Dec. 25 (Bloomberg) -- Tightening monetary policy may not help control inflation, the Economic Times reported, citing an interview with India’s Finance Minister Pranab Mukherjee.
Mukherjee called for a balanced approach to fight inflation as it has been substantially caused by supply side problems, the newspaper reported today.
The finance minister hasn’t set a timeframe for withdrawing the fiscal-stimulus policy and the government is trying to keep the fiscal deficit within the targeted level, according to the report.
India’s benchmark wholesale-price inflation more than tripled in November to 4.78 percent from 1.34 percent in October. An index of food articles rose 19.95 percent in the week ended Dec. 5, the most since 1998, the commerce ministry said Dec. 17.
Friday, December 25, 2009
Along U.S.-Mexico Border, a Torrent of Illicit Cash
LAREDO, Tex. — The streets of Laredo are awash in money, stacks of grimy bills tainted with cocaine residue, wrapped in plastic and stowed in secret compartments built into the trucks, buses and cars that flow south over the Mexican border daily like a motorized river.
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War Without Borders
Smuggling Dollars South
This series examines the impact of Mexican drug cartels on both sides of the border.
Previous Articles in the Series »
Customs officials have discovered a host of ingenious hiding places, from $3 million secreted in the floor of a Mexican passenger bus to $1.6 million stuffed in duffel bags and balanced atop the heads of people wading across the Rio Grande to Mexico.
At border crossings and airports alone, American customs officers seized $57.9 million in the fiscal year ending Oct. 1, up 74 percent from the previous year. And once the money lands in Mexico, it is easily swept into a largely unregulated underground cash economy or laundered through seemingly legitimate businesses.
As the United States has tightened bank regulations and clamped down on sophisticated money-laundering schemes in the past 35 years, more of the money from illicit drug sales is being smuggled across the border to Mexico the old-fashioned way, law enforcement officials say.
American officials say stopping the bulk cash shipments and scuttling money laundering are critical to crippling the cartels in Mexico, which have unleashed a wave of violence that has claimed more than 15,000 lives since President Felipe Calderón began cracking down on their operations in December 2006.
Law enforcement officials and business owners in Mexico say that the assault on the cartels has driven drug traffickers to branch out into an array of other money-making ventures, setting up businesses like spas and day care centers to launder drug proceeds or selling new products like pirated movies or pilfered oil.
“It’s a natural evolution of criminal activity, just as with the mob in the 1950s,” said John Feeley, the deputy chief of mission of the United States Embassy in Mexico City. “They can’t continue to work on one illegal product.”
But Mexican authorities have yet to make much headway against money launderers, and customs officials say the cash they seize is still a trickle of what flows across the border.
Joint operations of customs, border patrol and immigration agents set up checkpoints on southbound lanes every day, fishing for money. Customs officials have assigned 25 more teams of dogs and handlers to the task in the past two years.
Mr. Feeley said that he expected Mexico and the United States to devote even more energy to going after the cartels’ profits.
Although United States authorities seized $138 million last year, that amount pales in comparison to the $18 billion to $39 billion a year the Drug Enforcement Agency estimates is being smuggled to Mexico every year.
“There is an enormous amount of money that is flowing undetected and un-interdicted,” said John T. Morton, the assistant secretary for immigration and customs enforcement. “We are trying to be a step ahead of the people moving the money. Unfortunately, right now we are a step behind.”
On the border, federal authorities play a constant cat-and-mouse game with the traffickers. The dealers employ spies to spot checkpoints, while informants tip off agents about the movement of cash.
Across the Border
In Mexico, the cash is relatively easy to launder, law enforcement officials say. Though the Mexican government has tightened bank regulations in the last nine months, drug cartels still buy real estate, businesses, automobiles, jewels and other luxuries in cash without any reports of suspicious activity being made to the government. The sellers then make giant but legal cash deposits to the banks, and the money flows into the economy, Mexican government officials and experts on laundering said.
“When the money is already integrated into the economy it’s very difficult to detect and the players there are not obligated to report it,” said Ramón García Gibson, a consultant to Mexican banks on money laundering.
Nor is it a crime in Mexico to buy and sell dollars on the street. Thousands of informal money brokers exchange cash, and while they are not allowed to handle more than $10,000 a day per client, the rule is often ignored.
The money launderers are still outrunning the Mexican authorities. Though the main agency in the finance ministry charged with tracking money laundering has tripled in size in the past two years, it remains weak and overwhelmed with thousands of reports of questionable activity, officials there say. In the past year, they have referred about 600 cases to prosecutors, but only 18 were presented to the courts.
“They just don’t have the capacity yet to do the investigation and make it stick in court,” said Shannon K. O’Neil, a Mexico analyst with the Council on Foreign Relations in New York.
No one knows precisely how much money is shipped across the border, but Mexican authorities say cash smuggled illegally into their country and then sent back to United States banks through Mexican financial institutions totals at least $10 billion a year.
A good portion of that is pooled by foreign exchange businesses and then shipped back to United States banks in armored trucks, experts on money laundering said. Money is also smuggled out of Mexico to Colombia and other countries to pay cocaine producers.
Skip to next paragraph
War Without Borders
Smuggling Dollars South
This series examines the impact of Mexican drug cartels on both sides of the border.
Previous Articles in the Series »
Customs officials have discovered a host of ingenious hiding places, from $3 million secreted in the floor of a Mexican passenger bus to $1.6 million stuffed in duffel bags and balanced atop the heads of people wading across the Rio Grande to Mexico.
At border crossings and airports alone, American customs officers seized $57.9 million in the fiscal year ending Oct. 1, up 74 percent from the previous year. And once the money lands in Mexico, it is easily swept into a largely unregulated underground cash economy or laundered through seemingly legitimate businesses.
