Nikanorova

Дипломатическая академия МИД России
И.А. НИКАНОРОВА
НЕКОТОРЫЕ ОСНОВНЫЕ
ЭКОНОМИЧЕСКИЕ ПОНЯТИЯ
(по материалам Би-Би-Си)
Москва
2014
2
I.A. NIKANOROVA
SOME BASIC ECONOMIC CONCEPTS
Moscow
2014
3
УДК 811.111
ББК 81.432.1
Никанорова И.А. Некоторые основные экономические понятия (по материа-

лам Би-Би-Си). М .: 2014. 110 с.
Данное учебное пособие предназ начено для бакалавров четырехго-

дичного отделения, занимающихся по направлению Экономика. Пособие со-
стоит из оригинальных текстов Би-Би-Си, содержащих ряд важнейших эко-
номических понятий, таких как инфляция, ВВП, количественное смяг чение,
фискальный обрыв и т.д., построенных по принципу ответов на вопросы по
определенной теме. Тексты сопровождаются словарем, выделенным из тек-
стов и снабженных русскими эквивалентами, и заданиями типа Give a short
talk on … или Write a short essay on…
Несложный характер текстов и наличие словаря к ним дают возмож-
ность пользоваться ими на ранней стадии специализации, когда обучающиеся
еще не владеют экономической терминологией, но их общая языковая компе-
тенция соответствует уровню B1-B2. Помимо этого, пособие служит хорошим
дополнением к учебнику Guide to Economics, так как дает сведения по многим
темам, представленным в учебнике.
Порядок текстов в пособии произволен, т.е. нет необходимости жестко
следовать оглавлению. Преподаватель может выбирать ну жные ему темы,
имея, однако, в виду, что повтор экономических терминов в разделе Vocabu-
lary достаточно редок и текст может оказаться сложным для понимания без
дополнительной обработки словаря.
Отличительной чертой пособия является то, что в текстах отражены
современные экономические понятия, а раздел Vocabulary содержит единицы,
которые вошли в экономический пласт языка в последние несколько лет.
Это облегчает переход к работе над более сложными аутентичными
материалами.
Утверждено:
на заседании кафедры английского языка
ДА МИД России 17.10.2013 (протокол № 3)
 Дипломатическая академия М ИД России
4
WHAT IS GDP?
GDP, or Gross Domestic Product, is the most impo r-

tant of all economic statistics as it attempts to capture the
state of the economy in one numbe r.
Quite simply, if the GDP measure is up on the previous
three months, the economy is growing. If it is negative, it is
contracting.
And two consecutive three-month periods of contraction
mean an economy is in recession.
What is GDP?
GDP can be measured in three ways:
Output measure: This is the value of the goods and ser-
vices produced by all sectors of the economy; agriculture,
manufacturing, energy, construction, the service sector and
government.
Expenditure measure: This is the value of the goods
and services purchased by households and by government, in-
vestment in machinery and buildings. It also includes the value
of exports minus imports.
Income measure: The value of the income generated
mostly in terms of profits and wages.
In theory all three approaches should produce the same
number.
In the UK the Office for National Statistics (ONS) pub-
lishes one single measure of GDP which, apart from the first
estimate, is calculated using all three ways of measuring.
Usually the main interest in the UK figures is in the
quarterly change in GDP in real terms, that is after taking into
account changes in prices (inflation).
5
How is GDP calculated?
Calculating a GDP estimate for all three measures is a
huge undertaking every three months.
The output measure alone - which is considered the most
accurate in the short term - involves surveying tens of thou-
sands of UK firms.
The main sources used for this are ONS surveys of man-
ufacturing and service industries. Information on sales is co l-
lected from 6,000 companies in manufacturing, 25,000 service
sector firms, 5,000 retailers and 10,000 companies in the co n-
struction sector.
Data is also collected from government departments
covering activities such as agriculture, energy, health and edu-
cation.
New GDP figures are released every three months,

but they get revised in the interim. Why?
The UK produces the earliest estimate of GDP of the
major economies, around 25 days after the quarter in question.
This provides policymakers with an early, or «flash», es-
timate of the real growth in economic activity. It is quick, but
only based on the output measure.
At that stage only about 40% of the data is available, so
this figure is revised as more information comes in.
They are two subsequent revisions at monthly intervals.
But this isn't the end.
Revisions can be made as much as 18 months to two
years after the first «flash» estimate.
6
What is GDP used for?
GDP is the principal means of determining the health of
the UK economy and is used by the Bank of England and its
Monetary Policy Committee (MPC) as one of the key indica-
tors in setting interest rates.
So, for example, if prices are rising too fast, the Bank
would be expected to increase interest rates to try to control
them. But it may hold off if GDP growth is sluggish, as higher
rates could damage the recovery.
The Treasury also uses GDP when planning economic
policy. When an economy is contracting, tax receipts tend to
fall, and the government adjusts its tax and spending plans ac-
cordingly.
UK GDP is used internationally by the various financial
bodies such as OECD, IMF, and the World Bank to compare
the performance of different economies.
The European Union also uses GDP estimates as a basis for
determining different countries' contributions to the EU budget.
I. Vocabulary:
Gross Domestic Product or GDP – валовой внутренний про-
дукт, ВВП
measure – зд. показатель; измерение; измерять
grow – расти ( о производстве)
growth – рост (производства, экономики)
contract – сокращаться (о производстве)
contraction – сокращение (производства, экономики)
two consecutive three- month periods (quarters) – два кварта-
ла подряд
recession – экономический спад, рецессия
output – объем производства, производство
expenditure – расходы, затраты, издержки
7
income – доход
value – стоимость
in terms of – в терминах; in real terms - в реальных терминах
profit – прибыль
wages – зарплата
Office for National Statistics, ONS – Национальное стати-
стическое управление Великобритании
quarter – квартал; quarterly – квартальный
survey – обзор; рассматривать
manufacturing industries - обрабатывающие отрасли
service industries – сфера услуг
retailer – предприятие розничной торговли
get revised – пересматриваться, корректироваться
revision – корректировка
in the interim - в промежуточный период
flash estimate – предварительная оценка
Bank of England – Банк Англии (центральный банк страны)
Monetary Policy Committee, MPC – Комитет по денежно-
кредитной политике
set interest rates – устанавливать процентные ставки
sluggish (о росте) – вялый, неактивный
Treasury – казначейство; министерство финансов Велико-
британии
tax receipts – налоговые поступления
adjust tax and spending plans – корректировать планы нало-
говых поступлений и расходов
OECD, Organization for Economic Cooperation and Devel-
opment – ОЭСР, Организация экономического сотрудни-
чества и развития
IMF, International Monetary Fund – МВФ, Международный
валютный фонд
8
World Bank – Всемирный банк
performance – результаты деятельности, деятельность
contribution – вклад, взнос
II. Ans wer the following questions using as many vo-

cabulary ite ms as possible?
1. What is GDP?
2. How is GDP measured?
3. How often are new GDP figures released?
4. What is a flash estimate?
III. Give a short talk on the various uses of GDP by fi-

nancial bodies.
9
INFLATION
Inflation is one of the most important issues in eco-

nomics.
It influences the interest rate we get on our savings and
the rate we pay on our mortgages.
Inflation also affects the level of state pensions and be n-
efits, as well as the price of some train tickets.
What is inflation?
Inflation is the rate of increase in prices for goods and
services.
There are a number of different measures of inflation in
use. The most frequently quoted and most significant ones are
the Consumer Prices Index (CPI) and the Retail Prices Index
(RPI).
Each looks at the prices of hundreds of things we com-
monly spend money on, including bread, cinema tickets and
pints of beer - and tracks how these prices have changed over
time.
The inflation rates are expressed as percentages. If CPI
is 3%, this means that on average, the price of products and
services we buy is 3% higher than a year earlier.
Or, in other words, we would need to spend 3% more to
buy the same things we bought 12 months ago.
RPI includes housing costs such as mortgage interest
payments and council tax, whereas CPI does not.
But that only accounts for a small part of the difference
between RPI and CPI.
10
The main difference is caused by the fact that, although
they use much of the same data, they calculate the inflation
rate using different formulae.
The one CPI uses takes into account that when prices
rise, some people will switch to lower priced alternatives.
They will swap a higher priced brand of biscuits for a lower
one, for example.
This results in a lower CPI reading than RPI in nearly all
cases.
Why is it important?
The data from the CPI and RPI rates are used in many
ways by the government and businesses, and play an important
role in setting economic policy.
That's because the Bank of England uses it to set interest
rates. If the Bank's Monetary Policy Committee 1 thinks infla-
tion will be above 2% in the next two years or so, it may in-
crease interest rates to try to subdue it.
Conversely if it thinks inflation is likely to be below 2%,
it may cut interest rates.
That's why inflation is a crucial factor in determining the
rates banks charge for mortgages and the rates they offer on
savings accounts.
It also has a direct impact on some people's incomes.
Anything that is described as index- linked rises in line
with inflation.
That includes state benefits, pensions and - in part -
some train tickets.
Some companies use the level of inflation to set annual
pay rises.
1
The Ban k's Monetary Policy Co mmittee (MPC). See p. 8.
11
How is inflation calculated?
Every month the Office for National Statistics (ONS)1
collects more than 100,000 prices of goods and services from a
wide range of retailers across the country - including online
retailers.
Prices are updated every month and price collectors visit
the same retailers each time in order to monitor identical goods
and make sure they are comparing like with like.
All these prices are combined using information on av-
erage household spending patterns to produce an overall prices
index.
I. Vocabulary:
inflation – инфляция
interest rates – процентные ставки
set ~ устанавливать процентные ставки
increase ~ увеличивать процентные ставки
cut ~ уменьшать процентные ставки
mortgage rate – процентная ставка по ипотеке
inflation rate – уровень инфляции
benefits – льготы
Consumer Prices Index (CPI) – индекс потребительских цен
(ИПЦ)
Retail Prices Index (RPI) – индекс розничных цен (ИРЦ)
mortgage interest payments – уплата процентов по ипотеке
council tax – муниципальный налог
switch to smth – переключиться на ч-л
swap smth for smth – обменять ч-л на ч-л
set economic policy – определять экономическую политику
savings account – срочный вклад
1
The Office for Nat ional Statistics (ONC). See p. 8.
12
index-linked – индексируемый

cabulary ite ms as possible:
1. What is inflation?
2. What are the most significant measures of inflation in
use? What is the difference between them?
3. What impact does inflation have on interest rates set
by the Bank of England?
4. How is inflation calculated?
III. Write an essay of 180-200 words on the topic:

Inflation as a crucial factor in setting economic policy of a
country.
13
BANK OF JAPAN’S INFLATION TARGET
Japan has an inflation problem – it does not have

enough.
Instead, for almost two decades, the country has suffered
from on-and-off deflation, or falling prices.
On Tuesday, in an effort to draw a line under the years
of deflation, the central bank agreed to double its inflation tar-
get to 2% and to keep spending until things have turned
around.
Why is this target important for Japan?

Unlike other economies in the region, Japan has actually
been battling deflation, or falling prices, for the best part of a
decade.
And while that may sound good for bargain hunters, and
perhaps even more importantly for Japan's ageing households
receiving fixed pension incomes, if prices continue to fall for a
prolonged period, it actually has a negative psychological and
business effect.
Consumers and companies put off purchases in the hope
of getting a cheaper and better deal later on. At the same time,
deflation eats into the value of homes, increases the cost of
investment credit for corporations, reduces profits and even
wage packets.
Perhaps Japan's biggest headache is that deflation makes
it much harder for heavy borrowers, such as companies and
the government, to outgrow their existing debts.
The total value of Japan's economic output measured in
yen did not increase at all between 1991 and 2011, because
14
increases in the volume of output during the two decade period
were entirely offset by falling prices.
According to the new government, deflation is the big-
gest hurdle to Japan's efforts to boost domestic consumption.
In November, Japan's core consumer prices index, which
excludes fresh food, fell 0.1%.
Is this the first time Japan has set such a target?

The central bank, the Bank of Japan (BOJ), had pre-
viously set a «goal» of a 1% rate of inflation in February 2012.
But it said it may only be able to achieve that in the
2014-15 financial year.
However, the new government, led by Prime Minister
Shinzo Abe, called on the BOJ to set a «target» of a 2% rate of
inflation.
It argued that the new, higher target would put the onus
on the central bank to do more to stimulate growth.
Mr. Abe had also hinted that the bank should create «un-
limited» new yen, and inject it into the financial system.
The hope is that with more money around, consumers
will end up with more in their pockets, and be happier to
spend.
Can it achieve the 2% target?

