion by 2015-16.
-- According to a World Gold Council report, India has a savings rate of about 30 percent, and 10 percent of this is in gold. It says that gold reserves in India, both private and government, were around 20,000 tons at the end of 2011 and are worth roughly Rs 54 lakh crore, which is 60 percent of the nominal GDP of India in 2011-12.

-- Gold import value for the year 2010-11 was higher than the budget-estimated expenditure on urban development, housing, and family welfare for the year 2010-11.
-- According to the gold council report, gold jewelry accounted for about 75 percent of total Indian gold demand in 2009, the remainder being investment (23 percent) and decorative and industrial use (2 percent).
-- Demand for gold in India is not dependent on international prices but on seasonal demands in the country, like weddings and festivals. So people tend to buy gold whatever may be the price in these seasons.
... India's Golden Tradition

Gold is a part and parcel of India's culture and traditions. As money, jewelry, status symbol, and investment, gold has played a crucial role in the lives of Indians for centuries. A family's wealth was determined by the gold and land it had. Gold is considered "Lakshmi," the Hindu goddess of wealth, and a symbol of prosperity.

Traditionally and as a religious practice, an Indian woman wears ornaments throughout her life. Gold is her favorite jewelry. Normally, from childhood to the end of her life, gold adorns her in several forms depending on her wealth and status. Though the trend is tilted toward platinum and white gold in recent times among the urban elite, for middle- and lower-class families, jewelry means only gold.
Nothing could replace gold's stature and importance in the Indian society. In south India the first food a newborn consumes will include gold. According to the tradition, the elder family member will make a paste of a local herb and a minute amount of gold and feed the baby. This is believed to bring wealth and prosperity to the baby.

Gold is also part of the religious practices at homes and temples. In several states the yellow metal is worshipped as a symbol of Lakshmi and wealth.

No wedding is complete without gold, and gold ornaments are exchanged during the wedding ceremony, no matter which religion the bride and groom belong to. Mangalsutra -- a neck chain with a mandatory gold pendant -- is tied by the groom to the bride during the ceremony. Apart from this, Indian brides are normally decked in gold during their weddings. Though dowry is banned in India, it still exists in practice and gold is the most common form of dowry given to the daughters at their wedding.

The "Akshaya Trithiya" is an auspicious day in the Hindu calendar to buy gold. Devotees celebrate this day (usually in April) by buying gold. In recent years this festival became highly commercialized as the jewelers started promoting sales with discounts. Gold ornaments worth millions of rupees are purchased across the country in this one-day festival.

... Economic Importance

The importance of gold in the Indian society lies in its money, investment, and risk aversion quotient. Traditionally, gold was the unit of currency. In India there is no difference between rural and urban or rich and poor when it comes to investing in gold. Irrespective of the caste and creed, gold is considered the most tangible form of investment by the people.

Gold remains the easiest asset and investment for the rural poor because of its availability and liquidity. About 60 percent of India's gold demand is from rural areas.
It is their best tool for risk aversion and to hedge inflation and is their insurance against losses. It is also linked to the rural economy and the agricultural and trade sector. Farmers buy gold after the harvest as an investment. They often sell or pawn gold during the farming season to meet their expenses. This helps them insulate themselves from the claws of rural creditors who charge exorbitant interest on money borrowings.
Rural and urban middle- and lower-class income groups use their investment in gold they made over time to raise money for weddings and renovation of houses and to meet unforeseen expenses, either by selling it or pawning it.

So India's demand for gold is seasonal and dependent on domestic factors, not on international factors and prices. Gold purchases go high during harvest, wedding, and festival seasons and come down during the monsoon season.

... The Debate

The economists, worried about India's current account deficit, argue that Indians are importing gold when gold prices are too high in the international market. Since India depends on imports to meet more than 80 percent of its gold requirements and gold as a commodity on its own, it doesn't add much to the economic productivity. "We have to pay in dollars to buy gold. A huge part of our forex resources, which could have been used to import productive goods, are wasted on it," says Mangalore-based economy expert Jayadeva Prasad Moleyar.

"Most of gold is in the form of ornaments with the private people in households or is piled in bank lockers most of the time. Gold doesn't have economic value; it has only emotional value. And considering the heavy pressure its puts on imports, it is an investment better avoided," Jayadeva added.
Experts also warn that it is unscientific to buy gold at current high prices that are showing signs of declining. They also argue that money that gets wasted in gold should be used for productive purposes in the country, considering the poverty and lack of social infrastructure in India.