As the United States has tightened bank regulations and clamped down on sophisticated money-laundering schemes in the past 35 years, more of the money from illicit drug sales is being smuggled across the border to Mexico the old-fashioned way, law enforcement officials say.
American officials say stopping the bulk cash shipments and scuttling money laundering are critical to crippling the cartels in Mexico, which have unleashed a wave of violence that has claimed more than 15,000 lives since President Felipe Calderón began cracking down on their operations in December 2006.
Law enforcement officials and business owners in Mexico say that the assault on the cartels has driven drug traffickers to branch out into an array of other money-making ventures, setting up businesses like spas and day care centers to launder drug proceeds or selling new products like pirated movies or pilfered oil.
“It’s a natural evolution of criminal activity, just as with the mob in the 1950s,” said John Feeley, the deputy chief of mission of the United States Embassy in Mexico City. “They can’t continue to work on one illegal product.”
But Mexican authorities have yet to make much headway against money launderers, and customs officials say the cash they seize is still a trickle of what flows across the border.
Joint operations of customs, border patrol and immigration agents set up checkpoints on southbound lanes every day, fishing for money. Customs officials have assigned 25 more teams of dogs and handlers to the task in the past two years.
Mr. Feeley said that he expected Mexico and the United States to devote even more energy to going after the cartels’ profits.
Although United States authorities seized $138 million last year, that amount pales in comparison to the $18 billion to $39 billion a year the Drug Enforcement Agency estimates is being smuggled to Mexico every year.
“There is an enormous amount of money that is flowing undetected and un-interdicted,” said John T. Morton, the assistant secretary for immigration and customs enforcement. “We are trying to be a step ahead of the people moving the money. Unfortunately, right now we are a step behind.”
On the border, federal authorities play a constant cat-and-mouse game with the traffickers. The dealers employ spies to spot checkpoints, while informants tip off agents about the movement of cash.
Across the Border
In Mexico, the cash is relatively easy to launder, law enforcement officials say. Though the Mexican government has tightened bank regulations in the last nine months, drug cartels still buy real estate, businesses, automobiles, jewels and other luxuries in cash without any reports of suspicious activity being made to the government. The sellers then make giant but legal cash deposits to the banks, and the money flows into the economy, Mexican government officials and experts on laundering said.
“When the money is already integrated into the economy it’s very difficult to detect and the players there are not obligated to report it,” said Ramón García Gibson, a consultant to Mexican banks on money laundering.
Nor is it a crime in Mexico to buy and sell dollars on the street. Thousands of informal money brokers exchange cash, and while they are not allowed to handle more than $10,000 a day per client, the rule is often ignored.
The money launderers are still outrunning the Mexican authorities. Though the main agency in the finance ministry charged with tracking money laundering has tripled in size in the past two years, it remains weak and overwhelmed with thousands of reports of questionable activity, officials there say. In the past year, they have referred about 600 cases to prosecutors, but only 18 were presented to the courts.
“They just don’t have the capacity yet to do the investigation and make it stick in court,” said Shannon K. O’Neil, a Mexico analyst with the Council on Foreign Relations in New York.
No one knows precisely how much money is shipped across the border, but Mexican authorities say cash smuggled illegally into their country and then sent back to United States banks through Mexican financial institutions totals at least $10 billion a year.
A good portion of that is pooled by foreign exchange businesses and then shipped back to United States banks in armored trucks, experts on money laundering said. Money is also smuggled out of Mexico to Colombia and other countries to pay cocaine producers.
China Raises GDP Growth Estimates, Narrowing Gap With Japan
Dec. 25 (Bloomberg) -- China raised its 2008 growth estimate to 9.6 percent from 9 percent and said this year’s quarterly figures will increase, narrowing the gap with Japan, the world’s second-biggest economy.
Gross domestic product was 31.405 trillion yuan ($4.6 trillion) last year, the statistics bureau said at a briefing in Beijing today. That compares with a previous 30.067 trillion yuan and the World Bank’s estimate of $4.9 trillion for Japan.
China’s expansion will be more than 8 percent in 2009, according to government officials, and the nation is poised to overtake Japan next year, International Monetary Fund projections show. Today’s figures result from an economic census which showed a bigger contribution from services and continue a pattern of China revising up preliminary growth estimates.
“The big underlying factor propelling China’s growth is the continued migration of people from the agricultural sector to the more modern economy -- industry and services,” said David Cohen, an economist at Action Economic in Singapore. “There’s no stopping China.”
For 2009, revisions will mainly affect the value of the year’s gross domestic product, with a “very small” impact on the growth rate, said Peng Zhilong, the head of the bureau’s national economy calculation department.
China’s expansion in 2008 compares with U.S. growth of less than 1 percent. Japan’s gross domestic product shrank 1.2 percent. The Indian economy expanded 6.7 percent in the fiscal year ended March 2009.
‘Loose’ Monetary Policy
This year, the Chinese economy grew 8.9 percent in the third quarter from a year earlier, 7.9 percent in the second and 6.1 percent in the first. The government has pledged to maintain a “moderately loose” monetary policy in 2010 to sustain a rebound driven by a stimulus package and record lending.
The pace of growth is attracting more investment. Foreign direct investment climbed 32 percent in November to $7 billion from a year earlier. Luxury carmaker Bayerische Motoren Werke AG said last month that it will build a new factory worth 5 billion yuan in China to tap an auto market set to overtake the U.S. as the world’s largest.
“Investors are anxious to participate in what remains, with India, the biggest story that’s out there,” Action Economics’ Cohen said.
