Shopping on credit card

Banking and credit card system has probably be on the most difficult thing to manage for us when we arrive from France and certainly something that still continues to question us as an irrational concept.

American and French banking system are completely different as well as the credit management.

Typically, French banks only deliver debit cards. In most cases this is a VISA with a financial limit of debit authorization, which is fixed according your financial situation. If you exceed the limit you have penalties to pay and your card is blocked. Some private credit firm like SOFINCO exists which propose you credit cards with rates in the range of 9-12%. Salesman often proposes them when you want to buy standard consumer goods, like appliances, vacation package, or a car.

So we were and are still very puzzled when the cashier at Heinen’s ask us “Debit or credit’’. For us it is obvious that expenses like buying food for the week have to be paid cash or with a debit card with direct withdrawal.

With time, I realized that a lot of people paid their shopping with credit card. Once I witnessed a situation that surprised me: a person at Heinens had to use 3 different credit cards to pay her cart. My first thought was: are people indebted at such a high point that they cannot afford to buy food? Do they still have any control on their purchase capacity?

Then came the time for us to buy our house. There we learned about the credit score system and the paradox of the concept.

In France, you are a reliable person if you do not have more than 30-35% debts or in other words, the less credits you have, the more reliable you are. If you want to buy a car or a house and need to get a credit from your bank, you will be eligible only if you do not exceed this limit. This limit is considered as the maximum amount of money a household can spend for credit reimbursement while keeping their capacity to pay other expenses like insurance, food, schools…

In the United States, you have to prove that you have credits and you are able to pay them as a proof of reliability. This is recorded under credit score. It is common here to receive in your mail box proposals from private credit companies or banks saying “ Congratulation, You have been pre-qualified for a Platinum card with a reserved credit line...’’ Then in very small characters at the bottom of the page, you can read that the annual interest rate is 19.99%!!!

A real paradox to us. Arriving from France, we had no credit history, no debts with the financial capacity to pay our house cash, but not eligible for a credit because we had no credit history !!

To me, this partly explains the financial crisis we are plunged in. Living in a consuming society supported by a dangerous credit system, people have lost track on their financing capacity. Then devastated by too many debts to reimburse, they have all kinds of proposal coming from credit companies. Because people who had contracted these kind of credit did not have financial back up, credit companies collapsed, letting thousands millions of dollars unpaid to banks with the financial crash we have witnessed the lat two years.

I think a profound reappraisal and a new look on our consumer behavior would be essential. Even if consumption is a key part of the economy, rules should be established and basic principle introduced in the education to teach people not to purchase if they cannot afford it.

Women leading the economy

I read an interesting article in Newsweek, explaining how women are poised to become the most important and leading force of the post-recession era.

Actually, women represent a real driver of the economy as they make the majority of the purchasing decisions.

Besides that, women’s role in the world has significantly changed in the past decades:

· Access to education around the world has improved and colleges in Europe and in the United States became equally open to boys and girls.

· Laws changed to give women equal representation to their male peers.

A significant change is being observed.

Women from the previous generation, who tended to be paid less than their male peers, are retiring, leaving the place to a younger group with equal education that male. However, studies show that a woman with the same level of education and the employed at the same position than a man still tends to be less paid than him.

Hit by the crisis, companies had to licentiate people with a high salary in order to save money. Therefore, according to the article, 80% of the job losses in the United States were held by men, allowing women to access to high positions.

The article was interesting as it brought a new light on an unobvious aspect of recession and pointed out that the recession can benefit a certain category of person while hurting even more another one.

Crisis and Entertainment

Economy recession has plunged thousand families in difficult financial situation, having to struggle between household duties and charges, loans reimbursement nightmare, fees for school and college for children…

After one year of this unpredictable cataclysm, I was wondering how entertainment business was facing the situation.

A nice opportunity to talk about this topic arose as my mother just came back from Orlando where she was for business. She told be about her trip and was absolutely surprised to see how transparent the crisis was for Disney business.

She said that the level of activity for the hotel was high – though several seemed to have reduced their rates to attract a larger range of people –, attractions were always full, and she had to queue up to get a table in restaurants.

She told me she witnessed a person buying for more than five hundreds dollars of gifts in a Disney shop. It is interesting to note, she said, that the lady who wanted to pay with credit card had to try different ones as they were all rejected probably due to limitations of credit.

Saying that, I wondered how this is possible. How people can still spend thousands of dollars while the situation and the future are still so uncertain.

