Consensus may be hard to find in Washington these days, but many corporate executives and economists seem to agree on one point: the biggest risk to the world's largest economy may be its own elected representatives.Down-to-the-wire budget and debt crises, indiscriminate spending cuts and a 16-day government shutdown may not be enough to push the U.S. economy back into recession.But Washington's policy blunders in recent years have significantly slowed economic growth and kept roughly 2 million people out of work, according to recent estimates.Steep spending cuts are a big reason. But the governance-by-crisis also may be prompting businesses to sit on their cash rather than building new factories, buying more equipment and hiring more workers, some economists say."Increasingly I'm of the view that the reason why our economy can't kick into a higher gear is because of the uncertainty created by Washington," said Mark Zandi, chief economist of Moody's Analytics.Congress on Wednesday voted to re-open the government and extend its borrowing authority through February of next year. But the deal did nothing to resolve the underlying disputes that led to the crisis in the first place - leading many to fear that the standoff may play out again in a few months. The plan sets up a forum to try to forge a more permanent budget deal, but few expect it to succeed."We have crisis after crisis after crisis and it has a corrosive impact on the economy," said Greg Valliere, an analyst with Potomac Research Group. "If you're a business, how do you make plans in this environment?"Leading chief executives agree."Most CEOs I speak to in the United States say they're seeing a slowdown in business because of this," said Laurence Fink, the CEO of giant asset manager BlackRock Inc, in an interview on Wednesday. "I was on a conference call with many of them, and I heard across the board, a slowdown from the American consumer because of this narrative, so it's having an impact on our economy already - and it's going to have an impact on job creation at a time when we need more job creation.Not all economists agree that the political circus in Washington is hurting the economy in a measurable sense. While worries over the debt ceiling have pushed up the government's borrowing costs over the past week, those increases are minimal, and the S&P 500 stock index remains near its all-time high.Slow RecoveryBut the pace of recovery since the 2008-2009 recession has been unusually slow.While America's total economic output is now higher than it was before the recession, the level of private investment remains lower than it was in 2007. Employers also continue to hire workers at a slower pace than before the recession.Since the financial crisis eased, Washington has sent out one jolt after another. Democrats passed sweeping reforms of the healthcare system and the financial sector in 2010 which, whatever their merits, imposed wrenching changes on two pillars of the United States' post-industrial economy.Public unease with the healthcare law helped Republicans win control of the House of Representatives in 2010, ushering in an era of divided government that has led to repeated standoffs over taxes and spending. A near-shutdown in April 2011 led to the debt-ceiling impasse in July and August of that year, which took the country to the edge of default and prompted the country's first-ever debt downgrade.Like this most recent crisis, Congress averted disaster at the last possible moment. But the brinkmanship pushed consumer confidence to rock-bottom levels, where it remained for months. The S&P 500 tumbled 17 percent and took more than six months to recover its gains.That debt-ceiling deal called for steep cuts to national defense, highway construction, scientific research and other forms of discretionary spending that Congress must approve annually.Another budget deal, reached in January of this year after another round of brinkmanship, included tax increases to help narrow budget deficits further.Neither of those deals addressed the health and retirement spending that poses the greatest threat to the country's long-term fiscal health. A failure to cut back these programs or find savings elsewhere prompted a round of deliberately disruptive across-the-board spending cuts - the so-called "sequester" - to take effect in March.Along with an improving economy, those steps helped U.S. budget deficits fall from 8.7 percent of GDP in the 2011 fiscal year to an anticipated 3.9 percent of GDP for the fiscal year that ended on September 30.But this has all come at a steep cost.Jobs Not CreatedIn a report released on Monday, Macroeconomic Advisers estimated that 1.2 million more Americans would be working today if Congress had kept discretionary spending at the levels that were in place in 2010.The forecasting firm estimated that Washington's erratic behavior had also driven up unemployment by a further 900,000 jobs.Zandi estimates the fiscal austerity has cost 2.25 million jobs. Without those measures, the unemployment rate wold stand at 6.3 percent now rather than 7.7 per cent, he says.Even many of those