Today’s figures showed a 13.1 trillion yuan contribution from services in 2008, compared with 12 trillion yuan previously. The census, intended to give a better picture of the economy’s make-up, focused on industry and services rather than agriculture.
More Revisions Pending
Gross domestic product figures for 2005, 2006 and 2007 will also be revised as a result of the census, Peng said.
China’s economy was 4.4 percent bigger in 2008 than originally estimated, today’s figures showed. In comparison, a previous census in 2005 showed the statistics bureau had under- estimated the size of the 2004 economy by 17 percent.
Besides the census, China routinely carries out a first and second check of each set of annual figures for gross domestic product, issuing revisions where necessary.
In April last year, the bureau raised the growth figure for 2007 to 11.9 percent from 11.4 percent, citing larger estimates for the contribution from service industries such as telecommunications and retailing. In January this year, it raised the estimate again to 13 percent.
“Upward revisions of China’s GDP numbers are frequent, large and well expected, so we expect little market impact from today’s revision,” Lu Ting, a Hong Kong-based economist for Bank of America-Merrill Lynch said.
Energy Consumption
China also revised energy consumption per unit of economic output in 2008, officials led by chief statistician Ma Jiantang said at today’s briefing.
The measure showed a drop of 5.2 percent compared with an earlier estimate of a 4.59 percent decline. The statisticians revised up energy consumption for the year by 2.12 percent to the equivalent of 2.91 billion tonnes of standard coal.
Before this month’s talks in Copenhagen on climate change, China announced a target of cutting its 2005 levels of carbon dioxide emissions per unit of GDP by between 40 percent and 45 percent by 2020.
Today’s figures suggest “it should be a reasonable goal,” Merrill’s Lu said.
Gross domestic product was 31.405 trillion yuan ($4.6 trillion) last year, the statistics bureau said at a briefing in Beijing today. That compares with a previous 30.067 trillion yuan and the World Bank’s estimate of $4.9 trillion for Japan.
China’s expansion will be more than 8 percent in 2009, according to government officials, and the nation is poised to overtake Japan next year, International Monetary Fund projections show. Today’s figures result from an economic census which showed a bigger contribution from services and continue a pattern of China revising up preliminary growth estimates.
“The big underlying factor propelling China’s growth is the continued migration of people from the agricultural sector to the more modern economy -- industry and services,” said David Cohen, an economist at Action Economic in Singapore. “There’s no stopping China.”
For 2009, revisions will mainly affect the value of the year’s gross domestic product, with a “very small” impact on the growth rate, said Peng Zhilong, the head of the bureau’s national economy calculation department.
China’s expansion in 2008 compares with U.S. growth of less than 1 percent. Japan’s gross domestic product shrank 1.2 percent. The Indian economy expanded 6.7 percent in the fiscal year ended March 2009.
‘Loose’ Monetary Policy
This year, the Chinese economy grew 8.9 percent in the third quarter from a year earlier, 7.9 percent in the second and 6.1 percent in the first. The government has pledged to maintain a “moderately loose” monetary policy in 2010 to sustain a rebound driven by a stimulus package and record lending.
The pace of growth is attracting more investment. Foreign direct investment climbed 32 percent in November to $7 billion from a year earlier. Luxury carmaker Bayerische Motoren Werke AG said last month that it will build a new factory worth 5 billion yuan in China to tap an auto market set to overtake the U.S. as the world’s largest.
“Investors are anxious to participate in what remains, with India, the biggest story that’s out there,” Action Economics’ Cohen said.
Today’s figures showed a 13.1 trillion yuan contribution from services in 2008, compared with 12 trillion yuan previously. The census, intended to give a better picture of the economy’s make-up, focused on industry and services rather than agriculture.
More Revisions Pending
Gross domestic product figures for 2005, 2006 and 2007 will also be revised as a result of the census, Peng said.
China’s economy was 4.4 percent bigger in 2008 than originally estimated, today’s figures showed. In comparison, a previous census in 2005 showed the statistics bureau had under- estimated the size of the 2004 economy by 17 percent.
Besides the census, China routinely carries out a first and second check of each set of annual figures for gross domestic product, issuing revisions where necessary.
In April last year, the bureau raised the growth figure for 2007 to 11.9 percent from 11.4 percent, citing larger estimates for the contribution from service industries such as telecommunications and retailing. In January this year, it raised the estimate again to 13 percent.
“Upward revisions of China’s GDP numbers are frequent, large and well expected, so we expect little market impact from today’s revision,” Lu Ting, a Hong Kong-based economist for Bank of America-Merrill Lynch said.
Energy Consumption
China also revised energy consumption per unit of economic output in 2008, officials led by chief statistician Ma Jiantang said at today’s briefing.
The measure showed a drop of 5.2 percent compared with an earlier estimate of a 4.59 percent decline. The statisticians revised up energy consumption for the year by 2.12 percent to the equivalent of 2.91 billion tonnes of standard coal.
Before this month’s talks in Copenhagen on climate change, China announced a target of cutting its 2005 levels of carbon dioxide emissions per unit of GDP by between 40 percent and 45 percent by 2020.
Today’s figures suggest “it should be a reasonable goal,” Merrill’s Lu said.
Terror Attempt Seen as Man Tries to Ignite Device on Jet
A Nigerian man tried to ignite an explosive device aboard a transatlantic Northwest Airlines flight as the plane prepared to land in Detroit on Friday, in an incident the United States believes was “an attempted act of terrorism,” according to a White House official who declined to be identified.
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Times Topics: Airplane Accidents and Incidents
The device, described by officials as a mixture of powder and liquid, failed to fully detonate. Passengers on the plane described a series of pops that sounded like firecrackers.
