http://www.vancouversun.com/business/fp/money/face+debt/3143925/story.html
Summary:
This article talks about a trend that seems to be a fast growing problem. It is apparent that more and more seniors are beginning to face financial problems. With living standards rising, prices have risen and costs are piling up, yet income has not increased enough to match. And along with debts, even if they are good debts, financial problems are becoming more common for people in their golden ages. Baby Bloomers faced strong economic growth and adopted the idea that saving isn't too neccesary, but as these baby bloomers are growing old at the same time, problems are rising. Another factor in causing this problem is the trend to retire early while living a long life.
Connection:
This article relates to chapter 6 as it talks about bad debt expenses. Many people in the Baby Bloomers era felt as if the economy was going to give them financial security. Bad loans such as high interest loans for recreational purposes are rising to the surface as concern. Stretched out mortgage payments are seeing the effects and many of these factors result in a lack of financial security for the aging population. A positive example in this is shown in the article as a couple did not loan money for anything after one was made for their house. Good use of credit and long-term stable investing also helped them smoothen out the bump that is bulging for many people going into their golden years.
Reflection:
Long-term planning has always been a priority for couples as well as singles. But things may not always go as planned. But by decreasing unneccesary expenses, you increase the chance of having financial security in times when relaxing is the best option for health issues. Compound interest needs to be exploited at an early age to maximize its benefits. I think that you can never have too much savings as later on in your life, you will need it. We need to be smart in creating expenses so that it does not cause a problem in our future. Shortening mortgages may be difficult but it can be one of the most effective ways in security financial stability in our futures.
Saturday, June 19, 2010
Chapter 5 Blog
http://www.rupeetimes.com/news/personal_loan/sufficient_liquidity_still_seen_by_sbi_despite_3g_tax_cash_outflow_3664.html
Summary:
This article explains that there is enough liquidity in the system of the State Bank of India so that they do not have to increase interest rates in the short term. Even though the largest lender in India will see cash outflow of Rs 70,000 crore (which is aproximately 15 billion US dollars), they believe that there is sufficient liquidity. The chair man of the State Bank of India, O P Bhatt said that "on an average, there is still a fair amount of liquidity in the system. The large amount of cash outflow is going towards account of payments to be made to telecom companies. Although the liquidity in the system is relatively stable, the bank has repriced some categories of loans. It raised short-term corporate loans by 25-50 points, said Bhatt. The bank has also reported a decline in net profit in the fourth quarter.
Connection:
Chapter 5 is generally about cash outflow, liquidity, and cash flow statements. This article talks about how the State Bank of India, the largest lender in India, does not need to increase interest rates in the short term. This relates to chapter 5 in that even though there is a huge amount of cash outflow, the bank is able to balance its liquidity so that drastic action is not needed. The bank is about have a cash outflow of around 20 billion by mid June yet "there is enough liquidity in the system" so that interest rates do not have to be increased just yet.
Reflection:
While increasing interest rates can easily increase cash inflow in the short term, it may be bad longterm as many borrowers may seek an alternative lender to borrow from. There is always competition in this market and customers would of course seek to find the best deal. Increasing interest rates may increase the amount of cash earned from a transaction, but it will also reduce transactions which may decrease the bank's reputation. Especially as the largest lender in India, increasing interest rates may cause a small upstir and force borrowers to find another source of cash.
Summary:
This article explains that there is enough liquidity in the system of the State Bank of India so that they do not have to increase interest rates in the short term. Even though the largest lender in India will see cash outflow of Rs 70,000 crore (which is aproximately 15 billion US dollars), they believe that there is sufficient liquidity. The chair man of the State Bank of India, O P Bhatt said that "on an average, there is still a fair amount of liquidity in the system. The large amount of cash outflow is going towards account of payments to be made to telecom companies. Although the liquidity in the system is relatively stable, the bank has repriced some categories of loans. It raised short-term corporate loans by 25-50 points, said Bhatt. The bank has also reported a decline in net profit in the fourth quarter.
Connection:
Chapter 5 is generally about cash outflow, liquidity, and cash flow statements. This article talks about how the State Bank of India, the largest lender in India, does not need to increase interest rates in the short term. This relates to chapter 5 in that even though there is a huge amount of cash outflow, the bank is able to balance its liquidity so that drastic action is not needed. The bank is about have a cash outflow of around 20 billion by mid June yet "there is enough liquidity in the system" so that interest rates do not have to be increased just yet.
Reflection:
While increasing interest rates can easily increase cash inflow in the short term, it may be bad longterm as many borrowers may seek an alternative lender to borrow from. There is always competition in this market and customers would of course seek to find the best deal. Increasing interest rates may increase the amount of cash earned from a transaction, but it will also reduce transactions which may decrease the bank's reputation. Especially as the largest lender in India, increasing interest rates may cause a small upstir and force borrowers to find another source of cash.
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