My first assumption is that it may be a way for people to protect themselves from the moroseness. People save money for entertainment, probably reducing household expenses or delaying car purchase or the plan they had to remodel their bathroom or kitchen.

This is good for the entertainment business; nevertheless it is not a sign of recovery. Crisis is still there, though we start to see a slow down in the drop of economical indicators.

My mother brought me back some small gifts. It is interesting to note that all are manufactured in China – and therefore are manufactured for less than a dollar and however are sold for more that ten –. We have had a long conversation about that to finally agree to say that all the efforts developed by the United States to make the economy restart may finally result in helping countries such as China that product low cost goods. So we help these countries reactivating their economy first, before helping our own country.

I keep being reserved on how and when western countries will recover from the crisis.

I remain surprised to see how people seem to have reacted to the situation, as if they were ignoring it, and how some regions seem to not be affected by the crisis.

I hope they do that purposely and that it will help maintain a certain level of activity for the economy.

Equality

I recently studied the Declaration of Independence of United States. The sentence about the equality awoke my curiosity: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness” Together with French motto “Liberty, Equality, Fraternity”, I wondered how the Equality concept had evolved with time and what it means today.

I think Equality and the right for Equality is a universal concern that has been debated and will continue to be debated forever as it is in constant evolution.

To me, the main step has been taken by making each human being equal as a citizen – in other words politically equal: “one man, one vote’’. Unfortunately, we know this rule is not universally true particularly in countries where dictatorships still exist. This ontological right is key for the humanity and worldwide organizations continue to strongly struggle to make it applied.

Even if we consider western countries, I don’t think people have reached and will ever reach equality.

At first, the main form of inequality was based on the social class (rich vs. poor). However, this principle had evolved into more subtle inequality concepts. For example, if you live in a polluted suburb and your child suffers from asthma due to the pollution, you may feel an inequality compared to your friend leaving in countryside. If you suffer from a handicap, access to a job will be more difficult.

I think all the efforts deployed for years and centuries to set up liberties and equal rights for everyone have turned into a tyranny for equality with the counter productive result of increasing inequality. What do I mean by that? In this context tyranny refers to what we are kept being said: that we CAN succeed in life even if we start with bad cards in hand. However, do you think, a person will have the same chance to access Princeton or Harvard if he come from the suburb of Bronx or from downtown Boston? Moreover, I think there is a business around equality driven by the wish of people to possess the exterior signs of richness: have a nice car, a big house, play golf, have a Rolex…. To me the main risk is to see our society sacrificing its differences for the sake of equality, forgetting that its differences make its richness.

A perfectly equal society could result in a “flat” society not willing to expand its potential and go beyond its limits to get better. I think we should awake. The race for equality in all domains has turned into the opposite effect. We need to cultivate the differences as a unique source of improvement to keep civilization progressing, while giving more value to the equality in the sense of promoting the right to be different but still having the same chances to make our life unique.

2010 World Expo

We start to hear a lot about the 2010 World Expo to be held in Shanghai from May 1^st to October 31^st 2010. World Expo is another year event considered as a unique showcase for each country to promote its recent advances in technology and foster worldwide economical ties. First World expo was in London in 1851 and the last one was in 2008 in Seville.

Each World Expo is developed around a theme. Shanghai theme will be of “Better City, Better Life” and will focus on improvement of the quality of life in the world’s cities

In American newspapers, Shanghai expo is presented as “a unique occasion for the United States to promote business, culture, and values in one of China’s most dynamic cities and to foster an even stronger friendship between the American and Chinese peoples. It should host 70 million visitors, among which 60 million from China. More than 175 countries will be present through a country pavilion’’.

However, the bill to pay for the United States to get a Pavilion is 61 millions dollars. It will be 50 millions Euros for France.

USA was one of the last countries to confirm its participation. Indeed, it is prohibited in the United States to spend Federal funds to participate in expositions such as Shanghai 2010 World Expo. So, its pavilion had to be funded by private and non-profit funds.

In March, with 40 millions raised coming form a dozen companies including 3M, General Electric, Dell, Pepsi, the United States confirmed its participation.

This is where we can start to think about it: Is it the best and most decent time to spend such a huge amount of money while worldwide economy is ruined by the economical crisis?

After the Olympic games in Beijing, the World Expo in Shanghai is the second worldwide event in China and a unique opportunity to overcome economical crisis.