Federal officials said the man wanted to bring the plane down.
“This was the real deal,” said Representative Peter T. King of New York, the ranking Republican on the House Homeland Security Committee, who was briefed on the incident and said something had gone wrong with the explosive device, which he described as somewhat sophisticated. “This could have been devastating,” Mr. King said.
It was unclear how the man, identified by federal officials as Abdul Mudallad, 23, managed to get the explosive on the plane, an Airbus A330 wide-body jet carrying 278 passengers that had originated in Nigeria with a stop in Amsterdam. A senior administration official said that the government did not yet know whether the man had had the capacity to take down the plane.
“We’re trying to ascertain exactly what he had and what he thought he was doing, but our sense is he wanted to wreak some havoc here and was attempting to do just that,” the official said. “Whether at the end of the day he had the ability to do that is what I think we’ll be able to pull together over the next several days as we investigate this.”
A senior Department of Homeland Security official said that the device Mr. Mudallad had on him was “more incendiary than explosive,” and that he had tried to ignite the device or mixture to cause a fire as the airliner was approaching Detroit.
Mr. Mudallad told law enforcement authorities, the official said, that he had had explosive powder taped to his leg and that he had used a syringe of chemicals to mix with the powder to try to cause an explosion.
A federal counterterrorism official who asked not to be identified said Mr. Mudallad was apparently in a government law enforcement-intelligence data base, but it is not clear what extremist group or individuals he might be linked to.
“It’s too early to say what his association is,” the counterterrorism official said. “At this point, it seems like he was acting alone, but we don’t know for sure.” Although Mr. Mudallad is said to have told officials that he was directed by Al Qaeda, the counterterrorism official expressed caution about that claim, saying “it may have been aspirational.”
The incident unfolded just before noon. Passengers who were on the plane said they had heard a loud pop, smelled smoke and then seen flames in one area of the plane.
The suspect was quickly subdued as the plane — Northwest Airlines flight 253, operated on a Delta airplane — made its descent into Detroit Metropolitan Airport, landing at 11:53 a.m. (The two airlines merged last year.) Once on the ground, it was immediately guided to the end of a runway, where it was surrounded by police cars and emergency vehicles and searched by a bomb-disabling robot.
“Out of an abundance of caution, the plane was moved to a remote area where the plane and all baggage are currently being re-screened,” the Transportation Security Administration said Friday night. “A passenger is in custody and passengers are being interviewed.”
Sandra Berchtold, a spokeswoman with the Federal Bureau of Investigation’s Detroit office, said F.B.I. agents were at the scene Friday night and were investigating the matter. She declined comment when asked questions about Mr. Mudallad and any possible ties to terrorism.
One federal official who requested anonymity said Mr. Mudallad had suffered severe burns but was expected to survive. The man was admitted to the University of Michigan’s hospital in Ann Arbor, according to a senior state official who insisted on anonymity.
President Obama was kept informed throughout the day as he spent the Christmas holiday with his family and friends at a secluded Hawaiian beach house. After a secure conference call, he was given several follow-up briefings on paper. John O. Brennan, the White House counterterrorism chief, convened an interagency meeting in the late afternoon to go over what was known about the incident and what precautions should be taken.
A second Department of Homeland Security official said the Transportation Security Administration used layers of security measures at the nation’s airports and that it would be tightening them as a result of the incident in Detroit.
These measures — some visible to passengers, some not — include bomb-sniffing dog teams, carry-on luggage and passenger screening measures, and plainclothes behavioral-detection specialists inside airport terminals. The official said there were no immediate plans to elevate the nation’s threat level, which has been at orange since 2006.
Mr. King, of the Homeland Security committee, said there was no indication at this point that anyone else was involved, but he said officials would look back to see if any intelligence signals were missed. “For a while now we have had real concerns about Al Qaeda or terrorist connections in Nigeria,” he said.
Of the device used on Friday, he said, “It appears to be different from explosive devices that have been used before. That is perhaps why it escaped detection. Maybe that is why it made it through.”
Anahad O’Connor reported from New York, and Peter Baker from Hawaii. Eric Lipton and Eric Schmitt contributed reporting from Washington, and Micheline Maynard and Bill Vlasic from Detroit.
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Skip to next paragraph
Related
Times Topics: Airplane Accidents and Incidents
The device, described by officials as a mixture of powder and liquid, failed to fully detonate. Passengers on the plane described a series of pops that sounded like firecrackers.
Federal officials said the man wanted to bring the plane down.
“This was the real deal,” said Representative Peter T. King of New York, the ranking Republican on the House Homeland Security Committee, who was briefed on the incident and said something had gone wrong with the explosive device, which he described as somewhat sophisticated. “This could have been devastating,” Mr. King said.
It was unclear how the man, identified by federal officials as Abdul Mudallad, 23, managed to get the explosive on the plane, an Airbus A330 wide-body jet carrying 278 passengers that had originated in Nigeria with a stop in Amsterdam. A senior administration official said that the government did not yet know whether the man had had the capacity to take down the plane.
“We’re trying to ascertain exactly what he had and what he thought he was doing, but our sense is he wanted to wreak some havoc here and was attempting to do just that,” the official said. “Whether at the end of the day he had the ability to do that is what I think we’ll be able to pull together over the next several days as we investigate this.”
A senior Department of Homeland Security official said that the device Mr. Mudallad had on him was “more incendiary than explosive,” and that he had tried to ignite the device or mixture to cause a fire as the airliner was approaching Detroit.
Mr. Mudallad told law enforcement authorities, the official said, that he had had explosive powder taped to his leg and that he had used a syringe of chemicals to mix with the powder to try to cause an explosion.