who disagree with the notion that policy uncertainty has hurt the economy agree that the spending cuts and tax increases should have been phased in more gradually."Fiscal consolidation has been a big drag on the economy," said Paul Ashworth, an economist with Capital Economics.The International Monetary Fund called the United States' deficit-reduction efforts "excessively rapid and ill-designed" in June and said the sequester cuts would nearly halve U.S. economic growth this year.Meanwhile, Congress has punted on other important legislation like immigration reform that could boost the economy.Construction firms have seen federal work plummet over the past several years. With the government shut down, they have been unable to use the federal E-Verify system to check workers' immigration status or get permits to build in environmentally sensitive areas, said Ken Simonson, chief economist of the Associated General Contractors of America.The delays could be more than an inconvenience for builders trying to line up financing for a new project, he said."You never know when the market's going to turn and ... for some reason you may have missed the boat," he said.There's more turbulence on the horizon. Simonson said lawmakers may not have the stomach to avoid further cuts on transportation spending when they take up the issue next year.Though Washington may be responsible for lackluster business on Main Street, it may not have much of an impact on Wall Street.Many economists had expected the Federal Reserve to begin scaling back its massive monetary stimulus program last month. The chaos in Congress means it now probably won't begin pulling back its bond purchases until next year."I think the markets are beginning to learn how to live with Washington dysfunction," said Valliere.(Reuters)
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The World Bank sharply lowered its forecast for India's economic growth to 4.7 per cent from 6.1 per cent for the current fiscal year, citing a sharp slowdown in manufacturing and investment as well as negative business confidence.In a report released on Wednesday, the bank said "high headline inflation, an elevated current account deficit, and rising pressure on fiscal balances from the depreciation of the rupee" were factors that could impede the country's growth."Economic activity is expected to pick up in the second half of FY2014, although the speed of economic recovery could be impacted by the country's present vulnerabilities," the World Bank said in its India Development Update report.In a report published six months ago the bank had expected an acceleration in India's growth, driven by a pick-up in domestic activity, but that did not materialise.The latest report forecasts economic growth will pick up further to 6.2 per cent in the 2014-15 fiscal year that begins next April.Last week, the International Monetary Fund (IMF) slashed the growth forecast for Asia's third-largest economy to 3.8 per cent in calendar 2013 year and forecast 5.1 per cent growth for 2014.The World Bank's expectation of a pick-up later in the year tallies with the views of India's central bank chief, who expects the start-up of billions of dollars worth of stalled resource projects and a good monsoon season to bolster agricultural output and speed domestic growth.The Indian economy has slowed sharply from growth of around 8 percent per year between 2002 and 2012 to about 5 per cent in 2012-13.In the last fiscal year India posted a whopping $88 billion deficit on the current account, the third largest in the world, raising fears of a balance of payments crisis. The rupee crashed as much as 20 per cent between May and August.(Reuters)
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Heralding an end to its banking secrecy wall, Switzerland will now share bank account and other details with foreign countries, including India, even without prior intimation to concerned persons and on the basis of queries emanating from stolen data.The move comes as a shot in the arm for foreign authorities, including from India, who have been trying hard for years to get information about suspected illicit funds parked in Swiss banks.The Swiss Federal Council's detailed statement on sharing tax information comes a day after the country inked the OECD's Multilateral Convention on Mutual Administrative Assistance in Tax Matters. The signing of the pact allows for automatic exchange of information and mutual administrative assistance in tax matters with overseas authorities.Known for its banking secrecy, Swiss government's proposal of deferred notification of taxpayers in "exceptional cases" would soon be discussed by (Swiss) Parliament.Under the existing law, taxpayers had to be notified without exception before data concerning them was transmitted to the requesting state."Based on the results of the consultation procedure, the Federal Council has specified in its draft that deferred notification of taxpayers is possible only in exceptional cases," the Swiss government said today.Besides, the country which is putting forward the request would have to substantiate the same."The requesting state will also have to substantiate its request, e.g. by claiming the investigation would risk being compromised in the event of prior notification," it said.Noting that group requests are already possible under the existing law, the Federal Council said that in order to improve efficiency, the revision provides for a notification procedure that is tailored to group requests.(PTI)
