Why Buying a car makes sense now

It’s no fun buying a new car right now. Interest rates are creeping up. You have to pay an additional excise duty on bigger cars. And fuel prices are going through the roof. Right? Well, not exactly. Although the sentiment dampners are there, this could well be as good a time as any to pick up a car.

For one, although interest rates have climbed to 13-14%, depending on your debt history, banks will be willing to offer you better terms. For instance, if you have ‘preferred customer’ status with one of the big three financiers, ICICI, HDFC or Kotak, you will be able to get yourself a much better deal than what’s on offer in the market.

Also typically the bigger the car, the better the interest rates. Financiers see the big car buyers as lower risk customers so the rates dip as go along. Which means although you cough up anywhere between Rs 30,000-50,000 ex-showroom thanks to the excise hike, a bigger car will get you better EMI rates than a smaller one.

Add to that the fact that banks offer special schemes for women and many car companies will also do their bit to sweeten the pill for their customers. For instance if you already own a car from a particular brand and are ready to change the model, dealers and financiers will doubtless offer you attractive terms.

For a mass market C-seg car, for instance, the rates can be as low 11.5-12%, which is a good 2-2.5%lower than that on small cars. And then you have to factor in the discounts. Car companies, eager to push volumes to beat the sentiment slump, have upped the rebate levels substantially.

For example, B-seg models are currently fetching anywhere between Rs 25,000-45,000 in discounts. The C-seg sedans, particularly models that have been around for a while, will get you anywhere between Rs 30,000-60,000 off, sometimes even more.

Even when companies have launched facelifts or new variants, in most cases prices have remained unchanged. Which means you get better features at the same price. And in most of these cases, the dealer throws in something to make the deal sweet so you won’t drive away without some bargain tidbit.

There’s another reason why buying a car right now may be a good idea. Although financiers aren’t willing to bet on it, the buzz is that yet another interest rate increase may be right round the corner. If that happens, your loan will become even costlier. So it may be a good idea to opt for it and push for a good bargain while you are at it.

Of course there’s one very good reason why you may want to wait till the festival season. There are a slew of new launches that are lined up and those brands which don’t have a new model ont he anvil will offer mucho rebates and other attractive add-ons to make it worthwhile for you.

Traditionally that mad scramble for consumer mind space is what makes festival buying a good bargain. But this year, with the Nano debuting, the scramble will be madder. Which means the goodies on offer will be that much more for you, dear buyer.

Finally does it make better sense to go for a cash payment rather than financing your new car given the rising rates of interest? Not yet. Financiers throw in a decent amount of discount and dealers on their own will likely not be able to match the combined rebate coughed up by them, financiers and the car companies.

Already, with demand slackening, dealer margins are fairly thin. So if you have to depend only on them for your bargains, you won’t get that much. You may argue that you pay more on interest which gobbles up the rebate over the loan period. That’s true.

But chances are you would change your car before the loan runs out so you can roll your interest without paying the entire amount and get a rebate on your new car as well. Happy bargain hunting.

Oil price to hit $150-170 in coming months: OPEC

The president of OPEC, Algerian Energy Minister Chakib Khelil, predicted on Thursday that oil prices would rise to $150-170 a barrel during the northern hemisphere summer. helil insisted on Tuesday that oil producers saw no need to raise supply, blaming high prices on factors outside their control such as US pressure on Iran and the weak US dollar.

Speaking after talks with European Union nations, Khelil said the cartel of oil states believes it is pumping enough oil to supply current demand and has stocks and extra capacity to spare.

Khelil said prices in the next few weeks depend largely on how the US deals with Iran and the strength of the US dollar.

The US, supported by the European Union, wants Iran to permanently halt uranium enrichment, a technology that can give Iran the capacity to produce materials for a nuclear bomb if it wanted. Iran denies that, saying it only wants to produce energy.
"I think the market is probably waiting to see how the dollar is going to evolve in July, how the geopolitical situation is going to evolve with the threats made on Iran," Khelil said.

"I don’t think OPEC can do much about the geopolitics," he said. "I think some other people have to do something about that because if you have threats in areas that are producing areas or potentially producing areas, then of course the market will react to it."

The president of the Organisation of the Petroleum Exporting Countries, or OPEC, - based mostly in the Gulf region - could only handle one factor behind high prices: making more oil available.

