Money Buying, Selling, Paying

John LandrøSeptember 19 2005

EN-113

Lesson 10

Money – buying, selling, paying

A Personal finance

Sometimes in a shop they ask you: ‘How do you want to pay?’ You can answer: ‘Cash / By credit card.’

In a bank you usually have a current account, which is one where you pay in your salary and then withdraw money to pay your everyday bills. The bank sends you a regular bank statement telling you how much money is in your account. You may also have a savings account where you deposit any extra money that you have and only take money out when you want to spend it on something special. You usually try to avoid having an overdraft or you end up paying a lot of interest. If your account is overdrawn, you can be said to be in the red (as opposed to be in the black or in credit).

Sometimes the bank may lend you money – this is called a bank loan. If the bank (or building society) lends you money to buy a house, that money is called a mortgage.

When you buy (or, more formally, purchase) something in a shop, you usually pay for it outright but sometimes you buy on credit. Sometimes you may be offered a discount or a reduction on something you buy at a shop. This means that you get, say, £10 off perhaps because you are a student. You are often offered a discount if you buy in bulk. It is not usual to haggle about prices in a British shop, as it is in, say, a Turkish market. If you want to return something which you have bought to a shop, you may be given a refund, i.e. your money will be returned, provided you have a receipt.

The money that you pay for services, e.g. to a school or a lawyer, is usually called a fee or fees; the money paid for a journey is a fare.

B Public finance

The government collects money from citizens through taxes. Income tax is the tax collected on wages and salaries. Inheritance tax is collected on what people inherit from others. Customs or excise duties have to be paid on goods imported from other countries. VAT or value added tax is a tax paid on most goods and services when they are bought or purchased. Companies pay corporation tax on their profits. If you pay much tax, you should be given some money back, a tax rebate.

The government also sometimes pays out money to people in need, e.g. unemployment benefit (also known informally as the dole) disability allowances and student grants (to help pay for studying). Recipients draw a pension / unemployment benefit or are on the dole or on social security.

Every country has its own special currency. Every day the rates of exchange are published and you can discover, for example, how many dollars there are currently to the pound sterling.

A company may sell shares to members of the public who are then said to have invested in that company. They should be paid a regular dividend on their investment, depending on the profit or loss made by the company.

2.

Business booming nationwide

Norwegian businesses are reporting earnings that collectively are more than double the amount earned the year before. Fresh accounts from 114,000 companies suggest business is booming, and not just for oil- and gas-related firms.

Low interest rates are fuelling much of the profit growth. Financing costs are low and consumers are willing to borrow and spend, since they are not saddled with high financing costs either.

Operating profits for the 114,329 non oil- and gas-related companies reporting their results to the national registry in Brønnøysund were collectively up 43.9 per cent, according to newspaper Aftenposten.

The report shows that Norwegian business is earning money like never before, with growth occurring across most sectors.

(Aftenposten, September 12, 2005)

3. Oil lifts inflation to highest level for nine years

- Rise in fuel counters effect of cheaper goods

- Analysts warn of further price pressure to come

The spiralling cost of oil sent inflation in Britain to its highest level in almost nine years last month as dearer energy pushed up the cost of travel by car, train, plane and ferry, government figures revealed yesterday.

Swamping the benefits to consumers from cheaper imported electronic goods, the rising price of crude pushed inflation in the cost of living up 2.4% in August.

Analysts warned that this was not the end of the upward trend, since last month’s inflation figures did not take account of the latest jump in prices caused by Hurricane Katrina.

(The Guardian, September 14, 2005, article abbreviated)

Wealthy teenagers 'can't manage money'
British teenagers are better off today than ever before, but lack basic understanding of personal finance, according to a report published today.

Some 88% of 16-year-olds own a television, 86% have their own stereo, and 84% have a mobile phone.

Half of teenagers admitted they were not very good at managing money and only had a limited knowledge of finance. More than half do not keep track of what they are spending and almost as many wouldn't feel confident about writing a cheque.

(Sandra Haurant, The Guardian, February 9, 2004

Bill Clinton: Saviour of the world?

He has left the White House, but Bill Clinton still wants to end poverty, bring about global peace and save the planet.

Bill Clinton is fully engaged in the contest to be the best ex-president of the United States. This week, in New York, he will host the first global meeting of the Clinton Global Initiative (CGI), a super-NGO with grand goals such as the promotion of economic growth without environmental impact and the conciliation of religious differences as a way to end terrorism. At 59 and fully recovered from coronary revascularisation surgery, Clinton expects to gather together almost 1,000 entrepreneurial, labour and political leaders from all over the world. Every year for the next decade, the meeting in New York will coincide with the opening ceremony of the United Nations General Assembly. "It is a meeting unlike a Davos or a UN meeting, but an activism forum from which each participant will come out with a list of tasks to be accomplished," says the former president. "Those who do not fulfil the tasks will not come back the following year."

If the living standards of hundreds of millions of people in Asia and Africa were raised, it could be argued that this would hasten the depletion of natural resources. If all the inhabitants of the planet reached the same consumption standards of the inhabitants of California, there would be an environmental collapse, wouldn't there?

