1、Module 55.1 A culture of debt (page 47) Economist Perhaps the greatest legacy of the Federal Reserve Chairman Alan Greenspan is the way he transformed peoples attitude to credit and debt. During his term of office not only the national debt of America, but also personal debt, increased substantially
2、. Since the Great Depression of the 1930s, people in America have been naturally reluctant to borrow money. But for this generation, in the US and increasingly globally, debt has become respectable. From an early age, young people take out loans to pay their way through college and borrowing against
3、 equity in real estate is now at record levels. Re-mortgaging your home was unheard of generations ago: a second mortgage was an indication of a household in trouble. But today it is routine. All this is possible because credit is easy and interest rates are low. Banks are encouraged to lend, and of
4、ten do so irresponsibly. In some state its possible to get a 100% mortgage in other words with no down- payment- equivalent to four times a couples combined annual salary. The market is constantly coming up with new financial products and new ways of extending credit to ordinary people. General Moto
5、rs, whose automotive business in decline, now sells home equity loans through a subsidiary: its the only part of the company that has been consistently profitable in recent years. The reason for this boom in money lending is clear- to fund consumer spending. As long as people are spending, economic
6、growth continues. In other more conservative borrowing cultures, like Germany, economic growth has slowed because in times of uncertainty people tend to save their money, rather than borrowing and spending to make themselves feel better. So does the accumulating debt matter? Some say that as long as
7、 asset values rise faster than debt, theres no problem. In 2005 Americans were twelve trillion dollars in debt, but their personal assets stood at 64 trillion dollars. Others argue that we are sitting on a time- bomb. Asset values will not continue to rise indefinitely and when they crash, millions
8、of people will be plunged into negative equity. Liabilities remain the same but assets can go up and down in value. This was the case with stock market values, which saw sharp falls around 2000. Crisis was averted only because investors move their money into real estate. For millions of Americans th
9、is only confirmed the culture Alan Greenspan had been promoting- debt is good. And if he turns out to be wrong- well, we all had fun in the meantime. 5.2 Discussing costs (page 52)CA= Cost accountant GM= General manager CA Look, weve got to do something. Doing nothing is not an option. Our margins w
10、ill just get squeezed more and more. GM OK. What do you suggest?CA personally, Id recommend cutting the wage bill- either by laying some people off or by freezing salaries. GM Neither of which are going to be very popular options. CA No, but the alternatives are probably worse: reducing material cos
11、ts will definitely have an impact on product quality and cutting back on advertising expenditure is only a short-term solution- it will hurt in the long run. GM No, I see that. What about administrative costs or other overheads? Instead of cutting staff, we could try and do something about getting o
12、ur energy bills down for example. CA Ive already done as much as I can in those areas. I have thought about this a lot and for me, the only real solution is to tackle labour costs. It may be painful, but the advantage of it would be that, once done, we could get back to concentrating on selling. GM
13、OK, I hear what youre saying, but I think it might create more problems than you think. Im going to go away and think about it see if there is an acceptable way of doing it. 5.3 Exam spotlight, Key skill (page 54)We are accused frequently of doing nothing about the ageing population and the conseque
14、nt hole on pension funds. But you have to understand that, at the moment at any rate, there are no popular solutions to this problem. Either we raise the retirement age or we increase taxes on working people. Neither of these is a vote winner. I think a lot of us in government are hoping that if we
15、just hold on a bit, then sooner or later another solution present itself. 5.4 Exam spotlight, Exam practice (page 55)1 I dont believe in the capital markets. For a start they are unpredictable and for another thing, not everyone the possibility to take such risks with their money. I have always been
16、 of the view that you pay taxes through your working life in order to enjoy certain benefit from the state and certain protection against difficult times. For example, in case of unemployment or sickness or for your retirement, for that matter. So when I retire, I will live on what the government is
17、 due to give me. If I cant afford cruises in the Caribbean, then thats too bad. 2 I am very lucky to have worked in the civil service, which has its own pension scheme. My salary has never been as good as it might have been in the private sector, but you accept that when you work for a public servic
18、e. What you do get is job security, longer holidays, good medical insurance and an excellent pension. My pension is calculated as a percentage of my final salary. Thats very rate in the private sector. Usually private companies take your average salary over a period of, say, twenty years. So all in
19、all I expect to be very comfortable when I retire, even if I havent had that much disposable income during my working life.3 People think that as a company director, Im bound to have all sorts of privileged pension benefits and company schemes going on-some special executive plan. But its not the ca