"I think we are doing that and we think we are doing that very well," he said. "All you need to do is to look at the data to be convinced that the market is well supplied in oil and that we have enough surplus capacity and that we have enough stocks in the market."

The 13 OPEC members have for years gathered regularly to establish production quotas. They control some 40 per cent of world oil output. Despite the current surge in oil prices and growing global demand, they have refused as a group to boost production.

However, Saudi Arabia, the world’s largest oil producer, has said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.

OPEC members include: Algeria, Angola, Ecuador, Iran, Iraq, Libya, Nigeria, Saudi Arabia, Venezuela, Kuwait, Qatar and the United Arab Emirates.

1% rate hike may up housing EMI by 7%

Interest rates are all set to go up by 50-100 basis points, following the RBI’s decision to increase the lending rate on funds to banks by half a percentage point. Punjab National Bank (PNB) CMD K C Chakrabarty said the step taken by RBI will lead to a minimum increase of 50 basis points in interest rate. Some banks might increase the rate even to 75 basis points, he added.

However, a senior official of a private sector bank said increase in the lending rate might go up to one percentage point (100 basis points). As the interest rates are going upward for last quite some time and not likely to come down in the near future due to inflationary pressure , many banks will increase the rates by one percentage point from July 1, 2008.

CMD of Union Bank MV Nair said the present round of increase in the policy rates will force them to raise their prime lending rates by 50 basis points to 13.25% from the present 12.75%.

He said the present tight money policy pursued by RBI to contain inflation will affect more those banks which normally borrow in the overnight money market to meet their lending requirements. Because of rise in the repo rate by 50 basis points to 8.50%, the interest rates on short term funds has gone up immediately.

In fact, many banks had not increased their lending rates, when RBI had increased its repo rate any cash reserve ratio in April.

Realty: Tough to buy, tougher to rent

Realty prices might be showing signs of easing, yet its tough to buy a house. Prices are still high and loans are getting expensive. Renting a property is also getting dearer.

According to analysts and developers residential rentals are hardening, registering a 10% growth. The demand for rented residential space is high as India has very low residential rental yields hovering around 3-6% (that is, given the high prices, people prefer to live on rent rather than buy a property).

At the same time home loan interest rates are around 11% to 13%. While new property sales are slowing down, rentals are showing an upwards trend.

Many prospective home buyers are deferring purchase, expecting a dip in prices, and looking for renting accommodation in the short run.

“People are nervous about spending the capital they have in times of uncertainty. Therefore renting remains the only option. Though India is also unique as lot of people prefer to park money in residential projects and lock up apartments, which reduces the supply of apartments for rent, putting an upward pressure,” says global real estate advisory DTZ director Abhilash Lal.

Agreeing that lower residential yields have made renting a feasible option for many, Ansal Housing and Construction Director Kushagr Ansal points out, “Real estate yields in India are very low, pegged at 4-6%. This makes renting a lucrative option.”

Though new supply is being added to the pool of residential properties, it hasn’t really helped in stabilising rents. Says Parsvnath Developers COO Dr B P Dhaka, “New supply is not coming in the preferred centrally located residential areas. Also maintenance and construction costs have gone up in the last one year. All this has contributed to higher rentals.”

Developers also feel that residential rentals will not be hit in the short run. “Demand hasn’t really waned for quality houses and the market is still buoyant. Till the time the job market is healthy and disposable incomes don’t go down drastically, rentals will keep moving up. Though the rentals will plateau out in the long run,” says Ansal API vice-president (marketing) Kunal Banerji.

However, Omaxe executive director Vipin Agarwal points out, “Since residential rentals and lease are long term arrangements, there has not been a significant increase in rentals in last 6-8 months (for people already living in rented properties).’’

Why Crude Oil market is exposed to speculation

Speculation in association with an increasingly weakening dollar and supported by some fundamental risks such as fear of supply disruptions from unstable resource centers has fuelled the price spikes.

As long as the US interest rates will remain low, commodity markets in general, and crude oil in particular, will remain exposed to large speculative swings. Speculators purchase futures with borrowed money at low interest rates.