A federal counterterrorism official who asked not to be identified said Mr. Mudallad was apparently in a government law enforcement-intelligence data base, but it is not clear what extremist group or individuals he might be linked to.
“It’s too early to say what his association is,” the counterterrorism official said. “At this point, it seems like he was acting alone, but we don’t know for sure.” Although Mr. Mudallad is said to have told officials that he was directed by Al Qaeda, the counterterrorism official expressed caution about that claim, saying “it may have been aspirational.”
The incident unfolded just before noon. Passengers who were on the plane said they had heard a loud pop, smelled smoke and then seen flames in one area of the plane.
The suspect was quickly subdued as the plane — Northwest Airlines flight 253, operated on a Delta airplane — made its descent into Detroit Metropolitan Airport, landing at 11:53 a.m. (The two airlines merged last year.) Once on the ground, it was immediately guided to the end of a runway, where it was surrounded by police cars and emergency vehicles and searched by a bomb-disabling robot.
“Out of an abundance of caution, the plane was moved to a remote area where the plane and all baggage are currently being re-screened,” the Transportation Security Administration said Friday night. “A passenger is in custody and passengers are being interviewed.”
Sandra Berchtold, a spokeswoman with the Federal Bureau of Investigation’s Detroit office, said F.B.I. agents were at the scene Friday night and were investigating the matter. She declined comment when asked questions about Mr. Mudallad and any possible ties to terrorism.
One federal official who requested anonymity said Mr. Mudallad had suffered severe burns but was expected to survive. The man was admitted to the University of Michigan’s hospital in Ann Arbor, according to a senior state official who insisted on anonymity.
President Obama was kept informed throughout the day as he spent the Christmas holiday with his family and friends at a secluded Hawaiian beach house. After a secure conference call, he was given several follow-up briefings on paper. John O. Brennan, the White House counterterrorism chief, convened an interagency meeting in the late afternoon to go over what was known about the incident and what precautions should be taken.
A second Department of Homeland Security official said the Transportation Security Administration used layers of security measures at the nation’s airports and that it would be tightening them as a result of the incident in Detroit.
These measures — some visible to passengers, some not — include bomb-sniffing dog teams, carry-on luggage and passenger screening measures, and plainclothes behavioral-detection specialists inside airport terminals. The official said there were no immediate plans to elevate the nation’s threat level, which has been at orange since 2006.
Mr. King, of the Homeland Security committee, said there was no indication at this point that anyone else was involved, but he said officials would look back to see if any intelligence signals were missed. “For a while now we have had real concerns about Al Qaeda or terrorist connections in Nigeria,” he said.
Of the device used on Friday, he said, “It appears to be different from explosive devices that have been used before. That is perhaps why it escaped detection. Maybe that is why it made it through.”
Anahad O’Connor reported from New York, and Peter Baker from Hawaii. Eric Lipton and Eric Schmitt contributed reporting from Washington, and Micheline Maynard and Bill Vlasic from Detroit.
Sign in to Recommend Next Article in US (1 of 30) »
India imposes re-entry limit on foreigners
Stung by allegations that a US citizen with a long-term multiple-entry visa was the scout for the Mumbai terror attacks, India’s security apparatus has decided to bar foreign visitors re-entering India for two months after any trip to the country.
The sudden imposition of the new policy at the height of India’s busy winter season – which brings a surge of foreign holiday makers, business visitors, and academics – has generated confusion and anxiety, exacerbated by erratic implementation.
EDITOR’S CHOICE
Russia to supply India with nuclear reactors - Dec-07
Chicago man charged over Mumbai attack - Dec-07
A strained restraint - Nov-28
Himalayan ski plan hangs in balance - Dec-04
Radioactive leak was deliberate, says India - Nov-29
India reins in illegal mining - Nov-27
“Foreign passports are now stamped on exit to indicate that the bearer cannot re-enter India within two months of exit unless special permission is obtained,” the US embassy in India advised its citizens this week.
Both the UK and the US, have formally expressed their concern and urged Indian authorities to rethink the new rules, hurriedly drafted after David Headley, a US citizen of Pakistani origin, was accused of helping plan the Mumbai terror attacks during repeated visits to the country on a multiple-entry visa.
The furore comes as New Delhi is trying to aggressively promote itself as a tourist destination with a slick “Incredible India” advertising campaign. Despite its wealth of attractions, India received just 5.3m foreign tourists in 2008, up 5.6 per cent from 2007, but just a fraction of the nearly 14m visitors much-smaller Thailand attracts each year.
Indian officials say the requirement of the two-month “cooling off period” for foreign tourists is intended to deter misuse of five and 10-year multiple entry tourist visas, now used by thousands of foreigners to live in India while avoiding the complex process – and heavy tax liability – of establishing residency in the country.
However, the US embassy said the policy is also hitting genuine tourists who want to use India as a base from which to travel to other popular tourist destinations in the region.
It said an American family travelling to Sri Lanka from India was told they would need a special permission to re-enter India, while the visiting college-age children of a US businessman in India were told they could not re-enter if they left for a side trip to Thailand, after just three days in India.
The embassy said foreigners holding other visa types had also been affected. “There has been some confusion about what rules are in force and what rules are not,” said one Western diplomat.
India also recently tightened rules governing business visas to crack-down on tens of thousands of unskilled, and semi-skilled Chinese labourers who were working for Chinese companies on infrastructure projects in India.
The sudden imposition of the new policy at the height of India’s busy winter season – which brings a surge of foreign holiday makers, business visitors, and academics – has generated confusion and anxiety, exacerbated by erratic implementation.