The BOJ said that it will maintain a flexible monetary
policy to ensure that the target is achieved.
But it did not set a deadline by which it intends to do so.
The BOJ added that the government has shown its inte n-
tion to «aggressively pursue» steps aimed at stoking inflation.
However, most analysts believe that it is unlikely that
the BOJ will able to achieve the target before the 2014-15 fi-
nancial year.
15
Why does Japan need to boost domestic consumption?
Over the past two decades Japan has relied on the suc-
cess of its export sector, and on debt- financed government
spending, to drive its economic growth.
However, a slowdown in key markets such as the US
and the eurozone has hurt the export sector and impacted its
overall economy.
Meanwhile, increased competition from Chinese and
South Korean firms has also dented growth, in part thanks to
the yen, which has strengthened significantly since the 2008
financial crisis.
Japan's exports have now fallen for six straight months,
and many analysts believe that the sector may continue to re-
main under pressure in the near term.
As a result, Japan has been trying to boost domestic co n-
sumption to offset the decline in foreign sales and ensure a
sustained long-term growth of its economy.
I. Vocabulary:
on-and-off deflation – периодическая дефляция
Bank of Japan, BOJ – Банк Японии (центральный банк
страны)
draw a line under … - подвести черту под …
double Japan‟s inflation target – удвоить целевой показатель
инфляции в Японии
turn around – улучшиться, измениться к лучшему
battle deflation – бороться с дефляцией
bargain hunters – покупатель, ищущий выгодные сделки
ageing households – стареющие домовладельцы
fixed pension incomes – доходы в виде фиксированной пенсии
consumers – потребители, покупатели
16
put off purchases – откладывать покупки
eat into the value of homes – сокращать стоимость домов
increase the cost of investment credit – увеличивать стои-
мость долгосрочных кредитов
reduce profits – сокращать прибыли

wage packets зарплаты
volume of output – объем производства

offset – возмещать, компенсировать
hurdle – препятствие
boost domestic consumption – увеличивать внутреннее по-
требление
onus – ответственность, бремя
create unlimited new yen – создать неограниченное количе-
ство новых иен
inject yen into the financial system – накачать финансовую
систему иенами
maintain a flexible monetary policy – проводить гибкую де-
нежно-кредитную политику
set a deadline – установить крайний срок
stoke inflation – подогревать инфляцию
debt-financed government spending – госрасходы, финанси-
рованные за счет кредитования
drive economic growth – стимулировать экономический рост
slowdown – замедление
hurt the export sector – нанести ущерб экспортному сектору
impact the overall economy – сказаться на всей экономике
dent growth – снизить рост
the yen strengthened – иена укрепилась
ensure a sustained long- term growth of the economy – обес-
печить устойчивый долгосрочный рост экономики
17
1. What is deflation?
2. What impact does deflation have on the economy of Japan?
3. Can Japan achieve its inflation target?
4. Why does Japan need to boost its domestic consumption?
III. Give a short talk on the difference between inflation

and deflation. Supply examples of countries with high in-
flation rates.
18
QUANTITATIVE EASING
Since the global financial crisis, both the Bank of

England and the Federal Reserve have used the policy of
quantitative easing (QE) to try to revive consumer spend-
ing and economic growth.
In the UK, the Bank of England began its «asset pur-
chases» in January 2009.
The Bank has so far committed a total of £375bn to QE,
while in September the Fed said it would spend a further
$40bn (£25bn) per month. This was on top of the $2.3tn the
Fed had already put into QE since 2008.
What is quantitative easing?

Usually, central banks try to raise the amount of lending
and activity in the economy indirectly, by cutting interest
rates.
Lower interest rates encourage people to spend, not save.
But when interest rates can go no lower, a central bank's only
option is to pump money into the economy directly. That is
quantitative easing (QE).
The way the central bank does this is by buying assets -
usually government bonds - using money it has simply created
out of thin air.
The institutions selling those bonds (either commercial
banks or other financial businesses such as insurance compa-
nies) will then have «new» money in their accounts, which
then boosts the money supply.
Is this printing money?

These days the Bank of England does not have to litera l-
ly print money - it is all done electronically.
19
However, economists still argue that QE is the same
principle as printing money as it is a deliberate expansion of
the central bank's balance sheet and the monetary base.
How does it work?

Under QE a central bank purchases government bonds
from private sector companies or institutions, typically insur-
ance companies, pension funds and High Street banks.
This increased demand for the government bonds pushes
up their value, thereby making them more expensive to buy,
and so they become a less attractive investment.
This means that the companies who sold the bonds may
use the proceeds to invest in other companies or lend to ind i-
viduals, rather than buying any more of the bonds.
The hope is that with banks, pension funds and insurance
firms now more enthusiastic about lending to companies and
individuals, the interest rates they charge fall, so more money
is spent and the economy is boosted.
Why are the UK and US's actions different from

1920s Germany.
Printing money can be defined as the central bank fi-
nancing of government debts. This is what happened in 1920s
Germany and what the British government will insist it is not
doing, although the short-term effect is similar.
According to the Maastricht Treaty, EU member states
are not allowed to finance their public deficits by printing
money. That is one reason why the Bank of England has been
buying government bonds from financial institutions, not di-
rectly from the government.
20
The Bank believes this form of QE is different because it
is «printing money» as part of monetary policy - to prevent
deflation. It is not printing money to help the government
finance its deficit.
Also, this is a temporary policy: the Bank expects to sell
the government bonds back into the market when the economy
recovers.
I. Vocabulary:
Bank of England – Банк Англии
Federal Reserve (System), FRS – федеральная резервная
система США, ФРС
quantitative easing (QE) – количественное смягчение, смяг-
чение денежной политики
buy assets – покупать активы

purchase
raise (the amount of) lending – увеличить кредитование

lend – предоставлять кредит
option – зд. выбор
pump money into the economy – закачивать деньги в экономику
government bonds – государственные облигации
boost money supply – увеличивать количество денег в об-
ращении
Maastricht Treaty – Маастрихтский договор (1991г.)
print money – печатать деньги
balance sheet – баланс
monetary base – денежная база
proceeds – выручка, вырученные средства
finance public deficit – финансировать дефицит госбюджета
monetary policy – денежно-кредитная политика
21
1. What is quantitative easing? Which countries are us-

ing it?
2. How does QE work?
3. Why do the UK and the US have to buy bonds from
financial institutions?
III. Write as essay of 180-200 words on the topic:

Policies used by central banks to revive economic
growth.
22
WHAT IS TAPERING?
Since late 2012, the US central bank, the Federal Re-

serve (or simply the Fed), has been spending $85bn a
month to boost the US economy.
That is the most recent phase of quantitative easing
(QE), a policy that began as response to the financial crisis that
struck in 2007.
Under the plan, the Fed has been buying assets, mainly
US government debt, which has the effect of driving down US
interest rates, including the cost of mortgages, car loans and
financing for business.
But the Fed is expected to reduce that spending in a
process dubbed tapering.
Why now?
The Fed may judge that the economy has become robust
enough to recover without as much support.
There has been a slow recovery since the economy
emerged from recession in June 2009.
Economic growth picked up to an annual pace of 2.5%
in the second quarter - not spectacular, but a steady improve-
ment.
Unemployment has fallen to 7.3%, not far from the ta r-
get of 7% set by the Fed.
What will the Fed do?

As the word taper suggests, the Fed is likely to phase out
its support for the economy slowly.
Economists think the purchase of assets might be cut by
about $10bn a month.
23
The chairman of the Fed may also soften the blow by
pledging to make no further cuts over the next few months.
There will also be interest in what sort of assets the Fed
chooses to buy in the future.
At the moment, it mainly buys government debt and
mortgage debt.
Some economists think it may continue to buy mortgage
debt at the current rate, because it has a direct impact on the
property market.
Others think the Fed may cut back on that, because it is
becoming too large a presence in the mortgage market.
So how much has the Fed committed?

The accounts of the US Federal Reserve show that its
balance sheet has expanded from about $1 trillion before the
crisis hit in 2007 to almost $3.8tn, and that is likely to expand
further.
The majority of that expansion is due to the purchases
made under QE.
It is hard to conceive of numbers that big.
Perhaps this might help: the combined value of the three
biggest US technology companies - Apple, Google and Micro-
soft - is a little over $1tn and the total value of the UK econo-
my in 2013 was $2.4tn.
That is a lot of money. Did it work?

The Fed bought debt, mainly US government bonds and
mortgage-backed debt.
That drove down borrowing costs across the economy.
By late 2012, mortgage rates fell to record lows, which contri-
buted to a recovery in the housing market.
24
Other areas of the economy that are sensitive to interest
rates, including car sales, have also picked up.
It was also hoped that investors would switch money
away from the poor returns of government debt.
The US Federal Reserve itself said in March that the as-
set purchase programme had had a “meaningful” effect in eas-
ing financial conditions.
It estimates that the policy has boosted employment in
the private sector by two million.
I. Vocabulary:
drive down interest rates – снижать процентные ставки
cost of mortgages стоимость ипотеки
car loans кредитов на
покупкy
автомобилей
financing for business финансирова-
ние бизнеса
reduce spending – сократить расходы
tapering – постепенное сворачивание программы количе-
ственного смягчения
robust economy – крепкая, здоровая экономика
emerge from recession – выйти из рецессии
pick up (about growth) – набирать обороты
phase smth out – постепенно прекращать
soften the blow – смягчить удар
government debt _ государственный долг
mortgage ипотечный
have a direct impact on the property market –воздействовать

непосредственно на рынок недвижимости
accounts – счета
25
expand – увеличивать
expansion – увеличение
make a purchase – совершить покупку
combined value – общая стоимость
mortgage rate – ставка ипотечного кредитования
housing market – рынок жилья
poor returns – низкая доходность

1. Why is the Fed expected to stop buying assets?

2. What will the Fed do?
3. When will tapering start?
4. How much money has the Fed committed?
5. Did the programme work?
III. Speak on the reasons for ending the programme of

QE in the US.
26
THE US FISCAL CLIFF
A deal on the so-called «fiscal cliff» has been reached.

A 31 December deadline focused the minds of politi-
cians.
The US only managed to pass legislation to impose
higher taxes on the wealthiest Americans and postpone the
start of big spending cuts on 1 January.
Failure to reach a deal would probably have sent the US
economy back into recession.
What was the fiscal cliff?

The roots of the current crisis date back to 2001, when
President George W Bush managed to pass a programme of
tax cuts worth $1.7bn. The measures were pushed through un-
der a provision that the tax cuts would expire at the start of
2011.
In 2010, a deal was struck with the Republican-
controlled Congress to extend the deadline for two years. Re-
publicans also agreed to a payroll tax cut for citizens.
Separately, in 2011, President Barack Obama's adminis-
tration tried to raise the US government's borrowing limit - the
«debt ceiling», which is set by statute - as part of a budget deal
to tackle the ballooning US deficit.
But disagreements with Republicans over the govern-
ment's borrowing levels led to a compromise that meant the
debt ceiling was extended to 31 December 2012 - the same
day as when the Bush tax cuts expired.
Therefore, automatic tax increases of about $536bn and
spending cuts of $109bn from domestic and military pro-
gramme would be triggered if no broader deal on the budget
was reached on 31 December.
27
Republicans control the House of Representatives in
Congress and enjoy a blocking minority in the Democrat-
controlled Senate, while President Obama, a Democrat, wields
a veto, so any deal had to be backed by both political parties.
How did we get to the deal?

Over the last month, there have been a few attempts to
reach a deal. President Obama had previously insisted that ta x-
es must rise on all those earning in excess of $250,000, but
then offered to raise that threshold to $400,000.
The Republican Speaker of the House of Representa-
tives, John Boehner, had offered to allow the tax cut to expire
just for those earning more than $1m - but this was scrapped
because of lack of support from his own party.
This whole issue has been characterised by brinkma n-
ship, with neither side wanting to blink first. But faced with
the possibility of going over the cliff, even the most militant
Republicans agreed to what became the final deal.
That would have meant a recession for the US economy
and a sudden jump in taxes for every American.
What is the deal?

The deal is a patchwork of short-term and permanent
measures.
Firstly, taxes rise for families making more than
$450,000 and individuals above $400,000 a year. The rest stay
at what they are now, starting at 10% for those earning under
$9,000.
What this in fact means is that the Bush tax cuts from
2001 have now become permanent for everyone but the richest
2% of Americans.
28
But Mr. Obama's two-percentage-point cut to payroll
taxes from 2010 is now gone. It had lowered to 4.2% the e m-
ployee contribution to Social Security, allowing workers to
keep more of their gross pay. Employee payroll taxes will now
rise back to 6.2%.
There is a one- year extension for unemployment bene-
fits, affecting two million people and costing $30bn.
What would have happened if we had sailed over the

cliff?
This is now a moot point, but the stakes were high.
Many observers had said the combination of spending
cuts and tax rises would have amounted to a 4-5% cut in the
country's output, wiping trillions off the value of an already
fragile economy.
The IMF had calculated that the immediate neighbours
of the US, such as Canada and Mexico, stood to lose the most
from the fiscal cliff.
«But China and several advanced countries would also
suffer up to one quarter of the hit taken by US growth», it add-
ed. China is the world's second-largest economy.
It also predicted a drop in commodity prices - of 6-12%
for energy and 3-6% for non-energy such as food prices -
would affect exporters of these goods.
For most markets, the US remains the largest importer,
so any drop in demand is felt throughout the world.
I. Vocabulary:
fiscal cliff – фискальный/бюджетный обрыв
deadline – последний, предельный срок
pass legislation – принять закон
29
impose higher taxes on the wealthiest Americans – ввести бо-
лее высокие налоги на самых богатых американцев
postpone the start of big spending cuts – отложить значи-
тельное сокращение расходов
reach a deal – заключить соглашение

strike
send the US economy back into recession – вновь ввергнуть
экономику США в рецессию
pass a programme of tax cuts – принять программу сокра-
щения налогов
under the provision – при условии
expire – истекать (о сроке действия)
extend the deadline – продлить срок действия
payroll tax – налог на фонд заработной платы
debt ceiling – максимальный уровень госдолга США
statute – закон, статут
borrowing level – уровень заимствований
tackle the ballooning US deficit – заняться проблемой бы-
стро растущего дефицита США
trigger tax increases инициировать увеличение
налогов
spending cuts сокращение
расходов
enjoy a blocking minority – иметь блокирующее меньшинство
wield a veto – обладать правом вето
in excess of – свыше
raise the threshold – увеличить порог
Speaker of the House of Representatives – спикер палаты
представителей
scrap an offer – снять предложение
30
brinkmanship – политика балансирования на грани воз-
можного (или допустимого)
blink – дрогнуть, потерять самообладание
go over the cliff – свалиться с обрыва в пропасть
militant – воинственный
patchwork of short-term measures пестрая кратко мер
permanent картина срочных
постоян-
ных
employee contribution to Social Security – отчисления слу-
жащих в фонд соцстрахования
gross pay – зарплата до вычетов
unemployment benefit – пособие по безработице
moot point – спорный вопрос
high stakes – высокие ставки
amount to a 4-5% cut in the US output – составить 4-5% со-
кращения объема производства США
wipe trillions off the value of a fragile economy – нанести по-
тери слабой экономике на сумму в триллионы долларов
stand to lose the most – потерять больше всего, оказаться в
самом большом проигрыше
suffer up to one quarter of the hit taken by US growth – по-
нести убытки в размере до одной четверти потерь США
из-за удара, нанесенного росту экономики последней
drop in commodity prices – падение цен на сырьевые товары
affect exporters – отрицательно сказываться на экспортерах
drop in demand – падение спроса
31
1. What is the fiscal cliff?