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Britain’s Peter Higgs and Francois Englert of Belgium (in pic) won the Nobel prize for physics for predicting the existence of the Higgs boson particle that explains how elementary matter attained the mass to form stars and planets. In literature, Canadian Alice Munro won for her tales of the struggles, loves and tragedies of women that made her what the award-giving committee called the “master of the contemporary short story”. Americans James Rothman and Randy Schekman, and German-born Thomas Suedhof won in medicine, for plotting how cells transfer vital materials such as hormones and brain chemicals to other cells. Fellow Americans M. Karplus, M. Levitt and A. Warshel won the chemistry Nobel. And at the time of going to press, Malala Yousafzai, the Pakistani girl who was shot by the Taliban for going to school, was a strong contender for the peace prize.Nick Of TimeBritain told European regulators in July it was considering a break-up of part-nationalised Royal Bank of Scotland (RBS), pre-empting tough European Union (EU) rules on state support for banks which came into effect in August. The UK Treasury’s early notification means regulators will examine any proposals on an RBS break-up under the old EU rules, potentially making it easier to execute. “We made a precautionary notification to the European Commission in July of a potential restructuring measure at RBS,” a Treasury spokesman said. The Treasury is considering whether RBS, 82 per cent-owned by taxpayers following a £45.5 billion 2008 bailout, should hive off its riskiest loans into a separate legal entity, leaving the rest of the bank better placed. But the new EU rules would have required the bank to put a cap on the earnings of RBS executives and prevented the government from buying out minority shareholders, making the plan harder to implement.CrackdownThe probe into possible rigging of the $5.3 trillion foreign currency market is widening, with European Union regulators joining the hunt for evidence that banks may have tried to manipulate exchange rates. They suspect that competition rules had been broken. The currency probe marks the latest crackdown by regulators on banking misconduct. A global investigation into the setting of Libor has squeezed billions of dollars out of banks in fines and prompted regulatory changes. Investigations have also been launched in Switzerland and the UK.Looking UpPeriphery countries in the euro zone do not need to review their fiscal adjustment policies unless growth slows significantly, the International Monetary Fund (IMF) said. Jörg Decressin, the deputy director of the IMF’s research department, said austerity in countries like Portugal has already been less this year than in previous years, while growth is likely to rebound. These countries are struggling to tame their debt while coming out of a prolonged recession sparked by a sovereign debt crisis across the bloc. “Only if growth were to disappoint in a major way would one have to go and revisit this,” he said about the austerity targets. The IMF now expects Greece, Italy, Portugal and Spain to exit recession and start growing from next year. Ireland has already been growing, albeit slowly.Debt TrapUS President Barack Obama acknowledged that the White House and Treasury are planning for “all contingencies” if Congress doesn’t raise the debt ceiling in time. But the contingencies won’t be silver bullets. “No option is good in that scenario,” Obama said. “There’s no magic wand that allows us to wish away the chaos that could result if...we don’t pay our bills on time.” The Treasury is expected to do what it can to prioritise payments to bondholders. But there’s no guarantee markets will be sanguine if investors keep getting paid but many segments in the US economy are put on hold.CityscapesThe financial clouds that settled over US cities during the 2007-09 recession are lifting, with a recent survey showing cities’ revenues likely increased in 2013 for the first time in seven years, helping to boost their reserves. According to the annual survey conducted by the National League of Cities, which represents civic officials across the country, 72 per cent of city finance officers believe their municipalities are better able to meet financial needs this year than they were last year. In 2012, only 57 per cent said they were more capable of paying for services and other demands than in the previous year. “While conditions are no longer deteriorating, the capacity of city budgets remains weakened coming out of the Great Recession,” the survey says.Gearing UpFord Motor is poised to overtake its Japanese rivals on the top seller’s list in China as Toyota