But other experts and common people don't agree. They argue that the theory that gold is an idle investment is wrong. "There was a time when gold was used mainly for jewelry. But now all over the world the trend has changed and gold is an investment option. All over the globe, asset managers and funds are holding gold as an investment tool. Even in India people depend on gold to hedge inflation," Jayesh says.
Unlike international investors and lenders who invest in markets and trade, most Indian investors in gold aim at long-term benefits and hence they can hedge the short-term price volatility in the price of gold.
They also opine that the government and financial experts who want to reduce gold imports are not considering that gold is the best and least risky investment tool to cope with inflation.

If the government wants to reduce investment in gold, then it should provide the people with an alternative. But there is no alternative to gold now. For the rural people, who are the greatest consumers of gold, bank deposits and real estate are the only investment options easily accessible. As the inflation is higher than nterest rates, bank deposits are unattractive. Real estate prices have skyrocketed even in rural areas, making it difficult for the middle class and poor people to invest in.

People blame bad governance for the trade deficit in the country and opine that instead of attempting to change the centuries-old obsession of the people, the government should try to reduce inflation to save the economy. "Why does the government tell people to save the economy when it is the government's duty to do it? Why can't they take steps to improve exports to solve the trade deficit rather than curtailing imports?" asks Jayashree Chakkere, a lecturer in Bangalore.

Considering that the cultural affinity for gold has roots in its ancient history, convincing the people not to buy gold looks impossible.

"When a marriage happens we need gold, for both bride and groom. How can I marry off my daughter without giving her any gold? Even by borrowing money I will have to buy gold for her marriage. Though it is a burden on me, I am sure it will help her in bad times," says K. Narayan, a farmer in south Indian state of Kerala.

... Difficulties in Reducing Gold Imports

Economists are aware of the difficulty in dissuading people from buying gold. In the past the government tried to regulate gold prices by controlling its supply, limiting supply and increasing tariffs. Until the mid-1960s, the government had tight control over gold transactions as it barred the manufacturing of gold ornaments with more than 14 carats of purity. Even in the last budget, the government raised taxes on gold.

But experts feel that raising taxes on gold will not be any help as it will lead only to higher prices in the domestic market. Due to social factors, people cannot avoid buying gold and a rise in price will only cause gold smuggling, black-market trade, and hawala transactions, as happened in Vietnam when the government imposed a ban on gold imports.

"India has to live with gold imports. Gold imports cannot be banned, as it is citizen's fundamental right to buy gold. Further, any such measure will increase anti-social activities like smuggling. The government can only request citizens not to buy. But no one will listen to the government. Though gold importing hurts the economy, it is not the only thing that is blocking growth or depreciating the rupee. The government should look into policy issues and improve exports. Even global issues like the euro-zone problems affect the economy. Reducing gold imports to correct the balance-of-payments problem is a temporary solution," Jayadeva says.

"The government is resorting to a short-term approach. It has increased the tax on gold from 1 percent to 4 percent and is successful in reducing imports by roughly 30-35 percent. It has affected business badly. The notion that gold is non-productive is wrong. When millions of people use it as a security and investment, it cannot be non-productive. Moreover, the government that asks the people not to buy gold itself purchased around 200 tons of gold recently," says S. Venkatesh Babu, a wholesale bullion importer and president of the Jewelers Association of Karnataka.

Venkatesh says it is better for the government to improve its policies and governance before passing the buck to the common man. "The government should bring in the right reforms and economic policy to solve the economic crisis rather than controlling bullion imports," he adds.
So the government's efforts to dissuade the people from investing in the yellow metal may not work in India since it appears that Indians feel that an inch of gold can buy an inch of good time in future.

* * *

Join GATA here:
Hong Kong Gold Investment Forum
Monday-Wednesday, June 25-27, 2012
Renaissance Harbour View Hotel, Hong Kong
http://www.hkgoldinvestmentforum.com/


TOP NEWS

Sandusky Guilty of Sexual Abuse of 10 Young Boys

By JOE DRAPE
The jury verdict for the former Penn State assistant football coach Jerry Sandusky completed the downfall of a onetime local hero in a pedophilia scandal that seized national attention.

