Summary Blog

http://online.wsj.com/article/SB123913125063097913.html

Summary:
In the American’s Federal Reserve report states that the consumer credit has dropped by $7.5 billion n February. The credit grew $8.1 billion in January, and people predict that it will continue rise by $1.8 billion; however, it has dropped instead. This result was way bigger than what the Wall Street expected, and it was the fourth decline in the past six months. After the Wall Street crisis, the standard of qualifying to borrow money has straighten, which makes life harder for both consumers and businesses. In the recession, the situation is getting worst and worst.

Connection:
Through chapter 14-15 we have learned many things about credits in business. Some may about credit cards, or buying on credits. From the textbook we get to see a lot of benefits in using a credit system brings to us; however, in reality many businesses are screwed by those system, or by the other people who use those system improperly. For example, when businesses buying products from other businesses, they will usually buy on credits, which pay off about 30-60 days; however, some people may not pay their bills on time which make the other companies are short of cash and go bankrupt.

Personal Reflection:
In now days, people are depend more and more on the credit systems. Consumers are more likely to use credit card for shopping. As for businesses, they are more likely to purchases stuff on credits. The credit cycle gets bigger and bigger, when one part of this cycle does not pay off its bill, then it may break the whole cycle and make a huge crisis. For instance, if hundreds of consumers who use credit card to shop does not pay off their bills on time. This may cause retail stores short of cash, so they can not pay off their bills. So this makes the manufacture to lose money. In another words, with the credit systems we can easily lose money in the economy.