Motor and Honda Motor struggle to regain market share following a flare-up in anti-Japanese sentiment a year ago. Ford is likely to sell more than 900,000 vehicles, including passenger cars and commercial vehicles, in China this year thanks to its beefed-up product line-up. Sales have been growing in leaps and bounds and should become even stronger next year. Ford is expected to start production at a major assembly plant in the eastern city of Hangzhou around 2015.Phoney Wars Some older Samsung smartphones and tablets may be taken off store shelves in the US after the US Trade Representative opted not to reverse a ban ordered because the devices infringe Apple patents. The decision is the latest step in a patent battle across many countries as Samsung and Apple vie for market share in the lucrative mobile industry. Samsung and Apple are the No. 1 and No. 2 smartphone makers globally. So far, the models of the affected Samsung devices haven’t been disclosed.Mid-Air StrikeStung by the loss of a multi-billion-dollar jet order from Japan Airlines (JAL) to arch-rival Airbus, Boeing will mount a all-out defence of its position with Japan’s other major airline, ANA, say sources. Boeing executives are still trying to understand why long-time customer JAL ordered 31 Airbus A350s — worth $9.5 billion. ANA Holdings wants around 35 aircraft to replace its long-haul Boeing 777s and, like JAL, is considering both the A350 and the Boeing 777X. But the US’s close diplomatic ties with Japan could help Boeing’s cause, according to industry sources.Power OffPanasonic Corp will pull out of the plasma TV panel business by the end of the financial year, sources familiar with the situation said, marking a key milestone in the long-term decline of Japan’s TV industry. Panasonic had been expected to back out of the unprofitable business, but the exit comes sooner than predicted, underlining the firm’s determination to weed out weak operations.(This story was published in BW | Businessworld Issue Dated 04-11-2013)
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“One of the greatest damages done to this country was by the former CAG... it was the R-virus that derailed the growth story”— Manish Tewari, I&B minister, referring to Vinod Rai, the former CAG“We will go right up to the point of extreme idiocy, but we won’t cross it”— Warren Buffett, billionaire investor, on the US government shutdown, in a television interview“Lalu Prasad is a hero and he will remain a hero”— Rabri Devi, former chief minister of Bihar and Lalu’s wife, after his conviction“Let us also allow minorities to do that (default on loans)... this is part of development process”— G. Parameshwara, president, Karnataka Congress, demanding that minorities be provided loans even at the risk of defaults“People around the world are confused. They are bemused. But they are not amused by what’s happening ”— Christine Lagarde, head of the International Monetary Fund, on the US government shutdown“It is complete nonsense, it should be torn up and thrown away”— Rahul Gandhi, Congress vice-president, on the government’s ordinance on convicted MPs Scott Price“I don’t see how any foreign retailer can comply and, quite honestly, no domestic retailer is complying either”— Scott Price, Walmart Asia chief executive, on the government’s condition that 30 per cent of retail products be sourced locally“I am not the master of what people say”— Manmohan Singh, in response to Rahul Gandhi’s outburst on the government’s ordinance on convicted MPs(This story was published in BW | Businessworld Issue Dated 04-11-2013)
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The government is digging for treasure after a civic-minded Hindu village sage dreamt that 1,000 tonnes of gold was buried under a ruined palace, and wrote to tell the central bank about it. The state Archaeological Survey of India has sent a team of archaeologists to the village of Daundia Khera in Uttar Pradesh. They are due to start digging on 11 October' 2013, Praveen Kumar Mishra, the head archaeologist in the state, told Reuters. Yogi Swami Shobhan Sarkar says the gold he dreamt of belonged to a nineteenth-century ruler, Rao Ram Bux Singh. He says he wants it in government hands to help India recover from an economic crisis. "I cried the day I realised that India is going to collapse economically," the seer told the Mail Today newspaper. The dead ruler's spirit has been roaming the palace and asking for the gold to be dug up, he added. "It is a hidden treasure for the country." Not all Hindu leaders are so keen to put bullion into the Reserve Bank of India's vaults. Temples sitting on about half as much gold as in Fort Knox are resisting efforts by the central bank to audit their holdings. Indians buy as much as 2.3 tonnes of gold, on average, every day - the weight of a small elephant - and what they don't give to the gods is mostly hoarded. That is costing the economy dear, since India has few gold mines. Gold imports totalled $54 billion in the year ending on March 31, 2013, a major factor in swelling the current account deficit and undermining the rupee. Swami Sarkar's dream haul of 1,000 tonnes would be enough to replace all of India's imports for a year and would be worth at least $40 billion. The archaeologists plan to dig two 100-square-metre blocks beside the palace. Mishra, however, warned that there was as yet no proof that any treasure lay beneath the soil of Daundia Khera village. "We are still searching for the exact location and whether there is any treasure. It is all in the future," he said. "We often just find pottery and metal antiquities, like agricultural tools or kitchen tools."(Reuters)