Cardinal's Aide Is Found Guilty in Abuse Case

By JON HURDLE and ERIK ECKHOLM
Msgr. William J. Lynn, in Philadelphia, became the first senior Roman Catholic official in the United States to be convicted for covering up child sexual abuses by priests in his charge.

Killings Curb Reporting of Mexican Crime Wave

By RANDAL C. ARCHIBOLD
The recent death of Víctor Báez, a longstanding police reporter, has added to a climate of fear among journalists in Veracruz State, a center of increasing drug violence.
QUOTATION OF THE DAY
"This is the only state where the proponents are this honest about what exactly their motivation is."
Michelle Movahed, a lawyer with the Center for Reproductive Rights, about a law in Mississippi that would effectively leave the state's only abortion clinic without physicians.

U.S.

Interactive Feature: The First Family: A New Glimpse of Michelle Obama's White Ancestors

When we invited readers to pose questions about an article on Mrs. Obama's white ancestors, we never imagined that one would provide us with the first glimpse of two key figures in the first lady's family tree.
Opinion

Op-Ed Contributor

Why Vincent Chin Matters

Despite decades of debunking, the model minority myth - the perception of Asian-Americans as overachieving nerds - persists.
WORLD

Syria Shoots Down Turkish Warplane, Fraying Ties Further

By DALAL MAWAD and RICK GLADSTONE
Turkey announced Friday that Syrian forces had downed a military aircraft with two crew members over the Mediterranean, a potentially ominous turn in the countries' relations.

Pakistani Parliament Elects New Prime Minister

By DECLAN WALSH
The election of Raja Pervez Ashraf offered a brief respite after days of judicial intrigues and political turbulence that had shaken the country's fragile democratic foundations.

Greek-German Tensions Over Finances Spill Into Another Arena

By NICHOLAS KULISH
Tension over the economic relationship between the two countries was evident at their meeting in the European soccer championships.
U.S.

Oregon Study Shows Benefits, and Price, for Newly Insured

By ANNIE LOWREY
Researchers say Oregon's lottery system for granting health insurance has made it the best place to study the costs and benefits of the federal health care law.

Mississippi's Only Abortion Clinic Is at Risk as New Law Draws Near

By CAMPBELL ROBERTSON
On July 1, all physicians associated with an abortion clinic are required to have admitting privileges at local hospitals.

Cost of Minnesota Flood Estimated at $100 Million

By JOHN SCHWARTZ
As the floodwaters go down, officials in Minnesota estimate that repairs to roads and other infrastructure will cost $100 million.
POLITICS

Companies' Ills Did Not Harm Romney's Firm

By MICHAEL LUO and JULIE CRESWELL
Bain Capital, the private equity firm co-founded by Mitt Romney, structured its deals so that it was hard for the firm to ever really lose, even if the companies it owned foundered.

Gay Marriage Gains Backer as Major Foe Revises Views

By ETHAN BRONNER
David Blankenhorn, who argued against same-sex marriage as an expert witness in the challenge to California's Proposition 8, now supports legally recognizing gay and lesbian couples.

Obama Draws Contrast With Romney in His Turn Before Hispanics

By PETER BAKER
The president sought to capitalize on his newly announced reprieve for young illegal immigrants.
BUSINESS

Chinese Data Mask Depth of Slowdown, Executives Say

By KEITH BRADSHER
Corporate executives and economists say officials in some Chinese cities and provinces are falsifying statistics to mask the extent of the downturn in the nation's economy.
DealBook

A Debate Goes Behind Closed Doors

By BEN PROTESS
A proposal takes aim at sending derivatives trading overseas to escape the eyes of American regulators, but the Commodity Futures Trading Commission is said to be planning to cast their votes in private.
Your Money

Getting Lost in the Labyrinth of Medical Bills

By TARA SIEGEL BERNARD
How do hospitals and doctors arrive at the fees they charge? The not-so-simple answer is that it depends on what sort of deal their medical provider has negotiated with their insurer.
TECHNOLOGY
Cultural Studies

It's as Easy as 123!@S

By JACOB BERNSTEIN
As our dependency on the Internet has grown, so has the complexity of its restrictions. The end result: a mind-boggling array of personal codes.