EDITOR’S CHOICE
Russia to supply India with nuclear reactors - Dec-07
Chicago man charged over Mumbai attack - Dec-07
A strained restraint - Nov-28
Himalayan ski plan hangs in balance - Dec-04
Radioactive leak was deliberate, says India - Nov-29
India reins in illegal mining - Nov-27
“Foreign passports are now stamped on exit to indicate that the bearer cannot re-enter India within two months of exit unless special permission is obtained,” the US embassy in India advised its citizens this week.
Both the UK and the US, have formally expressed their concern and urged Indian authorities to rethink the new rules, hurriedly drafted after David Headley, a US citizen of Pakistani origin, was accused of helping plan the Mumbai terror attacks during repeated visits to the country on a multiple-entry visa.
The furore comes as New Delhi is trying to aggressively promote itself as a tourist destination with a slick “Incredible India” advertising campaign. Despite its wealth of attractions, India received just 5.3m foreign tourists in 2008, up 5.6 per cent from 2007, but just a fraction of the nearly 14m visitors much-smaller Thailand attracts each year.
Indian officials say the requirement of the two-month “cooling off period” for foreign tourists is intended to deter misuse of five and 10-year multiple entry tourist visas, now used by thousands of foreigners to live in India while avoiding the complex process – and heavy tax liability – of establishing residency in the country.
However, the US embassy said the policy is also hitting genuine tourists who want to use India as a base from which to travel to other popular tourist destinations in the region.
It said an American family travelling to Sri Lanka from India was told they would need a special permission to re-enter India, while the visiting college-age children of a US businessman in India were told they could not re-enter if they left for a side trip to Thailand, after just three days in India.
The embassy said foreigners holding other visa types had also been affected. “There has been some confusion about what rules are in force and what rules are not,” said one Western diplomat.
India also recently tightened rules governing business visas to crack-down on tens of thousands of unskilled, and semi-skilled Chinese labourers who were working for Chinese companies on infrastructure projects in India.
Wednesday, December 23, 2009
Japan Stocks Poised to Rebound After Trailing Developed Markets
Dec. 24 (Bloomberg) -- Government spending and the central bank’s plan to hold down interest rates will spur a rebound in Japanese stocks, this year’s worst-performing equities among major markets, six of the biggest securities firms said.
Kathy Matsui, Goldman Sachs Group Inc.’s chief strategist in Tokyo, forecasts the Topix index will rally 16 percent from the close on Dec. 22 to 1,050 by the first half of next year as the government moves to prevent a double-dip recession. Nomura Holding Inc.’s chief strategist, Seiichiro Iwasawa, predicts the Topix will climb to as much as 1,200 by the end of 2010.
“Chances are high for a turnaround in currency and equity markets,” Iwasawa said in a Bloomberg interview this month. “We can expect improvement in the performance of Japanese shares relative to other markets.”
Forecasts for a recovery in Japanese shares come as the Topix is poised for the smallest annual gain among the so-called Group of 20 nations, rising 5.1 percent this year, data compiled by Bloomberg show. The gauge is trailing the MSCI World Index by 21 percentage points, the most for any year since 1998, the data show.
Prime Minister Yukio Hatoyama’s government announced a 7.2 trillion yen ($80 billion) economic stimulus package on Dec. 8. The Bank of Japan unveiled a plan the previous week to provide 10 trillion yen in emergency credit to banks in an effort to revive an economy that it estimates will contract this year.
Bank of Japan Governor Masaaki Shirakawa said on Dec. 21 that the bank is committed to holding interest rates near zero “persistently.” The next day, the yen fell and the Nikkei 225 Stock Average climbed to its highest close in three months.
Strong Yen
The Topix dropped for three-straight months through November, widening its underperformance compared with benchmark indexes in other countries. The Russian Trading System Index, the Group of 20’s top performer, has climbed 124 percent this year. The earnings outlook in Japan has been hurt by a strong yen, whose average of 93.63 to the dollar this year is the highest level since currencies became freely traded in 1971.
A strong yen hurts exporters by reducing their foreign revenue when converted into yen and making their products more expensive overseas.
“Pessimism and frustration about Japanese shares are at their highest level in my 20-year career,” said Goldman Sachs’ Matsui in a report dated Dec. 10. “The government has finally realized that unless it quickly acts, the economy will be in danger of contracting again.”
Earnings Outlook
So-called current profit, or pretax profit from operations, for Japan’s major corporations will rise 62 percent in fiscal 2010 from the previous year, according to a forecast by Nomura Securities Financial & Economic Research Center, which assumed an exchange rate of 90 yen to the dollar.
Overall earnings for companies in the Topix are projected to rise 85 percent to 44.12 yen a share next year, according to estimates from equity analysts compiled by Bloomberg. That compares with an estimated growth of 27 percent for stocks in the MSCI World Index and 39 percent for the MSCI Asia Pacific index.
More stimulus measures may be introduced, along with dollar buying by the Bank of Japan, to stem the yen’s appreciation, according to Nomura’s Iwasawa.
The government’s implementation of fiscal and monetary policies to counter deflation and a stronger yen “make it easier to envision V-shaped recoveries in corporate earnings in fiscal 2010,” said Credit Suisse Group AG’s chief market strategist for Japan, Shinichi Ichikawa.
U.S. Jobs
The Bank of Japan forecasts the nation’s real gross domestic product will expand 1 percent in 2010 after falling 3.4 percent this year and dropping 1.13 percent in 2008.
“Corporations may continue to raise their earnings forecasts into early spring as the global economy improves,” said Shoji Hirakawa, UBS AG’s chief equity strategist for Japan. “Companies that are especially sensitive to changes in the economy may lead gains in equity markets.”
Further gains in Japan’s equity markets will depend on U.S. employment rates, according to Mizuho Securities Co. Equity Strategist Tomochika Kitaoka.