2. How was it avoided?
3. What is the deal?
4. What would have happened if the deal had not been
reached?
III. Give a short talk on the deal reached by US Co n-

gress and the President to prevent going over the fiscal
cliff.
32
RATING AGENCIES
AAA, CCC... they look like some kind of school report.

The ratings are given to large-scale borrowers, whether
companies or governments, and are an indication to buyers of
this debt how likely they are to be paid back.
They can also affect the amount that companies or go v-
ernments are charged to borrow money.
If a country is thought to have suffered a downturn and
its rating is lowered, investors may demand higher returns to
lend to it, as it is judged a riskier bet.
Borrowers in the news with downgraded ratings now in-
clude the UK, most eurozone governments, and the US.
But the companies doing the marking are nowhere near
as familiar.
They are credit-rating agencies, which exist to assess the
creditworthiness of bond issuers - companies or, as in this
case, countries who borrow money by issuing IOUs known as
bonds.
Poor and Moody

Standard & Poor's (S&P), as the oldest, comes first. It
was begun in 1860 by Henry Poor, who wrote a history of the
finances of railroads and canals in the United States as a guide
for investors.
The «Standard» part came into being in 1906, when the
Standard Statistics Bureau was set up to examine finances of
non-railroad companies.
The two businesses joined forces in the 1940s.
Moody's was started in 1909 by John Moody, who pub-
lished an analysis of the world of railway finances, grading the
value of its stocks and bonds.
33
These are now mighty concerns - Moody's operating in-
come was $688m in 2010 and Standard & Poor's made $762m.
They each have 40% apiece of the business of rating ma-
jor companies and countries.
Fitch was set up by John Fitch in 1913 and is a smaller
version of the other two.
Why are these three businesses the ones everyone

watches?
Part of the answer lies with the US Securities and Ex-
change Commission (SEC).
In 1975, it acknowledged these three as Nationally Re c-
ognized Statistical Rating Organizations (NRSRO).
An endorsement from an NRSRO makes life easier for
countries and financial institutions wishing to issue bonds. It
basically tells investors a firm has a good record and indicates
how likely it is to be able to pay back the money.
The SEC actually has 10 NRSROs on its approved list,
including a Canadian agency and two Japanese ones. The big
three - Standard & Poor's, Moody's and Fitch - remain the in-
dustry standard-bearers.
This is partly because they make their ratings available
freely to investors - making their money from charging the or-
ganizations who want their bonds rated.
So how do the agencies form their judgments?
Standard & Poor's says a committee of between five and
eight people decides the actual rating.
They base their assessment on a range of financial and
business attributes that might influence the repa yment, some
of which may depend on the issuer of the bond (i.e. the bor-
rower).
34
When asked why it changes ratings, S&P responded:
«The reasons for ratings adjustments vary, and may be broadly
related to overall shifts in the economy or business enviro n-
ment - or more narrowly focused on circumstances affecting a
specific industry, entity, or individual debt issue ».
But since the credit crisis began in 2007, these agencies
have come in for heavy criticism.
The potential for a downgrade to destabilise a country
was so feared that the European Parliament this year agreed a
set of rules designed to rein them in.
They state that agencies can issue ratings on countries no
more than three times a year, and only after markets have
closed.
Europe also wants to dilute the power of the Big Three
rating agencies by encouraging financial firms and others to do
their own credit assessments.
I. Vocabulary:
rating agency – рейтинговое агентство
rating – рейтинг, кредитный рейтинг
borrower – заемщик
borrow – заимствовать, брать кредит
charge – взимать плату
suffer a downturn – переживать спад
demand higher returns – требовать более высокий доход
downgrade – понижать кредитный рейтинг; понижение
кредитного рейтинга
AAA – высокий кредитный рейтинг
creditworthiness – кредитоспособность
bond issuer – лицо, выпускающее долговые обязательства
issue IOUs – выпускать долговые обязательства
bonds
35
grade the value of stocks and bonds – оценивать стоимость
акций и облигаций
operating income – доходы от основной деятельности
Securities and Exchange Commission (SEC) – Kомиссия по
ценным бумагам и биржам США
Nationally Recognized Statistical Rating Organization,
NRSRO – Национально-признанная статистическая рей-
тинговая организация
endorsement – одобрение
standard-bearer – флагман
assessment – оценка
repayment – выплата долга, погашение долга
ratings adjustment – корректировка кредитного рейтинга
come in for heavy criticism – подвергаться суровой критике
dilute the power of the Big Three – снизить, уменьшить
влияние «Большой тройки»

1. What is a rating agency?
2. What are the three most powerful rating agencies?
3. How can a downgrade of the rating affect the borro w-
er? Give examples.
III. Write an essay of 180-200 words on the history and

activities of the Big Three.
36
BONDS, PROJECT BONDS AND EUROBONDS
The idea of Eurozone economies clubbing together to

issue bonds representing all member nations has been ga-
thering momentum.
And it has some pretty influential backers, including
French President Francois Hollande, and the President of the
European Commission Jose Manuel Barroso.
But those that really matter are less keen.
The German government has said eurobonds «don't
make sense» right now, given that individual member states
conduct their own economic policies. It is also concerned the
introduction of such bonds could reduce the resolve of highly-
indebted governments to balance their budgets.
There does, however, appear to be a compromise in the
works. The Germans seem open to the idea of "project bonds"
that can be used to finance infrastructure investment across
Europe.
But what are eurobonds and project bonds, and what are
the government bonds on which they are based?
What is a government bond?

Governments borrow money by selling bonds to inve s-
tors. A bond is an IOU. In return for the investor's cash, the
government promises to pay a fixed rate of interest over a spe-
cific period - say 4% every year for 10 years. At the end of the
period, the investor is repaid the cash they originally paid,
cancelling that particular bit of government debt.
Government bonds have traditionally been seen as ultra-
safe long-term investments and are held by pension funds, in-
surance companies and banks, as well as private investors.
They are a vital way for countries to raise funds.
37
What is a bond market?
Once a bond has been issued - and the government has
the cash - the investor can hold the bond and collect the inter-
est every year until it is repaid. But investors can also buy and
sell bonds that have already been issued on the financial mar-
kets.
The price of the bond will fluctuate as the outlook for in-
terest rates changes. So, for example, if the markets think that
interest rates are going to rise sharply, then the value of a bond
paying a fixed rate of 4% for the next 10 years will fall. Bond
prices will also fall if investors think that there is a risk of the
government that issued the bond not being able to make the
annual interest payment or repay it in full on maturity.
Why do bond markets matter?

Because they determine what it costs a government to
borrow. When a government wants to raise new money, it is-
sues new bonds, and has to pay an interest rate on those bonds
that is acceptable to the market. The yield at which the market
is buying and selling a government's existing bonds gives a
good indication of how much interest the government would
have to pay if it wanted to issue new bonds. So, for example,
Spanish 10-year bond yields have risen above 6% in recent
years. That means that if the Spanish government wants to
borrow new money from the bond market for 10 years, it
would have to pay an interest rate on the new bond of more
than 6%.
So what is a eurobond?
A eurobond would operate in exactly the same way as a
government bond, except that all member states of the euro-
38
zone would collectively guarantee the debt rather than a single
government.
There are, however, many important questions about
how a eurobond might work that remain to be answered. For
example, if one government could not pay its share of the bond
payments, would the other governments step in and make the
payments on its behalf? Would the government that got into
trouble be required to prioritise its eurobond payments over its
other debts?
How might a eurobond solve the crisis?

During the financial crisis, investors have been much
less willing to buy the bonds of troubled southern European
countries, and much more willing to buy the bonds of Germa-
ny and some other financially stronger countries. That has
made it much cheaper for Germany to borrow, and very e x-
pensive for Greece, the Irish Republic and Portugal to borrow.
Introducing eurobonds would level the playing field - all gov-
ernments would be able to borrow at the same interest rate.
Why does Germany object to eurobonds?

Germany has three basic objections. First of all, the
Germans do not see why they should be on the hook for all of
the debts racked up by their southern neighbours. Secondly, it
may make it more expensive for Germany to borrow, because
markets may consider the eurozone as a whole to be a more
risky borrower than the financially strong Germans on their
own. Thirdly, the German government is afraid that if they
guarantee the debts of their eurozone neighbours, that will
simply encourage the southern Europeans to borrow and spend
more freely, making their debts even bigger.
39
What about «project bonds?»
These would be issued by the European Commission.
The borrowed money would be spent by the Commission on
infrastructure and other growth-enhancing investments, and it
would ultimately be responsible for repaying the project
bonds.
They would be similar to eurobonds to the extent that the
EU governments are collectively bound to support the Co m-
mission and make sure that it can repay the debts. However,
the amount of money involved in the project bonds would be
far smaller than what is envisioned by the advocates of euro-
bonds. The Commission's entire budget is equivalent to about
1% of the EU's GDP, whereas most EU government budgets
are equivalent to about 50% of their respective GDPs.
I. Vocabulary:
government bonds – государственные облигации
issue bonds – выпускать долговые обязательства, облигации
gather momentum – набирать силу, наращивать скорость
backer, advocate – сторонник
given that … – учитывая, что…
reduce the resolve – уменьшить решимость
highly- indebted governments – правительства стран с высо-
ким уровнем задолженности
balance one‟s budget – сбалансировать бюджет
IOU – долговая расписка
pay a fixed rate of interest over a specific period – выплачи-
вать фиксированную процентную ставку в течение опре-
деленного периода времени
repay the cash – рассчитываться по облигациям
40
cancel the government debt – погасить государственный
долг
ultra-safe long-term investment – абсолютно надежные дол-
госрочные инвестиции
raise funds, raise money- привлекать средства
collect the interest – получить проценты
fluctuate – колебаться ( о цене)
make the annual interest payments – выплачивать ежегодные
проценты
maturity – срок платежа, дата погашения
bond yield – доходность облигации
return on the investment – доход на инвестиции
eurobond – еврооблигация
on smb‟s behalt – зд. за к-л
prioritise Eurobond payments over other debts – погасить ев-
рооблигации в первоочередном порядке
level the playing field – предоставить всем равные условия
be on the hook – “быть на крючке”
rack up debts – набирать долги
project bonds – проектные облигации, облигации под кон-
кретные проекты, выпускаемые Еврокомиссией
spend money on infrastructure and other growthenhancing in-
vestments – тратить средства на инфраструктуру и другие
проекты, стимулирующие рост экономики
envision - предусматривать

1. What is a government bond?

2. What is a bond market?
3. Why do bond markets matter?
41
4. What is a eurobond?
5. Why does Germany object to eurobonds?
6. What are project bonds?
III. Write an essay of 180-200 words comparing the ad-

vantages and disadvantages of introducing eurobonds.
42
EUROPEAN STABILITY MECHANISM
The eurozone’s new permanent bailout fund for

struggling economies and banks has been formally
launched.
It is one of the key elements in the eurozone's defences
against a deepening debt crisis.
But what exactly is the European Stability Mechanism
(ESM) and how will it work?
What is the ESM?

The European Stability Mechanism is a new European
Union agency that will be able to provide financial assistance
to eurozone countries in difficulty.
It is a permanent agency, based in Luxembourg, and will
eventually replace the temporary European Financial Stability
Facility (EFSF), although the two will operate in parallel for
some time.
How much financial help can it provide?

The ESM will ultimately - from 2014 - be able to use up
to 500bn euros ($650bn; £400bn) to help countries in difficul-
ty. In the interim, the EFSF will be able to make up the differ-
ence so that the total capacity for new assistance will be 500bn
euros.
How will the ESM get the money?

It will borrow in the financial markets, by selling bonds,
the same method that governments use for most of their bor-
rowing needs.
43
Is there a contribution from governme nts?
The financial foundation of the ESM is capital provided
by the eurozone governments. They have committed a total of
700bn euros, although the plan for up to 2014 is that they will
actually pay in just 80bn euros. The additional capital can be
called in if it is needed.
Which countries are the biggest contributors?

Germany will provide 27% of the capital, France 20%
and Italy 18%.
Anything from the UK?

