September 2008 – Page 2

Greenspan Calls This the Worst Economy and Lehmann Declares Bankruptcy

In an interview with ABC’s This Week Alan Greenspan portrayed a very grim picture of the US Economy and said that this is “by far” the worst situation that he has seen in his career.

This comes on the eve of the 158 year old Lehman Brothers filing Chapter 11 bankruptcy. The firm had to go down, after it failed to find itself a buyer despite long negotiations. What is interesting is that most buyers walked awayÂ after the US Treasury refused to provide any financial aid for Lehman, like it had done for Bear Sterns earlier.

When asked about his take on this Greenspan said “Rising speculation that Lehman Brothers Holdings Inc. may fail is generating less concern among investors than when Bear Stearns Cos. imploded in March.” He said that the conditions during the Bear Sterns bail-out were once in a “once in a half century, probably once in a century type of event.”

The housing market crash has created a downward spiral which has taken down a lot of financial giants and Greenspan expects that we may see one more major financial institution go down. His expectation is that the prices in the US housing market need to stabilize before the crisis can be over and this will happen around early next year.

In a nutshell according to Greenspan:

How bad is the crisis? – This is the worse that he has seen.
Will Lehman be the last victim? – We may see one more financial institution go down
How will it get over? – When the prices in the US housing market stabilizes
When will that happen? – Think early next year

This matches very closely with what a lot of other pundits are also saying and right now early January 2009, does not look that far away either.

Is it a good time to buy Infosys Technologies?

I have had Infosys in my portfolio for a long time now and although it is giving negative return right now, I was wondering if it is a good time to buy some more stock now.

For one the fall in the dollar value impacted Infosys quite a bit in the early part of the year but the dollar has gained strength now. But more importantly Infosys still remains the best of the lot as far as the Indian IT companies are concerned and is available at attractive valuations right now.

1. Climbing the value chain: Infosys is rapidly moving up the ladder in terms of providing value added services. This is especially important because the application development market is becoming increasingly commoditized and in order to grow revenues by keeping the profit margins intact, the bigger companies need to enter newer areas. Infosys has done a lot of big ticket acquisitions in recent times and it gets around half of its revenues from newer areas and not the core areas of application development and maintenance.

2. Geographic Diversification: I was surprised to see that Infosys is now getting only 62% of its revenues from North America. This means that it relies really less on North America as its chief source of revenue and has done a good job of diversifying globally.

3. Reasonable Valuation: For a blue chip like Infosys the current valuation really looks very attractive. The company has given EPS guidance of Rs.95 for the coming year and the current stock price which has been hovering around Rs.1800 mean that the P/E is less than 20. That means that Infosys is trading at one of the lowest P/Es in the last five years or so and offers very attractive valuation.

So there you have it, three reasons why Infosys looks attractive right now.

First Premier Bank Gold Credit Card for people with bad credit

First Premier Bank Gold Credit Card has a credit card for people with bad credit. This is one of most referenced credit cards for people with bad credit.

When you do not have good credit, there are not many options that you have. In such circumstances it is good to explore all available avenues and look at all the pros and cons. It is only natural that credit cards for people with bad credit have more fee than regular credit cards and it is wise to take a close look at these fees. In this post we look at the fee that First Premier Credit Gold Credit Card charges.

There is a total fee of $256 on the First Premier Gold Credit Card for people with less than perfect credit. This is how it breaks out:

Account Set-up Fee: $29.00 (one-time fee)
Program Fee: $95.00 (one-time fee)
Annual Fee: $48.00
Monthly Servicing Fee: $84.00 Annually ($7 will be charged to your account every month)
Additional card fee: $20 (only if it is applicable)

So the main thing to remember here is that this fee will be charged on your card when you get it. So if you get a credit card with a credit limit of $250, then your initial available credit will be $71 and you will need to pay up $179 on your credit card without having spent a dime on it.

Other Fee

The fee we talked about earlier was for opening up your credit card and you need to pay that for sure, on top of that when you start using your First Premier Bank Gold credit card, there may be some additional fee that you may have to pay.

Fee for paying late or extending credit: $29
Monthly account maintenance fee:Â $3 per month on closed accounts with an outstanding balance of $20 or more.
Internet Access Fee: one time of $3.95
Return Item charge: $25.00
Auto draft charge: $11.00
Credit limit extension: $25.00
Copying fee: $3.00
Wire transfer fee: $5.00
Express delivery of card in case the card is lost, stolen or being replaced: $25.00

What about the APR?