The speculative demand pushes the spot prices upwards, which, in turn, fosters even higher expectations of future price increases, which generates even more speculative demand and so on in a self-fuelling upwards spiral up to the trend reversal when speculation is no more profitable. And in case a trend reversal ensues, speculation could create an amplifying effect on the downside.

In the shorter term where demand is very insensitive to price, sharp price increases, whether caused by the OPEC’s decisions or by the trader’s expectations, are not dampened by parallel reductions in demand volumes.

Also the supply side of the market is very inelastic in the short-to-medium term, large speculative price increases cannot be cut short by flooding the market with additional supply. In a situation like this, a price speculation can continue to growing without resulting in surplus inventory, simply because traders can keep selling the same inventories to each other at ever high prices.

The likely trigger for crude oil price crash could be a slowdown in emerging markets (perhaps caused by the high oil price itself), which would obviously cut down demand for goods and services in general and crude oil in particular.

While the economic growth will accelerate for oil exporting countries, the high crude prices will impact the growth figures of fast moving economies. Inflation is rising in India and China due to increase in the costs of food imports, the current account deficits, though comfortable at current levels (China’s surplus of 11% and India’s deficit of 1%) will also be rising if the prices were sustaining at current levels.

On the other hand the ongoing slowdown in the US economy, the subprime impact and credit crunch, will negatively impact the US oil demand which accounts for nearly 21 percent of the global demand for crude oil. And even if China ’s GDP continues to grow around 10-11 per cent in the next two more years, the resultant increase in oil demand will not be sufficient to offset the decline in demand from the US economy.

It may be mentioned that the Organization for Economic Cooperation and Development has already cut its economic growth outlook through next year. It now forecasts several quarters of weak growth for most of its 30 members, which include the U.S., Japan, and several European countries.

Among the industrialized economies, the U.S. economy is projected to grow just 1.2 percent this year and 1.1 percent in 2009. The euro zone is likely to grow at 1.7 percent in 2008 and 1.4 percent in 2009. Japan is expected to expand at 1.7 percent this year and 1.5 percent in 2009. Also the IMF’s world economic outlook is not encouraging, they have already reduced the world GDP growth from 4.9% in 2007 to 3.7% in 2008.

According to the IMF estimates a permanent $ 5 a barrel increase in oil prices will decrease global GDP by up to 0.3 percentage points. This means that a $ 35 (approx.) increase in the oil prices since January 1, 2008, will cut the world GDP by 2.1% this year. The relationship between oil prices and output has also been studied by Bernanke, Jones, and Lee . These authors found significant recessionary and inflationary impact for oil prices on real GDP and consumer prices.

In a nutshell we can conclude that moderation in global economic growth could create a trend reversal in the crude oil prices, where there is possibility that speculation could create an amplifying effect on the down side. This is likely to pull crude prices back to US $ 85 – 90 range (per barrel) from where they had started recent up swing in January 2008.

Dr. S P Sharma is a Senior Research Analyst with IL&FS Investsmart Commodities Limited

'Pro-women laws being misused'

Are we being fair on the not -so-fair sex? It would appear not. Laws for protecting women like the anti-dowry legislation and the domestic violence Act were vociferously opposed by men’s groups on Wednesday at a consultation initiated by the ministry for women and child development and UNIFEM.

The burden of their argument was that these laws don’t follow the fundamental legal premise that a person is innocent until he is proven guilty. "In 30% of the cases that come to us, there is a rift between the woman and her in-laws where the woman forces the man to choose between the two under the threat of slapping Section 498A of the Dowry Prohibition Act on the husband and his family," said Ashish from Save Indian Family (SIF). He added that there should be a deterrent to prevent misuse of the law. Another representative Hemant from SIF said that 1.2 lakh women (women relatives of husbands) were arrested under the anti-dowry Act but the ministry of women and child development minister was not doing anything about it. "Are you a wife development or a woman development minister?" he asked.

Dr Anumapa Singh, who counsels couples, pointed to the anomaly in the domestic violence law in that the aggrieved party could only be a woman while the respondent could only be a male. "We have witnessed violence at home where the perpetrator is a woman. So why does the law hold a man as the accused?" she wanted to know. TOI had reacted to an observation of the Orissa chairperson of the state commission for women on September 19, 2007, when she had said that these laws were being abused. We had felt there should be checks on such abuse and said, "In cases where a complaint is proved false beyond doubt, the accuser must face a jail term." This would act as a deterrent to the abuse of Sec 498A, we felt.