“When better job statistics make it possible for the U.S. to raise interest rates from near-zero, the yen may be sold and Japanese shares may be bought,” Kitaoka said in a report dated Dec. 11.
U.S. unemployment is estimated to rise to 10 percent in 2010 from 9.3 percent this year, according economists’ estimates compiled by Bloomberg, while real GDP is projected to expand 2.6 percent from a contraction of 2.5 percent this year.
Domestic Demand
A U.S. economic recovery may leave Japan as the last major economy with near-zero interest rates, which would “prompt liquidity to head to Japan,” said Kitaoka.
“Shares of Japanese exporters may be bought if improved U.S. employment prompts expectations of a recovery in consumer spending,” said Barclays Plc’s chief equity strategist for Japan Fumiyuki Takahashi in an interview earlier this month.
Companies that depend on domestic demand may also climb after the expansion of child-care subsidies planned by the Hatoyama administration, according to UBS’s Hirakawa. From April, the start of the fiscal year, ”the stimulus may lead to a greater-than-expected recovery in domestic demand. I’m focusing on banking, real estate, and retail shares,” said Hirakawa in an interview this month.
Kathy Matsui, Goldman Sachs Group Inc.’s chief strategist in Tokyo, forecasts the Topix index will rally 16 percent from the close on Dec. 22 to 1,050 by the first half of next year as the government moves to prevent a double-dip recession. Nomura Holding Inc.’s chief strategist, Seiichiro Iwasawa, predicts the Topix will climb to as much as 1,200 by the end of 2010.
“Chances are high for a turnaround in currency and equity markets,” Iwasawa said in a Bloomberg interview this month. “We can expect improvement in the performance of Japanese shares relative to other markets.”
Forecasts for a recovery in Japanese shares come as the Topix is poised for the smallest annual gain among the so-called Group of 20 nations, rising 5.1 percent this year, data compiled by Bloomberg show. The gauge is trailing the MSCI World Index by 21 percentage points, the most for any year since 1998, the data show.
Prime Minister Yukio Hatoyama’s government announced a 7.2 trillion yen ($80 billion) economic stimulus package on Dec. 8. The Bank of Japan unveiled a plan the previous week to provide 10 trillion yen in emergency credit to banks in an effort to revive an economy that it estimates will contract this year.
Bank of Japan Governor Masaaki Shirakawa said on Dec. 21 that the bank is committed to holding interest rates near zero “persistently.” The next day, the yen fell and the Nikkei 225 Stock Average climbed to its highest close in three months.
Strong Yen
The Topix dropped for three-straight months through November, widening its underperformance compared with benchmark indexes in other countries. The Russian Trading System Index, the Group of 20’s top performer, has climbed 124 percent this year. The earnings outlook in Japan has been hurt by a strong yen, whose average of 93.63 to the dollar this year is the highest level since currencies became freely traded in 1971.
A strong yen hurts exporters by reducing their foreign revenue when converted into yen and making their products more expensive overseas.
“Pessimism and frustration about Japanese shares are at their highest level in my 20-year career,” said Goldman Sachs’ Matsui in a report dated Dec. 10. “The government has finally realized that unless it quickly acts, the economy will be in danger of contracting again.”
Earnings Outlook
So-called current profit, or pretax profit from operations, for Japan’s major corporations will rise 62 percent in fiscal 2010 from the previous year, according to a forecast by Nomura Securities Financial & Economic Research Center, which assumed an exchange rate of 90 yen to the dollar.
Overall earnings for companies in the Topix are projected to rise 85 percent to 44.12 yen a share next year, according to estimates from equity analysts compiled by Bloomberg. That compares with an estimated growth of 27 percent for stocks in the MSCI World Index and 39 percent for the MSCI Asia Pacific index.
More stimulus measures may be introduced, along with dollar buying by the Bank of Japan, to stem the yen’s appreciation, according to Nomura’s Iwasawa.
The government’s implementation of fiscal and monetary policies to counter deflation and a stronger yen “make it easier to envision V-shaped recoveries in corporate earnings in fiscal 2010,” said Credit Suisse Group AG’s chief market strategist for Japan, Shinichi Ichikawa.
U.S. Jobs
The Bank of Japan forecasts the nation’s real gross domestic product will expand 1 percent in 2010 after falling 3.4 percent this year and dropping 1.13 percent in 2008.
“Corporations may continue to raise their earnings forecasts into early spring as the global economy improves,” said Shoji Hirakawa, UBS AG’s chief equity strategist for Japan. “Companies that are especially sensitive to changes in the economy may lead gains in equity markets.”
Further gains in Japan’s equity markets will depend on U.S. employment rates, according to Mizuho Securities Co. Equity Strategist Tomochika Kitaoka.
“When better job statistics make it possible for the U.S. to raise interest rates from near-zero, the yen may be sold and Japanese shares may be bought,” Kitaoka said in a report dated Dec. 11.
U.S. unemployment is estimated to rise to 10 percent in 2010 from 9.3 percent this year, according economists’ estimates compiled by Bloomberg, while real GDP is projected to expand 2.6 percent from a contraction of 2.5 percent this year.
Domestic Demand
A U.S. economic recovery may leave Japan as the last major economy with near-zero interest rates, which would “prompt liquidity to head to Japan,” said Kitaoka.
“Shares of Japanese exporters may be bought if improved U.S. employment prompts expectations of a recovery in consumer spending,” said Barclays Plc’s chief equity strategist for Japan Fumiyuki Takahashi in an interview earlier this month.