No. The UK does, however, contribute to existing ba i-
louts through the IMF. It also made a contribution in the case
of the Republic of Ireland.
What form will the financial assistance to eurozone

governments take?
The ESM will be able to lend directly to governments. It
will also be able to buy their debts (bonds) either directly
when they are first issued or in the financial markets.
In addition, the ESM will be able to support banks d i-
rectly, but only once there is a new eurozone supervisory sys-
tem in place involving the European Central Bank. This sup-
port would be «recapitalization», or taking a shareholding.
Will the re be conditions attached to financial assis-

tance?
Yes. The economic policies will be negotiated on a case-
by-case basis, but they are likely to include steps to reduce the
44
borrowing needs of the country concerned - some combination
of spending cuts and tax increases.
They are also likely to include reforms intended to sti-
mulate economic growth, such as introducing more competi-
tion into the labour market and other areas of the economy.
Will it be enough?
The big question is what if Spain and Italy need assis-
tance? They are much larger economies, with larger debts and
larger annual borrowing needs than Greece, Portugal and Ireland.
However, if they seek assistance, the European Central
Bank would be ready to intervene by buying their bonds in the
markets. The ECB's financial firepower is potentially unli-
mited. It is a central bank so it can simply create the money to
buy as much as it chooses.
I. Vocabulary:
European Stability Mechanism, ESM – Европейский стаби-
лизационный механизм, ЕСМ
European Financial Stability Facility, EFSF – Европейский
фонд финансовой стабильности
European Central Bank, ECB – Европейский центральный
банк, ЕЦБ
launch a new permanent bailout fund – ввести в действие но-
вый постоянно действующий фонд помощи
struggling economies – экономики, испытывающие трудно-
сти; слабые экономики
provide financial assistance – предоставлять финансовую
помощь
replace the temporary fund - заменить временный фонд
in the interim – в промежутке, в промежуточный период
make up the difference – компенсировать разницу
45
total capacity – общая мощность
financial foundation – финансовая основа
commit (money) – вкладывать (средства)
contributor – вкладчик, донор
lend directly to governments – кредитовать непосредственно
правительства
new eurozone supervisory system – новая надзорная система
еврозоны
recapitalization – рекапитализация
take a shareholding – приобрести долю в акционерном ка-
питале
attach conditions to financial assistance – выдвигать условия
при оказании финансовой помощи
negotiate smth on a case-by-case basis – обсуждать условия,
договариваться в индивидуальном порядке
reduce the borrowing needs – сократить потребность в за-
имствованиях
spending cuts – сокращение расходов
tax increases – увеличение налогов
stimulate economic growth - стимулировать экономический
рост
introduce more competition into the labour market – сделать
рынок труда более конкурентоспособным
seek assistance – добиваться получения помощи
interfere – вмешиваться
financial firepower – финансовый потенциал

1. What is the ESM?
2. How much money can it provide?
46
3. What form will the financial assistance to European
governments take?
4. What conditions can be attached to financial assis-
tance?
5. How big is the ESB‟s financial firepower?
III. Give a short talk on the role of the ESM in solving

the eurozone debt crisis.
47
TOBIN TAX ON FINANCIAL TRADING
Ten EU me mber countries have said they wis h to

move ahead with introducing a financial transactions tax.
The nations - which include France and Germany - in-
tend to use the tax to help raise funds to tackle the debt crisis.
The tax has the backing of the European Commission.
The other countries that wish to introduce it are Italy, Spain,
Austria, Belgium, Greece, Portugal, Slovakia and Slovenia.
Yet the tax is opposed by other nations, such as the UK,
where the government feels it would damage the City of Lo n-
don. The US has also expressed its opposition to the idea.
The idea of such a tax - often described as a Tobin tax
was first outlined 40 years ago.
What is the Tobin Tax?

It was put forward in 1972 by the Nobel-prize winning
American economist James Tobin.
Originally he suggested a tax on all payments from one
currency to another.
His aim was to curb massive and destabilising move-
ments of funds between foreign currency exchanges.
He proposed that the cash raised should be used as aid
for developing countries.
The idea has since been extended to cover a tax on all
share, bond and currency transactions.
How would it work?

Tobin said it had to be an internationally agreed uniform
tax to work effectively.
48
Critics said it would be impractical: a high rate would
undermine financial markets, but if it were too low, it would
not achieve its aim.
It has also proved impossible to get global agreement to
introduce it.
Without worldwide agreement, the 11 European coun-
tries have decided to move ahead on their own, with the sup-
port of the European Union.
And instead of paying the proceeds to a global body,
they will use the funds to help bring down their respective na-
tional debts.
How much would it cost?

Tobin suggested a rate of 0.5%, but other economists
have put forward rates ranging from 0.1% to 1%.
Even at a very low rate, supporters argue that if it were
imposed on all financial transactions across the world, it could
raise billions of pounds.
What are the advantages and disadvantages of the tax?

The advantage of the tax is that it could be a huge mo n-
ey-raiser for governments. Others add that it is only fa ir that
banks and other financial firms pay an additional tax to help
tackle government debt levels that they helped increase, as a
result of the bailout schemes which many of them required
during the financial crisis.
Critics argue that the tax will result in fewer financial
transactions being made, leading to job losses in financial ce n-
tres. Others warn that the tax will mean pension funds and
savers get less returns, as banks will simply pass the cost of
the tax onto their customers.
49
How quickly could the 11 European nations intro-
duce the tax?
No timetable has yet to be released. The tax will, ho w-
ever, need to be backed by a majority of the 28 European Un-
ion member states, including those who will not be introducing
it. It will also need to be approved by a majority in the Euro-
pean Parliament. When such backing has been secured, Eu-
rope's Taxation Commissioner can release a detailed proposal
on the tax and its implementation.
I. Vocabulary:
Tobin tax – налог Тобина
introduce a financial transaction tax – ввести налог на фи-
нансовые операции
tackle the debt crisis – решать проблему долгового кризиса
back – поддерживать
backing – поддержка
oppose smth – выступать против ч-л
opposition to smth – возражение против, сопротивление ч-л
outline an idea – выдвинуть идею
put forward
suggest a tax on all payment from one currency to another –
предложить ввести налог на все платежи при покуп-
ке/продаже валюты
curb massive movements - сдерживать масштабные движения
destabilizing of funds дестабили- средств
зирующие
foreign currency exchanges – валютные рынки
raise cash - собрать, привлечь средства
money
money-raiser – мероприятие по сбору средств
50
cover a tax on all share transactions - с акциями
bond предусматривать налог облигациями
currency на все операции валютой
uniform tax – единый налог
rate – налоговая ставка
undermine financial markets – нанести ущерб финансовым
рынкам
proceeds – вырученные средства
bring down debts – снизить долги
bailout schemes – планы оказания финансовой помощи
pass the cost of the tax onto customers – переложить стои-
мость уплаты налога на клиентов
Europe‟s Taxation Commissioner – еврокомиссар по вопро-
сам налогообложения

1. What is the Tobin tax and when was it first put forward?
2. How would it work?
3. How much would it cost?
4. What are the advantages and disadvantages of the tax?
5. How soon will it be introduced?
III. Give a short talk on the origin of the Tobin tax, its
advantages and disadvantages.
51
PAYDAY LOANS
Payday lende rs have faced criticism from all angles

in recent months.
Insolvency experts predict that more people who are
short of money are going to turn to payday lenders – who can
be found on the High Street and the internet – for a short-term
loan.
Some debt charities and consumer groups have warned
that such lenders can lure borrowers into taking on debt that
balloons out of control.
An official study in 2010 said they provided a legitimate,
useful service that helped to cover a gap in the market.
But in early 2013, the Office of Fair Trading said that
there was widespread irresponsible lending in the industry.
How do payday loans work?

Typically someone will borrow a few hundred pounds
from a payday loan firm for a short time, to tide them over un-
til they receive their next wage or salary cheque.
The borrower will usually offer a past-dated cheque to
the lender to cover the eventual repayment of the money bor-
rowed, plus interest.
The cash is often emergency borrowing to pay an urgent
unexpected bill, or rent or utility bills.
How many people use them?

There are no official figures on how many people use
this sort of borrowing.
52
As a result of its most recent inquiries, the OFT thinks
that as much as £1.8bn a year may now be being lent by pa y-
day lenders.
The Public Accounts Committee (PAC) said that about
two million people in the UK used payday loans.
Who uses them?

The OFT found that the typical borrower of a payday
loan was «more likely to be a young male, earning more than
£1,000 monthly, and in rented accommodation. Many are un-
married with no children».
But the borrowers are not normally unemployed or with-
out a bank account.
They sometimes see the short-term loan as a sensible al-
ternative to running up an unauthorised bank overdraft.
Some have turned to these lenders because household
budgets are being squeezed and banks have restricted their
credit offers.
How many firms offe r them?

The OFT said in November 2012 that there were about
240 payday loan firms altogether in the UK, with the top 50
accounting for most of the lending.
There were also thought to be more than 100 online
firms offering cash too, which were much more expensive.
Are they regulated?

Yes. Any lender, whether it be a big High Street bank or
a one-outlet payday loan shop needs a consumer credit licence
from the Office of Fair Trading (OFT).
53
What is the problem?
The loans are very expensive with very high rates of in-
terest.
That can be acceptable to the borrower if the payday
loan is more convenient than an overdraft and is taken for just
a few days.
The problem for a borrower starts to build up quickly if
he or she cannot in fact repay the loan as planned, and it gets
extended.
The interest then builds up rapidly and can soon swamp
the size of the original loan.
Should anything be done?
Despite the negative publicity surrounding payday loan
firms, the OFT said in 2010 that these and other high-cost cre-
dit businesses - such as pawn brokers should not have their
interest charges restricted.
It concluded that they provided a useful service for some
people who would not otherwise be able to borrow legitimately
and who might thus be forced to borrow from illegal loan sharks.
I. Vocabulary:
payday loans (short-term loans) – краткосрочные кредиты,
кредиты до зарплаты
payday lenders – кредиторы, выдающие краткосрочные займы
insolvency – неплатежеспособность
High Street (banks) – коммерческие банки (Великобритания)
lure the borrower – привлечь заемщика
balloon out of control – разрастаться до неконтролируемой
величины
cover a gap – закрыть пробел
Office of Fair Trading, OFT – Бюро добросовестной конку-
ренции (Великобритания)
54
widespread irresponsible lending – широко распространен-
ная безответственная выдача кредитов
tide smb over – позволить продержаться, пережить вре-
менные трудности
past-dated cheque – чек, датированный задним числом
cover the repayment – погасить кредит
interest – проценты
Public Accounts Committee, PAC – Комитет по контролю за
расходованием государственных средств
pay a bill _ оплатить счет
rent аренду
utility счет за коммунальные услуги
unauthorised bank overdraft – несанкционированный бан-
ком овердрафт
restrict credit offers – ограничить предложения по выдаче
кредитов
squeeze household budgets – ограничивать бюджет домохо-
зяйств
repay the loan - погасить кредит
extend - пролонгировать
swamp the size of the loan – зд. превосходить величину
кредита
loan sharks – ростовщики, «кредитные акулы»
II. Ans wer the following questions using as many of the
vocabulary ite ms as possible:
1. What is a payday loan?
2. How do payday loans work?
3. Who uses them?
4. What are disadvantages of such loans?
III. Give a short talk on the pros and cons of payday

loans. Research the situation with such loans in Russia.
55
THE EUROZONE'S BANKING UNION
What is the «banking union»?

It consists of three parts:
A common banking supervisor (or «single supervisory
mechanism»): This job goes to the European Central Bank,
which will be given the power to monitor the health of and the
risks taken by all the major banks within the eurozone, and
intervene if any gets into trouble.
A common resolution frame work: If a bank anywhere
in the eurozone gets into trouble, the process of bailing it out -
or, in the worst case, letting it go bust - would be managed by
a common "resolution authority", with the cost borne by the
eurozone governments collectively.
A common deposit guarantee: Anyone who puts mon-
ey in an ordinary bank account anywhere in the eurozone
would have their money (up to a limit, expected to be 100,000
euros) guaranteed by a common eurozone fund.
What powe rs will the supe rvisor have?

According to the proposal, the eurozone central bank
will «have direct oversight of eurozone banks, although in a
differentiated way and in close cooperation with national s u-
pervisory authorities».
The ECB, in its new role as supervisor, will monitor the
health of banks within the eurozone (but not the UK), and be
able to intervene when a bank is in trouble.
Countries such as the UK and Sweden, outside the euro
area, can enter into «close co-operation arrangements» with
the ECB if they choose to.
56
A compromise agreement was reached giving the ECB
direct oversight of banks with assets greater than 30bn euros
($39bn; £24bn).
Under the compromise, the ECB will oversee banks
representing more than a fifth of a state's GDP.
How will the «common resolution frame work» work?

If a eurozone bank got into trouble, the process of re s-
cuing it - or, in the worst case, putting it through a kind of
bankruptcy procedure - would be carried out by a pan-
European «resolution authority» - potentially the ECB, or an
agency reporting to it.
As part of any rescue, the eurozone governments would
require the bank's existing shareholders and lenders to take a
lot of the losses.
All eurozone banks would also be required to contribute
annually to a common fund that could be used to absorb the
cost of a bailout - and therefore reduce the cost to taxpayers.
To the extent that taxpayer money is also needed to ab-
sorb losses, or has to be put at risk by buying new shares in a
troubled bank in order to provide it with more capital, then this
would be provided by the eurozone governments collectively,
irrespective of which country the bank is based in.
This taxpayer money is expected to be provided by the
eurozone's recently inaugurated permanent bailo ut fund - the
European Stability Mechanism.1
How will the common deposit guarantee fund work?

Currently each eurozone country operates its own na-
tional deposit guarantee scheme. During the crisis, all EU
countries agreed to raise the amount of each deposit that they
guarantee to 100,000 euros.
57
The summit discussion pape r - talks about a «harmoni-
sation» of these national schemes, which presumably involves
setting the same rules in each country for who gets guaranteed
how much and when, and what the banks in each country must
contribute to the scheme.
It is unclear if, and how much, these national schemes
will then be guaranteed by all of the eurozone's governments
collectively 1 .
When will all this happen?