At the meeting on Wednesday, however, the men’s group wanted the laws to be scrapped altogether — which is not such a good idea as it is undeniable that many women do get harassed by greedy husbands and in-laws and need legal protection. Sanjay Bhartia of the Gender Human Rights Society said, "We have been opposing the domestic violence Act and have even submitted a memorandum to the Prime Minister last year on the issue," he said. Bhartia added that there was need to review the laws that were radically tilted in favour of women and open to misuse.

Men’s organisations invited for the interaction landed up in huge numbers with posters and banners, disrupting the consultation with their sloganeering.

Faced with vehement opposition, WCD minister Renuka Chowdhury admitted that she was open to change the law. "Law-making is a dynamic process. We are ready to change the law but as of now there will be no amendments to it," she said.

Reacting to the constant allegations of misuse, Chowdhury said that there were enough deterrents in the penal code to punish those found guilty of misuse. She, however, did not spell out the deterrents.

Wednesday’s protest came at a time when the Delhi police commissioner has issued instructions that only the husband and not the extended family can be arrested in anti-dowry cases. Reacting sharply to this, National Commission for Women chairperson Girija Vyas said, "If the anti-dowry law is taken lightly, women will suffer a huge loss. Only 6% of the cases are false under the Act."

India ranked 74 on world corruption index

India has been ranked a lowly 74, two steps down since last year, among 180 countries of the world on the worldwide Corruption Perceptions Index (CPI), prepared by independent international agency Transparency International.

However, corruption is much higher in Pakistan which occupies 140th place, a little below Iran, Libya and Nepal which are ranked 133, 134 and 135 respectively.

Meanwhile, China which was ranked a joint 72 with India in 2007, slided a step down to occupy a place above its neighbour this year.

Among other Asian countries, Russia is placed still lower on 145, while Sri Lanka occupies the 96th position and Maldives is ranked 90.

The least corrupt country in the region is the nascent democracy Bhutan, which has been placed at the 41st spot by the non-government organisation tracking prevalence of corruption worldwide.

Denmark, Finland, New Zealand, Singapore and Sweden corner the top five spots retaining positions as the least corrupt nations of the world, while bottom of table is occupied by Myanmar and Somalia.

The United States also retains its position and is ranked 20th, just below Germany, Ireland, Japan and France. Besides, Britain occupies the 13th spot and is just ahead of Hong Kong.

C02 emissions: US losing business in Europe

United States is losing business in Europe because of failure to respond to climate change. US and China are the largest emitters of carbon and they have an enormous responsibility to participate in emissions trading, Bart Chilton, Commissioner of Commodities Futures Trading Commission (CFTC)said.

Speaking at the Finance IQ, Second Carbon Trading Conference, New York, New York on Wednesday, he said that , it is past time for the United States to pick up the slack and start getting serious about climate change.

“In fact, the biggest increase in the Chicago Climate Exchange carbon market took place after Super Tuesday, February 5th. That is the date when 24 states had political contests—with 52% of all pledged Democratic Party delegates and 41% of the total Republican Party delegates at stake. That is the date when the field of presidential contenders shrank to three viable candidates,” Bart Chilton said.

All three, Senators Clinton, Obama and McCain, support a mandatory cap and trade system. Within a short period of time thereafter, prices for the Carbon Financial Instrument traded on the Chicago Climate Exchange moved from the $2.50-$3.00 range to over $7.00.

“Ensuring honest emission markets, for both futures and options contracts, would be the responsibility of the CFTC. We would perform the same types of oversight functions that we currently perform to guard against fraud, abuse and manipulation. We would work to ensure that these emission markets are viable tools for hedgers and for speculators,” Chilton added.

Despite the phenomenal growth in market for carbon emissions since 1990’s the United States, world’s historically largest emitter has only initiated certain voluntary carbon markets and has sat on the sidelines and not truly tapped into its massive potential to participate in this space, Chilton said.