"The shortest answer is yes. But the longest is that it is possible to create wealth without destroying the environment. This is the great challenge. All over the world, water reserves are diminishing, fertile soils are being eroded and seed production is showing a downward trend. South America is one of the few regions in the world that was able to increase the production of soy and other seeds thanks to technology and the abundance of fertile lands. But this is an exception in the world. The rule is the shortage of water and of arable lands.

"Therefore, one of the dearest purposes of my initiative is to find ways to turn environmental preservation into a path to attain economic prosperity. Otherwise, the reaction of people, let us say, in China and India, may be very negative. They might think that environmental preservation is an ambush by Americans and Europeans to prevent their countries' economic growth. For this reason, we have to stimulate the use of solar energy, of aeolian energy, and help to popularise highly productive cultivation techniques that will help us preserve water and the soil. Thus, people will understand that preservation makes them richer, not poorer.

"Another beneficial effect of raising the standard of living and consumption of the population is shown by statistics: as countries grow rich, population growth diminishes. When we know that the greatest population impact in the planet is in the countries with the big forest reserves, the importance of helping them grow rich becomes clear."

Recently, you said that the world needs to enter the post-globalisation phase. What does this mean?

"The globalisation of the economy had very positive effects, but a lot of people did not benefit from it. The only way to broaden these beneficial effects is to bring the civil society to the scene. I think time has come for non-governmental organisations, companies, workers' associations and international organisations to try to develop a social and environmental policy that is in keeping with the challenges and opportunities created by globalisation. The global economic system alone cannot solve all the problems, either locally or globally. Issues such as the environment and the increase of poverty and inequality cannot be confronted only by the market forces. Therefore, I think it is not very realistic to imagine that we can have a globalised economy without the counterpart of global social action. My idea is, basically, to contribute to the creation of a global civil society with partnerships that transcend national and regional borders."

It seems very praiseworthy, but aren't you being too optimistic over the practical results it may bring?

"I think that, together, we can produce actual results in a shorter term than what is imagined. Global civil society is rapidly expanding since the end of real communism. If you look at what's happened in the world since the fall of the Berlin Wall in 1989, you will see that three major and little-celebrated phenomena are giving shape to the contemporary world. The first one is the fact that, for the first time in history, more people are living under democratic governments than under dictatorships. The second one is the geometrical expansion of the internet. The third one is the consolidation of NGOs as action-organisations with global amplitude.

Democratic nations rarely wage wars among themselves, but what other opportunities were created by the phenomena you describe?

"The boom of use of the internet as a citizenship tool has been vital. The Chinese, for instance, used the internet to oblige their government to acknowledge the seriousness of the disease known as Sars, the Asian flu, and to take the necessary measures to prevent the progress of the epidemic. After the terrible tsunami that razed South-eastern Asia at the end of last year, 30 per cent of Americans made donations to the victims. Half the donations were made via the internet."

You're talking about millions of people...

"It is unbelievable. Add to this the capillarity of the NGOs in developing countries and in wealthy countries and we have a very optimistic scenario. The boom of the NGOs goes from the Bill Gates Foundation, which spends billions of dollars in health treatments in India and Africa, to the smaller organisations that grant micro-credit in Latin America, in Africa and in southern Asia. What I think I can do to help is to provide all these people with the opportunity to focus their actions so as to make them more effective. I hope to create an environment in which entrepreneurial, labour and political leaders and NGOs can sit together and say: 'Well, these are the things we must begin and end within a year, these are the areas we think are vital for our common future.'"

Great projects have a tendency to attract corrupt people. Do you fear this may jeopardise everything?

"Projects do not need to be great. They have to be functional. For example, Brazil has at least two successful cases that may serve as an example to the world. One of them is the programme of distribution of anti-viral medicine for Aids patients. The medicine reaches even the more distant populations, including indigenous patients who do not even speak Portuguese. This is something extraordinary. No other country in the world has a project comparable to Brazil's. Another programme of which Brazilians must be proud is the one in which mothers of poor families periodically receive an amount of money as an incentive to keep their children at school. I believe that there are many ways to finance projects without running the risk of fostering corruption. For this, the quality of people is fundamental. In many countries of the extinct communist bloc, there are many people who are really skilled in government, in the middle of a rotten bureaucracy that no longer works. What can we do? Identify the good people and help them. I agree that, when a government is dishonest, help is equivalent to throwing money down the drain.

The idea that some good people in the right place may make the difference is comforting, isn't it?

"Yes. Even in countries without a very effective governing system, there are helpless but clever people who are managing to survive even when everything conspires against them. When a good network of NGOs arrives in a place like this, their work can save many lives, establish companies and promote economic growth."

Do you picture yourself going back to the White House as a "first husband"?

"I do not know anything about this. You know my wife. I am very proud of her. She has been doing an extraordinary job in the American Senate. She will run for re-election in New York in 2006. Before thinking about anything else, she needs to face this campaign. What I can say is that I am very happy with the work of my foundation, trying to save lives and solve problems. I thank every day for the life I have and for my wife's political work. I cannot say anything else about this right now."

(The Independent, September 12, 2005, article abbreviated)