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As the fiercest storm to hit India this century barrelled across the Bay of Bengal last week, a local mandarin frantically worked the phones from his hot and humid office, leading the charge in an operation to move nearly a million people to safety."We were telling people: 'Look, you have to choose between death and life'," said Taradatt, who heads the Revenue and Disaster Management Department in the poverty-plagued eastern state of Odisha."Those who were not willing (to be evacuated), I was telling the local official to use force, because the rules permit that."When Cyclone Phailin slammed into Odisha and neighbouring Andhra Pradesh states with winds gusting at more than 200 kph (125 mph), India was braced for the worst. A monster storm that hit the very same region 14 years ago had killed 10,000 people. But this time, the death toll was astonishingly low, at the latest count just 21.It was a rare moment of relief in this disaster-prone country, one that has already been hailed as a triumph of official heroism and defies the Indian bureaucracy's reputation for bungling and indecision."It's nothing short of a miracle that so many lives were spared. We were expecting the worst, but it just shows that all the time and investment put into preparing for such disasters by the authorities, civil society organisations and communities has paid off," said Devendra Tak from Save the Children, the international NGO.Disasters that claim thousands of lives are still almost routine in India, however. More than 5,000 people died in June when flash floods hit a Himalayan state, and even on Sunday - as many marvelled at the low death toll from the cyclone - more than 100 devotees were killed in a stampede at a Hindu temple.Empowering Local OfficialsAlong with Taradatt, who just uses one name, junior officials also chipped in. As the storm closed in on Odisha's coastal district of Ganjam last Saturday, 12 October, the seniormost local civil servant Krishan Kumar was exhausted.For the past three nights he hadn't slept, working without a break to set up hundreds of temporary shelters in schools and temples and persuade villagers to abandon ramshackle dwellings."There was a lot of resistance to begin with," said 37-year-old Kumar. "The weather was very good, the sun was shining and to convince people was not an easy job. We had to move from village to village explaining what could happen."With a couple of hours to go before the storm made landfall, some 350,000 people living up to 10 km (6 miles) from the shoreline were safely sheltered for the night. Across the two eastern states, more than 1 million people were evacuated from their homes.Civil servants like Kumar are some of India's best and brightest, but they have long been hamstrung by a bureaucracy that discourages individuals from taking decisions on their own. Kumar said he knew lives depended on breaking with that culture."That's the first thing I asked, that I be completely authorised to take decisions at my own level," said Kumar, who received an award from the country's prime minister five years ago for resettling victims of bloody clashes between Hindu tribes and Christians in another district.Kumar, in turn, last week empowered officials across Ganjam to act as they saw fit, including ordering village shops to remain open to prevent hoarding of food and emergency supplies.'Every Minute Is Important'Back in the state capital, Bhubaneshwar, disaster management chief Taradatt had also taken matters into his own hands as the cyclone approached.An original proposal to assign the task of evacuation to multiple civil servants was ditched after Taradatt volunteered to oversee it himself, an official who attended an early planning meeting told Reuters.The official said Taradatt worked day and night to liaise with district chiefs like Kumar and, after the storm had blown over, he dived straight into the problems of an estimated quarter of a million people left stranded by the resulting floods."I do not even have time to respond to the calls of my family. My son called me from New Jersey to speak to me, but I told him, sorry," Taradatt told Reuters from his government office. "Right now every minute is important, please excuse me."Much of what went right in Odisha at the weekend can be traced to a wake-up call delivered by the 1999 cyclone, which thrashed the state - then known as Orissa - with wind speeds of 300 kph (190 mph), leaving more than a million homeless.This time Odisha was relatively lucky: the storm moved quickly