Debt limit overtakes shutdown as focus of US crisis; US science is in peril, say Nobel winners; Gold befuddles Bernanke; India streamlines investment, sort of

1 Debt limit overtakes shutdown as focus of US crisis (David Espo in San Francisco Chronicle) A possible national default has loomed closer as the partial government shutdown lingered, rattling markets in the US and overseas. A gridlocked Congress betrayed little or no urgency toward resolving either of the threats. Stocks got a case of the jitters on Wall Street, and halfway around the world China stressed the importance for the international economy of raising the US debt limit.

"Safeguarding the debt is of vital importance to the economy of the US and the world," Vice Finance Minister Zhu Guangyao said. China holds $1.277 trillion in US Treasury bonds, second only to Japan. At home, the political rhetoric was unchanged while a new poll suggested Republicans are paying a heavier price than Democrats for the deadlock.

In the Senate, where majority Democrats forced approval of legislation before the shutdown aimed at preventing it, officials said Majority Leader Harry Reid was drafting a bill to raise the current $16.7 trillion debt ceiling before the Oct. 17 deadline when Treasury Secretary Jacob Lew has said the government will reach its borrowing limit. The measure would allow the government to meet its borrowing needs through the 2014 elections, officials said, although few details were immediately available.

http://www.sfgate.com/news/politics/article/Gov-t-shutdown-enters-2nd-week-no-end-in-sight-4874539.php

2 US science is in peril, say Nobel winners (Straits Times) Three American winners of the Nobel Prize for Medicine have said scientific progress in the US is in peril due to unprecedented funding cuts and ideological challenges. The scientists were honoured for their work on how cells organize their cargo and move molecules - a process that contributes to normal body and brain function but is also at the root of neurological diseases, diabetes, and immune disorders.

But after they recounted their anecdotes of shock and amazement, including the German-born neuroscientist Thomas Suedhof, their speeches turned to a future that may hold fewer opportunities. Co-winner James Rothman, 63, of Yale University, who studies how cells transport energy outside of themselves, said he was struck by how hard it is to get research funding these days.

http://www.straitstimes.com/breaking-news/technology/story/us-science-peril-say-nobel-medicine-prize-winners-20131008

3 Gold befuddles Bernanke (The Sydney Morning Herald) Ben Bernanke, the world’s most-powerful central banker, says he doesn’t understand gold prices. If his peers had paid attention, they might have stopped expanding reserves that lost $545 billion in value since bullion peaked in 2011. Bernanke told the Senate Banking Committee in July that “nobody really understands gold prices and I don’t pretend to really understand them either.”

Central banks, which own 18 per cent of all the gold ever mined, will add as much as 350 tonnes valued at about $15 billion this year, the London-based World Gold Council estimates. They purchased 535 tonnes in 2012, the most since 1964. Russia is the biggest buyer, expanding reserves by 20 per cent since prices reached a record $1,921.15 an ounce in September 2011. Gold has slumped 31 per cent since then.

As policy makers were buying, investors were losing faith in the metal as a store of value. The value of exchange-traded products dropped by $60.4 billion, or 43 per cent, this year, saddling hedge fund manager John Paulson with losses, according to data compiled by Bloomberg.

Warren Buffett, the fourth-richest person in the Bloomberg Billionaires Index and the world’s most successful investor, has said the metal has no utility because it moves to vaults once mined. While countries from the US to the UK adopted a gold standard by the 19th century to limit inflation, no central bank or government institution links currencies directly to the metal anymore. The Fed, created a century ago, cut the dollar’s ties to gold four decades ago.

 “Bernanke was suggesting in his own way that too much importance is given to gold, it’s too hyped,” said Nouriel Roubini, professor of economics and international business at New York University. “Gold is not a currency.”

http://www.smh.com.au/business/markets/gold-befuddles-bernanke-as-banks-still-buy-20131008-2v588.html

4 India streamlines investment, sort of (Saptarishi Dutta & Ashutosh Joshi in The Wall Street Journal) India’s latest attempt to simplify the rules for foreign investments are helpful but won’t move the needle on attracting foreign capital inflow, say analysts. India’s capital markets regulator, the Securities Exchange Board of India, has announced that it would stop segregating foreign investors into categories and start rolling them into one category known as foreign portfolio investors. Foreign investors who want to buy Indian stocks and bonds need to register with the regulator, a process which investors have long complained is time-consuming and cumbersome.

The new rule is expected to help reduce some of the paperwork for foreign investors, says Tirthankar Patnaik, head of institutional research at Mumbai brokerage Religare Capital Markets Ltd. The move comes at a time when India is seeing a massive exodus of foreign capital as India’s growth prospects grow dim. According to SEBI, foreigner institutional investors have sold around $12.3 billion-worth of Indian shares and bonds since June.

But analysts say that investors need to regain confidence in India before they will put money back in. “This move will only give you a result when the economy starts going up,” said Siddharth Bhamre, head of equities and derivatives at Angel Broking, a Mumbai-based brokerage. “If I give you a bad investment opportunity and you have bare minimum paperwork to do, you won’t go [ahead],” he added.

Analysts also note that there are still plenty of bureaucratic hurdles for foreign investors, despite the decision to streamline. Also, the tax structure for this new category of investors, foreign portfolio investors, isn’t clear, says Mr. Swamy of PwC. “Only when we see all these things together, can we say that the entire route is eased,” said Mr. Swamy.

http://blogs.wsj.com/indiarealtime/2013/10/07/india-streamlines-foreign-investment-sort-of/