Ch. 14- Taking advantage or being taken advantage of credits cards?

Summary:

The article I read talks about the use of credit cards and the rewards from using credit cards. The use of credit cards are now very common with over 50 million Visa and Mastercards in peoples pockets its no wonder banks are so keen on giving out rewards for using their cards. With each transaction a patron makes with the credit card, the bank takes transaction fees and then their are annual fees for each card a cardholder has. So the banks are now trying to "sell" their credits card by giving rewards like air miles, and lower interest rates so people will choose to use their credit cards and make money off the transaction fees.



Connections:

This article relates to the chapter as it shows the progression of credit cards and the many uses it has accumulated over the years. It shows that the base for choosing which bank account and credit card to use has changed and it also shows what people are prioritizing and what they deem as unimportant. Also as you know that humans are very greedy people, they will try to get the best deal out of anything, and that is no difference in choosing what credit cards to use. With so many different banks and cards out there to choose from, its hard to make a decision so the banks will not only have to provide services but advertise their credit cards and make sure that they are appealing to the public. Also with the weakening economy, encouraging people to spend and travel is a very good idea to help improve the global economies so that we can get out of this recession sooner.



Reflection:

With the rewards and benefits, I think that people may be tempted to use credit cards to pay for everything they may buy. But that might not be the best thing, as the most important and liquid assets is cash, I think people should use and keep cash more as well. We can't just make every transaction on account because that means that money hasn't really been exchanged yet, so if a large amount of money owed on account the banks may not be able to cover everything. So it may go bankrupt if it can not pay off the debts of its customer, if they haven't paid the bank yet. So it can be quite dangerous, using credit cards all the time so i think people should try to use cash as often as they can.

Chapter 12. B.C. retail sales downward spiral.

Summary:
The article reports that retail sales in B.C. is continuing its downward spiral to a record low, with forecasts suggesting 2008 will end with the weakest growth performance in several years. According to a report from central 1 credit union, spending in B.C. has been at an all time low because people are losing confidence due to the financial crisis and a worsening economy. Not only is the retail business being affected but housing market and equity market are also falling. But a lower Canadian dollar will discourage many Canadian shoppers to go out of the country and keep them here. So that would help the economy a little.

Connection:
Since the retail businesses are being affected because of the financial crisis making people lose confidence in spending. The businesses must either lower their prices to meet the demands, or give discounts as to let people get a great bargain. Or there would be no other way of saving a business with today's economy. But because of these discounts and lower prices wages may also be cut, or employees may find their employment terminated. Which would hurt the economy even more, so business owners are faced with a dilemma and there is no hints or clues as to what to do.

Reflection:
The lowering of prices would encourage more people to spend. Also due to the holidays coming closer the economy cannot afford to be in a recession. But giving discounts is actually a very good idea, it will let the consumers save some money and allow the retails to still make a profit. Its is profitable for both sides. Also because of this people spending more might help slow down the fall to recession while our government tries to fix this predicament. Plus sooner or later out Canadian dollar will return to its original glory and that would help the economy and raise prices. But the problem is how much longer do we have to wait to lose this problem. No one knows, but I'm sure no one wants to be in a recession.

U.S. Stock Market Crisis

The recent stock market crash that happened in the U.S. has now quickly become a global crisis. Not only are U.S. investors in a panic but the recession has also spread to Canada and several European countries. Not only that but it seems that stocks in emerging nations like Europe and Canada plunged even more steeply than in the U.S. as investors in other countries saw the credit crisis as a threat, not just to U.S. investors. But one good thing is that Canada won't be in the slump won't be as serious and long as the U.S. and some European nations, that is because the Canadian banking system is solid and this country's economy is not weakened by growing government debts. But the economy has still been hurt by falling export sales to the U.S. and as people start spending less on daily life as job growth stalls and fear spreads through the economy. Also Canada is hit the harder because it is a big resource exporter and plunging income from the petroleum and other commodities that needed a high export price. But we are still much better than the U.S. and Europe because their banking systems are burdened by massive debts, many of which unlikely to be repaid.

Connections:

The crash would have a serious impact on our economy resulting in a recession which would strike fear in the residents, making them spend less, plunging our country into further recession. That would lead to the government losing money from taxes and going into debt. Not only that but it would affect our schools, health care, community centers, and much more. Also because we have a federal election coming up the next party to come into power would have risen to a position of debt and a shortage of money. So that would lead to prices increasing for our essentials and then employers would have to raise salaries to meet the demands of the prices and that would lead to further increase in prices and that would enter a continuous cycle. Where prices increase salaries increase and government goes into debt. But not only that but the trade companies would have a much harder impact because their most prominent trade route is with the U.S., but now that they can't afford to buy our materials we would lose a large source of income.

Reflection:
This article makes me wonder how come the U.S. let this happen so easily, did they not have any back up plans or something that will prevent the country plunging into a recession. The government is a big factor in this predicament they should have budgeted their spendings in their projects and have a financial plan that would ensure the safety of the economy. But our government has ensured that we would not fall to far as apposed to the U.S. but that does not mean we would not be hurt as much. As the U.S. continues to not buy our trade products would would lose revenue and that would be just as bad. But as the crisis continues we may not know what would be the eventual outcome of this disaster may be but we can only hope for the best.