inland and dissipated, whereas in 1999 it clung to the coastline for two terrifying days.Back then, however, the state had only 23 cyclone shelters and many survivors said later that they had not been provided with sufficient information to judge if they were at risk.Both Odisha and Andhra Pradesh now have disaster management departments, both have built hundreds of cyclone shelters along the coast, and drills are conducted regularly so people know what to do when an alert is issued.Technological advances since 1999 mean that forecasters can accurately predict weather patterns seven days in advance.The advent of mobile phones has also made a huge difference, said district chief Kumar, who said he was able to contact officials in remote villages to spread word of the coming storm.At the time of the 1999 cyclone, there were less than 2 million mobile phone users in the whole of India: today, about 25 million people in Odisha alone - 60 per cent of the state's population - carry a phone.Kumar insisted that his efforts to minimise the loss of life were just part of a state-wide mobilisation of forces that leapt into action. Authorities cancelled the holidays of civil servants during the popular Hindu Dussehra festival, and they deployed disaster response teams with heavy equipment as well as helicopters and boats for rescue and relief operations.Naveen Patnaik, who was elected chief minister of Odisha the year after the 1999 cyclone partly on promises of better disaster management, said that lessons have been learnt."We have been working very hard on that all these years," he told Reuters. "You can see for yourself, when one million people were evacuated in 36 hours, that it is working well." (Reuters)
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One of three American economists who won the 2013 economics Nobel prize on Monday for research into market prices and asset bubbles expressed alarm at the rapid rise in global housing prices.Robert Shiller, who shared the 8 million Swedish crown ($1.25 million) prize with fellow laureates Eugene Fama and Lars Peter Hansen, said the US Federal Reserve's economic stimulus and growing market speculation were creating a "bubbly" property boom.The Royal Swedish Academy of Sciences lauded the economists' research on the prices of stocks, bonds and other assets, saying "mispricing of assets may contribute to financial crises and, as the recent global recession illustrates, such crises can damage the overall economy."This was the case in the collapse of the US housing market, which helped trigger the 2008-2009 global financial crisis. Markets are at risk of committing the same error now, Shiller told Reuters after learning he had won the Nobel prize."This financial crisis that we've been going through in the last five years has been one that seems to reveal the failure to understand price movements," Shiller said.Bubbles are created when investors fail to recognize when rising asset prices become detached from underlying fundamentals.Shiller and other economists warn that prices in some markets have risen too far, too fast due to the Fed's ultra-easy monetary policy. The benchmark US Standard & Poor's 500 index hit a record in September, though it is generally not considered overvalued based on expectations for corporate earnings results or economic growth.Shiller's work led him to suggest in 2005 that the US housing market might be overheating. He helped create a closely watched gauge of housing prices, the S&P Case/Shiller Index.In June, he pointed to a potential new housing bubble in some of America's largest cities."It is up 12 per cent in the last year. This is a very rapid price increase right now, and I believe that it is accelerated somewhat by the Fed's policy," he said.China, Brazil, India, Australia, Norway and Belgium, among other countries, were witnessing similar price rises. "There are so many countries that are looking bubbly," he said.The Fed has held US interest rates near zero since late 2008 and almost quadrupled its balance sheet to around $3.7 trillion through a campaign of bond buying, or quantitative easing, to hold down long term borrowing costs.Placing more emphasis on avoiding asset price bubbles, and financial stability in general, has been a controversial topic for many years in policy-making circles.Central bankers traditionally try to avoid targeting asset bubbles with a blunt instrument like interest rates. But the severe harm done when a bubble bursts means that, in the United States at least, they are thinking more broadly about the unintended consequences of their monetary policy decisions."When asset prices are getting way out of line it should be cause for alarm. The monetary authorities should lean against extreme asset price movements," Shiller said.The bubbling housing market is not mainly the result of central bank policy, but reflects a shift toward "a more speculative attitude," Shiller said. "We cannot expect monetary policy to cure all of these problems."Hansen struck a more cautious note. "We often underestimate how much uncertainty there is in terms of our understanding