“We all know that the global market for carbon emissions has grown precipitously since its origins in the 1990’s, and particularly in the last few years. In 2002, the World Bank estimated the volume of carbon emissions traded globally at 32 million metric tons with a value of approximately $100 million. For 2008, these values are estimated to increase to a volume of 4.2 billion metric tons, and a total value of $92 billion,” he said.

What does all that mean? It means that the market value of global carbon trades has experienced an average annual growth rate of about 312% since 2002! That is a cumulative increase of 92,000 percent! That’s not conjecture, it is a hard number fact that this trading has gone from $100 million to $92 billion. As important is the fact that what we are seeing is a policy value shift – a change in priorities for the world which is reflective of the seriousness of this issue, Chilton added.

It is unacceptable that China, the second-largest economy in the world, is not stepping up and participating in this global challenge, he commented.

Hows and why’s of Internet banking

Are you one of those wizards whose Internet banking password is `Password123’? You are in August company. Most don’t seem to have the patience to create an elaborate password. Your Internet banking account is only as secure as its password. A weak password exposes it to strangers and hackers.

If you love the ease of online transactions, you have to learn the ropes of basic online security, in your own interest.

Here are a few tips for creating and more importantly, remembering a secure password.

Your name, surname, pet name, names of your kids, your birthday, your employee number, your car’s number plate, and your account number, are all easy to guess. Avoid them completely.

Don’t create lazy passwords. To make passwords strong, complicate them with capitals and small letters; use numbers and characters such as !@#$% ^&*() .

Create an algorithm. It could be important dates, the first line of your favourite song or your favourite movie. Like `One Flew Over The Cuckoo’s Nest’, will get you ‘1F^TCNest’.

Don’t scramble around wondering if `F’ was capital or if it was `o’ or `0’ or `1’. Have an algo and always apply it.

For example, one number, one character, beginning with caps and ending with the last word in full. Use the algo to reset and change passwords. Don’t discuss your algorithm, it is the formula to your password.

There are passwords to your Yahoo and Hotmail accounts and there are passwords to your bank account. Don’t sweat over the small stuff. If your friend logged in to read your mail, you may at the most lose a friend; if someone logs in to sweep off your cash, you lose both the money and the friend. Keep your critical passwords strictly confidential.

Also, avoid typing a password in front of someone. Passwords like ‘qwerty123456’ are so easy for peepers to figure. Avoid strokes to adjacent keys that can be cracked by mere observation.

Short passwords can be easily assaulted. Hackers routinely crack up to six characters. If your algo is a good one, remembering may not be tough. `Raindrops keep falling on my head and I want to steal your umbrella’ can become a superb password -- RkFoMh&Iw 2SyU.

Longer a password, the more secure it is. For, every extra character increases the potential for more possible combinations. Anyone who uses a combination of at least eight letters, numbers and special symbols make things hard for decryption software.

If you use 26 lowercase letters of the alphabet and a password length of seven characters you will have 26 = 8.03 billion combinations to choose from.

This may appear large but it will be cracked in 45 minutes by a common computer.

Passwords longer than seven characters, using non-dictionary words are therefore to be preferred in an attempt to use ’good’ passwords.

Don’t make the password so complicated and bizarre that you cannot remember it unless you wrote it down somewhere. Commit your password to memory with a keyword or picturisation.

Imagine for example, a cuckoo clock striking one, on the top of your bank building.

If you don’t leave your house key below the door mat, you don’t leave your password below the keyboard, mouse pad, in your diary, or on a post it slip stuck to your monitor.

If you have to store it, make it a sentence only you understand. For example, cuckoo clock above the bank strikes one. Never keep the user name and password together.

Online banking comes with some preset safeguards. Your password is masked when you type it -- it is not displayed on the screen. You are required to reset passwords periodically.

When you reset, you are asked for the old password for authentication. Your new password has to be typed twice, so that you don’t inadvertently set a password with a typo and are unable to retrieve it. Your account is locked after a few attempts at guessing the password. You can ask for resetting if you have genuinely lost the password.

As most writers on the subject say, a password is like your toothbrush: choose carefully, change regularly, and never share it with anyone.

India banks sell dollars to beat tight cash, rupee up

The rupee rose to a fresh three -week high on Thursday as banks liquidated dollar holdings amid tight cash conditions in the money market, and buoyed by firmer stock markets.At 11 a.m., the partially convertible rupee was at 42.695/700 per dollar, 0.1 percent stronger than Wednesday’s close of 42.73/74. The rupee has risen 0.6 percent this week but is down 7.7 percent in 2008.