The eurozone governments want to have the legal
framework for the common banking supervisor in place by 1
January 2013.
The ECB will then have up to 12 months to put in place
its new supervisory department, and take over active duties by
1 January 2014.
Some kind of common resolution arrangement should a l-
so be in place by then, backed by the eurozone's bailout fund.
In order to keep to this schedule, the legal framework
will need to be designed in a way that avoids the need for a
change to existing European treaties.
A treaty change would open a whole new can of worms -
it would need to be negotiated with all the EU governments,
including the UK. And it would then need to be ratified by all
of the EU parliaments.
In the long run, however, a treaty change looks unavoid-
able if the ECB is to be given adequate authority, and if the
resolution framework and deposit guarantee scheme are to be
given enough financial backing to see off a future financial
crisis.
1
See p. 56.
58
However, it seems likely that Germany would delay this
until much greater integration has been achieved in other areas
- including economic policy and government spending rules.
I. Vocabulary:
eurozone‟s banking union – банковский союз стран еврозоны
common banking supervisor – общий орган банковского
надзора
single supervisory mechanism – единый надзорный меха-
низм
common resolution framework - общий механизм урегули-
рования
common resolution authority – общий орган урегулирования
common deposit guarantee – общая гарантия банковских
вкладов
common eurozone fund – общий фонд стран еврозоны
powers – полномочия
have direct oversight of eurozone banks – осуществлять пря-
мой надзор за банками еврозоны
national supervisory authorities – национальные надзорные
органы
monitor – осуществлять контроль
intervene – вмешиваться
get into trouble – попасть в беду
reach a compromise agreement – достичь компромиссного
соглашения
bank assets – банковские активы
rescue a bank – спасти банк
put a bank through bankruptcy – обанкротить банк
report to – быть подотчетным
take losses – понести убытки
59
contribute annually to a common fund – вносить средства
ежегодно в общий фонд
absorb the cost of a bailout – взять на себя стоимость фи-
нансовой помощи
taxpayers – налогоплательщики
permanent bailout fund – постоянный фонд помощи
operate national deposit guarantee schemes – задействовать
национальные схемы гарантии вкладов
harmonisation – унификация
legal framework – нормативная база
open a new can of worms – создать кучу неприятностей
ratify a treaty – ратифицировать договор
to be given adequate authority – предоставлять достаточные
полномочия

1. What is the eurozone banking union?
2. What powers will the supervisor have?
3. How will «the common resolution framework» work?
4. How will the common deposit guarantee fund work?
5. When will all this happen?
III. Give a short talk on the proposed eurozone’s bank-

ing union.
60
BANK STRESS TESTS
Tests designed to measure the health of 19 of the big-

gest US banks have revealed that 10 need a combined $74.6
bn (£50bn) of extra funds to boost their reserves.
What happens to the banks that failed the tests?

Bank of America is the most at risk,
needing an additional $33.9bn.
It plans to issue shares and sell
some assets to cover the short- THE 10 THAT NEED
MORE CAPITAL
fall. Bank of America - $33.9 bn
Wells Fargo and Morgan Stan- Wells Fargo - $13.7 bn
ley have both announced plans GMAC - $11.5 bn
for a tock offering. Citigroup - $5.5bn
Private investors may well be Morg an Stanley - $1.8bn
reluctant to pump new money Regions Financial - $2.5 bn
SunTrust B anks - $2.2 bn
into «failed» banks. KeyCorp - $1.8bn
The Treasury Secretary said Fifth Third B ancorp - $1.1 bn
that if banks were unable to PNC Financial Services - $600m
raise funds from private
sources, the government would step in with public money as
a last resort.
But regulators predicted that this would be unnecessary.
Why we re the «stress tests» needed?

The point of the tests, which were carried out by the US
Federal Reserve, was to find out which banks, might require
more cash reserves in the event of the economic outlook wor-
sening.
Under the worst case scenario – a 2010 unemployment
rate of 10.3%, an economic contraction of 3.3% and a 22%
61
further decline in house prices - banks could see a further
$600bn in losses, the central bank concluded.
When the tests were first announced in February, there
were fears that they might show that some banks needed to be
nationalised.
Some commentators have questioned whether the tests
have been strict enough.
Critics also said the tests did not take into account the
different business models used by lenders.
The tests were based on a one-size- fits-all mathematical
model that made automatic assumptions and as such the results
are open to interpretation, they said.
What factors did the tests look at?

The Federal Reserve's criteria for the tests set out its
forecasts for economic growth and «worst case» scenarios.
Banks were expected to show they had enough cash re-
serves to cope with both the current forecasts and a «worst
case» outcome.
Supervisors took into account factors such as the qua lity
of a bank's assets, its projected earnings, risks of the institu-
tion's exposures, and the composition and quality of its capita l.
So, for example, they might ask how many of a bank's
home loans would go bad if interest rates rose by 1%.
Who was being tested?

The tests were carried out at 19 of the largest financial
institutions in the US – those with assets of over $100bn
(£66bn). These institutions represent about two-thirds of all
assets held by US banks.
62
Regulators have said they will not allow any of the 19
firms to fail because it would be too dangerous for the fina n-
cial system.
The banks that do not require extra funds are Goldman
Sachs, JPMorgan Chase, Bank of New York Mellon, MetLife,
American Express, State Street, BB&T, US Bancorp and Cap i-
tal One Financial.
I. Vocabulary:
stress test – стресс-тесты, тесты на устойчивость банков
issue shares – выпустить акции
sell assets – продать активы
cover the shortfall – покрыть недостаток средств
stock offering – предложение акций
be reluctant – не хотеть сделать ч-л
pump money into «failed» banks – накачивать деньгами
банки, не прошедшие стресс-тесты
Treasury Secretary - министр финансов США
raise funds from private sources – привлечь средства из ча-
стных источников
public money – государственные средства
last resort – последнее средство
which banks will require more cash reserves – каким банкам
потребуются больше резервов наличности
in the event of – в случае, если
economic outlook – экономический прогноз
under the worst-case scenario – при самом плохом сценарии
decline in housing prices – падение цен на жилье
take into account – принимать во внимание
one-size- fits-all mathematical model – одна математическая
модель для всех
quality of a bank‟s assets – качество банковских активов
63
projected earnings – прогнозируемая прибыль
risk of exposure – риск возможных потерь
composition and quality of capital – структура и качество
капитала
regulator – регулятор

1. What is a bank stress test?

2. What happens to the banks that failed the test?
3. Why were the stress tests needed?
4. What factors did the test look at?
5. Who was being tested?
III. Give a short talk on bank stress tests.

Find some information about those tests in Russia.
64
EU BUDGET BATTLE
The EU’s marathon negotiations in Brussels have re-

sulted in a multi-year budget for 2014-2020.
For the first time the EU is imposing a real-te rms cut
in budget spending, as UK Prime Minister David Came ron
and others argued that austerity at home must be matched
by EU austerity. But many in the EU argue that this fund-
ing is vital to help relaunch growth in the 28-nation bloc.
So was the original proposal too big?

Yes, according to the UK, Germany, the Netherlands and
Sweden. They are net contributors to the budget. No, accord-
ing to the European Commission, the European Parliament and
many of the new member states in Central and Eastern Europe,
who want to catch up with the old EU core states and are net
beneficiaries from the budget.
How much money is at stake?

The final total for the budget, officially called the Multi-
Annual Financial Framework (MFF), is 960bn euros (£812bn;
$1.3tn). That ceiling for spending is equivalent to 908bn euros
in actual payments.
The hard bargaining whittled the budget down. At the
November summit the chairman, European Council President
Herman Van Rompuy, had proposed a compromise total of
973bn euros.
The MFF is equivalent to about 1% of total output
(GDP) across the EU countries, and the combined national
budgets are far greater.
The new budget envisages cuts to subsidies for farmers
(the Common Agricultural Policy) and an increase for «com-
65
petitiveness» - a category that includes innovation projects and
research.
Outside the MFF the EU still intends to spend 37bn e u-
ros on aid - mostly for non-EU developing countries.
What is the argume nt for increasing EU spending?

The Commission said its draft MFF would boost funding
for research and innovation - projects that could help revive
growth in a Europe hit by recession and record unemployment.
The governments are also asking the EU to do more, the
Commission says, so those tasks need to be resourced. For ex-
ample, the EU now has a new diplomatic corps and new regu-
latory bodies will have to oversee Europe's banks and fund
managers.
Unlike the current MFF (2007-2013), the next one also
provides more money for three new member states – Bulgaria
and Romania, which joined in 2007, and Croatia, which joined
in July 2013.
Is this a victory for David Came ron?

Mr Cameron certainly thinks so. «I think the British pub-
lic can be proud that we have cut the seven- year credit card
limit for the EU the first time ever», he said.
He also said he had fought off attempts to change the
UK's budget rebate, worth about 3.5bn euros annually. He de-
clared it «safe».
However, the UK's net contribution is actually likely to
rise, because of a previous agreement negotiated by former
Prime Minister Tony Blair. Years ago the UK and other big
contributors agreed that more would have to be spent to fund
the EU's eastward enlargement.
66
Mr Cameron's main allies in demanding cuts were the
leaders of Germany, the Netherlands, Finland and Sweden.
He had threatened to veto a deal if other EU leaders sup-
ported a budget rise.
What are the most contentious areas of spending?

Agriculture, cohesion - that is, funding for the EU's
poorer regions - and EU administrative costs.
EU staff costs are often criticised by Eurosceptics - and
Mr Cameron is among the critics. But this has actually gone up
in the new budget by a few billion euros. In any case, slashing
the staff budget would not have delivered the size of cut de-
manded by the UK.
Why is so much spent on agriculture?

While national governments manage most other policy
areas, such as health, education and transport, it is the EU that
provides the bulk of support for farmers, through the Common
Agricultural Policy (CAP).
In 1985 about 70% of the budget went into the CAP -
those were the days of butter mountains and wine lakes. There
have been far-reaching reforms to the subsidy system since
then and the budget has been cut. Farmers risk losing part of
their subsidy if they ignore the EU's rules on the environment
and animal welfare.
What about the UK rebate?

This was a red line for the UK government. In 2011 the
UK's rebate was 3.56bn euros. It used to be bigger, but was
reduced as the reforms to the CAP budget took effect.
It was Margaret Thatcher who persuaded the UK's EU
partners in the 1980s that the British contribution was exces-
67
sive, at a time when farm subsidies were bigger than now and
France was a major beneficiary.
There is pressure in the EU to scrap the rebate. The
Commission and some of the countries, which rely heavily on
EU funding, consider the UK rebate to be unfair and say more
should be spent in the EU's poorest regions.
I. Vocabulary:
impose a real-terms cut in budget spending – ввести реальное
сокращение бюджетных расходов
austerity – политика жесткой экономики
relaunch growth – запустить рост
net contributors – чистые доноры
net beneficiaries – чистые бенефициары
catch up with the old EU core states – догнать старые веду-
щие страны-члены ЕС
Multi-Annual Financial Framework, MFF – Многолетняя
программа финансового развития
ceiling – потолок, предел, верхняя граница
hard bargaining – трудные переговоры
whittle down – урезывать
envisage cuts to subsidies for farmers – предусматривать со-
кращение субсидий для фермеров
Common Agricultural Policy, CAP – общая сельскохозяйст-
венная политика
competitiveness – конкурентоспособность
spend money on aid for non-EU developing countries – тра-
тить деньги на помощь развивающимся странам, не чле-
нам ЕС
draft MFF – проект многолетней программы финансового
развития
68
boost funding for research – увеличить финансирование
научных
innovation исследований/инноваций
revive growth – оживить рост

new diplomatic corps – новый дипломатический корпус
new regulatory bodies – новые органы регулирования
oversee Europe‟s banks – осуществлять надзор за европей-
скими банками
fight off attempts – отбить попытки
UK rebate – возврат части взноса Великобритании
fund the EU‟s eastward enlargement – финансировать рас-
ширение ЕС на восток
veto a deal – наложить вето на соглашение
contentious areas – спорные направления
cohesion – сближение (ЕС)
administrative costs – административные расходы
Eurosceptics – евроскептики
slash the staff budget – урезать, сократить бюджет персона-
ла ЕС
bulk of support – основная поддержка
red line – красная черта, предельная черта
take effect – вступить в силу
excessive contribution – чрезмерный взнос
scrap the rebate – отменить возврат части взноса Велико-
британии
rely heavily on EU funding – сильно зависеть от финанси-
рования со стороны ЕС
69
1. Why was the draft MFF slashed?

2. How much money is at stake?
3. What is the argument for increasing EU spending?
4. What is the position of David Cameron?
5. What are the most contentions areas of spending?
6. Why is so much spent on agriculture?
III. Give a short talk on the EU budget battle.
70
FORWARD GUIDANCE
The new governor of the Bank of England, Mark

Carney, has set out a «forward guidance» strategy to ac-
company his first inflation report.
Mr. Carney faces a UK economy that has been strug-
gling to achieve a sustained recovery - although recent data
has been more promising - and which also faces seven more
years of government austerity.
With the Treasury unable or unwilling to fulfil its usual
fiscal role in supporting the economy - via spending - the pres-
sure remains on the monetary authorities to do more.
«Forward guidance» is a tool that Mr Carney has shown
a penchant for in his previous job heading Canada's central
bank, and that he more-or- less put into immediate action in a
statement following the first policy meeting under his steward-
ship.
Now he, and the Bank's Monetary Policy Committee
(MPC), have delivered explicit guidance regarding the future
conduct of monetary policy.
So what has the governor said?

He said that the Bank would not consider raising interest
rates until the unemployment rate has fallen to 7% or below.
However, that link could be put aside if the inflation rate
threatens to rise above 2.5% in the medium term.
The statement also says that the MPC is also ready to
undertake further asset purchases, through the programme of
quantitative easing - while the unemployment rate remains
above 7% 2if it judges that additional monetary stimulus is
warranted».
71
The Chancellor, George Osborne, had asked the Bank to
produce a report in time for his inflation report.
Forward guidance is not just a strategy being used in the
UK. The US Federal Reserve has been increasingly using for-
ward guidance ever since 2008, and now the European Central
Bank is also getting in on the act.
What is forward guidance?

It is making a promise about the future, particularly
about future interest rates.
The Bank of England, like other central banks, directly
controls the short-term interest rate at which it lends to or bor-
rows from the High Street banks overnight.
This is the interest rate that gets set at each of the Bank
of England's monthly Monetary Policy Committee meetings.
The Bank has now told the market that it intends to keep
this rate at its current historically low 0.5% at least until the
unemployment rate falls to 7% or below.
Mr Carney has not said that interest rates will automati-
cally rise when that threshold is reached, rather that it is a
«waystation» for further consideration of the issue.
What's the point of forward guidance?