Personally, I have a reserved opinion on the pertinence of this event in the current economical situation and how it can help world to strengthen and expand economical relationships between countries.

From an economical standpoint, China already drags a lot of our economy with billions dollars of exportation of goods not balanced by import.

To what extent will that be beneficial for United States and other countries? I don’t know. It will certainly help China to face the crisis. I see more opportunities and benefits for China as for the participants. Indeed, preparation will give thousands jobs to China, tourism will be boosted, and infrastructure like transport, hotels in and around the city developed for the occasion will benefit to Shanghai on the long term.

Is that fair to ask 61 million dollars to participate? It would have been reasonable to reconsider the project and the contribution asked.

I hope the effort deployed by each country in the current circumstances will be beneficial from a political standpoint by relaxing relationships when it is needed and that the theme “Better city, Better life” will rally all nations in the world around a central motto.

Illusion

Two weeks ago, we discovered in class Julian Beever and his incredible talent to create illusions and to make us see the world in a different way for a second. This reminded me a movie a watched last summer called “Life Is Beautiful”. This is the story of a Jewish Italian person who had been deported to a concentration camp with his five-year-old son. To protect and help this latter survive their internment, he use his imagination to “create” a better and imaginary world for his son.

These two elements brought me to think and question myself about illusion and the impact it can have on your life. I started my reasoning by trying to find other field where illusion comes to play. The most relevant I thought about was magic. We all know that there is nothing magic in this world. However, we all enjoy magic tricks? Why? Why do we like so much to be fooled? The explanation I came up with might create some disagreement so I apologize to my reader if my opinion differs from yours. I think that illusions allow us to think that everything is possible and that our lives might improve after all and it comforts us just to think that it is possible. To come back to my previous example, at the end of a magic trick, you look for the secret. But you won't find it... Because of course, you're not really looking...you don't really want to know. You want to stay with this perception that every thing can happen.

I did some research about illusion and found that scholars usually separate illusion into two categories: affective illusions and perceptive illusions. Perceptive illusions are well represented by Julian Beever’s drawing while affective illusion is a little bit more complex. Affective illusion is more an ultimate solution human being has to escape the reality when the latter becomes unbearable. This is perfectly well expressed “Life Is Beautiful”. At some point, it is comparable to psychosomatic diseases, where the illusion is the way used by the mind to express something that would be unbearable otherwise. Affective illusion can protect for a certain time if it remains under control. The risk is to become insane.

Halloween

My attention has been caught these past few weeks by the general and strong effort people put to be well prepared for Halloween. Houses are decorated and people will have fun in costume party on the D Day of October 31st.

In France this feast is not officially celebrated. Only young children like to go in costume from house in house to ask candy, but without any sort of idea of the reason of why they do that that day.

So I was curious to understand the origin of this celebration so present in the United States and try to figure out how marketing had taken the opportunity (again) to harness a tradition into a making-money product.

I did some researches about Halloween to better understand the origin of this celebration.

I learned that this feast was a pagan holiday originally celebrated in Ireland, Great Britain, Scotland and Northern Europe originating from the Celtic tradition.

Celebrated during the night of October 31^st, it corresponds to Samhain day – meaning End of the Summer -. This was the last day of the Celtic calendar, the end of the harvests and the occasion for great festivals in villages. Because Celt people were very superstitious, they feared that the soul of dead could roamed in the village and throw a bad fate on their house. To keep the souls quiet, the tradition was to put gifts at the entrance of the village to keep them far enough and to make sure next year will be a good year.

It is interesting to know that Halloween is the shortened wording for All Hallow’s Even – Hallow meaning Holy and Even meaning Evening in old English- which is the abbreviation of All Hallow Evening.

This pagan holiday was turned into a Christian day known as All Saint’s day celebrated on November 1^st.

It is good to see people perpetuating the tradition with the most famous symbols like the carved pumpkin, the lintel nailed to the door and other symbols. However, this special day seems to have more and more turned into a fun and costume party day. Children wear costume and go from door to door with the ‘’Trick-or-treating ‘’, other watch horror movies, and elder going in haunting attractions. These activities are of course well prepared by marketing, always in the lockout to make business, with adds arriving in your mail box by mid August and stores entirely dedicated to Halloween derived products.

I have nothing against to use tradition to support and develop business. However, I think traditions should remain traditions with their context, history and symbols explained and perpetuated over the generations and not limited to a marketing product.