of the economy," he said. "If you pretend that we know more than we do, you are in danger of constructing policies that can be counter-productive."Different Thinking On MarketsThe Royal Swedish Academy of Sciences said the laureates' insights "provide guidance for the development of theory as well as for professional investment practice".Fama, tipped as a Nobel winner for many years, has been called the father of modern finance and is well-known for research showing certain groups of stocks tend to outperform over time, and for thinking about markets as efficient.This view of how assets are priced is at odds with Shiller's belief that investors can fall prey to "Irrational Exuberance," the title of his 2000 book, shortly before the bursting of a global bubble in information technology stocks.Hansen, who voiced caution about the ability of economists to spot asset bubbles in advance, said there were different ways to interpret evidence."In terms of overall understanding I guess there is a sense in which one could view them as complimentary," he said of the research of his co-winners. "But right now, they would both have very different guesses about what is the right set of models going forward," he said in an interview.Fama and Hansen are professors at the University of Chicago, while Shiller is a professor at Yale University. Collectively, with research spanning decades, their work helped the emergence of index funds in stock markets, the award-giving body said.Peter Englund, professor of banking at the Stockholm School of economics and member of the prize committee, said their research had deeply influenced modern finance."The most obvious application, that follows on from Fama's research, is the insight that you can't beat the market. It is impossible to prove that equity analysis is worth the money," he told Reuters."That has led to the development of index funds and that most households actually put their savings in index funds."(Reuters)
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Three American scientists won the 2013 economics Nobel prize on Monday, 14 October, for research that has improved the forecasting of asset prices in the long term and helped the emergence of index funds in stock markets, the award-giving body said."There is no way to predict the price of stocks and bonds over the next few days or weeks," The Royal Swedish Academy of Sciences said in awarding the 8 million crown ($1.25 million) prize to Eugene Fama, Lars Peter Hansen and Robert Shiller."But it is quite possible to foresee the broad course of these prices over longer periods, such as the next three to five years. These findings ... were made and analyzed by this year's Laureates," the academy said.Shiller helped create a closely watched gauge of U.S. housing prices and in June this year warned of a potentially new housing bubble in some of America's largest cities.Fama, tipped as a Nobel winner for many years, has been called the father of modern finance and is well-known for research showing that certain groups of stocks tend to outperform over time.The behaviour of asset prices are key to decisions such as savings, house buying and national economic policy, the academy said."Mispricing of assets may contribute to financial crises and, as the recent global recession illustrates, such crises can damage the overall economy," it added.Fama and Hansen are professors at the University of Chicago, while Shiller is a professor at Yale University."A lot of people had told me they hoped I would win it, but I am aware that there are so many other worthy people that I had discounted it, so I would say no, I did not expect it," Schiller told a news conference.The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968. It was not part of the original group of awards set out in dynamite tycoon Nobel's 1895 will.(Reuters)
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Gold prices jumped up by Rs 575 to Rs 30,775 per ten gram in the national capital today on increased buying by retail customers for the ongoing marriage and festival season amid a firming global trend.Silver followed suit and advanced by Rs 680 to Rs 47,570 per kg on emergence of buying by industrial units and coin manufacturers.Traders said the precious metals remained in demand for the ongoing festivals and marriage season, while silver rose on industrial units and coin makers demand.They said amid firming global trend gold traded higher and recent plunge also increased physical demand.Gold in London, which normally sets price trend on the domestic front, rose by 0.4 per cent to USD 1,276.66 an ounce and silver by 0.1 per cent to USD 21.35 an ounce.On the national front, gold of 99.9 and 99.5 per cent purity surged by Rs 575 each to Rs 30,775 and Rs 30,575 per ten gram respectively. Sovereign advanced by Rs 100 to Rs 25,100 per piece of eight gram.Silver ready spurted by Rs 680 to Rs 47,570 per kg and weekly-based delivery by Rs 80 to Rs 47,270 per kg. However, silver coins held steady at Rs 84,000 for buying and Rs 85,000 for selling of 100 pieces.(PTI)
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