The Bank can only directly control the short-term inter-
est rate. But this rate has already been cut to the lowest level
that the Bank feels comfortable with.
Given that it has exhausted the more traditional option of
short-term interest rate cuts, another way for the Bank to sup-
port the economy has been to offer this indicator, by which
companies and mortgage borrowers can estimate for how long
72
such low interest rates may be around for in terms of months
or years.
Forward guidance is thus a way of converting low short-
term interest rates into lower long-term interest rates.
The thinking is that if the High Street banks can be co n-
vinced that they will be able to borrow overnight from the
Bank of England at just 0.5% for many nights - indeed many
months or years - to come, then they will hopefully be willing
to lend money out to the rest of us for the longer term at a
commensurately lower interest rate as well.
Is the Bank tying its own hands?

Unfortunately, the Bank cannot actually do that.
Whatever promises it may make now, it will always
have the right to change its mind later. Indeed, Mr. Carney did
exactly this in his time at the Canadian central bank, breaking
an earlier promise not to raise interest rates for at least a year.
This inability to tie its own hands presents the Bank with
a conundrum - how to convince markets today to believe
promises that in the future it may be strongly tempted to re-
nege upon.
I. Vocabulary:
forward guidance – перспективное управление
governor of the Bank of England – глава Банка Англии
set out a forward guidance strategy – изложить стратегию
«перспективного управления»
achieve a sustained recovery – добиться устойчивого подъ-
ема экономики
government austerity – правительственная политика жест-
кой экономии
Treasury – Министерство финансов Великобритании
73
fulfil fiscal role – выполнять бюджетно-налоговую роль
via spending – с помощью расходов
monetary authorities – денежно-кредитные органы
show a penchant for – продемонстрировать склонность к…
under smb‟s stewardship – под ч-л руководством
future conduct of monetary policy – проведение денежно-
кредитной политики в будущем
raise interest rates – поднимать учетную ставку банковско-
го процента
undertake further asset purchases – продолжить покупку ак-
тивов
monetary stimulus – денежный стимул
be warranted – быть оправданным
control short-term interest rates – контролировать кратко-
срочные процентные ставки
High Street banks – коммерческие банки (Великобритания)
lend overnight - выдавать краткосрочные
borrow - брать кредиты
set the interest rate – устанавливать процентную ставку

keep the interest rate at its historically low 0,5% - сохранять
крайне низкую процентную ставку в 0,5%
reach the threshold – достичь порога
waystation – зд. промежуточный этап
exhaust the option – исчерпать возможность
indicator – показатель
mortgage borrowers – заемщики под залог имущества
commensurately – соизмеримо
tie one‟s own hands – связать себе руки
change one‟s mind – изменить решение
74
present the Bank with a conundrum – поставить перед Бан-
ком головоломную задачу
renege on promises – нарушить обещания

1. What strategy has the new governor of the Bank of
England set out?
2. What has he said?
3. What is forward guidance?
4. What‟s the point of this strategy?
5. Can the Bank renege on its promises?
III. Give a short talk on the strategy of forward guid-

ance adopted by the Bank of England.
75
«OBAMACARE» HEALTH LAW
One of the central provisions of President Barack

Obama and the Democrats' healthcare reform law, known
popularly as «Obamacare», took effect on 1 October.
The Patient Protection and Affordable Care Act, signed
by Mr. Obama in 2010, is the largest overhaul of the US
healthcare system since the 1960s.
What does the law do?

Its aim is simple: to extend health insurance coverage to
some of the estimated 15% of the US population who lack it.
Those people receive no coverage from their employers and
are not covered by US health programmes for the poor and the
elderly.
To achieve this, the law requires all Americans to have
health insurance, but offers subsidies to make coverage more
affordable and aims to reduce the cost of insurance by bringing
younger, healthier people into the health insurance system.
It also requires businesses with more than 50 full- time
employees to offer health coverage, although this provision
was delayed until 2015 to allow more time for compliance.
The law creates marketplaces – where individuals can
compare prices as they shop for coverage.
In addition, the law bans insurance companies from d e-
nying health coverage to people with pre-existing health con-
ditions, allows young people to remain on their parents' plans
until age 26, and expands eligibility for the government-run
Medicaid health programme for the poor.
The law aims eventually to slow the growth of US
healthcare spending, which is the highest in the world.
76
Why do Republicans oppose the law so vehemently?
The Republican Party and conservative think-tanks have
fought the law since Mr. Obama first proposed it in 2009 at the
start of his first term in office.
The law passed in 2010 after a bitter parliamentary fight
in Congress, with Republicans unanimously opposed. Then
Republicans contested the law in the courts, a battle that ended
in June 2012 when the US Supreme Court declared it constitu-
tional.
It was a central issue in the 2012 presidential election.
Republican candidate Mitt Romney vowed to push for its re-
peal. Mr. Obama pledged to defend the law, and easily won re-
election. The law's success depends in large part on co-
operation from state governments, but Republicans in state
capitals across the country have sought to undermine it in var-
ious ways.
And in autumn 2013, the Republican Party refused to
pass a budget to fund the operations of the US government un-
less Democrats agreed to delay the law or eliminate its fund-
ing. When Mr. Obama and the Democrats who control the Se-
nate refused, the government shut down.
Republicans say the law imposes too many costs on
business, with many describing it as a «job-killer». They have
also decried it as an unwarranted intrusion into the affairs of
private businesses and individuals.
But Democrats and some analysts say Republicans are
motivated by politics - they want to undermine Mr. Obama's
signature domestic political achievement in order to weaken
him.
When does it take effect?

The law takes effect in several stages:
77
2010: Insurers were banned from denying coverage to
children with pre-existing conditions, adults under 26 were
allowed to remain on their parents' plans, and insurers were
barred from cancelling coverage in some circumstances. Insur-
ers were forbidden from imposing lifetime limits of health
coverage.
2011: The law expanded access to preventative health
services, and offered drug discounts for people in the Medicare
program for pensioners.
2012: Provisions to encourage healthcare providers to
lower costs took effect.
October 2013: Consumer health insurance marketplaces
go online.
2014: People without health coverage from the govern-
ment or their employers will be required to purchase it. The
government Medicaid health program for the poor will be e x-
panded to cover more people, tax credits will subsidize indi-
viduals' and families' purchase of health coverage, and insurers
will be barred from denying coverage to people with pre-
existing health conditions.
I. Vocabulary:
Patient Protection and Affordable – Закон о защите пациен-
тов и доступном
Health Care Law, Obamacare (разг.) - медицинском обслу-
живании
provision – положение
take effect – вступать в силу
overhaul of the healthcare system – реформа системы здра-
воохранения
78
extend health insurance to… – распространить медицинское
страхование на …
health coverage – страховое покрытие медицинских расходов
purchase health insurance – покупать медицинскую стра-
ховку
offer subsidies, subsidise - предлагать субсидии, субсидировать
compliance – соблюдение (законов, правил)
marketplace – рынок, рыночная площадка
ban
bar запрещать
forbid
deny health coverage to people with – отказывать в меди-

цинском страховании pre-existing health conditions лицам,
имеющим проблемы со здоровьем
expand eligibility for … – расширить право на …
government-run Medicaid programme – правительственная
программа бесплатной медицинской помощи неимущим
slow the growth of US health insurance – замедлить рост
стоимости медицинского страхования в США
vehemently oppose smth – резко возражать, выступать про-
тив ч-л
think tank – мозговой центр
contest a law in courts - оспаривать закон в судах
declare a law constitutional – объявить закон, соответст-
вующим конституции
repeal a law – аннулировать, отменить закон
state government – правительство штата
pass a budget – одобрить, принять бюджет
fund; funding – финансировать; финансирование
impose costs on business – налагать расходы на предприни-
мателей
79
decry – осуждать, порицать
unwarranted intrusion – неоправданное вмешательство
signature achievement – главное, важнейшее достижение
cancel coverage - отменять медицинскую страховку
impose lifetime limits – вводить ограничения по срокам
продолжительности жизни
preventative health services – профилактические медицин-
ские услуги
offer drug discounts – предлагать скидки на лекарства
Medicare – программа медицинской помощи лицам старше
65 лет
tax credits – налоговые льготы

1. What is the aim of President Obama‟s healthcare

reform law?
2. What are its main provisions?
3. Why do Republicans oppose the law?
4. When does it take effect?
III. Give a short talk on the new law to reform US

healthcare. Follow the latest developments in the attempts
to make it work.
80
US DEBT CEILING
The debt ceiling is a cap on the total amount the US

government can borrow set by US lawmakers.
The current debt limit of $16.699 trillion was reached in
May. Since then the US Treasury has been using what are
called extraordinary measures to keep paying the bills.
Why does the US government need to borrow so

much?
If you compare borrowing to the size of the US econo-
my, it has been increasing since the 1980s.
But the 2007 financial crisis created huge gaps between
government income and expenditure.
The economy was plunged into a deep recession and fed-
eral finances deteriorated dramatically as the government at-
tempted to boost the economy and stabilise the financial sector.
As a result the debt ceiling was raised twice in the
second half of 2008 and twice in 2009.
According to the Congressional Budget Office (CBO),
US debt as a percentage of gross domestic product (GDP) is
now 73%, twice as much as it was at the end of 2007.
Why can't the president raise the limit?

He doesn't have that power.
The limits are set by lawmakers in Congress.
They set in law how much the Treasury department can
borrow.
81
Why has it become such a big issue?
Since the Democrats lost control of the House of Repre-
sentatives to the Republicans in 2010, budget fighting b etween
the two parties has become commonplace.
Republicans took their victory in the mid-term elections
as a sign that Americans had rejected the president's Demo-
cratic agenda, and more specifically, that Americans were un-
happy with the Patient Protection and Affordable Care Act, or
«Obamacare» as Republicans label it.
Although past budget fights have included larger que s-
tions about the size and scope of the US government, this one
is very specifically about Mr Obama's healthcare law.
Republicans have been doing everything in their power
to force Mr. Obama to delay implementation of a law they
strongly believe was rejected by the American public.
Democrats argue the law was validated by the Supreme
Court in June 2012 and was a central issue in the 2012 pres i-
dential election, which Mr. Obama won decisively.
It seems a messy way to run the nation's finances.

Part of the problem is that Congress approves spending
separately from the debt ceiling.
So politicians can agree to all sorts of expenditure with-
out necessarily having the financing in place to pay for it.
In good years that does not matter too much as govern-
ment income is greater that expenditure.
But historically those have been rare.
Usually the Treasury has to cover the gap between in-
come and expenditure by borrowing on the international mo n-
ey markets.
82
When does the money run out?
The government has been juggling its debts to keep pa y-
ing the bills, but those measures will run out between 22 Octo-
ber and the end of the month, according to the Congressional
Budget Office.
What happens then?

The government could make drastic cuts in federal
spending or try to raise taxes, or possibly even both.
That would be difficult and, perhaps, not enough.
So what does that mean?

The big worry is that the US government may have to
stop paying back its debts, which is known as a default.
Traditionally the US has been able to borrow at low in-
terest rates on the international markets, which has helped
keep interest rates low for consumers.
But a default could damage confidence and drive up the
cost of borrowing for Americans.
I. Vocabulary:
debt ceiling – потолок госдолга США
raise the debt ceiling – поднять потолок госдолга
set a cap – установить предел
lawmakers – законодатели
US Treasury - Министерство финансов США
use extraordinary measures – прибегать к чрезвычайным
мерам
create huge gaps – создать огромную брешь
cover the gap – закрыть брешь
income and expenditure – доходы и расходы
83
plunge the economy into a deep recession – ввергнуть эконо-
мику в глубокую рецессию
deteriorate – ухудшаться
Congressional Budget Office – Бюджетное управление кон-
гресса
enact measures –предпринимать меры
alter the limit on federal debt – изменить предел федераль-
ного долга
budget fighting – борьба вокруг бюджета
reject the president‟s agenda – отвергнуть программу прези-
дента
Patient Protection and Affordable Care Act 1
validate a law – придавать юридическую силу, признавать
законным
approve spending – утверждать расходы
international money markets – международные денежные
рынки
juggle – заниматься манипуляциями
borrow at low interest rates – занимать средства под низкие
проценты
debt default – дефолт, неисполнение обязательств по долгам
damage confidence – подорвать доверие
drive up the cost of borrowing – повышать стоимость заим-
ствований

1
See P. 84.
84
1. What is the debt ceiling? Who sets it?
2. Why does the US government need to borrow so
much?
3. Has the debt ceiling ever been raised?
4. Why has it become such a big issue?
5. What will happen if the government does not have the
money to pay its debts?
III. Give a short talk on the problems with the US gov-

ernment debt ceiling. How much does politics interfe re
with the way the nation’s finances are run?
85
2013 US GOVERNMENT SHUTDOWN
The US government has begun a partial shutdown after

Republicans refused to approve a budget, saying they would
only do so if funding for President Barack Obama's healthcare
reforms was delayed.
The stand-off follows what has become close to an an-
nual budget fight in Washington.
President Obama warned a shutdown would have «a
very real economic impact on real people, right away», putting
the fragile US economic recovery at risk.
Why was this allowed to happen?