Companies that depend on domestic demand may also climb after the expansion of child-care subsidies planned by the Hatoyama administration, according to UBS’s Hirakawa. From April, the start of the fiscal year, ”the stimulus may lead to a greater-than-expected recovery in domestic demand. I’m focusing on banking, real estate, and retail shares,” said Hirakawa in an interview this month.
BOJ Members Were Ready to Take Action, Minutes Show
Dec. 24 (Bloomberg) -- The Bank of Japan said “many” of its board members expressed readiness to act against financial- market volatility last month, before officials held an emergency meeting to address a surge in the yen.
“Many” agreed “the bank would maintain its stance of responding promptly to changes in the market situation,” according to minutes of the bank’s Nov. 19-20 meeting released in Tokyo today. The central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets,” the report said.
The central bank unveiled a 10 trillion yen ($110 billion) fixed-rate lending facility in an emergency meeting on Dec. 1 to lower borrowing costs and counter the yen’s advance to a 14-year high against the dollar. Governor Masaaki Shirakawa has said the bank is ready to do more and can extend the lending program if the demand for cash jumps.
“The central bank’s next option will probably be to provide abundant funds aggressively by utilizing the latest program,” said Mari Iwashita, chief market economist at Nikko Cordial Securities Inc. in Tokyo. “Expanding the program will allow the bank to enhance the effect of its accommodative monetary policy.”
The emergency meeting was prompted by the yen’s advance to 84.83 on Nov. 27 and escalating warnings from Prime Minister Yukio Hatoyama’s government about prolonged declines in consumer prices. Shirakawa in October had announced plans to end some of its emergency lending programs.
Stimulus Package
Hatoyama unveiled a 7.2 trillion-yen stimulus package, his first since coming to office in September, a week after the BOJ’s emergency gathering.
Commercial banks are utilizing the central bank’s program of offering them three-month loans at 0.1 percent. In a Dec. 16 auction, lenders asked to borrow 8.5 times more than the amount offered. Deputy Prime Minister Naoto Kan said this month BOJ policies have helped the yen decline.
The board kept its benchmark overnight lending rate at 0.1 percent in a unanimous vote at the November gathering. Members said the bank would maintain an “extremely accommodative financial environment,” the minutes showed.
Board members also discussed how the bank should express its view on deflation, according to the minutes. One person said the bank should be careful about using the word to ensure it doesn’t hurt corporate and consumer sentiment. Shirakawa on Nov. 30 said the central bank agreed with the government’s view that the economy is in “mild” deflation.
Doesn’t Tolerate
The bank last week said it “does not tolerate a year-on- year rate of change in the CPI equal to or below zero percent.” Policy makers consider prices are stable as long as they are in a positive range equal to or below 2 percent. Analysts said the stance may signal the bank is committed to keeping interest rates at 0.1 percent until prices rise.
A Cabinet Office official attending the meeting, who wasn’t identified by name, called on the bank to recognize the risks of deflation, the minutes said. Government representatives attend policy board meetings, though they don’t vote on policy decisions.
A “few” members said the central bank should clearly explain that persistent price declines are being driven by weak demand and that it is “essential” for business sentiment and consumer spending to drive growth in order to overcome deflation.
“Many” agreed “the bank would maintain its stance of responding promptly to changes in the market situation,” according to minutes of the bank’s Nov. 19-20 meeting released in Tokyo today. The central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets,” the report said.
The central bank unveiled a 10 trillion yen ($110 billion) fixed-rate lending facility in an emergency meeting on Dec. 1 to lower borrowing costs and counter the yen’s advance to a 14-year high against the dollar. Governor Masaaki Shirakawa has said the bank is ready to do more and can extend the lending program if the demand for cash jumps.
“The central bank’s next option will probably be to provide abundant funds aggressively by utilizing the latest program,” said Mari Iwashita, chief market economist at Nikko Cordial Securities Inc. in Tokyo. “Expanding the program will allow the bank to enhance the effect of its accommodative monetary policy.”
The emergency meeting was prompted by the yen’s advance to 84.83 on Nov. 27 and escalating warnings from Prime Minister Yukio Hatoyama’s government about prolonged declines in consumer prices. Shirakawa in October had announced plans to end some of its emergency lending programs.
Stimulus Package
Hatoyama unveiled a 7.2 trillion-yen stimulus package, his first since coming to office in September, a week after the BOJ’s emergency gathering.
Commercial banks are utilizing the central bank’s program of offering them three-month loans at 0.1 percent. In a Dec. 16 auction, lenders asked to borrow 8.5 times more than the amount offered. Deputy Prime Minister Naoto Kan said this month BOJ policies have helped the yen decline.
The board kept its benchmark overnight lending rate at 0.1 percent in a unanimous vote at the November gathering. Members said the bank would maintain an “extremely accommodative financial environment,” the minutes showed.
Board members also discussed how the bank should express its view on deflation, according to the minutes. One person said the bank should be careful about using the word to ensure it doesn’t hurt corporate and consumer sentiment. Shirakawa on Nov. 30 said the central bank agreed with the government’s view that the economy is in “mild” deflation.
Doesn’t Tolerate
The bank last week said it “does not tolerate a year-on- year rate of change in the CPI equal to or below zero percent.” Policy makers consider prices are stable as long as they are in a positive range equal to or below 2 percent. Analysts said the stance may signal the bank is committed to keeping interest rates at 0.1 percent until prices rise.
A Cabinet Office official attending the meeting, who wasn’t identified by name, called on the bank to recognize the risks of deflation, the minutes said. Government representatives attend policy board meetings, though they don’t vote on policy decisions.
A “few” members said the central bank should clearly explain that persistent price declines are being driven by weak demand and that it is “essential” for business sentiment and consumer spending to drive growth in order to overcome deflation.
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