"It is very difficult to hold on to a long dollar position with call rates at almost 9 percent," a senior dealer with a private bank said.

Overnight cash rates, a barometer of cash supplies in the inter-bank money market, were at 8.50/8.75 percent, compared with 6 percent when cash is adequate.

The rupee was also underpinned by a hefty half percentage point increase in interest rates by central bank on Tuesday to rein in galloping inflation. It was the second rate rise this month.

Traders said annual inflation, which hit a 13-year high in early June above 11 percent, was expected to stay in double digits for some time.

"With this kind of inflation and repeated rate hikes in the country, there is expectation the rupee may not weaken more than 43 per dollar," the trader at the private bank said.

Dealers said they expected dollar supplies would be higher than demand, helping the rupee to trade in a band of 42.65 to 42.75 through the rest of the session.

Traders were also watching the stock market to gauge fund flows. Foreign institutional investors have been net sellers of $6.2 billion of Indian shares so far this year, after having bought $17.4 billion in 2007.

India’s main share index was up 1 percent in the morning but is down more than 29 percent so far in 2008.

Now, an 'orgasm jab' for women

Want to heat up your bedroom life? Get the ’G-shot’! It’s a jab that enhances a woman’s sexual experience by boosting the G-spot- the ultra-sensitive area of tissue that can hold the key to happy lovemaking.

Also known as the ’orgasm jab’, the non-surgical treatment comes at a price of 800 pounds. Rather like lip-plumping jabs, the treatment involves injecting collagen straight into the G-spot, reports the Daily Mail.

This not only enhances its sensitivity, but increases the width of the area to the size of a 10 pence piece. It also raises the G-spot a quarter of an inch in height, making it much easier to find.

The treatment is sure going to make women’s sex life reach new levels as with the evolutionary treatment they can achieve multiple orgasms every time they have sex.

Quit smoking, stop heart problems: Cardiologists

Stay away from smoking and fast food, advocate eminent cardiologsits to youths as the number of young people suffering from heart problems are on the increase. The number young people coming with heart ailments for treatment was gradually increasing but no statistics are available," they said.

It was important to have a national statistics to work on proper policies and programmes to make a healthy society, they said citing the example of American Collelge of Cardiologists’ programme on diet restriction and compulsory exercises for youth.

"Today, it is a scary situation as we get young people in late twenties and thirtees with heart problems," eminent cardiologist Dr Samuel Mathew told media on Wednesday.

"Since we do not have the statistics on young adults, the civic bodies should prepare epidemiological data so that the country can have proper statistics to work on various policies and programmes," he said.

Angioplasty is a common intervention choice to avoid bypass surgery and "we try to avoid surgery on a young person and even angioplasty," he said.

Mathew demonstrated today two difficult cases of 100 per cent blockages in patients (71-year-old man and 47-year-old woman) with low heart function for the benefit of 1,500 cardiologists who were attending the international cardiology meet at Bangkok.

Other doctors who participated in the angioplasty demosntration were Jamshed Dalal, Anil Sharma, Nitin Gokhale and Ajit Menon.

Shake a leg to recharge mobile battery

What do you do if you are stuck in a field at a pop festival but there’s trouble ahead because your mobile phone’s battery is about to run out? Thanks to a new gizmo, you now just need to face the music and dance.

Mobile phone operator Orange said on Tuesday it had teamed up with GotWind, a firm specializing in renewable energy, to produce a recharger powered by dance energy alone.

The portable kinetic energy chargers will be given a test run at this year’s Glastonbury Festival, the world’s biggest greenfield music and arts celebration that begins on a farm in Somerset on Friday.

Orange said the prototype chargers weigh the same as a phone and are about the size of a pack of cards. Attached to the user’s arm, they employ a system of weights and magnets which provide an electric current to top up charge in a storage battery. This can then later be used to recharge the phone.

"We wanted to create a fun, engaging and interactive product which would encourage users to have a laugh while charging their mobile phone and at the same time test out a new energy-efficient prototype," said Hattie Magee, Head of Partnerships at Orange UK.