babble home
rabble.ca - news for the rest of us
today's active topics


Post New Topic  Post A Reply
FAQ | Forum Home
  next oldest topic   next newest topic
» babble   » current events   » international news and politics   » 2006 Nobel Peace Prize: Muhammad Yunus and the Grameen Bank

Email this thread to someone!    
Author Topic: 2006 Nobel Peace Prize: Muhammad Yunus and the Grameen Bank
Stephen Gordon
rabble-rouser
Babbler # 4600

posted 13 October 2006 11:50 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Economists get two Nobels this year.

Best take I've seen so far is from Tyler Cowen:

quote:
This is a wonderful choice. The funny thing is, they never would have considered this guy for the Economics prize.

From: . | Registered: Oct 2003  |  IP: Logged
Sans Tache
rabble-rouser
Babbler # 13117

posted 13 October 2006 12:43 PM      Profile for Sans Tache        Edit/Delete Post  Reply With Quote 
This is great news. A bank that loans money to help women get out of poverty. Very, very forward thinking.

Bangladeshi Nobel winner to give prize money away

The first story covered the latest winner of the Nobel Peace Prize, Muhammad Yunus, who pioneered the idea of "micro-credit." He founded the Grameen Bank, which gives business loans to impoverished people who could never qualify for loans from an ordinary bank (even if the bank felt like it was worth the bother to lend someone $50). The fine folks in Oslo announced his win early this morning.

Maybe the Canadian banks could learn lessons form these economists.


From: Toronto | Registered: Aug 2006  |  IP: Logged
Wilf Day
rabble-rouser
Babbler # 3276

posted 13 October 2006 06:37 PM      Profile for Wilf Day     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Sans Tache:
Maybe the Canadian banks could learn lessons from these economists.

A moment ago on the National News we saw a spokeswoman for VanCity Credit Union saying that's what they do too, and an example of a small busines in Vancouver started with a $1,000 loan from VanCity's micro-credit programme.

It's all optics. "Micro-credit" was, and sometimes still is, the everyday work of small credit unions. Glad to see VanCity hasn't forgotten.


From: Port Hope, Ontario | Registered: Oct 2002  |  IP: Logged
Sans Tache
rabble-rouser
Babbler # 13117

posted 15 October 2006 03:34 PM      Profile for Sans Tache        Edit/Delete Post  Reply With Quote 
Wilf, Canadian Credit Unions have always had a great loan policy. Their resources are sometime stretched but they often help small business well.

Unfortunately, the Big Banks in Canada don’t know much about monetary compassion. That is why I hold very little dept with big banks. I try to give my business to the little guy, the corner shop, the private grocer, etc.

As for Muhammad Yunus, I understand his smallest loan was $1.00. His loans have a 98% repayment rate. This guy is amazing!


From: Toronto | Registered: Aug 2006  |  IP: Logged
Stephen Gordon
rabble-rouser
Babbler # 4600

posted 15 October 2006 03:39 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Grameen isn't quite the same as a credit union. The general problem in this sort of business is collateral. These people wouldn't have anything to offer as collateral, and we've had bad experience with collateral-free loans. If there are no consequences of defaulting, few pay it back. That's not really a problem per se (there are any number of people who don't mind donating money to help poor people in developing countries), but since the money didn't seem to go towards projects that would actually increase their incomes (the typical anecdote would involve the men squandering it on beer), they weren't any better off than before.

What Grameen did was create a form of collateral, one that people would take seriously: peer pressure. People would be put in small groups of 5 or so applicants, but only 2 or 3 would actually get a loan at first. The others would have to wait until the first ones paid back their loan. Knowing that your neighbours and relatives are counting on you to pay back your loan would be a powerful incentive. And since the only way to pay off your loan was to run a profitable business, that's what they'd do. At the end of the exercise, they'd have an income-generating business that didn't exist before, and (possibly just as importantly), they'd be able to hold their head up high in their home village. And since Grameen didn't lose any money, they were able to continue on to the next round of loans.

The real key wasn't having the money. It was figuring out a way to create collateral.


From: . | Registered: Oct 2003  |  IP: Logged
jeff house
rabble-rouser
Babbler # 518

posted 15 October 2006 04:19 PM      Profile for jeff house     Send New Private Message      Edit/Delete Post  Reply With Quote 
He got a Nobel prize for that?
From: toronto | Registered: May 2001  |  IP: Logged
Stephen Gordon
rabble-rouser
Babbler # 4600

posted 15 October 2006 04:24 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Apparently the Nobel committee doesn't give points for style. Results are enough.
From: . | Registered: Oct 2003  |  IP: Logged
M. Spector
rabble-rouser
Babbler # 8273

posted 25 October 2006 12:54 PM      Profile for M. Spector   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
The trouble is that microloans don't make any sort of a macro-difference. They have helped some poor women, no doubt about it. But in their own way they're a register of defeat. Back in the early 1970s there were huge plans afoot to change the entire relationship of the Third to the First World, to speed Third World economies towards decent living standards for the many, not just the few. At the United Nations radical economists were hard at work drafting plans for a New World Economic Order. All that went out the window and here are the caring classes thirty years later, hailing microloans.

Microloans are micro-bandaids in a scale of things today where ­- to take the example of India -- well over 100,000 farmers, including a large number of women, have killed themselves because their federal and state governments, plus large international institutions, have promoted the savage priorities of neoliberalism.

As the economist Robert Pollin put it pithily when I asked him what he thought of the award to Younus, "Bangladesh and Bolivia are two countries widely recognized for having the most successful micro credit programs in the world. They also remain two of the poorest countries in the world."
....

But today the World Bank and the IMF, along with state-owned and commercial banks are diving into microfinance. The microloan business is fast becoming a gigantic empire, bringing back into control the very banks and bureaucracies women have been trying to bypass. Microcredit is becoming a macro-racket.

Sainath points out that the interest rates micro-indebted women are paying in India are far higher than commercial bank lending rates.

"They are paying between 24 and 36 per cent on loans for productive expenditures while an upper class person can finance the purchase of a Mercedes at 6 to 8 per cent from the banking system."

The average loan of the Grameen bank is $130 in Bangladesh, lower in India. Now, the basic problem of the poor in both countries is landlessness, lack of assets. In the Indian province of Andhra Pradesh, where there are thousands of microloan groups, land costs 100,000 rupees an acre, poor land maybe 60,000 rupees--over $2000. $130 doesn't buy you the ranch, not even a good cow or buffalo. So how many poor women have escaped the poverty trap in AP, Sainath asks. "Try getting an answer."

"With that $130 the most basic assets do not come to you," Sainath says. "The amount is tiny. Interest rates are high and the default sanctions savage. During recent floods in AP, freelance journalists came to a village where everything had been washed away. The first people back in were the micro creditors threatening women, demanding monthly installments from women who had lost everything."

Governments like microloans because they allow them to abdicate their most basic responsibilities to poor citizens. Microloans make the market a god.


Source

From: One millihelen: The amount of beauty required to launch one ship. | Registered: Feb 2005  |  IP: Logged

All times are Pacific Time  

Post New Topic  Post A Reply Close Topic    Move Topic    Delete Topic next oldest topic   next newest topic
Hop To:

Contact Us | rabble.ca | Policy Statement

Copyright 2001-2008 rabble.ca