about whether you actually can afford to take out this loan or not

Transcription

1 Financial Crisis Diego and Hana debate the current financial crisis. Hanna: OK, so we were talking about finance, so we're just going to talk a little bit about the financial crisis. What do you think about it? Diego: I think the financial crisis is a huge mess and a lot of people don't really understand how it happened or why it happened, so I think it's important to talk about the general background of the whole thing, so basically in my own personal opinion, I think it is that credits got out of hand and they were given to people who were not able to repay those credits and the whole system collapsed. Hanna: But at the same time, if you are taking out a loan and you have a look at the details and realize that you might not be able to pay it out, maybe you should be thinking a little more, a little bit more carefully about whether you actually can afford to take out this loan or not Diego: You do have a point but I think it has to do with culture in a way because I am from Mexico and we Mexicans can see Americans, that they never... that they're always taking out loans for everything, right? So they buy a house. they take out a loan. If they buy a car, they take out a loan. So there's this common expression that Americans are always in debt, so that's the whole thing, a lot of people were taking out loans to buy a million dollar house, a 750,000 dollar houses, when they were only able to afford ,000 dollar houses, but they knew they weren't going to be able to pay looking at their income statements and all that, and regardless of all of that, they still gave out those loans. Hanna: That's true but at the same time, I think you are the person signing the contract if you're taking out the loan. I don't think being in debt is a bad thing, but I think that if you are going to take out a loan, you have to do it responsibly, so you do have to read all the fine print, and you do have get a second opinion about whether you will actually be able to keep going with this loan. I mean, as you said, if you're taking out a loan that's, you know, or mortgage, that's 750,000 grand, I mean, you're gonna be paying that for a long time, and you want to know that twenty years into the future you're not gonna end up losing your house. continued on the next page...

2 Financial Crisis continued... Diego: Well, that's the thing, like, the banks in a way... it's all about the social contract, right, and that social contract was broken from both sides, but the banks knew that the these people we're going to lose their houses in twenty years due to their... you know, because they weren't going to be able to pay out these loans? Hanna: Really? Diego: Yes, they knew that, like I'm pretty sure, because it doesn't take a rocket scientist. If you look at their income statements and you do the math for twenty years at the interest rates they were charging, like I don't... I think it was just taking advantage of the people in a way. Hanna: I think the banks have been a little bit irresponsible in this matter, but in the end it is the person taking out the loan who signs the contract, so they also have to bear some of the burden. Diego: Yes, but this is not the first time that this has happened. It happened back, I don't when... with the Asian crisis in Thailand, and it was a huge collapse around the world economy, and it happened in the States before, so it's not the first time that it has happened, so it makes you wonder why do we allow this huge financial institutions and big government to allow these things to happen.

3 Grammar Page Work with a partner. Circle the mistakes and write them correctly. 1. Benjamin Franklin said, A penny saved is a penny gained. 2. Whose rich? He that is content. Who is that? Nobody. 3. The only way not to thinking about money is to have a great deal of it. 4. Money is root of all evil. 5. Lack of the money is the root of all evil. 6. A large income is the best recipe for happy that I ever heard of. 7. A wise men should have money in his head, but not in his heart. 8. The safest way to double your Money is to fold it over and put it in your pocket. 9. No one can earn a million dollar honestly. 10. Never spend your money before you have.

4 What do you think? Discussion Write the number of the question being answered in the box 1. Do you owe anyone money? Preston - US Daisuke - Japan 2. What is the most money you have ever let someone borrow? 3. Do you have a credit card? 4. Do you think the US will recover from the economic crisis? 5. Which is more important to you, money or love? 6. Are you willing to work hard to earn a lot of money or would you rather be lazy and poor? They say that money can t buy love, but actually I think it can help a lot. Stylish clothes, a nice haircut, a flashy car, an impressive house, and a fun lifestyle are very attractive to women. I m willing to bet money that a guy with all those things has a better chance at finding love than a guy that doesn t take care of himself and has a boring lifestyle. Ana - Colombia I can t imagine the person that would say that money is more important than love. Love can mean so many things. The first thing we think of is romantic love but there is also love for our family, loving our hobbies, and even loving food. Money is necessary to live but love is necessary to live with true happiness. Write a paragraph or a dialogue about one of the discussion questions: In Japan, we also had a very difficult situation in Japan in the 90s. It was similar to what the United States is experiencing right now. We still haven t recovered completely from that crisis. Before Japan didn t have homeless and unemployed people but now we have a lot of them. Most people still live a nice lifestyle though. Vittoria - Italy I got my first credit card when I was 21. At first, I paid it off every month. Then after about 6 months, I didn t have enough to pay it all so I left a balance of $100. The next month it was $200 and the next $1000 until I finally owed $7,000. It took me about 6 years to pay off all of that debt. I ll never make that mistake again!

5 Grammar Page Work with a partner. Circle the mistakes and write them correctly. 1. Benjamin Franklin said, A penny saved is a penny gained. earned 2. Whose rich? He that is content. Who is that? Nobody. Who is 3. The only way not to thinking about money is to have a great deal of it. think 4. Money is root of all evil. is the root 5. Lack of the money is the root of all evil. Lack of money 6. A large income is the best recipe for happy that I ever heard of. happiness 7. A wise men should have money in his head, but not in his heart. man 8. The safest way to double your Money is to fold it over and put it in your pocket. money 9. No one can earn a million dollar honestly. dollars 10. Never spend your money before you have. have it.