20、se. We have a company scheme for all our employees but I dont actually participate in it. Instead Ive put most of my money in a long-term savings account, that gives a good rate of return if you keep it in for long enough. It seems bizarre I know, but I make far more than I need to spend and I guess
21、 Im naturally cautions with my money.4 There is a saying- I dont know who by- that you should invest in land, because they dont make it any more! I think thats good advice. Around 2004 there started to be a lot of stories in the media about company pensions and private pensions not delivering the be
22、nefits they had promised, mainly because they were linked to stock market investments. At that point I decided to withdraw my money from my own private pension and put it into property. I figure that if I bought a small office building, then by the time I reached retirement age, I would have paid of
23、f the mortgage and could live off the rent so thats what I did. 5 I released quite early on that my state pension wasnt going to be sufficient, so I took out a private one when I was about 30. It works like a managed investment fund- a mixture of blue-chip stock- so I dont really have much say in ho
24、w the money is invested. Unfortunately, like a lot of private pension schemes, it hasnt really performed as predicted. I think the projected growth rate was between 8 and 12% and it grown at about 4.5%, which isnt much above inflation. There are signs that the stock markets are doing a little better
25、 now, so Im hopeful that in the long run I will have reasonable funds for my retirement. Would I advise anyone to do the same with hindsight, probably not.Module 66.1 A contract to supply (page 59)Barbara Paragon. Can I help you?Paul Hello, is that Barbara?Barbara yes, speaking.Paul Hi, Barbara, thi
26、s is Pual from A1 Flooring in London. Im just calling to discuss the extension of our contract for next year. Is this a good moment for you? Barbara Yes, as good as any, I guess. Let me just get a pen and paper so I can make some notes OK, so where have we got to?Paul Well, first the good news. The
27、Klik laminate flooring has been going really well here- youll probably have noticed that from the order book in the last six months or so. Customers really love it: the feedback weve had has been excellent. Barbara Thats great. Paul It is good. I have to say, Im not so surprised- its an excellent pr
28、oduct, very high quality and the price reflects that of course. Which brings me on to my next point. Now Im not asking for better commission- we are OK on that but what would really help is more seasonal discounting from your end. What I mean is reductions that we could pass straight on to our custo
29、mers. Generally, we run sales in January, spring and late summer and at the moment Paragons products are the only ones that dont feature. I suppose you could say that gives them a certain exclusivity in the eyes of the customer, but at the same timeBarbara I can see the logic of what youre saying, a
30、nd Ive no doubt it would help sales, but what you must understand is that its very difficult for us to have a policy with you thats different from all our customers. Let me think what I could suggest is that we try and feed you more discounted stock when we are coming to the end of a particular prod
31、uct line. I can speak to the boss about that. Paul Well, could you also mention to him the principle of seasonal discount, because I think it would generate even more interest in the products.Barbara All right, I will but Im not too optimistic. Are there any other points?Paul Yes, there is one other
32、 problem, which is that when we place an order, its quite often the case that you dont have exactly what we want in stock and you offer us a substitute instead. Let me give you an example: we want engineer wood flooring in a natural oak and you only have it in a stained oak. On the whole we try to b
33、e flexible, but its something which seems to be happening more and more- and that worries me. Barbara I dont understand, Pual, and I apologise. Its something which we are trying to solve. But its not really a problem of our own making. Its a result of shortage in raw material and delays further up t
34、he supply chain. We do try to carry reserve stocks of all types of wood, but as you know its a sensitive product to transport and store and we often have to rely on whats available from our suppliers at a given time. Thats just the nature of the product. Paul Yes, I appreciate all that, but explaini
35、ng it to our customers is another thing. Often theyre just not prepared to wait and if they cant get what they want exactly when they want it, theyll go elsewhere. In the end, thats no good for either of us. Are you saying that the situation is unlikely to improve because if you are 6.2 Telephone ex
36、pressions (page 62)ExampleA Hello, is John there?B Sure, Ill just get him for you. A Thanks a lot. 1 A Can I speak to Yan Lin, please?B Im sorry, the line is engaged. Would you like to hold?A No, thats OK. Ill call back later. 2 A Im afraid Mr. Chiu is out of the office today.B OK. Can you take a me
37、ssage?A Of course. Ill just get a pen and paper.3 A Hello, Morris Industries.B Can I have the sales department, please?A One moment. Ill put you through. 4 A Im afraid our computers are down at the moment. B But I need the information by the end of today.A OK, Ill get back to you as soon as possible
38、 I can.B Thank you. Id appreciate that. 5 A How can I help you?B Can you ask Esther to bring her laptop with her?A Sure. Ill make sure she gets the message.B Thanks.6 A Im calling about Mr. Signelli. Is his bill for $3,000 or $3,500?B One second. Ill just check my records. 7 A Can I speak to Sarah, please?B Hang on. Ill see if shes back from lunch yet.8 A So, its the Taj Mahal restaurant at 1 oclock.B Great. Ill look forward to seeing you then.