It is a matter of political wrangling between the Republi-
cans, who control the lower house – the House of Representa-
tives – and the Democrats, who have a majority in the upper
house, the Senate.
Due to disagreements between the two houses over fed-
eral government spending, the US Congress failed to pass a
budget before the fiscal year ended on 30 September.
Since President Barack Obama's election the parties
have never come to a resolution on a US budget that extends
further than a few months.
The central issue this time round was Mr. Obama's
healthcare reform programme, with the Republican-controlled
House of Representatives approving budgets eliminating its
funding or delaying its central provisions. These were later
rejected by the Senate.
As a midnight deadline passed, no budget bill had been
agreed by both houses, meaning the US faces its first par-
tial shutdown in 17 years.
86
How did it get so bad?
Since the Democrats ceded control of the House of Rep-
resentatives to the Republicans in 2010, budget fighting be-
tween the two parties has become commonplace.
Republicans took their victory in the mid-term elections
as a sign that Americans were revolting against Mr. Obama's
Democratic agenda, and specifically, that Americans were un-
happy with the Patient Protection and Affordable Care Act.
Republicans vehemently rejected Mr. Obama's efforts to
overhaul completely the way healthcare is provided in the
United States.
Republicans have been doing everything in their power
to force Mr. Obama to delay implementation of the bill.
Mr. Obama and the Democrats, are keen to remind vo t-
ers that the law was validated by the Supreme Court in June
2012 and was a central issue in the 2012 presidential election,
which Mr Obama won decisively.
Who is affected?
Ten minutes before midnight on 30 September, the
White House budget office issued orders for government o f-
fices to start shutting down, with workers told to stay at home
without pay.
This affects all «non-essential staff», which by some es-
timates is more than 700,000 of the total 2.1 million-strong
federal workforce.
National parks, museums, federal buildings and services
will all be closed.
Air-traffic controllers, active military personnel, and
border security guards are to be told to report for work, but
new passports will not be issued and tax offices will also close.
87
Even some of the White House staff might have to stay
at home.
However, workers like teachers, firefighters and doctors
will continue to be paid, as they are paid for by the state, not
the federal government.
What is the likely economic impact?

It depends on how long it takes for Congress to thrash
out an agreement on the budget.
The US government has experienced 18 shutdowns in
the past 30 years, with the latest one lasting 21 days under US
President Bill Clinton in 1995, costing the economy over
$1bn.
If the Democrats and Republicans reach a deal on the
budget within a day or two, the negative effect on the recovery
of the US economy will be fairly limited.
However, the daily impact of the economic shutdown
may accelerate if it affects confidence and consumer spending,
especially with hundreds of thousands of workers left unpaid.
Over the past three years, the debt ceiling has been used
as a negotiation point for House Republicans who have sought
to extract budget concessions from Mr. Obama.
What's next? How will it be resolved?

There are a few ways out of the shutdown: Congress
could pass a bill on the budget that does not tamper with the
Affordable Healthcare Act, the Senate and Democrats could
accept changes in the health law, or a compromise could be
reached.
88
Congress will need to meet a crucial deadline on 17 Oc-
tober to raise the government's $16.7 trillion debt ceiling – the
limit at which it can borrow money to pay its bills.
I. Vocabulary:
government shutdown – прекращение работы федерального
правительства
partial shutdown – частичное прекращение работы прави-
тельства
approve a budget – одобрить, принять бюджет
pass
delay funding – отложить финансирование

eliminate – отменить
stand off – противостояние

put the fragile US economic – поставить под угрозу хрупкое
recovery at risk - восстановление экономики США
political wrangling – ожесточенные политические споры
fiscal year – финансовый год
cede control – уступить контроль
Patient Protection and Affordable Care Act 1
non-essential staff – вспомогательный состав
thrash out – прорабатывать, детально обсуждать
affect confidence and consumer spending – отрицательно
сказаться на доверии и потребительских расходах
seek to extract concessions – добиваться уступок
tamper with – вмешиваться, трогать
reach a compromise – достичь компромисса
meet a critical deadline – уложиться в крайне важный пре-
дельный срок
1
See P. 84.
89
1. What is a shutdown?
2. Why did it happen?
3. Who is affected?
4. What is its likely economic impact?
5. How can it be resolved?
III. Give a short talk on the reasons and conse-

quences of the 2013 US gove rnme nt shutdown. Has a long
term solution been found?
90
SUPPLEMENT I
PROFILE: EUROPEAN UNION
The European Union, or EU, describes itself as a

family of democratic European countries, committed to
working together for peace and prospe rity.
The organisation oversees co-operation among its mem-
bers in diverse areas, including trade, the environment, trans-
port and employment.
On 1 May 2004 the EU took in 10 new members in a
huge step along the road towards dismantling the post-World
War II division of Europe.
The new joiners were the Czech Republic, Cyprus, Esto-
nia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and
Slovenia.
However, plans to introduce a constitution - intended to
ensure the smooth running of the enlarged EU - faltered re-
peatedly at various national referendums until the revised
«Lisbon» reform treaty was adopted. It came into force in De-
cember 2009.
History
Over half a century earlier, it was the devastation caused
in Europe by World War II which underlay the imperative to
build international relationships to guard against any such ca-
tastrophe recurring.
French statesmen Jean Monnet and Robert Schuman are
regarded as the architects of the principle that the best way to
start the European bonding process was by developing eco-
nomic ties.
91
This philosophy was the foundation for the Treaty of
Paris which was signed in 1951. It established the European
Coal and Steel Community (ECSC) which was joined by
France, Germany, Italy, the Netherlands, Belgium and Lux-
embourg.
Under the Treaty of Rome which came into force in
1958, these six countries founded the European Economic
Community and the European Atomic Energy Community to
work alongside the ECSC.
In 1967 the three communities merged to become collec-
tively known as the European Communities (EC) whose main
focus was on cooperation in economic and agricultural affairs.
Denmark, Ireland and the UK became full EC members
in 1973, Greece joined in 1981, Portugal and Spain in 1986,
Austria, Finland and Sweden in 1995.
Maastricht and beyond

The Treaty on European Union, signed at Maastricht in
1991, formally established the European Union as the succes-
sor to the EC.
At the same time Maastricht expanded the concept of
European union into new areas. It introduced a Common For-
eign and Security Policy and moved towards an EU coordinat-
ing policy on asylum, immigration, drugs and terrorism.
EU citizenship was brought into being for the first time,
allowing people from member countries to move freely be-
tween member states. The treaty included a Social Chapter,
from which the UK opted out, laying down EU policies on
workers' rights and other social issues.
Crucially, Maastricht established the timetable for eco-
nomic and monetary union and specified the economic and
92
budgetary criteria which would determine when countries
were ready to join.
The subsequent Stability and Growth Pact tightened up
the approach to these criteria, stressing that strict fiscal discip-
line and coordination would be vital to the success of econo m-
ic and monetary union. It also laid down penalties for me m-
bers failing to control budget deficits.
Monetary travails
The single European currency, the euro, was officially
adopted by 11 member states in 1999. Greece, which took
longer to meet convergence criteria, joined two years later.
Denmark, Sweden and the UK chose not to join.
The failure of many eurozone countries to stick to the
self- imposed rules on government debt triggered a major fi-
nancial crisis in 2009. By the end of that year Greece was bur-
dened with debt amounting to 113% of GDP - nearly double
the eurozone limit of 60%.
Following a 110bn-euro bailout package for Greece
agreed in May 2010 by other eurozone members and the IMF,
other heavily- indebted EU member states - notably Ireland,
Portugal and Spain - started to come under close scrutiny.
In November 2010, an EU/IMF bailout package totalling
85bn euros was agreed on for Ireland, and in May 2011 a
78bn-euro bailout was approved for Portugal. By the end of
the summer the indebtedness of Spain, Italy and Cyprus was
also becoming a cause for concern.
Signs that the debt contagion was spreading beyond the
periphery of the eurozone gave rise to a clamour of calls for
urgent action, and at an emergency summit in October 2011,
Europe's leaders agreed on a package of measures that in-
cluded boosting the eurozone's main bailout fund to 1tn euros.
93
This, however, failed both to address a continuing crisis
of confidence in the currency and to heal rifts among the major
European Union economies on how to deal with it. France and
Germany sought eurozone tax harmonisation, while Brita in
demanded safeguards for its own financial sector.
The year 2012 saw the debt crisis worsen in Greece and
Spain, while the election of a Socialist government in France
left Germany isolated as the chief advocate of austerity within
the eurozone.
Sensing a need for leadership, in June 2012 the Euro-
pean Union authorities unveiled their own vision for a future
that gave them much greater power, including a European
treasury with control over national budgets.
European Commission President Jose Manuel Barroso
said this «defining moment for European integration» was de-
signed to strengthen the eurozone and prevent future crises
over a ten-year period, but critics saw little in it to address
pressing debt problems.
Mr. Barroso went further in September 2012, calling for
an eventual «federation of European nation-states» in a speech
that also sought to deal with bank debts by establishing a su-
pervisory mechanism for all eurozone banks.
However, internal divisions were highlighted in Nove m-
ber 2012, when a summit meeting in Brussels failed to reach
agreement on the EU's next seven-year budget.
Other key issues

Supporters of the 2004 influx of new member states saw
enlargement as the best way of building economic and politi-
cal bonds between the peoples of Europe in order to end the
divisions of the past.
94
They looked forward to sharing the world's largest single
market and so to expanding and consolidating stability and
prosperity.
Critics highlighted the fact that average GDP per head
for the new member states was 40% of the average for existing
EU countries, making them an economic burden.
Some also argued that the EU decision-making process
would become bogged down as the number of countries round
the table increased.
Fears were expressed in some quarters that established
EU members would see a huge influx of immigrants seeking
better job and benefit prospects.
Reform treaty
Expansion is almost certain to continue. Bulgaria and
Romania joined in January 2007 and Croatia became the EU's
28th member state in July 2013, and in 2009 Serbia submitted
a formal application to join. Talks over Turkey's possible ac-
cession began in October 2005.
With the first big wave of enlargement approaching, a
convention was established in 2002 to draft a constitution for
the EU intended to streamline and replace the complex array
of treaties and agreements which then governed it, and to de-
fine the powers of the body.
After intensive negotiation, the final text of the constitu-
tion was approved at a meeting of the 25 EU heads of state in
Brussels in June 2004.
However, every EU country had to ratify the constitution
- through national parliament or public referendum - before it
could take effect. The charter was dealt a severe blow in May
and June 2005 when it was spurned by French and Dutch voters.
95
The constitution was put on hold, but with Germany's
assumption of the EU presidency in January 2007 it was
placed firmly back on the agenda.
Negotiations on a new Reform Treaty took place
throughout 2007, and what has become known as the Lisbon
Treaty was signed in the Portuguese capital on 13 December.
Most European leaders acknowledged that the main sub-
stance of the constitution would be preserved, but they argued
that Lisbon simply amended previous European treaties, rather
than marking any fundamental new shift in powers.
All 27 EU countries were expected to ratify the Treaty in
2008 with a view to it coming into force in 2009. However, it
was thrown into turmoil in June 2008 after voters in Ireland -
the only country to hold a referendum on it - delivered a re-
sounding «no» vote.
European Commission President Jose Manuel Barroso
urged other countries to continue ratifying the Treaty, and Ire l-
and approved it in a second referendum in October 2009.
The ratification process was completed the following
month when the eurosceptic Czech President Vaclav Klaus
finally signed it.
New presidency
In November 2009 the Council of Ministers approved
Belgian Prime Minister Herman Van Rompuy as the first pres-
ident of the European Council. Mr. Van Rompuy took office in
January 2010.
The European Union Trade Commissioner, Britain's Ba-
roness Ashton, was appointed High Representative for Foreign
Affairs at the same time. She took office when the Lisbon
Treaty came into force in December 2009.
96
Under Baroness Ashton's chairmanship, EU foreign mi-
nisters have taken a more concerted line on issues in the Mid-
dle East, in particular sanctions against Iran's nuclear pro-
gramme. In January 2012 they banned imports of Iranian oil in
a major step against the Tehran authorities.
EUROPEAN COUNCIL
The European Council is an institution of the European
Union. It comprises the heads of state or government of the
EU member states, along with the President of the European
Commission and the President of the European Council. The
High Representative for Foreign Affairs, currently Catherine
Ashton, takes part in its meetings.
While the European Council has no formal legislative
power, it is charged under the Treaty of Lisbon with defining
«the general political directions and priorities» of the Union. It
is thus the Union's strategic (and crisis solving) body, acting as
the collective presidency of the EU.
The meetings of the European Council, commonly re-
ferred to as EU summits, are chaired by its president and take
place at least twice every six months.
The European Council was established as an informal
body in 1975; it became an official EU institution in 2009
when the Treaty of Lisbon entered into force.
EUROPEAN COMMISSION
The European Commission (EC) is the executive body
of the European Union responsible for proposing legislation,
implementing decisions, upholding the Union's treaties and
day-to-day running of the EU.
The Commission operates as a cabinet government, with
28 members of the Commission (informally known as «com-
missioners»). There is one member per member state, though
members are bound to represent the interests of the EU as a
97
whole rather than their home state. One of the 28 is the Com-
mission President proposed by the European Council and
elected by the European Parliament. The Council then ap-
points the other 27 members of the Commission in agreement
with the nominated President, and then the 28 members as a
single body are subject to a vote of approval by the European
Parliament.
EUROPEAN PARLIAMENT
The European Parliament is the directly elected par-
liamentary institution of the European Union. Together with
the Council of the European Union and the European Com-
mission, it exercises the legislative function of the EU and it
has been described as one of the most powerful le gislatures in
the world. The Parliament is currently composed of 766 mem-
bers.
It has been directly elected every five years by universal
suffrage since 1979.
Although the European Parliament has legislative power
that the Council and Commission do not possess, it does not
formally possess legislative initiative, as most national parlia-
ments of European Union member states do. Parliament is the
«first institution» of the EU (mentioned first in the treaties,
having ceremonial precedence over all authority at European
level), and shares equal legislative and budgetary powers with
the Council. It likewise has equal control over the EU budget.
Finally, the European Commission, the executive body of the
EU, is accountable to Parliament. In particular, Parliament
elects the President of the Commission, and approves (or re-
jects) the appointment of the Commission as a whole. It can
subsequently force the Commission as a body to resign by
adopting a motion of censure.
98
MEMBER STATES OF THE EUROPEAN UNION
A member state of the European Union is a state that is
party to treaties of the European Union (EU) and thereby sub-
ject to the privileges and obligations of EU membership. Un-
like the membership of an international organisation, EU
membership places each member under binding laws in e x-
change for representation in the EU's legislative and judicial
institutions. On the other hand, EU states retain considerable
autonomy compared to the constituent states of a federation,
maintaining their national military and foreign polic y (where
they have not agreed to European action in these areas).
There are twenty-eight member states of the EU. Six
core states founded the EU's predecessor, the European Eco-
nomic Community, in 1957 and the remaining states joined in
subsequent enlargements. Having acceded on 1 July 2013,
Croatia is the newest state of the EU. Before being allowed to
join the EU, a state must fulfil the economic and political co n-
ditions generally known as the Copenhagen criteria. These es-
sentially require a candidate to have a democratic, free market
government together with the corresponding freedoms and in-
stitutions, and respect the rule of law. Enlargement of the Un-
ion is contingent upon the agreement of each existing member
and the candidate's adoption of all pre-existing EU law.
There is a wide disparity in the size, wealth and political
system of member states, but all have equal rights. While in
some areas majority voting takes place where larger states
have more votes than smaller ones, smaller states have dispro-
portional representation compared to their population.
THE EURO
The euro is the single currency shared by 17 of the Eu-
ropean Union's Member States, which together make up the
euro area. The introduction of the euro in 1999 was a major
99
step in European integration. It has also been one of its major
successes: around 330 million EU citizens now use it as their
currency and enjoy its benefits, which will spread even more
widely as other EU countries adopt the euro.
When the euro was launched on 1 January 1999, it be-
came the new official currency of 11 Member States, replacing
the old national currencies – such as the Deutschmark and the
French franc – in two stages. First the euro was introduced as
an accounting currency for cashless payments and accounting
purposes, while the old currencies continued to be used for
cash payments. Since 1 January 2002 the euro has been circu-
lating in physical form, as banknotes and coins. The euro is
not the currency of all EU Member States. Two countries
(Denmark and the United Kingdom) have „opt-out‟ clauses in
the Treaty exempting them from participation, while the re-
mainder (several of the more recently acceded EU members
plus Sweden) have yet to meet the conditions for adopting the
single currency.
Which countries have adopted the euro- and whe n?
 1999 Belgium, Germany, Ireland, Spain,
France, Italy, Luxembourg, the Netherlands, Austria, Portugal
and Finland
 2001 Greece
 2002 Introduction of euro banknotes and coins
 2007 Slovenia
 2008 Cyprus, Malta
 2009 Slovakia
 2011 Estonia
100
SUPPLEMENT II
World Economic Forum Davos
Once again the rich and powe rful are congregating in