For Bullied Bus Monitor, a Windfall to Ease the Pain

By JENNIFER PRESTON
An online fund-raising drive for a 68-year-old Rochester woman who was brutally taunted by a group of 12- and 13-year-old boys has proved hugely successful.
App City

A Digital Art Space

By JOSHUA BRUSTEIN
The MoMA Art Lab app, the digital version of the museum's Materials Lab, allows children to create and learn about art.
SPORTS

Shaken by Sandusky Scandal, a Changed Penn State Is Moving On

By PETE THAMEL
Since the former football assistant Jerry Sandusky was charged with child sexual abuse last fall, Penn State has dealt with tumultuous times.
Mets 6, Yankees 4

Mets Make Opening Statement Hold Up

By DAVID WALDSTEIN
After a late-inning rally by the Yankees, the Mets' closer Frank Francisco protected a two-run lead in the ninth inning to pick up his 18th save.

Mike Trout, the Angels' Prodigy, Is Enjoying the Ride

By TYLER KEPNER
Recruited as an athletic base-stealer and drafted at 17, Mike Trout currently ranks among the American League's best hitters.
ARTS
Exhibition Review

Filling Up on a Midday Bite of New York History

By EDWARD ROTHSTEIN
The savory menu at the "Lunch Hour NYC" exhibition at the New York Public Library goes from street carts to automats to Wonder Bread to company lunchrooms.
An Appraisal

Achieving Fame Without a Legacy

By KEN JOHNSON
LeRoy Neiman tackled subjects that the serious art world chose to ignore, but not with a depth that would have made them matter.
Music Review

Blues and Soul, Vintage Blend

By NATE CHINEN
At the Beacon, Bonnie Raitt shared a bill with Mavis Staples, calling to mind the act of peering into the rearview mirror only to catch a glimpse of your current self.
NEW YORK / REGION

In Karaoke, Lawmakers Find a Catalyst for Collegiality

By JOHN ELIGON
A new Wednesday night tradition of singing together at a tavern has helped the New York Legislature function more smoothly than in its rancorous past, participants say.

A Daylight Theft of a Drawing by Dalí, Incongruous in Simplicity and Ease

By VIVIAN YEE
The man who stole a $150,000 Salvador Dalí drawing on Tuesday from a gallery on Madison Avenue used only a black shopping bag as his tool.

Dolan Says Obama Policies Threaten 'Sacred Liberties'

By SHARON OTTERMAN
Cardinal Timothy M. Dolan on Friday helped launch a national campaign opposing the health care overhaul and other government policies, portraying them as a threat to religious freedom.
TRAVEL

Chasing a Prairie Tale

By TONY PERROTTET
In 1872, a New Yorker headed west to Nebraska to hunt buffalo with the Pawnee Indians. What happened to the man and the tribe? A journey back to the Plains uncovers answers, and more.
Explorer

Hiking Through Biblical Backcountry

By BRAD WETZLER
The 40-mile Jesus Trail snakes through the Galilee region of Israel, linking historic sites along the way.
Overnighter

Tracking the Bieb and the Bard in Stratford

By STEVEN McELROY
The unlikely duo of William Shakespeare and Justin Bieber is pulling people to this Ontario town.
EDITORIALS
Editorial

The Anti-Union Roberts Court

In a labor union case, the conservative justices broke court rules to insert themselves into a political issue.
Editorial

A Small Stimulus for Europe

Germany and others edge toward a plan for job-creating projects, and not a moment too soon.
Editorial

What's Missing From This Picture?

Despite promises, New York lawmakers adjourned without accomplishing top legislative items. Voters should demand that they finish their job before the November election.
OP-ED
Op-Ed Columnist

Bullies on the Bus

By CHARLES M. BLOW
Do those adolescent boys represent something in our society at large? The answer may be quite uncomfortable.
Op-Ed Columnist

The (Sort of) New Mitt

By GAIL COLLINS
Is General Election Mitt Romney making some changes from the Primary Mitt Romney? Just look at the Mittspeak, people, and decide for yourself.
Op-Ed Columnist

Burger King, the Cash Cow

By JOE NOCERA
The fast-food restaurant chain made big news this week in going public. Here is why private equity firms keep feasting on burgers and fries.
ON THIS DAY
On June 23, 1947, the Senate joined the House in overriding President Truman's veto of the Taft-Hartley Act.