The US is still crawling through a recession and its citizens are unhappy that their president is squandering huge resources on a vacation
There's a groundswell of anger in the US over the high cost of Barack Obama's trip to India this weekend. The sentiment stems from reports that the president and his entourage of about 3,000 officials, business people and security personnel will spend an estimated $200 million a day when he visits India for four days, beginning Saturday.
Topping the list of critics is newly-elected Republican representative from Minnesota Michele Bachmann, who has called the cost of the upcoming presidential trip "over-the-top". In an interview to a television channel on Wednesday, following her victory in a hotly-contested re-election bid to the US Congress, she said, "We have never seen this sort of an entourage going with the president before. And I think this is an example of the massive overspending that we've seen-not just in the last two years, really in the last four."
There has been no independent confirmation of the expenditure figures, but the White House was quick to respond, saying that the figures cited have no basis in reality. "Due to security concerns, we are unable to outline details associated with security procedures and costs, but it's safe to say these numbers are wildly inflated," White House spokesperson Amy Brundage said in a statement.
Still, it's difficult to believe that the elaborate arrangements for the four-day visit will come cheap. Take the bomb-proof surface tunnel that is to be installed by US military engineers on the approach to Mani Bhavan, the Gandhi museum that the president will visit soon after he comes to Mumbai on Saturday. US security officials came up with the plan after inspecting the route to the museum and they felt that the area was too congested to monitor. The kilometer-long tunnel that will be large enough to let Obama's cavalcade drive through, will be put up in an hour.
Several officials from the White House and US security agencies have been in India for the past couple of weeks with helicopters, a ship and high-end security systems, preparing for the visit. While security is a major concern, Americans aren't convinced about the costs involved.
"Some people say that Obama does not get it. I say he gets it just fine. He just does not care. He has his pie and he will eat it with all the toppings he can get on it and to heck with anyone else," writes one reader to a website, in response to the report on the cost of the trip. "This man has had more vacations in his two years in office than I have had in my entire life. He does not care that US citizens are living in tents as long as he is not."
Bill Hammersley, another writer on the website disagreed with the criticism. "Every time I see this article the number of people grows and grows. It started out as 150 people and now it's 20 times that size. This is the kind of over exaggeration that makes us look so silly and ignorant."
At $200 million a day for the four-day stay, the total expenditure might not be anywhere near $1 billion, perhaps a lot less. But this is apparently a little too much for Americans working through a recession to digest. A large section of them are struggling without employment and factories are continuing to close down. Thousands have lost their houses since the financial crisis set off the economic slide in 2008.
Obama was elected exactly two years ago for the hope he gave the American people. With no significant improvement in the economic situation, the sense of hope has been replaced by frustration and fear which resulted in a dramatic vote against the president and his Democratic Party in mid-term elections this week. As Bill, one of several agitated Americans, wrote after returning from casting his vote: "I'm totally speechless when it comes to Obama and his clowns and the whole political mess. I can't express my anger and resentment anymore."
Signs of easing of the global economy brought about by various central banks boosted global markets today and India was no exception. The market picked up the festive fever and the Sensex finished at a new all-time closing high today.
The commodity market, except the crude oil has already discounted the US Fed’s move to buyback the debt from banks and so far have remained flat.
Commodity prices are not likely to witness a great momentum in the long-term following the US Federal Reserve's (the Fed) $600-billion programme to buy debt from banks, which may weaken the dollar further, say analysts.
"The programme will certainly impact the US dollar negatively as the Fed's decision will increase liquidity of the greenback in the market. However, the market was fully aware about the Fed's action so the impact would not be very acute. And I don't think it will create a significant pressure on the dollar," said an analyst from a Mumbai-based research firm.
The Fed also announced that the $600 billion programme would be topped by around $250 billion of re-invested assets, mainly mortgages, from the quantitative easing.
"The market was expecting around $500 billion, but they have come up with $600 billion. They will also continue their re-invest programme, so total would be around $850-$900 billion," said the analyst.
In early trades on Thursday in London, base metals prices gained marginally. Copper for the three-month delivery gained 1.3% to $8,430 per metric tonne, while aluminium gained 0.9% to $2,439 per tonne on the London Metal Exchange (LME). Ony silver was up about 3% and zinc was up 2%.
"We have not seen a great impact of the Fed's announcement on commodities as of today and since tomorrow is the holiday in India, there is not much action in the market," said a senior analyst from Anand Rathi Financial Services Ltd.
"Fundamentals are still not good for commodities. Commodity prices are climbing just because of the depreciation of dollar and will go further, except agriculture commodities, which are still in a better place due to huge demand-supply mismatch situation," added the analyst.
Analysts also feel that the package announced by the Fed would give some support to crude oil price.
"Crude oil prices indicate the global economic condition in a better way than metals. Since last two to three months, metal prices have recovered very fast. However, crude oil prices are not showing the same performance and are hovering between a broad range of $75-$85 per barrel. Unless the US economy shows some recovery, crude oil prices will not move up much. However the Fed package and China's action to build up its strategic petroleum reserves due to lower crude oil prices, is likely to support oil prices to gain some strength," said an analyst.
JP Morgan Chase & Co and Bank of America Merrill Lynch (BoAML) have also said that crude oil would rebound and may touch $100 a barrel in 2011 as the US economy strengthens its growth.
"We are expecting maximum price of oil would be $90 per barrel," added the analyst from Anand Rathi Finance.
The analyst was also bullish on gold. He said, "Gold prices will increase due to the dollar factor and fears of inflation. I think it would be a win-win situation for gold."