Davos in the Swiss mountains for the annual meeting of the
World Economic Forum (WEF) – but does the forum still
have a purpose?
What is the World Economic Forum?

The WEF is a talking shop. Arguably, though, it‟s the
best of its kind in the world.
The concept dates back to the early 1970s, and is very
simple. Take top business leaders out of the pressure cooker of
their job and bring them together in a remote valley in the
Swiss mountains. Removed from daily routine they can freely
exchange ideas, broaden horizons – and break the ground for a
deal or two.
Professor Klaus Schwab, who invented and still runs the
event, calls it «a platform for collaborative thinking and
searching for solutions, not for making decisions».
Over the years it‟s evolved, taking in artists, politicians
of all stripes, activists from trade unions and campaign groups,
entrepreneurs, inventors, all sorts of clever people from uni-
versities and think tanks.
That doesn’t sound like a small event anymore …

What started as a cosy chat around the log fire in a
mountain chalet is now a huge event, with more than 2,500
participants from nearly 100 countries, hundreds of journalists,
about 50 heads of state or government and numerous other
politicians.
101
The key ingredient, though, is the 1,600 bosses of many
of the world‟s top companies – not just from the West, but
from emerging economies as well.
And this is just the annual meeting, traditionally held in
the Swiss mountain village of Davos.
The once-a-year event has evolved into a year-round
succession of regional forums in all corners of the world, plus
working groups bringing together key decision makers on
global issues such as cyber security, global risks, and fighting
corruption and poverty.
All these activities are supposed to underpin the forum‟s
official motto: «Committed to improving the state of the
world».
And I thought it was just a bunch of capitalists hav-

ing a good time in the mountains…
Well, that‟s one way to see it. Yes, Davos is about the
rich and the powerful having a good time. The parties and ex-
clusive dinners, the deal making and schmoozing – and the
skiing – are legendary.
But you have to give the forum‟s organisers some credit:
every year they are trying hard to put tough topics on the
agenda and add inconvenient voices to the mix. Fighting po-
verty, climate change and the shortcomings of banks and co m-
panies are always big themes here.
Also remember that the forum often provides the cover
for political enemies to meet, gain mutual understanding, and
even strike a peace deal.
And then there is the fabled «Davos consensus», when a
common theme emerges that sets the global agenda for the
months to come.
102
What are this year’s big topics?
It‟s always hard to tell, but it looks like one of the big is-
sues will be, now that there are signs of growth again in many
developed economies, how can that growth he made more in-
clusive?
There‟s always lots of interest in the latest technological
developments and what challenges and opportunities they
could create for businesses.
And the Forum is setting out to explore how a world
population of nine billion people could be sustained.
How does it work?

It‟s obviously big, and in a strange way it is both free-
flowing and utterly regimented. The fairly rigid framework is
provided by hundreds of official sessions- panels, speeches
and workshops-ranging from a keynote speech from Australi-
an Prime Minister Tony Abbott to a bunch of Nobel Prize-
winning economists discussing the year‟s economic challenges
to a panel discussing how video games are affecting the next
generation.
The free-flowing is everything in between. There are
numerous private sessions and bilateral meetings. The corri-
dors of the concrete-and-wood confection of a conference cen-
tre are host to constant networking and schmoozing.
Here you can hear financial regulators criticize top
bankers, trade unionists challenge the bosses of the world‟s
biggest multinationals, and the finest minds in economics dis-
cuss the finer points of quantitative easing.
And what will the outcome be?

Don‟t expect any. Not even the organisers do. They say
that‟s not the forum‟s purpose.
103
But if participants go away with new ideas, new conne c-
tions, a better awareness of the world around them, and fresh
ideas on how to tackle its problems, Davos may well have
served its purpose once again.
I. Vocabulary
world economic forum (WEF) – Всемирный экономический
форум
talking shop (разг.) – “говорильня”
arguably – бесспорно
break the ground – подготавливать почву
evolve – развиваться, эволюционировать
politicians of all stripes – политики разного рода
think tank – мозговой центр
emerging economies – страны с развивающейся экономикой
global issues – глобальные проблемы
underpin – лежать в основе
motto – девиз
committed to – приверженный ч-л
schmoozing sl. – обхаживание, неофициальные разговоры
networking – налаживание связей
give smb credit – отдавать к-л должное
put tough topics on the agenda – включать сложные темы в
повестку
set the global agenda – определять глобальную повестку
provide the cover – обеспечить прикрытие
strike a peace deal – заключить соглашение о мире
Inclusive growth – инклюзивный рост
free- flowing (зд.) – свободный
regimented – строго регламентированный
rigid framework – жесткие рамки
104
panels – группа специалистов для обсуждения к-л вопроса
workshops – семинары
keynote speech – основное выступление
finer points – более сложные / тонкие аспекты / пункты
quantitative easing – количественное смягчение
awareness – осознание, понимание
tackle a problem – заняться решением проблемы
serve one‟s purpose – выполнять свое предназначение

cabulary ite ms as possible.
1. What is the World Economic Forum?
2. Who is the founder of the WEF?
3. What is the purpose of the WEF?
4. What has it evolved into?
5. What topics are usually on the agenda of the Forum?
III. Give a short talk on the origin of the World Eco-

nomic Forum and its role in tackling global proble ms.
105
SUPPLEMENT III
HOW TO WRITE A SUCCESSFUL CV BEFORE

APPLYING FOR A JOB
A good curriculum vitae - or CV - is vital whe n look-

ing for work, especially when the re are numerous candi-
dates for the same job, so what should it contain?
There is no perfect template, and each sector may re-
quire a different emphasis on a different aspect of the content,
such as career history or qualifications.
However, experts suggest there are some basic rules on
how a CV should be written and the information that should be
included.
Overall, a CV should be neat and typed.
It should also be short, usually no more than two sides of
A4. It should be positive, stressing achievements and
strengths, and make a good impression in a clear and positive
way.
The basic format for a CV includes:
 Personal details, including name, address,
phone number, email address and possibly any professional
social media presence. You no longer need to include your
date of birth, owing to age discrimination rules;
 Career history, starting with your most recent
job first. Include dates and temporary or voluntary jobs if ap-
propriate;
 A personal profile which sells yourself and your
qualities, tailored towards the job you are applying for;
 Achievements from previous jobs that are rele-
vant;
106
 Qualifications and training from previous jobs,
with the most recent first;
 Interests, if they are relevant and especially if
the skills or teamwork concerned are relevant for the job;
 Any extra information, such as reasons for a ca-
reer change or reasons for gaps in career history;
 References, ideally two or more and including a
recent employer.
Corinne Mills is managing director of Personal Career
Management, which offers careers coaching. She says that the
spelling must be checked and checked again.
«Poor spelling is the quickest way of getting a reje c-
tion», she says.
She adds that people should check five or six adverts for
a particular job and then use the common requirements to
mould their CV.
«Many people think that one CV will fit all applications,
but it needs to be a very targeted document for the role they
are going for. Do some research so you understand what e m-
ployers are looking for».
Each CV needs to be tailored towards your own skills,
experiences and your job application.
I. Vocabulary:
curriculum vitae [kə'rikjuləm 'vitai] or CV ['si: 'vi:] (Br.E);
resume ['rezju:mei] (Am.E) – резюме
template – шаблон, образец
social media – социальные сети
age discrimination – дискриминация по возрасту, возрас-
тная дискриминация
sell oneself – подавать себя в выгодном свете
if appropriate – если уместно, целесообразно
107
be tailored torwards – рассчитанный на…
relevant – важный, существенный
teamwork – коллективная работа, работа в команде
reference – рекомендация
careers coaching – профессиональная подготовка
advert (Br.E), ad (Am.E) = advertisement (for a job) – объяв-
ление (о найме на работу)
targeted document – адресный, целевой документ

cabulary ite ms as possible.
1. What are some basic rules of writing a CV?

2. What should a typical CV include?
3. What advice does Corinne Mills offer?
III. Imagine that you are applying for a job as a coach

in a summe r camp for children. Write your CV stressing
your achievements and strengths.
108
109
Никанорова И.А.
Некоторые основные
экономические понятия
(по материалам Би-Би-Си)
Редактор: Т.Д. Полянская
М акет: П.Г. Кабанен
Подписано в печать 24.09.2013.

Формат 60 Х 84 1/16. Усл. печ. л. 6,5
Тираж 100 экз. Зак. №
Издательство «Канон»
М осква, ул. Остоженка, 53/2
Отпечатано в Дипломатической академии МИД России
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SOME BASIC ECONOMIC CONCEPTS

Никанорова И.А. Некоторые основные экономические понятия (по материа-

Данное учебное пособие предназ начено для бакалавров четырехго-

 Дипломатическая академия М ИД России

GDP, or Gross Domestic Product, is the most impo r-

New GDP figures are released every three months,

II. Ans wer the following questions using as many vo-

III. Give a short talk on the various uses of GDP by fi-

Inflation is one of the most important issues in eco-

II. Ans wer the following questions using as many vo-

III. Write an essay of 180-200 words on the topic:

Japan has an inflation problem – it does not have

Why is this target important for Japan?

Is this the first time Japan has set such a target?

Can it achieve the 2% target?

reduce profits – сокращать прибыли

volume of output – объем производства

III. Give a short talk on the difference between inflation

Since the global financial crisis, both the Bank of

What is quantitative easing?

Is this printing money?

How does it work?

Why are the UK and US's actions different from

buy assets – покупать активы

raise (the amount of) lending – увеличить кредитование

1. What is quantitative easing? Which countries are us-

III. Write as essay of 180-200 words on the topic:

Since late 2012, the US central bank, the Federal Re-

What will the Fed do?

So how much has the Fed committed?

That is a lot of money. Did it work?

have a direct impact on the property market –воздействовать

II. Ans wer the following questions using as many vo-

1. Why is the Fed expected to stop buying assets?

III. Speak on the reasons for ending the programme of

A deal on the so-called «fiscal cliff» has been reached.

What was the fiscal cliff?

How did we get to the deal?

What is the deal?

What would have happened if we had sailed over the

reach a deal – заключить соглашение

1. What is the fiscal cliff?

III. Give a short talk on the deal reached by US Co n-

AAA, CCC... they look like some kind of school report.

Poor and Moody

Why are these three businesses the ones everyone

II. Ans wer the following questions using as many vo-

III. Write an essay of 180-200 words on the history and

The idea of Eurozone economies clubbing together to

What is a government bond?

Why do bond markets matter?

How might a eurobond solve the crisis?

Why does Germany object to eurobonds?

II. Ans wer the following questions using as many vo-

1. What is a government bond?

III. Write an essay of 180-200 words comparing the ad-

The eurozone’s new permanent bailout fund for

What is the ESM?

How much financial help can it provide?

How will the ESM get the money?

Which countries are the biggest contributors?

Anything from the UK?

What form will the financial assistance to eurozone

Will the re be conditions attached to financial assis-

II. Ans wer the following questions using as many vo-

III. Give a short talk on the role of the ESM in solving