The starting APR for the First Premier Bank Gold Credit Card is 9.9%. This can go up to as high as 19.9% in case of penalty. The penalty APR will be imposed if you default on your payments for two consecutive billing periods or two billing periods in six months. If you keep your account current for three consecutive months after this, they will restore your APR to 9.9%.

So there you have it, these are some of the fee and charges that you should be aware of while getting this credit card. Many people who have not taken credit cards meant for bad credit are sometimes caught by surprise by these charges or aren’t fully aware of the fine print and miss it completely. So be aware of such fee and use your card wisely.

If you want to read the entire fine print of the First Premier Bank Gold credit card read the full terms and disclosures.

My experiments with thrift

I have never really been thrifty. I am not the kind of person who knows how to save a buck. That is probably because I always equated saving money with consuming less and didn’t like the idea.
Lately I discovered a way of saving money by buying the same stuff that I was buying earlier, only, cheaper. To a lot of people, what I am saying here must be common sense, but to me, it was a kind of a revelation.

I did a few things and that made me save money by not sacrificing anything. I started transferring the money saved, from my Checking to my Savings account; even if the amount was small, like a dollar or two and that helped even more. Because, after some time, you really get to understand that small things do add up a lot.
1.Buying used games: An avid Wii gamer, I buy a lot of games, some of which can go as much as $49. I started buying used games from Amazon and that helped me save a lot of money. I buy games which are labeled – ‘Very good’ or ‘As good as new’ from buyers with good ratings. This ensures that the games reach on time and also that their quality is great!

2.Clipping coupons: This is the one thing that really helped me save a lot of money. To some, it may sound cheap. But by spending a few minutes online, I was able to find coupons for things that I was anyway going to buy and saved money. The best example, is when I had to change my brakes at Midas. For a bill of over $800, I spent a few minutes online and found a discount coupon for $30. That helped save a few bucks which I had to otherwise spend.

3.Avoiding Cosco: I used to shop frequently at Cosco but the trouble with that, is the lot size. While the things are cheaper, I invariably used to buy more than I needed and ended up paying more cash at the end of the month. Now I don’t shop their at all and that has helped reduce overall spending.

4.Getting hooked to Digg and Yahoo! Answers: I used to visit sites like deals2buy and Amazon in myÂ free time and if I liked something and it didn’t cost much I used to buy things. These were real impulse buys. Lately I became active on Yahoo! Answers and Digg and found that I stopped visiting sites like deals2buy and that helped save money on those impulse purchases!

5.Getting Kroger and CVS cards: I really don’t know how it works but some retailers like Kroger and CVS give you their cards, which you can scan before any purchase and sometimes, you get money off on your purchases. You don’t need to pay for the cards and there is no fee whatsoever. Getting these cards has helped save a few bucks on groceries.

So there you have it, a few ways to save money while continuing to buy the same stuff.Â I will be interested to know your thoughts on this, do you know of any other interesting ways to save money?

Manshu Verma

What is a prepaid credit card?

Prepaid credit card by definition can’t exist because the whole concept of a credit card is that you spend first and pay later. Anything where you have to pay first and spend later can’t be called a credit card at all.

However there are certain type of cards that are funded by you first and then you start spending on them. Such cards are known as pre-paid credit cards.

More than credit cards they resemble debit cards and are offerred by big companies like Walmart. They have really high fees for everything and should not be used by anyone who can get a regular debit card by opening a checking account with a bank.

If you must use a prepaid card then use the Walmart money card because that has got the lowest fee among all other cards of similar nature.Â Before getting such a card though try and get a debit card by opening an account in a bank or a credit union.

China and the USA

The recent olympics showed how serious China is at becoming a global superpower and emerging on the world scene as a great super power.

There are three news items which I read over the last week or so which showed China’s prowess at the world scene in three different areas.

The Olympics Medal tally happens to be the first one. China got a massive 51 golds this time and a total of 100 medals and US got 36 golds and a total of 110 medals. Last time around US had the upper hand in terms of golds with 35 golds for China’s 32.

China – Iraq $3 billion oil deal which is the first major oil deal after the fall of Saddam Hussein is really very interesting. Especially with the backdrop of how much the war is costing the US. The giant US and European companies like Shell, Exxon Mobil, Royal Dutch Shell, BP and Chevron are still negotiating with Iraq but it seems they have been nudged by China for the first major oil deal.

China is one of the biggest creditors of the United States. China’s share in the US debt is $503 billion and it is second only to Japan. Economists within and outside US are worried at the pace with which US debt has increased over the years. Will this be China’s gain?

Is it just China’s lucky week or is the tide turning?

Manshu Verma