Reuters blog archive
from India Insight:
India's central government in January raised the tax on refined gold imports by 50 percent. This increase to 6 percent from 4 percent is the second rise this fiscal year. Why does it keep making gold more expensive, particularly as the nation enters its prime wedding season when brides will be bedecked with the metal from head to toe?
That's part of the problem -- a large part. India's cultural attachment to gold is something that anybody who has been to an Indian wedding could tell you about. For those of you who haven't, consider this report from CBS's "60 Minutes" TV news program:
"India's love for gold is almost a religion. Beyond being a symbol of wealth and status, gold is part of worship and culture - a tradition that goes back thousands of years. From birth to death, for men and women, among rich and poor - acquiring gold is a goal for the people of India. All of which has made India the world's largest consumer of gold and thus a powerhouse in industry ... Just as part of the American dream is to own a home, the dream in India is to own gold. For Indians, gold jewelry is wearable wealth, financial security that's also a fashion statement."
CBS notes that half the gold that Indians buy each year is jewelry bought for a wedding. And as this Voice of America report says, India produces almost no gold, and imports 700 tons a year to feed demand. That's half of 700 tons, sitting on India's brides. It's your savings, not to mention an inflation-proof investment. Here's an enlightening excerpt from that report:
from Rolfe Winkler:
Obama to unveil plan on bank taxes (WSJ) Surprisingly this doesn't look dead on arrival in Congress, maybe because banks know that the tax -- spread over 10 years -- isn't likely to hurt very much. It's a missed opportunity to shrink big bank balance sheets.
The advanced technology trade deficit (Mandel, ht NG)
Sheila Bair testimony before FCIC (FDIC.gov) Bair was the highlight of the morning's hearing and the headline from her testimony is that it's the Fed's fault. Had Alan Greenspan taken Edward Gramlich's advice to regulate subprime, perhaps many of the excesses of the bubble could have been avoided. In other news, the commission is unhappy with Attorney General Eric Holder b/c the Dept of Justice isn't sharing as much information as the commission would like.
from The Great Debate:
If current trends continue, China might swing to a trade deficit in the not-too-distant future. Given that China has enjoyed more than a decade of strong exports, this may sound a bit far-fetched. But even if it happens, this would not necessarily be something for the world to worry about.
Some economists have recently sounded alarm bells about the possibility of a Chinese trade deficit. They argue that if the Chinese current account surplus shrinks, it would leave Beijing with less spare cash to buy U.S. Treasury bonds. Then who would fund the U.S. budget deficit -- and, by implication, U.S. consumers?